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Location: Seeking That Hot Spot

Craig Dakauskas |

Is there an ideal location for a self-service laundry? The answer is yes ... and no.Many factors go into determining whether a particular location will be successful — including demographics, competitive landscape, marketplace health, and even traffic patterns. But none of these considerations are the right place to begin when evaluating a location. The first, and most important, consideration is: does the location work with one’s larger business plan?The first step is to determine what one’s business goals are, and then decide if a location aligns with those goals. Before you go shopping for real estate, you need to examine your business plan and clarify your total budget, identifying available capital, resources and debt. Is the plan to rent, lease, or purchase space? Are you looking for a long-term investment, retirement income, or to build and sell? Who will be working the store? If you are going to work the store, convenience and drive time will be considerations.DUE DILIGENCEWhen considering location, you need to conduct marketplace research. This is where a distributor can add real value. The distributor should be an expert on his territory and should provide great insight into the demographics and competitive landscape. Demographics identify ethnic populations, median incomes, size of families, numbers of renters, occupancy rates in apartment complexes, percentages of transitional and contract workers, and whether a neighborhood is growing or declining in population. This provides an accurate snapshot of the marketplace and is critical to making an informed purchase.While demographic analysis is an extremely important tool, it isn’t foolproof. One can’t depend on it alone to provide market intelligence. Unexpected events can impact demographics, rendering existing census information inaccurate. The “current” census data for New Orleans, for instance, is no longer correct. It doesn’t reflect the departure of population in the aftermath of Hurricane Katrina, and accurate data will not be available until the next census is published. Likewise, populations along the Gulf Coast are currently in flux due to the oil spill. Tourism is down, but there has been a huge influx of migrant and contract workers to help with the cleanup.All of this shows that demographic research is only the beginning. To evaluate a location’s potential, one must consider the context, and to do that, you have to put feet on the ground. Walk and drive the neighborhood at varying times of the day and week. Conduct a site audit. Are there existing laundries, and what is the health of those businesses? Are the owners reinvesting in their properties or are the stores poorly maintained? It’s possible to be successful, even in a saturated market, if a new store is clean, offers better amenities and bigger front loaders, providing a better experience for the customers.Check out other neighborhood businesses. Are new stores opening or are there a multitude of “going-out-of-business” sales? Keep an eye out for Walmart. Finally, use technology. Get on the Internet and look at what is going on in that area; look at who is pulling building permits, and if there are any big construction projects planned. Also, use the Internet to look at rental availability and cost, as well as the size and attractiveness of apartment laundry rooms.KNOW YOUR NEIGHBORSThere are a number of criteria to keep in mind when evaluating specific store sites. Look for a location where the drive-by traffic is slow and the business can easily be identified from the street. Parking is a huge consideration for convenience and security reasons. The end of a strip mall is often desirable because parking is ample, access is easy, and other businesses can complement a laundry. A neighboring business, such as a dog groomer, hair and nail salon, or a coffee shop, can be a great partner for advertising or cross-promotions.Neighbors to avoid include bars or other adult ventures, as these can make your store less desirable to female customers, particularly those who have their children with them.RECESSION ACTIVITYThe ongoing recession has impacted the real-estate business. On one hand, a buyer’s market makes it easier to negotiate better terms with a seller or landlord, but it makes it more difficult to acquire financing. If a store owner is looking for financing from a bank, it is beneficial to already have an established relationship with the institution and to be a proven business owner. It is a much more difficult environment for someone getting into business for the first time. Many manufacturers provide their own financing, but they also have to assess risk for any loan.I understand and support a lender conducting a realistic risk assessment, even if it means a customer fails to get funding and the sale is off. I say this because I am selling someone a business, not a bunch of iron, and I am invested in that business being a success. A store failure on my watch hurts my brand and reflects poorly on my business expertise, market knowledge, and value as a resource.BACK TO THE BEGINNINGThe location can dictate many aspects of a Laundromat. It can determine if it should be coin or cashless, if it needs an attendant, if it should offer other amenities (such as drop-off or drycleaning services) and even what the ideal equipment mix should be.At the end of the day, you need to realize that the location should not dictate the business plan; the business plan should drive the location. 

About the author

Craig Dakauskas

Commercial & Coin Laundry Equipment Co.

Vice president

Craig Dakauskas is vice president of Commercial & Coin Laundry Equipment Co. in Gulf Breeze, Fla. He has 12 years of experience in the industry.

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