Utility:gross Ratio Question

[TotoMongo]

I have read in previous posts that in an attended store the utility:gross revenue ratio would be lower than in an unattended store. Even though I am not an owner yet, that does make sense.

Tonight, I looked at a store that has a 16% ratio (1890/11600 a month). That is on the low end of the spectrum. The seller claims that 80% of his business is drop off. He's in a neighborhood that would substantiate that claim. Concievable or should I run as fast as I can? I havent any water usage numbers so an in-depth examination isnt possible yet.

By the way, I would like to thank everyone for advising me to ditch the brokers I have been using. In the last 4 days I have visited approximately 15 mats. Of the 15, 3 were potential sellers.

Toto

[Jim]

Those type of numbers sound great but we need more info before being able to continue.

Even though you maybe new here, I think you know the numbers needed before anyone can tell if it is a good deal or not, and obviously your opinion of the place matters most.

[Anonymous]

If 80% of the business is drop-off I would expect the ratio to be even lower than what you stated. A store with that high a percentage of drop-off is really not a laundromat - its more of a service business which also offers limited laundromat service. Not that there is anything wrong with that, just be aware of what you are getting into. It will likely offer much higher profits than a typical laundromat, but you will have much more reliance on employees and service.

[TotoMongo]

Thanks guys. I just met these people so I dont have the info to make an informed decision. Just as soon as I do I will post them as I rely on so many of your opinions.

Kirby, good point. As 25% is used as a rule of thumb, I wondered if anyone has here has any experience with an operation such as this. Also, I have no ownership experience but do know a bit about heavily relying on employees. I traded stocks for a living and had difficulty finding dependable and responsible assistants.

Thanks for the tips!
Toto

[Anonymous]

It is harder to find good quality people in this business than in the Wall Street business, as on Wall Street you can usually come up with high pay for quality people. The margins in a typical laundromat won't allow you to hire people for $60K+ a year. Here you are typically working with people that don't earn a whole hell of a lot more than minimum wage and there work ethic and duration of employment is not that long.

(Yes I know there are exceptions so don't anyone write back and tell me how they pay $12/hr and have the same quality employee for 23 years - you are the exception that makes the rule.)