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Location, Location, Location (Part 1)

Paul Partyka |

CHICAGO — In the annals of history, three words have been ingrained in the memory of all business owners: location, location, location. Self-service laundry owners are no exception.I’m sure there are plenty of horror stories about store locations that just didn’t pan out, be it for a poor analysis of demographics, underestimating competition, or myriad other reasons.What are the key factors when searching for a good location? Can the demographic data fool you? Is there such a thing as an automatic deal-breaker? How has the economy affected the search for a new location?These are just some of the questions we posed to distributors from across the country.REGIONAL DIFFERENCES MATTERThe key factors to finding a good location are demographics, traffic flow (nondivided highways), the ease of entering/leaving the laundry, and parking, says Bill Reed, Daniels Equipment Co., Auburn, N.H.Strip centers are popular locations for self-service laundries, but Reed has some advice for those seeking a strip-center spot. “First of all, you don’t want your store near a restaurant or a grocery,” he advises. “When people shop, for example, they tend to spend at least half an hour at the store. With restaurants, it’s the same amount of time, or even longer. These people take up parking.“Plus, if you’re going to be in a strip center, try to get an end spot; it’s easier to vent the dryers.”Analyzing demographics presents a variety of challenges. In Reed’s case, “regionalism” taught him some lessons. He spent some time as a distributor in Washington state, and learned some valuable lessons — not all business climates are alike, for one.“In Washington, it’s a newer part of the country; there are more single-family homes than back East. In the East, in the older sections of cities like Boston, Philadelphia and New York, there is a high population density, and this can affect your decisions.”A failed business transaction also highlighted regional differences. One operator had old, 50-pound electric dryers. Reed figured this owner would be a prime candidate for gas dryers. What he didn’t know was that electricity was generated at such a cheap cost out West that the new gas dryers weren’t cost-effective. “I double-checked my figures. I just couldn’t justify selling the new dryers! Regional differences matter.”Deal-breakers can be location-specific, he says. He cites parking as an example. He’s a strong believer in the importance of parking, yet realizes that in some densely populated areas, there is almost no parking available. In these areas, people will accept walking to the laundry, he explains. “However, you better have parking in the suburbs, where people are used to driving everywhere, and want to drive right up to the laundry door and unload.”If a location is so great, how come no one else thought of building a laundry in the area? Reed has heard this question, and believes that you might be the first person to discover a prime laundry location. “Someone has to be first.”Economic conditions may also influence a location choice. “Before the recession, some of the landlords wanted everything; they wouldn’t give anything, such as a good rent or even a longer rent. In these cases, we would tell investors to stay away. That ballgame has changed.”If you’re considering purchasing an existing store, there are different questions to ask. “I want to know how much time is left on the lease. Is it really a good location, or has a competitor altered the [business situation]? Ask the owner why he is selling. Is he retiring or just tired of the business? Then, you have to wonder if what he’s telling you is the truth.” Reed cautions operators to be leery of any answer they might receive.One of the biggest changes in finding a location is Internet research, he says. “The younger investors can get a lot of key information about the location before they talk with me. We can’t spoon-feed them anymore. They know what to look for, and know answers to some of the questions we used to answer for them.”If you’re thinking about adding a location in the near future, Reed sees larger stores with larger equipment taking hold. Some of the newer owners aren’t using top loaders, he adds.DON’T BATTLE A SIMILAR STOREKey demographic data such as traffic count, number of renters vs. owners, and income levels are major factors when looking at a new location, says Nick Luzecky, KeeWes Equipment, Springfield, Mo.More specifically, Luzecky keeps a close eye on all aspects of the traffic count and the demographic subsets as they apply to different nationalities.As for deal-breakers, he won’t put a new store close to an existing store, unless the new store offers something new to the area. Having two similar stores nearby doesn’t make good business sense, he says.“However, if you’re going to put in a brand-new store, and the store down the street is old, it makes sense. The new equipment would appeal to customers. So would a clean store.Being the first laundry “on the block” could be the result of several things, Luzecky explains. “There might have been a Blockbuster there; now that store is gone and space is available. Plus, lower lease rates are now making certain locations more desirable. New opportunities do sprout up.”Today’s investors are more sophisticated, he believes. “These investors are from the corporate world and have in-depth business knowledge. They can see real value in this industry because it’s a coin business; this business isn’t one that can be shipped overseas.”He advises owners seeking an existing store to study the demographics, and see how things may have changed in the area since the store opened. “Why is the owner leaving? The beauty of an existing store is that it has historical numbers (financial records).”BEWARE OF CHANGING NUMBERSThe new-location focus should be on demographics (within a 2-mile radius), more specifically: population density, income level, and types of dwellings, says Mike Moser, Onward Commercial Laundry Equipment, Livonia, Mich.These demographic factors should hold up, but if a new store pops up in your area, all bets are off. You can’t really avoid this, Moser admits, but he says it doesn’t happen that often because other owners don’t want to compete with new stores either.“If you see a dilapidated laundry in the area you’re looking at, go for it. Put in a new store and compete with this store.”In addition to strong competition, rent is a deal-breaker, he says. “If you end up having to charge more than the market will bear because of a high rent, it doesn’t make any sense.”In a challenging economy, Moser, a “big demographics guy,” becomes somewhat skeptical about some of the demographic numbers. In some areas, the lack of jobs has forced people to relocate. “I’m waiting for the census numbers. There are plenty of laundries in my area, but some of them are not kept up. Opportunities do exist. We’re seeing some of these stores close. In the future, there may be new stores emerging.”If someone questions Moser about the lack of laundries in what appears to be a prime location, he simply says, “Missed opportunities occur.” High rent or the lack of property in a popular area may also have kept laundries out of an area, he adds.When evaluating an existing location, keep a close eye on access to proper utilities, he advises. “It’s extremely expensive to go from 1-inch lines to 3-inch lines. Make sure the existing store has plenty of windows. Is the layout conducive to a coin laundry?”Like others, Moser forecasts fewer, but larger, self-service laundries in the future.Check back on Wednesday, August 18 for Part 2 of this story. 

About the author

Paul Partyka

American Coin-Op

Paul Partyka was editor of American Coin-Op from 1997 through May 2011.

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