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How to Value a Laundromat

How to Value a Laundromat

According to laundromat industry reports, a large part of the industry is made up of small business owners. One report suggests that over 80% of all laundromats are owned and operated by small business owners. This means that the industry is fragmented and very competitive. This is why understanding how to value a laundromat is so important. By learning how a valuation analyst gauges the value of a laundromat, you can begin taking steps to increase its value. Whether you plan on selling a laundromat or buying a laundromat, it is important to understand the fair market value of a laundromat.

Many factors affect the value of a laundromat. As a business appraiser, Peak Business Valuation works with laundromat owners and operators. We help them better understand the value of their laundromat. The first step in doing so is obtaining a business valuation. As part of a business valuation engagement, we discuss some of the key factors a valuation expert uses when valuing a laundromat. The factors discussed in the blog are for educational purposes only. For more information, schedule your free consultation with Peak Business Valuation, business appraiser. 

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Market Multiples for a Laundromat

The multiples represented in this blog are from recent transactions involving the sale of a laundromat. A valuation expert uses multiples when determining the value of a laundromat.

  • SDE Multiple Average Range: 3.39x – 3.97x
  • EBITDA Multiple Average Range: 4.09x – 4.82x 
  • Rev Multiple Average Range: 1.18x – 1.74x
**Disclaimer: These multiples are for educational purposes only. As such, the information provided does not constitute valuation advice. These multiples do not represent the opinion of Peak Business Valuation or its professionals. Instead, seek the guidance and advice of a qualified business valuation professional about any matter in this article.

How is a Laundromat Most Often Valued?

A valuation expert uses a variety of business valuation approaches to determine the value of a laundromat. Often cash flow multiples – SDE and EBITDA multiples are most applicable. The valuation expert uses their knowledge to determine the methods applicable to your business.

By increasing your understanding of what your laundromat is worth, you can begin to take steps to increase the value of your laundromat. This information can be very helpful for laundromat owners and operators. Whether you are expanding, acquiring, or maximizing the value of your laundromat, we are here to help. Below are a few key success factors related to improving your laundromat. If you are looking for more help, schedule a free consultation with Peak Business Valuation, business appraiser.

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Key Success Factors for a Laundromat

Peak Business Valuation values laundromats. Our experience valuing laundromats shows us that several important key success factors set successful laundromats apart. Below are several success factors that can help distinguish your laundromat and increase the value of a laundromat. 

Location

It can be a challenge to differentiate a laundromat apart from competing laundromats. This is because services do not vary much among competitors. Yet, one of the best ways to make a laundromat stand out is through its location. Placing your laundromat around potential consumers will drive revenue and increase company value. For example, college housing or large apartment complexes are ideal locations. The location factor can be the most effective way to increase the value of your laundromat. 

Extra Amenities and Revenue Streams

Another way to drive laundromat revenue is by adding extra amenities and revenue streams to your company. Extra amenities can provide a more comfortable space for customers to spend time during their laundry cycles. Such improvements can include adding TVs, free Wi-Fi, or comfortable seating arrangements. The more comfortable guests are at your laundromat, the more they will visit your laundromat.

This leads us to our next factor. Guests tend to spend time at laundromats waiting for cycles. A great way to increase the value of your laundromat is to capitalize on this time spent. Adding vending machines serving snacks and beverages provides extra revenue. These extra revenue streams also increase the company’s value. Some laundromats go further by adding kitchens with hot foods for sale. Adding these extra revenue streams increases the revenue and cash flow of the laundromat business. This increases the value of the laundromat. 

Updated Machines

Never forget the value newer, updated machines can provide to your laundromat. New washing and drying machines can use less electricity per wash, saving you money. Decreasing your costs will increase your margins and make your laundromat more valuable. 

They also can speed up the required wash time which increases customer satisfaction. Additionally, adding large, family-sized washing and drying machines can increase customer satisfaction. Happy customers are repeat customers. Increasing the number of repeat customers can provide a lot of value to the laundromat by increasing revenue outlooks.

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Summary

There are many important factors and considerations when valuing a laundromat. Understanding the value of a laundromat is important whether you are looking to buy, sell, or grow a laundromat. A business valuation can help you understand the fair market value. It can also identify opportunities to maximize the value of a laundromat.

If you are interested in learning more about valuing a laundromat, be sure to check out our blog Value Drivers for Laundromats.

Peak Business Valuation values laundromats across the country. We can help you understand the value of your laundromat and are happy to answer any questions about valuing a laundromat. You can reach out by scheduling your free consultation below. 

 

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