New Mat open

[pete f]

1st of the series..

For many of you who have followed my saga, the new 3x my size l'mat opened it's doors sometine last week. I took a water meter reading Friday, new meter,,, 7500 (gal) I will check it every Fri and report if I can think about it. I do not know how long he has been open, I stop in my mat today, it was very busy. I talked with people, one told me the parking was bad. They had been at the China restruant next door the day before, and peeked in the new mat,, 84 machines. She brought up the parking, the owner told he to pull up and he would unload her. She was at my mat the next day. Told me that was a nice gesture, but still a pain. She told me not to worry, my regulars will not leave. I belive her, as she was in this biz many years ago, and knows more than most about people habits and laundry. So many have documented thier life via web cam, a few doing a debt reduction web site (hey buddy can you pay pal me a quarter) and other wild stuff. I will try to document the pitfall of this mat.
Here is an interesting factiod.. They are making so much cash flow on this mat (proforma of course) the guy is going to build (rebuild an old restraunt) into his second mat!! While the new location is a stand alone building, so he won't have the parking problem, there is not an apartment building for some distance. The area is know for vagrents and steet walkers. Guess they have to do laundry. Just how much?

Money to burn!! This new store does not affect me, and not sure it will affect anyone else...nearest store is about 4 blocks away, open 24/7, not to bad shape, maybe coin 75k yr?
This dude has been to 1 to many seminars...

About the only good news I have seen/heard is his prices are "kinda high" at the store he opened, and the sign on the door "last wash 8:30" he he he he
And yes I am down a little, about $10 a day. Wonder what he will do with all that money

[pete f]

This is the second week the new mat has been open. Possibly his first full week, I am not sure when they opened the doors.
He used 4600 gals of water for the week, giving him a gross revenue of about $391 for the week. He may have done a few w/d/f, maybe he got $400 for the week.

He has really done more than I thought. He has a big sign in the window "Grand opening Sept 29 to Oct 4 FREE WASH"
Next weks water usage should be higher, as nobody has to pay for washing!! Let's see how much FREE wash he can give away.

My store for the week was down 6% to $670 for the week, not including soap. soda. This is the slowest month of the season, but I am ahead of last year by 25% for the month. I am actually making money at this level. My store is 840 SQ ft, I have about 100k in it including the purchase price and recent remodel (40k).
I was worried about spending the 40k on remodling becuase it is not that great of a l'mat area, as far as volume from what I could tell. I have got 57k back in cash flow in the last 3 1 /2 years, putting about 1/2 back in it, much of it in the form of debt payments to the former owner..So I was buying equity. The place has generated about 16k a year. No I don't make a living off it, but it adds up. I bt it for 40k, spend about 6 hours a week on it. It is located between my 2 big stores, so I have to almost drive by it anyway. I had been hoping to pump it up to 20-25k a year with a new remodel.

The new store is 2800 SQ ft, and I was told he spent $425,000 on it. I still wonder where he will get cash flow from. He is on track to gross about $40k a year, before paying any expenses or debt service. With rent around 12 a sq ft, 36k a year, well, anyone with a big new store out there explain how it works.

[pete f]

I have not had time to check the guy's water meter, try to grab it later. I braced for a drop of 30-50% revenue for this week as newbie is doing FREE WASH unlimited loads, any machine/s. I did finally stop in a couple days ago, I wanted to chat with him. HE lied to me. When he was in my store about 4 months ago and ramblin' on about how great l'mats are and cash flow, I told him he had to take all my business and the one 10 blocks away and some from others to make it. His reply " I am not looking to steal anyones' business, there is plenty" Well, when you advertise free wash it appears to me you are stealing business. Here is an interesting tidbit.. the know it all takes out a full page ad in a micro local news rag... that is not even in his immediate area. SO it looks like he ends up giving free wash to people 5 mile away. That is his big promotion! Realize, this mat is the talk of the county (mat owners), I have direct input to a person who knows everyone. Nobody can believe it. And nobody thinks he will make it. And a few await the next big store he is doing.. he already bought the building. Not much sign of activity,, wonder if he is thinking this time. He has to be seeing RED. If he were not such a jerk I would feel bad for him, but he has it comming.
Oh, my mat was UP 25% from last week, avererage $128 a day.
It was like the guy did not exist. And he was giving away free wash all week. So I made $60 a day, he lost, guess,,say $175 a day. That is the hard number, not including equipment lease/purchase note, or any borrowed fund. My guess that works out to another $110 a day or so. Basicaly the guys needs 3 bills a day to clear. Won't ever happen. I just like to calculate how much he is spending, try to figure when he will give up. I did give him advice to keep his checking
account full, as he would need it. Also told him to think of tanning beds. He laughed.

[Fred50]

Pete,

The guy may be losing money on every sale, but he will certainly make it up on volume. :D

[mike]

About 6 months seems to be the time reality takes to set in. That's when growth starts to slow, and he realises that he may be getting 5% more per month for the first year or so. You think he needs $300. or so a day, If he has staff, I think it is closer to $400. a day. It will take him years ! Nobody (except me) is that tenacious. I kept a dog (slow starter) for 10 years before it started to show a profit. (machines purchased in an era of 18% interest) but I will never make back my accumulated losses.

[pete f]

I got the water reading last nite. I may be proved wrong. He did about 3 times as much business as I did, if he were getting paid for it all mu guess is he would have done about $2700 for the week. That would put him in the $380 a day range. Outstanding!
What can not figure out is why I was actually up, meaning he stole no business from me, so where did all these people come from for free wash? I have to guess the next town over where he advertised. Maybe some of them came to his place, did not like the parking, card system or whatever and stopped in my place instead. I can not envison people driving very far to pay money to do laundry. His mat is nice, but there are several smaller, but as nice, mats in the town he drew from. The age old question, what can you offer that they do not already have? Free wash?
Time will tell. My theory was he will have all the customers he possibly could ever get durring his free wash, and I would have the largest reveune hit I would take durring that same period, meaning I would know my downside, and he should know his upside. I still think the upside part of the theory is true, but am puzzled about the downside part of it now.

It is a great day here, off to the beach to have some fun. The seasonal residents will be drifting back in now, and I know business will pick up smartly soon. It will be interesting to see how many of them convert to the card system.

[mike]

Pete, there may have been some "pent-up demand" in his volume, that is, washes that were done before the last minute, just because they were free, people washed everything in sight, including seasonal stuff they don't do that often.
Hell, you should be taking your wash over there to do !
And you are right, If people are coming in from far afield for free washes, they won't be back. (I speak from experience of a coupon promotion for free washes that upped my business until the coupons stopped, then I went right back to my old level, maybe up 2 or 3 new customers only)
It remains to be seen how he prices, any guesses or info ?

[pete f]

Pricing does not seem like an issue. I have 6 tops are 1.50, 2 maytag neptuners sold as doubles 2.00, 2 25# super IIs for 2.50, 2 27# SQ for 2.75, 1 37# SQ for 3.50 3 40# dexter for 3.75, 1 55# dexter for 4.75 dry 8 min, 25 set at 185 degree, 1 min cool down,, soap 60 cents.

His (all SQ) tops 1.59, 18# 1.79, 27#, 2.79
35 # 3.79 50# 4.95 He has equal numbers of each machine, as each bank is a top, 18#,27#,35#,50# all lined up. To use 2 50# washers you have to go around to the next isle, as there is only one in each. If you get between 2 banks you have them across from each other. soap 50 cents. dry 25 for 8 min He advertises 90 new machines, I need to recount that.. I think he counts the dryer as 2 machines

I believe I will retain most or all of my elderly customers, about 50% of my biz, based on cheaper tops, and a cash system.
Double load machines really do not get that much use at any of my mats, so him being a little cheaper will not be a factor. I am slighlty less on the 25/27, which is a popular machine, and my 37 & 40's. I would have put the 40's to $4 and the 55 to $5 when I put them in a few months ago, but I was competeing "friendly" with a mat 10 blocks away who has the same brand and size Dexters for 50 cents less..

[Kitty]

Pete,

We used free wash advertising. Ran it for one full week when it opened 15 years ago. Ran an umlimited free wash campaign for a 3 day weekend when finished with the expansion last year. Unbelievably, we had people from several towns over. I never looked at the water usage, but it would have been off the charts. It wa/is a great campaign, as many of these people are faithful patrons.

Feed off of this, find a way to market your store. What are his negatives? What is your positives. Don't let him ride the wave alone...

[anonymous]

Pete --

PLEASE, OH, PLEASE be careful about banking on the senior citizens aversion to card systems. I just retro-fitted to card in mid-August, and contrary to what I thought would happen, my seniors love it! I have a lot of "snow birds" who winter in Arizona, New Mexico, etc. and many of them have used cards in other laundries in other states. Plus the cards are in widespread use in casinos. They seemed to know more about them than I did! I was actually THANKED by the majority who find it difficult to handle coins as their joints stiffen with age. Not a single senior poo-pooed the change. I was STUNNED!

Is the other laundry charging for the cards themselves? I don't because I have the Easy Card system, and the cards are inexpensive as opposed to smart cards. If he has smart cards (I was told that SQ uses the ESD smart card system and it can be a bit glitchy) and is giving them away as part of his opening promo, he may start charging for them down the road. People really have a problem with paying $3 or so just for the card alone. This may help you in the long run.

I'm incredibly interested in your weekly updates. Gives a new spin on soap opera........... ;D ........... please keep us posted!

[JeffLange]

Every time I opened a new laundromat I ran free wash for a week. I knew I had the best store and once i got them in I would keep most of them. It worked great for me and killed my comp.

[pete f]

I am not banking on his card system failing him, I am more banking on his lack of decent parking and the fact he way overbuilt for the amount of laundry biz in the immediate area, meaning his nut will never be made. Let's say your mat does well. Why don't you move accross the street and build a new one 3 times the size? After all, you will make 3 times as much money, right? If anyone believes this is a true statement then please let me know how it worked out. Also, you would not be closing down the mat you are moving across the street from. If this guy had built a 1500 SQ mat I would be a little worried, becuase at that pace he might make it.

Last nite at 9:00 I was trying to clean up, but had to leave. My place was so packed I could hardly move around. I had 3 mega wash types in, backed thier cars up to the front door.. plus a couple regular types with a couple loads each. No satailite TV here, the radio is cranking tunes, a/c humming, people a buzzin'
The guy across the street was empty..last wash 8:30 says so on his sign..

[pete f]

OK, the free wash is taking it's toll. I was off about 30% for the 6 days, my collection days included 3 days of his free wash program, which were weekend days.. The free wash sign is down now, replaced by a huge inside banner that say "grand opening" which covers most his front window so you can't see in.
The new guy went thru less water for the week, then last week, 2 were free days, Sat and Sunday. I read the meter Fridays. I collect every 6 days so his week and mine are not the same.
He would have taken in about $1900 had he been paid for all the laundry done. That means he was down about 30% also. Of course 5 of his days people had to pay. Hard to say how much was free water and how much paid for this way. My mother stopped in Sunday, she said the place was packed. She felt if he was ever really busy it was kind of crowded becuase it is a long thin mat. She was not overly impressed. She went by mine, I had 2 paying customers.
The mat has 8 #55, 8 35's, 8 27's 8 18's 8 tops, 40 stacks.

[Kitty]

Hey Pete,

What are his prices? When you say 40 stacks, is that 80 pockets or 40 pockets? I assume all 30's? 40 pockets would not be enough pockets for drying with that mix.

Keep on your toes, and keep plugging away. You know the customers are going to try the new mat, especially if something free is enticing them. Keep your friendly, johnny on the spot, janitor profile and they'll come back to their friend pete! :)

[Fred50]

Pete,

Being off 30% is no picnic, but he had to offer free wash to have any impact on you.

Keep us posted on the effect as he goes back to full pricing.

Thanks!

[Anonymous]

Pete,

My heart goes out to you.... I am in the same kind of situation.

A month or so ago, I was off by as much as 40% several weeks in a row. I have come back a little, but am still down about 20%.

In my situation, as soon as the unlimited free wash & free dry that was being offered quit, I regained about half of what I lost. However, the dumb-dumb is till offering "half" priced washes, and 25 minutes drying for a quarter. I feel confident that if he ever goes to competitive pricing, then I'll gain back even more of my lost business.

Chin up, my friend - you can weather this storm. Your overhead is a fraction of his, and you have something he can't finance - experience. Those two factors will get you through in the long run.

Now, if I could just convince myself.......

[buddy]

To some extent Laundromat is like a Barber shop. Customers might try other places and take advantage of the coupons or discounts but finally they return home to your MAT. They are used to with your mat and familiar with your staff and environment. Whatever you guys are facing, it's temporary storm - The brighter days are ahead.

You cannot put a value on a good friendly customer service and therefore these supermats are never going to be able to recoup their huge investments. They were scapegoats of devious salesman at the dealer. Poor guys they wouldn't know what hit them once they stop offering free washes and it's time to pay up notes on their equipments.

[Kitty]

Dave in IL, you are in need of the pep talk today!!! Chin up to you too!

When you guys talk about the new competitor, are these new stores operated by seasoned laundrymen?? If not, you guys have more knowledge and you must remember this. Hopefully you have become aware of who and where your customers are coming from. If the new store owner is not a working owner capitalize on that and YOU be the one who provides the full service, sparklin clean customer friendly atmosphere that most laundry customers demand. Let the customers in your area know that YOU appreciate THEM and WANT their patronage. Machines, and price are great, but if customers do not feel appreciated, they will find a place that they are appreciated and will stay put, until otherwise unsatisfied.

We started many promos and did a complete customer service check when building started for the other mats. We work hard at retaining our share.

We have maintainned the market share in our area. We are the oldest mat in town, with the oldest building, the oldest bathrooms. All equipment is older than the other stores. What the competition does not have is seasoned laundry experience. They lack the customer service skills and knowledge of the industry. Hopefully you and Pete will survive your compettition. You will lose a little at first, but do not go down without a fight. We worked harder before, during and after the opening of the other mats. We continue to stay on top of our competition. You can too. Great Luck!! Kitty

[Anonymous]

Thanks Kitty, I agree with you....

The advantage I have is that, like Pete, my overhead is low - no attendants, etc. The other advantage I have is that my main living expenses are paid for by my day job. The laundromat is a "side" business, but a business I take very seriously. The 40% hit put me at break even basis for a couple of weeks. The 20% hit that I am experiencing right now still makes some money.

I think the customer service thing is very important. We (my wife and I) have always tried to keep the place clean, but we are really going overboard right now (if that is really possible). I have carried more laundry baskets for folks in the last month than I ever thought I would in my entire lifetime!!

I WILL weather this storm. There are two mats that are duking it out that are causing this problem, and something will eventually happen. One is a $500,000 place that moved out of a strip mall to a new building a block away. The other is the landlord of the strip mall who got upset at his former tenant and decided to put in a mat where the other one use to be. These two places are literally a block from each other! The landlord has vowed to put the big place (his former tenant) out of business...... hence free, wash free dry - now 25/25 dry and 1/2 price wash.

We just keep the place clean, keep the machines running, always always always wear a smile, and try to assist the customers in any way, shape, or form that we can.

I don't know the laundry business that well - still a newbie myself - but my advantage is this board. The knowledge that I have attained from everyone else's experience is priceless. That could be the "hidden" factor that helps me prevail in all of this.....

Thanks for your support. It is greatly appreciated.

[Kitty]

You've got competition having a pissing match between them??? You will weather the storm!! And maybe get some great equipment for 20 cents on the dollar a year or so from now?
Keep plugging away, the gravy will come back!

[Fred50]

Dave,

Aren't there laws against predatory pricing?

I can see these clowns ending up in court. Bankruptcy may not be too far either.

I have seen some price wars and eventually someone has to give in. Let them kill each other for the time being.

What is the new mat doing to combat his old landlord?

[Anonymous]

Hey Mark,

The predatory law thing has been brought up to me before.... not sure of the specifics, and I'm not sure I want to get involved. Let me explain:

The "landlord" guy - the one who owns the strip mall and vowed to put his former tenant out of business - is a multi-millionaire. I really don't believe he wants anything to do with the laundry business. He's just doing it our of spite to this other guy. He has VERY deep pockets and could literally go years losing money and not have an impact on his financial position. I don't know him, but I know *of* him and the things he's involved in. I'm surviving right now and making some profit. Right now, this guy is mad at the other guy. His focus is there.... I don't want him having a reason to get mad at me and then maybe change his focus my direction..... I just want to be the silent guy staying out of the picture.

The other guy - the former tenant - has got to be hurting. I know him, kinda, and it was a bit of a stretch for him to make this leap into this new building (the lot alone was $200,000/building was $300,000). When I drive by his store, there usually aren't many cars in his lot. I have driven by on Saturday & Sunday mornings and there have been zero cars in his lot! I don't know what he's doing to compat his former landlord....

I think that by January 1st something is going to give. The former tenant will be hurting real bad. But remember, this millionaire guy is use to things that gross millions per year. The whole laundry business in this town probably doesn't exceed $250K - even if he got all of the business. I think he is going to get tired of this "small" stuff and want out.....

But then again, he may not keep those low prices for ever. He didn't become a millionaire by giving things away or by supporting money losing ventures.

I'm "content" right now. I'm learning the business and making a profit. We'll see how it goes the rest of the year. I'm just sitting in the weeds watching, and hoping that I may come out the ultimate winner in all of this.

Like Jimmy Buffet said: "Only Time will Tell"

Have a good weekend, all!

[Kitty]

I hate businesses that have the "blockbuster" attitude. Let the customers know what is what in laundry land. People do not like "money" people squashing the good ole boy. This one will probalby back fire on the rich guy and he will deserve the headache of all that will follow

[JeffLange]

Lets face it . Running a laundromat is very simple.

Location
Keep it Clean
Good running Equipment
Be nice to your customers


If you think the new guy does not realize this you are foolin yourself. The only thing you can hope for is that your comp. has a lazy owner.

[pete f]

Kitty, 40 stacks I ment 80 pockets. I posted the pricing last week, he is slightly higher on some, little lower on 18's.

I am not worried about 30% drop, I had planned on that. I am still making a decent return on my investment. I do not think he made his rent yet for the week. The time period right now is the slowest time of year, my business will be up 50% shortly, reguardless of what happens. It is a seasonal thing. By the time it does kick in full tilt, , he will have about all the customers he will ever get, and I will know my true situation. I feel within 2-4 months you are at your true customer base after a big remodel, or store opening. From there you grow revenue very slowly. This guy is suppossed to be building another l'mat, I have not seen any work started on the new location. He may be rethinking things. My best deal would for him to rip all the stuff out and take it to his new building he bought, but that will never happen. And I doubt he will close down anytime soon. So it comes down to what my return on investment is, my time and is it all worth it at a lower level. I need a few more months to really decide, but it looks like it will be a net nothing deal to me, I remodeled and was up 30%, now that 30% is gone. So I make what I always did, just have a lower return becuse of the money spent remodeling. .but I have less repairs, and smaller utility bills because of the new stuff, so I make a little extra on the back side.

Dave- I hope your deal simmers down, I think you have the right attitude and outlook. I am sure your business will get busier becuase of the winter also. Try to look at the silver linning.... these guys are losing thier ass. As they say, hit 'em where it hurts. Someone will fold out of the poker game somtime.

[Fred50]

Pete,

Your situation should be a wake up call to all of the mat owners who let their places get run down or delay remodelling because they don't want to lay out the $$.

Could you imagine what the impact would have been to your business if you didn't remodel?

[Anonymous]

Well, just an update, for those who are following my saga.......

A customer was in my store last night, and we got to talking a bit. He mentioned the guy up north of me who was offering the "half price" washes. Well, according to my customer, that isn't the case anymore. His tops have gone to $1.50. Actually, he has gone up on all of his pricing. He is higher on everything than I am. My customer, in his words, said: "....why should I go all the way up there and wash and spend more money? I only live two blocks from here!..." And apparently some of the folks are rather pissed off. This guy was charging 50 cents for a toploader and was advertising it as "half priced". Now he goes to $1.50. I guess the customers are seeing this guy as a shiester or something. Fine with me!

Well, well, well..... looks like I may be getting some of my business back. Not sure when this great transformation occurred, but I thought it was busier this past weekend than it had been lately. And I actually saw some familiar faces in the store that I hadn't seen for a while.

Don't get me wrong. My goal is not to be the "cheapest" laundromat in town. But it might be fun to let this guy have a little of his own medicine. Let him figure out how to compete with someone cheaper than him.

The next couple of weeks should tell the tale. Thanks for all the encouragement from the board. I don't like crying in mine or anybody else's coffee, but sometimes you just can't help it.

This really made my day yesterday, and I am still somewhat glowing from it. And I understand that I can't sit back and rest on my laurels - now is the time to really push hard and get back everyone I can!!

This good news took the edge off the fact that I discovered yesterday that the heat exchanger on my furnace is cracked........equillibrium: everything balances out.

[Anonymous]

Good news Pete.
Thanks for the update.

[Anonymous]

Hey Tin Man....... it wasn't Pete. (Although I wish it WOULD happen to Pete).

[Anonymous]

Sorry D.I.L.

[mike]

Re: Dave's saga, If the original tenant from the shopping center had owned his own location instead of renting, everyone would be much happier now, (especially him !)

[pete f]

Hey Dave, glad to hear some extra qrts comming your way.
I collected today, am up nicely from last year, and last week. Seems like the folks who can't get free wash would rather pay me then him. Let's not feel sorry for them other owners just yet..

[pete f]

Things are kind of back to normal. My collection was up substantally from last week, (40%) vs my drop of 30% last week. I am still up on average about 25% over last year, this is do to the remodel and change to a 24hr l'mat. Cooler weather is staring to arrive, I get to open up the front, both big sliding glass doors, and turn off the a/c, place looks great from the street.

The new guy across the street was down about 60% from his previous week. I guess you lose alot of business when you don't give away free wash. I figure he did about $800 for the week. I really did not think there was that much extra business around. I am sure he is sucking close to $40 a day from me. I would be puking if I had a $425,000 store ( leased) and doing $800 a week. I don't see any way his revenue can increase very much. If he cut his price in 1/2, the revenue would still be the same.

I think I will go to a by-weeky report from here, you'all got the picture. I hope Dave sees the same type results as me.

[Glenn]

Keep in mind that new laundromats like almost all new small businesses generally take 6 months to 2 years to get where they're going. Every location is different. Of course distributors only mention the stores that get off to a fast start in their seminars. Good luck.

[Lar Hylobates]

On the other hand, I have monitored the destruction of three stores that had a big competitor open. They all recovered from the disaster and leveled out after six months, quite off from previous years, but still profitable with nowhere to go but up.

My personal store was one of them, that was cut by over 50% for the first six months. In the following two years I was able to bring it back to record numbers and now holding strong.

Good luck monkey!

[buddy]

Just like I said Dave.. This is temporary storm and the Cows will come home at the end of the day.

[Anonymous]

Pete,

I agree. As soon as a competitor starts charging "normal" prices, the game changes again.

I was up this past week - not to where I was before the war started - but up from where I had been.

I was in the mat until 10pm Saturday night because the place was PACKED! At 10:00, every one of my dryers were going, and there were still customers waiting for dryers. I was passing around a small bag of crap candy I keep in the back just as a token gesture. I also did some chatting with the folks.

Seems a lot of my customers are pretty pissed at the new guy. One for raising his prices (did they really expect to have half price washes for ever?), and two for having no bathrrom! He doesn't allow the customers to use the bathroom - employees only. Well, anyone with kids is bound to have a problem with that! I was just planning to redecorate my bathroom......

I think things will go up from here. I believe it will take a few weeks for this guy's new price increase to take hold and drive everyone back to me. Like I said before, I don't want to necessarily be the "cheapest" place in town, but I'm going to be REAL careful about raising prices right now or in the near future.

Several of my customers said they had been going there, but have decided to come back to me. They also said that their "friends" were also going to come back, either this week or next week.

The saga will continue........

[pete f]

You and your other comps got sucked by the big guy.. My question is,, do you think the big guy is making any money?
How much did it cost to put in, what is his water usage? You are making money, but is he?

I like to watch the new guy giant mat loose his butt. Sort of a game. I know he tried to put the hurt on me, it did not work. I know your previous situation, and how you have done upgrades.
Stuff like that the big guy did not count on, or figure in to his game plan. The pie is only sliced so many ways, and people are creatures of habit. Very few laundromats actualy close down. That must tell us something of the old ones..

So is your big guy making a return on his inve$ment?
Or being taken to the cleaners?

___________________________
no cool saying just yet

[Anonymous]

Hey Pete,

My situation is a little differant than most, or at least I think it is.....

I don't think this "new" guy ever wanted to be in the laundry business. He's there as a vendetta against his former tenant. This "new" guy is a multi-millionaire - he doesn't have to make a return on his investment. He can use the entire laundromat as a right off on his other businesses.

I don't think many of us have ever been in competition with someone that actually doesn't care whether they make a profit or not. How do you compete against that?

However, he didn't get rich by giving things away. Hence the reason I believe he has raised his prices. His business common sense overtook his emotional vendetta, and he is now trying to run a legit business.

But I think he'll be selling soon and that's maybe why he raised his prices - make it look more like a legit business. When he was unable to put his "enemy" out of business in two months (like I think he thought he would), he has realized how little laundromat money there really is in town. I don't believe he wants to mess with such a small industry (maybe 225K max). He's use to places doing several million a year. This little laundry stuff isn't worth his time is what I think he'll soon be saying.

Anyway, I'm looking at new dryers because I've ran out of capacity twice in the last two weekends. It's a nice problem to have, rather than what it was a few weeks ago. Let's just hope it keeps going......

Later.

[Anonymous]

People do many stupid things. I looked at a mat about 2 years ago that was failing and the owner wanted out bad. He was almost at the point that he would give it to me if I picked up the lease. I took a pass on the place. It was closed for about 18 months and then someone picked it up and remodeled. I estimate that the equipment and the construction probably ran them over $500K. Three months later they were trying to sell it, saying it took too much time and they had other things to do even though this was their dream business. Today I get an e-mail from a broker trying to sell the place.

Here is the joke of it all: They are asking 550K, claiming it grosses about 200K and nets $25k.


Maybe it would be worth it this time if I just pick up the lease, since it is all new equipment now.

[Kitty]

Has anyone ever wandered to the public database for your county or a county you are interested in looking into. During my research I have found the deed for the big money moyz down the street.......625K Whew, takes alot quarters to pay that note!

[Fred50]

Kirby,

Keep me posted if this is the place that we once discussed. The funniest part of this story is that they advertised it in the paper months ago, but they never returned phone calls!

I spoke to the wife once, but she couldn't answer any relevant questions and the husband never called back. She gave me the same BS line about being too busy!

It takes all kinds. I guess they are waiting for the next sucker to come along!!

[pete f]

Here is where the new guy got all his info to build the store across from me,, an ad in Sunday's paper

Businesses for Sale - OWN A COIN LAUNDRY SUPERSTORE (Everybody Needs Clean Clothes) New & Exciting Locations Available! Cash req'd as low as $75k Free investment seminar Wed., 10/23 at 7pm Statewide Laundry Equipment, 4422 N. Church Ave., Tampa (across from Legends Field) RSVP@ 1-800-282-9023

[pete f]

I have been to busy to worry much about this guy, it is like he does not exist.

For the last 30 days he has used 37,900 gals. No free wash in this data, so it is all real business. I underestimated the market, I did not think there was that much extra biz out there. I am not sure it was worth spending $465,000 for that much business though. Go ahead, look at your water bills, you do the numbers.

[anonymous]

But that is less than 16% of the water my place uses per month! How is this bozo paying the rent? Eating? Whatever?

[Anonymous]

Superpete,
Ouch.
I'd do a quick guess that he's on pace for a $35,000 year!

If any of that equipment is financed, he's bleeding fast.

What equipment does he have ? I'm in the market for some good used/new equipment and a trip to Florida, in January.

And I'll stop by and drop off that cigar I owe you.

[pete f]

If you are near Tampa bay let me know, I would like to meet up with you.

As a side trip we could go and watch the new guy bleed.

He is redoing an old restraunt into a supermat in another area right now, must be from all the money his is making on the one across the street. Rumours abound at 600k sunk into this one.
How do rich people keep rich?
An interesting side note: every business that has ever been in that building has folded within a few years, sort of like a doomed site, you all know a building like that..

[CharlieS]

I once opened and managed a new flight operation for a guy, who had sold his business for $60 Million and retired, and just liked flying. We had direct competition on the field. My guy decided to offer fuel for 1/2 of cost, figuring that he would just absorb the cost until the competitor gave in.

Turns out the competitor was owned by 2 guys, each twice as wealthy as my guy. They were losing $250K a year, and just agreed to split it.

After 1 year, my guy called it quits and sold out to them for about 25% of his $1Million investment. At the time, Pan Am and Eastern had just gone under, and pilots were begging for jobs. That's when I quit the flying business.

My competition with my first mat is owned by a man who is extremely wealthy, measured in numbers starting with a B. I have no desire to get into a price war with this guy.

Charlie

[Anonymous]

It's amazing how many rich people do NOT stay rich due to bad business decisions, etc. They haven't read, "SD's boring guide to big bucks". It's a quick read.
1. live beneath your means, always
2. make smart decisions
3. work harder than everyone else

I've heard alot of stories like this, but one of the best stories I've heard is MC Hammer (A popular rap singer in the late 80's) who was worth 40Mil in 88'. By 96' he was bankrupt. About a month ago, I was flipping through the channels at the mat, and came across MC preaching a sermon on the Christian station. Seems he turned himself around,......... maybe.

[Fred50]

SD,

I think that the long version of your guide is called, "The Millionaire Next Door". A must read for anyone who wants to be "successful" and stay that way.

[Lar Hylobates]

Pete, in response to my immediate new competition.

I estimate and have confirmed from his distributor that he does at least $25,000 gross per month. I think he is doing very very well. The guy knew what he was doing when he opened in between three mats that were run down crap and always packed.

I continue to slowly crawl on him, and as I have previously posted, the next six months to a year will allow me to decide what to do about my under capacity issue.

[CharlieS]

The "Millionair Next Door" is an interesting read. Not so much for what you can learn, but more for finding out how your personality fits into the entrepreneurial world. It describes the "underachiever of wealth" and the "overachiever of wealth" in great detail. The bottom line is whether or not you are living not simply beyond your means, but well below your means. This creates capital wealth, which allows you to start using these capital assets to create cash flow above and beyond your own individual work product. It describes how the average person will buy as much house as they possibly can, thereby saddling themselves with significantly higher operational costs. Same for their car, and other toys. On the other hand, the typical millionaire drives an older, domestic car, lives in a house much smaller than his wealth would permit, and is not hung up on what people think about them.

The fact that Sam Walton drove an old, beat up truck, was more an indication of the traits that made him rich, not an eccentric wish to appear humble.

Charlie

[pete f]

I know many of you have been waiting for this report.
The new guy's business is still increasing. As I figure it, he is up about 25% from his last reading. He has gone from about $120 a day to around $160 a day. Nice jump, I really did not think that much extra business was there. My store is up just over 10% from last year for the month of November, the remodel should have made me up 30%, so I figure 20% went to him. I am hearing from a few customers who went over and tried the forbidden fruit. They tell me parking is a big issue withnthem and he has really not much more to offer. I will also say there are a couple mats about 10-15 blocks away, in an area he is advertising, one is for sale, the other was, not sure now. I am researching them now and do not see much impact if at all. I just can't figure where this mat is geting thier business. Anyway, he appears to be a non issue to me now, I will keep an eye on just for sport, and keep an eye on the 2 mats I have interest in. The new guy is opening his 2nd brand new ground up Speed Queen super mat store closer to them in a few weeks.
I am waiting and watching before I make any offers on the 2 stores I see as fitting into my overall plan.

[MichaelCa]

Pete, how does one go about determining those figures of a competitor?
i.e. $120/day previously, and now $160/day

It sounds like you feel you have fairly accurate info.

[pete f]

I do a guesstimate of profit per gallon

[MichaelCa]

OK, i guess you mean you first have to know how many gallons he's going thru .... which I take it you can do by reading his meter once a wk.

Is this what you meant ?

[pete f]

yes Michael, you have it correct. I do not read the meter every week though, last time was 3 weeks ago. I was curious how much extra business there was out there.

[Kitty]

Almost 3 years later ~ what is this market situation, Pete?

[pete f]

Almost 3 years later ~ what is this market situation, Pete?

Fair question, I should update. My store is netting me about 18-20k a year. the big new store across the street, I can only guess, here are some numbers, none actually verified, though most add up. I did offer my store to the owner a year ago for 50k, he did not buy me out, which I thought was pretty stupid.'
last water reading made me figure the store was grossing 75k a year.
take 3500 rent, whatever payroll, yes, attended., say $3000 mo. Ok, you all add up the rest. Now tell me if he was dumb not to buy me out, say he got 1/2 of my biz, 23k, less utility means 16k profit. At this point I am not selling, just collecting and watching. I know his lease is up for option soon, so I wait it out... and my $1 tops are popular

[MyLaundry]

He was already stupid enough to build a big store at a location that only gross $75K a year. I guess he did not do enough "homework" before he built.

[Kitty]

He was already stupid enough to build a big store at a location that only gross $75K a year. I guess he did not do enough "homework" before he built.


I suppose if I were a distributor, I would not want to lose a sale to a competitor when this type of situation arises when you have a losing situation such as this. A cold location and a hot investor. But, I would think it is much worse to be associated with a "cold location" Not just a bad location, as it is hard to tell, but a "cold location. There is a difference.

A cold location is the type of location Pete has described, one that does not warrant the inception of another mat into the market place, or that there is the risk of the entire new laundromat into the market place is overwhelming as it needs to overtake the current underdog out of the picture completely to win the entire market in order to succeed.

I know in today's markets things are tough, the store level is seeing utilities out of control Laundromat owners must run very lean in order to see the margins of yesterday and keep tight controls. Things in this industry in order to keep those same control should follow suit so to speak.

Distributors might be thinking of widening territories and have their salesman concentrate more on upgrading laundries and returning to befriending the store owner. This would certainly be beneficial to the industry and the manufacturers themselves with educating the store owners directly with what new equipment is coming out and how the store owner can become more efficient I can tell you in the 9 years I worked for BD. We never saw a sales rep unless we called one. He had three stores... Someone somewhere should have known who he was... looking for the relationship of his business or trying to get his business. With the ever changing equipment. Thats what I'd be doing...looking for sales and new relationships with you store owners, because thats where their bread and butter is going to be for a while don't you think?

I have on another thread the new mat going into BD's market in my area. A new small retail center. A L shaped building small 1000 sqft retail stores with the excpetion of the laundromat that is scheduled to go into the corner of this area. I cannot believe the laundromat will go in the corner of the center.... Parking will be a nightmare for this...In this particular market a laundormat is warranted. Any distributor that ran numbers should have said this size mat is 1. too small and 2. not enough parking 3. corner area . As I said in the other thread, I will be posting the life of this build to see how this store progresses....

Kitty