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Economics of a Laundromat Retool (Part 1)

Operators recount their latest overhauls

OAKBROOK TERRACE, Ill. — Whether owning a self-service laundry now or likely buying one in the future, retooling is something that you’ll consider someday. But in what ways can a project like that benefit you and your customers? What are the economics of such a project?

The Coin Laundry Association recently hosted a webinar about retooling and invited a trio of experienced operators to describe their latest retools and how they were able to get their project financials “to pencil out.”

“It’s one of the biggest potential investments—or reinvestments—of your Laundromat career, when you consider doing a complete retool of your store,” says moderator Brian Wallace, CLA president and CEO. “We know that there are lots of considerations.”

LAVANDERIA EXPRESS, OWNED BY JOSE ALMONTE

Jose Almonte has been in the laundry business since 1993. He owns 10 stores but has had as many as 20 at any one time during his career.

He retooled the Lavanderia Express at 100-25 Atlantic Ave., New York City, spending $680,000 on the 5,000-square-foot store that offers 58 washers and 29 stack dryers. His monthly note is $6,608.49, and he says sales increased 62.5% after the retool.

“This was my second retool. The first one, I did five years ago,” Almonte says. “I had built a store in 2001 and after 14 years, the equipment gave me so much trouble.” He was convinced to give retooling a try by a well-known finance company representative with laundry experience. “The numbers that came back were amazing.”

The Atlantic Avenue store was about 18 years old when Almonte purchased it. “After I did the first one, I saw the benefit of doing it. I’m working on another that will be ready soon.”

“A lot of people have had the philosophy of letting the equipment run 18-20 years and then decide about making those upgrades. … It’s a lot of money,” Wallace says. “Not something you’re going to rush into doing.”

“That is true,” Almonte says. “You have be committed in the business. I will tell anybody who’s going to try to do a retooling to not just change the machines, you have to do a face-lift on the location cosmetically, you have to light it up. Make them come to the store because of the changes you’ve made.

“Don’t retool it and leave it the way it was, because I don’t think you’re gonna get the same result you’re looking for.”

GOOD NEIGHBOR LAUNDROMAT, OWNED BY MANNY ZERVOS

Manny Zervos has been in the laundry business since 2014 and gotten off to what Wallace called a “fast start,” owning four stores.

Zervos retooled the Good Neighbor Laundromat at 980 E. 233rd St. in Bronx, N.Y., spending $600,000 on the 4,000-square-foot store that offers 68 washers and 76 stack dryers. His monthly note is $6,900, and he’s seen store sales increase 15% since the retool.

“When we bought the store, the machines were about 8 years old,” he explains. “A year into it, I noticed a lot of bearing jobs. We were changing bearings weekly, so the cost of maintaining these machines was way too high. Always breaking down, always some type of issue. Customers weren’t happy.”

The company financing the project suggested changing brands, and Zervos has been happy with the result.

“Yes, ($600,000 is) a high number but in order to make money, you’ve gotta spend money, so we took that model and we retooled. Just like Jose, it’s not just retooling the machines, you’ve got to give it a little face-lift. Some tile work, we did the bathrooms. … Got some nice signage outside. Lightened up the parking lot. We brought nice colors into the store.

“Everybody’s worried about the note. Whatever my note is, I doubled that. I made double of what the note is. I’m happy, definitely happy with my retool.”

PRECISION WASH & DRY LAUNDROMATS, OWNED BY LOU SPROVIERO

Lou Sproviero is a 30-year industry veteran who owns 22 laundries. He has a background in construction, landscaping, restaurants and hotels, Wallace says, but whittled that portfolio down to just the laundries a few years ago.

Sproviero retooled the Super Saver at 199 Exchange St. in Chicopee, Mass., spending slightly more than $450,000 on the 3,600-square-foot store offering 30 washers and 20 stack dryers. His monthly note is $4,557, and he’s seen store sales increase $2,000 a week following the project.

“This project is the last of 22 stores. We just completed it,” he says. “It was probably one of the least desirable locations and was pretty much floundering at break-even. We saw so much success in the prior projects that we finally decided to do this one.

“It was not a large-producing store, doing about $5,000 a week. … We probably decreased utilities by about 8%. Of course, the cost of repairs went down. The equipment that we replaced was about 16 years old. … The aesthetic is probably something that people underestimate, but the aesthetic is critical.

“The washer itself has to have a nice aesthetic. And dryers. Obviously, when you get into it, you might as well paint. We put some mirrors over the top of the dryers for better visibility to the whole store. Re-did the bathrooms. Granite countertops for the folding tables. Signage, spent some money on promotion, letting people know that things had changed. Just a general rejuvenation of the store itself.”

In Monday’s conclusion: Panelists discuss factors that favor making the decision to retool and how they approach the process

The Coin Laundry Association frequently offers webinars that cover topics such as marketing, store operations and management, and new investor education. Visit www.coinlaundry.org/events/webinars to learn more.