How do you increase the value of your Laundromat?  How do you increase the selling price of your Laundromat?  Easy, increase your profits and increase your multiplier.

Probably the fastest way to increase the value of your store is to secure a long term lease.  If you have two identical Laundromats, both with the same rent and the same revenue; the store with the longer lease will have a higher value than one with a shorter term.  The longer Laundromat lease will make more money over the long haul.  Ideally you want to tie up the Laundromat location for as long as possible.  When I initially negotiate a lease I try for a 10 year lease with 2 or 3 - 5 year options.  This assures that there will be a Laundromat in this location for a long, long time.    

Leases are also very negotiable, unlike utility costs or labor costs.  The cost of the lease is the biggest area of potential profit or loss.  The rental costs per square foot in NYC, for example, are going to be much more expensive than rents in downtown Bridgeport or in Granby, Connecticut.  There are many locations where it is much too costly to operate a Laundromat.  At one point in time, I was looking at rents in Greenwich, Connecticut that were over $85/sf.  This rent is just too high to have the store make money.  The same store 20 miles away in Bridgeport, Connecticut would have a rent of $14/sf. If the vend prices are similar, which Laundromat makes more profit and which store is worth more money?  If you have negotiated a cheap, long term lease then you have also reduced the value of the building or the property.  If you have also negotiated the "right of first refusal" in your lease, you now have lowered the potential selling price of the property saving you even more money.

If you have performed a Profit and Loss on your own Laundromat, look at maximizing everything that adds revenue. Many times you can add more revenue just by adding more vended options.  Profit can be generated by many sources including:

• adding video games,
• arcade games,
• vending machines,
• car vacuums,
• ATM's, 
• adding additional large washers or dryers,

All of these can add additional revenue to the Laundromat.  You can also advertise your WD&F service to increase your business and make more WD&F profits.

By reducing expenses you also increase the store profits and include the value of the Laundromat. Some of the expense reducing ideas are:

• Shop around for deregulated utility expenses,
• Shop around for insurance,
• Shop around for soap & supplies and replacement parts,
• Talk to your landlord about reducing your rent,
• Contact a repair service to fix your machines on a contract basis (rather than time & material),
• Replace your old T-12 light bulbs with the newer T-8's or even LED's,
• Reduce or eliminate WD&F attendants where the WD&F is being subsidized by the rest of the Laundromat,
• Clean the Laundromat (dirty Laundromats have high repair frequency and less efficient dryers).

Another method for increasing the profit of the Laundromat is by replacing an in-efficient piece of equipment with a new super efficient replacement.  For example if you have an old tank type water heater it is probable running at 60% efficiency.  This is wasting a lot of natural gas and increasing your utility expenses.  If you were to replace that heater with a new modern 95% efficiency water heater you will start saving dollars now and in the future.  By reducing your expenses you are also increasing your profits and also increasing the value of the Laundromat.  My Briarcliff Laundromat is a perfect example of using new Huebsch Galaxy 600 washers and having their note payment being paid for by the water & sewer savings.  (I win with new machines, new warranty, increase customer satisfaction, reduced water & sewer & gas costs and the store is valued at a higher number.)

Still another way to increase the value of a Laundromat is by increasing the multiple at which the store is valued.  If the store has state-of-the-art laundry equipment with a card system, then we are increasing our multiple 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 multiple.  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 coin 3 to 4 times a week; that that is a lot more hands-on than 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 multiplier of the profit and the higher the value of the store.

All of these suggestions increase the value of your Laundromat. Does it make sense to add a large detergent bottle vender for $6000? Maybe.  The cash-on-cash payback period is usually between 1 to 2 years.  But right from day one, the future annual profit of the store will increase by $2000.  At a four time multiple the value of the Laundromat will have increased by $8000. Not too bad for a $6000 purchase.  It is all about focusing on increase your profits.