What do you think?

[sdudeck]

I wonder contemplating posting this because it is such small peanuts...but here I go.....I have been looking into a mat for some time. I recently found one right under my nose. The circumstances: The mat is located in a residential section. 15/85 renters/owners. 3,600 renters within a 1.5 mile radius. Closest mat is 4.1 miles away. The mat is located in a strip mall with a pizza shop on one side and a Dry Cleaners on the other. A chinese food place 2 doors down and a Walgreens 3 doors down. In the parking lot is a stand alone BlockBusters Video. Very busy intersection. The mat has been there for 19 years. The current owner has owned it for 16 years. He is a retired teacher and has moved out of the area, has bad back, and wife is sick, he no longer wants to put in the time. He has let it run down (real bad) over the last 2.5 years. Barely putting any money or time into the store. It is pretty disgusting.

I am not looking to get rich, just a few extra bucks.

Current owner bought mat 16 years ago for $94,000.
Mat was doing $55-45,000 GROSS up until 5 years ago.
Last two years has done $24,500/year GROSS.

22 top loaders (12 Speed Queen work)
5 single pocket dryers (4 work)
4 Double stack dryers (3 out of the 8 work)
750 Square foot store
Yearly costs:
$10,200 rent
$5,800 Utilities (Gas/Elec/Water)
$800 Insurance
$1,225 Taxes

I need to buy new washers and dryers, paint, new floor, lights, major TLC.

11 - Speed Queen toploaders (1.50) - These work and will stay.

I plan to buy:
7 - Speed Queen 18lb front loaders (1.75)
2 - Speed Queen 30lb fron loaders (3.25)
7 - Double Stack Speed Queen Dryers

My questions are:
1) Will I be able to upgrade the mat, pay the loan back, and cover expenses? If I do $25,000 GROSS I will be losing my shirt. I have worked the numbers so that I need to do 34,000 Gross to break even.
2) Should I expect to get the revenue back to what the mat was doing 7-8 years ago? How long will it take to get back the customers?

My feelings are:
1) The location's demographics are getting stronger every year.
2) I used to use this mat and remember it was so busy not being able to get a machine on Saturdays.
3) Is my optimistic views on what this mat COULD do, getting in the way of making an objective assessment of the situation?

Steve

[Kitty]

What does the competitor 4 miles away offer that this location does not?

Top loaders won't get you a decent revenue. Frontloaders are more expensive and costly to put in, but if you are going to provide a decent service you must provide what the customers need/want. Who is the laundry customer in your area, and how much weekly laundry do they need to service?

[pete f]

A major remodel can easly add 50% to revenue, in some cases could double it, depending on how strong the location is.

New paint, lights, sign, you are on the right track.

Wrong machine mix though for an area that has few renters. You will need to draw the home owners who already have a washer for thier comforter business. I have an 800 sq ft store in an area similar. I have 6 tops, 2 neptunes, 4 25#, 4 40#, 1 55#, 9 stacks. The 40's take in most of the money, the 55 gets decent use as do the 25's. The tops decent, the neptunes low usage. 2 stacks only take in a couple bucks, and I mean $2 a week, so really don't need them. So you could get buy with 6 tops, 3 25's, 3 40's 1 55# and about 7 stacks. My rent is about the same. It is not a bad little store, but if it were any further away than 5 miles and not in between 2 big stores I own I would not mess with it for the money vs. time spent. It would be OK for a starter store to learn the business.

[Jim]

My questions are:
1) Will I be able to upgrade the mat, pay the loan back, and cover expenses? If I do $25,000 GROSS I will be losing my shirt. I have worked the numbers so that I need to do 34,000 Gross to break even.
2) Should I expect to get the revenue back to what the mat was doing 7-8 years ago? How long will it take to get back the customers?
Steve

1) You never mentioned how much they are asking for the mat.....Remember you pay for what they are selling now....not what the potential may be..

2) Realistically only expect to make what he is currently making now ...your hard work and what you put into the biz is what is going to make it produce more ....remember, mats like all businesses are risky.(Mats are probably more so). 7 to 8 years ago is an eternity in apartments...which change people every 5 years...different cliental.. It is possible that you could make more than what was being made 7 years ago...but less is also possible..

[sdudeck]

Thanks for the input. I really appreciate it.

Kitty - The mat 4 miles has WDF, 25 front loaders, 20 dryers. In rough section of town. The mat I am looking at is in a pretty good residentail area. It has been there for about 20 years.

Your right about the Machine Mix. I will need some major front loaders to get in there. maybe a 45#, a few 35#. I need to figure that one out, and see what i can afford.

The price of the mat is $10,000 up front and $5,000 at the end of the first year. So $15,000. Again - I know this mat is rundown, and i do mean RUN DOWN and U-G-L-Y.

My concern is getting back the business it once had.

Thanks People!

[mike]

Well the price is good,

but

Be sure that you have a long enough lease to at least pay back your investment in new machines !

You need more larger machines and fewer small machines than you indicated,
because with only 750 square feet, you must use every square inch, with the highest per sq. ft. return.

[pete f]

I agree with mike, you need a solid lease. The price is much cheaoer than a new one could be built for, so you would be ahead there. still you need maybe 60k to do the place over right. It could work our, most numbers due

[sdudeck]

Thanks.

Pete - You hit the nail on the head. 60K is exactly what we were planning. We will be getting a ten year lease aggrement to start with. (5 years with an option for another 5).

We have been looking at the Speed Queen 30, 40 #ers. Somewhere in that area. I have the prices from the distributors. Do you have an idea of what I should be paying per washing machine, and dryer? (installed)

Thanks

[pete f]

I would not put Speed Queen EC series in an unatended store.

Most washers are in the $100 per pound range, ie, a 35# capacity washer is about $3500 Install and bases are extra, maybe $350-$500 each, ask a local installer for pricing, same goes for dryer installs. A new stack is about $4000.
My 3 40#, 1 55# washer and 4 stack dryers cost me around 37k installed in '02, including around $2000 needed for extra electric/plumbing work. You will have extra expense for electrical work also, maybe venting too.

[sdudeck]

Pete - Forgive me but what is the EC series? And what is the problem with them?

[pete f]

EC is the touch pad style. The SC series is push button style. It is easier to use, but still has the same door lock and drain valve problem.

[Fred50]

EC is the touch pad style. The SC series is push button style. It is easier to use, but still has the same door lock and drain valve problem.

I have had the push button style for 1-1/2 years and I have had no problems.

Pete,

Are you referring to older models and extrapolating?

[pete f]

Mark, I knew you had SQ, did not know which one, you chose wisely.
But still they have problems, and most machines do, you just try to find the ones that suit you the best. You have attendents, so a machine that continues to run forever becuase of something stuck in the drain is no problem, the attendent can shut it off so the customer can get thier clothes.
This is a big negative for the unattended owner. The door problem is when the door pin gets a little worn the machine will stay on a slow spin at the end of the cycle and never shut off, this also is a bit of a bother for the unattended store. The fact you can not change the water level is another factor. I really think SQ washes as well as any other, but the things that are common problems are worse to me then the common problems with Dextor. The most frequent problem there is they leak easy, it only take shoe lace or hair to get caught between the door gasket to make them leak. And I don't like the way the front rubber strip panel protector falls out of place, I rip mine off and toss them. And Dexter has a problem with the softner portion of the soap box, it turns black gunk easier than SQ. However, Dexter will run DRY and are fairly easy to use, so I put up with the other problems becuase I do not get called to fix them. Water goes on the floor, people walk around it. I have to clean a little extra on the softner dispensor. I am putting in Maytag next, am wondering how they will do, I have tested and researched for all possible problems I have seen on other machines, they look good, but are substanially more money, maybe there is a reason for that.

[sdudeck]

Pete - I looked into the Maytags Neptunes. I heard of some type of mold problems with the washers?? Have you heard this about the Neptunes?

Other Maytags seem more expensive. I wonder if there is a good reason for that.

Thanks for the info on the push buttons. I appreciate it.

[pete f]

Pete - I looked into the Maytags Neptunes. I heard of some type of mold problems with the washers?? Have you heard this about the Neptunes?

Other Maytags seem more expensive. I wonder if there is a good reason for that.

Thanks for the info on the push buttons. I appreciate it.


The mold is an early home style model problem. The commercial are fine, and would work well in a store like you are looking at. I think hard mount are much better though, if you have the space and plumbing for them. If you put in Neptunes skip the double loader hard mounts.