How Much Is Your Laundromat Worth?

As a laundromat owner, knowing an accurate value of your laundry facility is an important factor when assessing whether or not you can make key business decisions. There are multiple ways to determine how much your laundromat business is worth, with each method deriving a different number. HK Laundry wants to share the best ways to calculate the value of your laundry operation with you.

The Three Most Common Evaluation Methods

Typically speaking, there are three ways to value your laundromat, which include: 

• Salvage Value: Based solely on the value of the used laundry equipment in your store.
• Replacement Value: Based on re-building your entire laundromat from scratch.
• Multiple of Profitability: The most common valuation method used (for any laundromat that is making money). It is based on the profitability of your facility and is calculated by figuring out how many years it will take you to recoup your original purchase price if you paid in cash.

Factors That Affect the Multiple of Profitability Evaluation Method

Even though the multiple of profitability is the most common way to assess the value of your laundry business, it's important to realize that there are multiple factors that also affect this equation. Other elements that influence a profitable laundromat are:

• Length Left on Lease: Laundromats that have long-term leases are worth more compared to stores that have shorter terms left on their lease. After the contract is up, the interior of the building has to be restored to its original state, often costing up to two years of profit to remove the special laundromat leasehold improvements like concrete slab, wiring and plumbing.

• Age and Condition of Laundry Equipment: Old and heavily used laundry machines have a negative effect on a store's multiple of profitability valuation. Replacing and upgrading old machines have many benefits like lower utility bills, increased vend prices, decreased maintenance costs, and adding to the multiple.

• Future Expenses for Store: It's important to always consider unplanned expenses like maintenance costs, building repairs, and equipment replacement expenses. There are always problems that arise throughout the fiscal year and planning for those will help you immensely.

How much can I sell my laundromat for?

An important component of valuing your laundry business is using that number to help you sell it, if needed. So what are the common selling multiples for laundromats? Ordinarily, the industry standard is to use 3-5 times the annual profits as a selling price. It's important to consider the length left on the lease, condition of laundry equipment, and future store expenses as well when you are choosing a selling price for your operation. These factors will all influence the range of your laundromat's price tag.