BROOKLYN, N.Y. — Often seen as a quiet, traditional small business, the laundromat industry is attracting ambitious young investors who see untapped potential in innovation, customer experience, and efficiency.
American Coin-Op interviewed a trio of dynamic entrepreneurs, each with his or her own approach to reshaping the future of self-service laundry, and will introduce them over the next week. With unique ideas, tech-savvy strategies, and a commitment to community, they are proving that laundromats are more than just a place to wash clothes.
LOOKING TO BE THE BEST ON EVERY LEVEL
Long Island native Jake Barone, 29, owns Laundry House in Brooklyn, N.Y. He started early in business, becoming a real estate agent while still in high school. At age 19, he started Gateway Builders, a commercial general contractor, and grew it into a 40-person company. After COVID took hold, he founded Gateway Capital as a growth strategist.
“That’s where I learned how to run a business, grow a business, operate a business,” he says of Gateway Builders. “I scaled over the course of several years until COVID hit. We had a decent amount of work in backlog but I saw a tremendous amount of risk in the marketplace. These building owners could file bankruptcy because they weren’t collecting the income anymore.”
His dream of becoming a real estate investor would have to wait, despite having the capital, connections and knowledge.
“I started looking for businesses for sale on BizBuySell and when I filtered from highest return to lowest, I saw all these laundromats, and that’s really what kind of created the spark for me,” he says.
Barone says he loved the passive nature of real estate, and he saw laundry ownership as “kind of an in-between. You didn’t have all the complexities I saw on the construction end of running a business but you had higher return than a truly passive investment.”
Since he had no laundry experience, he searched for an existing store he could acquire and then boost its value.
“Every laundromat on the market was, like, a million dollars and they were all 20 to 30 years old,” Barone says.
He looked for leased space and learned that in the New York City boroughs, a laundry’s venting needs make finding such a spot challenging.
Barone reached out to property landlords with laundries among their tenants and pitched them on investing in theirs. He connected with one who owned but didn’t run the laundry and was looking to sell.
“He has this laundromat in the middle of the ’hood, a high-crime area. There was a shooting before I took it over; I didn’t realize it had been closed and the insurance agent told me. … But I got it for a great price and a new lease.”
Laundry House offers 34 soft-mount washers and 34 dryer pockets, all from Electrolux Professional. Renovation of the 2,000-square-foot store lasted a few months. “I would say reconstructed. The only thing we kept was a small portion of the concrete pads. Everything else, the plumbing, the electrical, I stripped absolutely everything down.”
All in, it was a $2 million project upon opening in spring 2022. It’s possible Laundry House will one day offer varied services but for now is focused on self-service, Barone says.
“We have extremely high throughput, a little over nine turns a day. The goal is to get that to 13,” he says. “Having such a high-throughput store, if we’re going to do laundry services, the only option would be possibly to do it during a night shift.
“Also, I want to open 24/7 because there’s a market for that in New York. When you’re able to advertise 24/7 on Google Maps and all these places, there are a lot fewer laundromats open. If someone types in ‘24-hour laundromat’ or searches that at 1 a.m., you and a handful of others will come up, and then it’s very easy to compete.”
He has just one person working per shift now (he employs a manager, two attendants, plus a part-time cleaning person). Payroll for the self-service operation alone is around $120,000 annually. Offering laundry services would mean a whole lot more to manage.
“We’d also need a lot more storage space. We have the demand. We have hundreds and hundreds of names that say, ‘Please, offer wash and fold. Do pickup and delivery.’ But then we’re going to have to figure out where to store the dirty and clean laundry.”
He’s acquired the retail space next door, formerly a liquor store, should he decide to expand Laundry House’s services.
The brand is everything a customer engages with through their senses, says Barone, so he invested greatly in developing the “Laundry House.”
He took great pains to present a décor unique to the area, including the tiles, ceiling grid and a live moss wall running along one side of the laundromat. These touches aren’t what people are used to seeing in the gritty Big Apple.
“A lot of people would think this is crazy but I spent $50,000 on a branding and marketing company just to build the brand, to document a go-to-market strategy, to create all of our signage, all these different things,” Barone says.
He’s happy to have learned the marketing side of this business: “To bring in those customers, I needed to learn B2C (business to consumer) marketing. That was a lot of fun learning how to create the messaging, how to get it in front of them, how to get them to come in.”
Many customers assume Laundry House to be a franchise, Barone says, “because everything’s so professional.”
“It was really important to me that I built this laundromat in a way where we would be the best on every level,” he says. “That was the goal, both to the current laundromats and to the future laundromat investor that may look to come in and try to outdo us. It’s such a huge investment, I’d rather spend a little bit more and make sure we’re ‘uncompetewithable.’”
Check back Tuesday to meet Milwaukee’s Kelli Johnson in Part 2
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].
