HK Laundry Equipment Inc.

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June 17, 2014
How Much is your Store Worth?
Fun Stuff
HK Weekly Parts Specials
How much is your store Worth? 
Island of Washers (C&H)

Do Laundry Card systems add Value to your store?
Dryers & CCI

The more profitable your Laundromat,  
the more it is worth. 
Washers & Customer

You Lease has a great importance
on the Value of your Laundromat 

Fist of Cash
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HK Laundry News

HK offers this quick 5 minute Newsletter to inform our customers and prospective customers of important industry topics, up-coming events, industry news and HK Special Promotions.  HK will only send out these Newsletters when we believe we have something important to say.  We truly respect your time.
How much is your Laundromat Worth?

How much is your Laundromat Worth?  There are several ways to value your Laundromat. There is the salvage value based on just the value of the used laundry equipment in your store.  There is the replacement value which is based on re-building your entire Laundromat from scratch.  The most common method used for any Laundromat that is making money, is based on the profitability of your Laundromat.  The method is that if you purchase a Laundromat (or any business) for cash, that you will get your money back in "X" number of years.


The multiple of profitability is the best way to purchase a Laundromat business.  The more the store makes in profit, the more the store is worth.  Please note I said PROFIT, not gross revenue.  There are many very profitable Laundromats that have modest gross revenue income and conversely there are many huge volume stores that make only a small amount of profit.  HK once owned a Laundromat where our rental costs were almost 50% of the revenue for the store. The Laundromat made lots of money, but it would have been hugely successful if we could have reduced our rental expenses.  We suffered from having a Laundromat in a great location but with too much rent ($40-50 sq ft).  If you run a very profitable Laundromat then the store is worth significantly more money.


Other factors that affect the profitability of a Laundromat are the length of time left on the lease, the age & condition of the Laundry Equipment and the future expenses for the store.  If you have 2 Laundromats both making the same profit with the same number of machines. If one store has 20 years left on the lease and the other Laundromat has 2 years left, which store is worth more?  How much more?  Obviously the Laundromat with the longer lease is going to be worth a lot more than the store with only 2 years left on the lease.  The store with 2 years left is on the lease is probable worthless unless you can get a long term lease.  Because after 2 years you have to revert the Laundromat back to its original condition of 4 bare walls. This would mean that you need to remove all of the plumbing, electrical, concrete work & venting.  This can be very expensive and time consuming and at the end of the day all of the profit received in the 2 years leading up to the end of the lease, could pay for these expensive restoration bills.


The age and condition of the laundry equipment has a factor in store valuations.  If you have very tired 20 year old laundry equipment, you have to repair the machines on a regular basis.  If the store owner is doing most of the work himself, these expenses do not show up on the Laundromat's Income statement.  Old laundry equipment will have a negative effect on a store's multiple valuation.  I personally look at the stores with old equipment as opportunities because I can easily replace the equipment and instantly boost the profitability of the Laundromat.  With new washers & dryers I can raise my vend prices, I can reduce my water & sewer costs and also reduce my gas costs.  I also reduce my repair and maintenance expenses because the new machines come with Parts & Labor warranty.  If the washers are state-of-the-art I can even get energy saving rebate from the local utility company for upgrading my washers & dryers.  If I replace my in-efficient boiler, there are additional savings and rebates available too. My accountant likes new equipment because I can now depreciate the entire purchase price from current and future profits.  Replacing Laundry equipment in a good location Laundromat is a win-win.


What are common selling multiples for Laundromats?  Typically the industry uses between 3 - 5 times the annual profit of the Laundromat as a reasonable selling price for a Laundromat. The factors of lease length, future lease costs, and equipment condition all factors that tweak the multiplier higher or lower.  For example if the Laundromat only has 3 years left on the lease, then the store is worth something but maybe only 1 time profit, because there is no guarantee that the store will be around after 3 years. If the store has a 20 year lease, with reasonable rent escalations', then we are higher and at the top of the 5 time multiple.


If the store has state-of-the-art laundry equipment with a card system, then we are increasing our multiples because the store is worth more.  Brain Brunckhorst, who wrote " The secrets of owning & buying Laundromats" states that the more automated you can make your Laundromat the higher profitability and the higher the value of your store.  Brain says that when you own stocks you pay up to a 30 time multiple because as an investor you don't do any running of the business except receive a dividend check.  Logic says that if you have a coin operated Laundromat and you have to process quarters 3 to 4 times a week that that is a lot more hands-on business.  On the other hand, with a card operated Laundromat that you only have to handle the currency once or twice a week.  The more automated and hands free you can make your Laundromat, the higher the value of the store.  This is an interesting concept I never thought about before. 


For example lets' say you have a Laundromat with 10 years left on the lease with 10 year old laundry equipment. If the store grosses $5000 a week ($260,000 per year) and the store is making a profit of $1700 per week ($88,400 per year) with no debt service included, then the store at 3.5 times would be worth in the neighborhood of $309,000. This is a very simplistic example, with no variables, but it illustrates the concept of purchasing based on a multiple of profit.


In the next article we will discuss how you go through the process of evaluating a cash business like a Laundromat. 

    Fun Stuff ...
HK Parts Specials:
HU70136101 Dryer Overlay   


Overlay for Huebsch Stack Dryers

List Price $ 37.19

HK Special Pricing $ 17.99 


  HU70298701 (Red rollers)    


Rollers for Huebsch / Speed Queen Dryers

List Price $ 31.51

HK Special Pricing $ 16.98


Call Anthony at 1-800-229-4572 or

email [email protected]

to take advantage of these

Weekly Parts Specials.

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HK is a family run business that has been providing "Un-Compromising Quality since 1967".  That is 47 years of trust, respect, and loyalty to our customers.  HK Newsletters is our forum to help educate our customers on important topics in the Laundry Industry.  HK is committed to educating newbies and veterans alike.  Please let us know how we are doing and (obviously) if there is any topic or subject you would like to know more about, please email me at [email protected].
Best Regards,


Karl Hinrichs

HK Laundry Equipment Inc.  Facebook