Store in overbuilt market

[Ken]

I just found out a few days ago,a store I always want is avaliable in good price but the big problem is 2 super stores just open in the same area .
It is not a large town,has 4,5 small to mid size older stores, I know 2 owners ,they did ok in that town but new 2 over 4500 sqft store were just opened this month!That was a little crazy,nobody built a new store in that town in 10 years,2 large one in shipping center this year!
I am thinking:
Do I need any more laundromats?or make my 3 stores better ,do some remodle.I have 3 laundromats and other business.
Do I want to jump in a overbuilt market?It was ok market until the 2 super stores.
I don't know how much buiness the new stores will take from the older one since they just open.I know the store,the location,the area,has been watching that store for years but after saw the 2 large stores,made me think twice.

[Silent Roo]

There are two thoughts

1. The new owners saw potential in the market. I as a distributer am about to build a new store in a town that is already over laundried. The problem is one guy owns a couple of locations and has not touched them in years. They are ratholes and should have been closed years ago. He owns the building and they cover expenses and give him a little money each month. My new owner knows that the college kids driving 12 miles to the other side of town past 2 mats to get there will flock to the new store about 1/2 mile from campus. It will be big and clean. It is the best location in town demographically speaking. However I would consider either of the two fixerupers as they are in a Good laundry location as well. The new mat will make 4 in town and I know the town can support 3 well. One will close.

2. Wait 6 months to a year. One of the Shinny new stores may be closed or for sale. You will know what impact everything has had.

Bottom line is there is a pie. It is cut into peices, the size peice you get has more to do with location, and running than size. Size is a factor but customers can be funny. I can point to many little mom and pop stores next to Walmart that are priced higher selling the same stuff that do well. I can point to small laundry close to a Store almost 3 times it's size that does more business than the big store.

[bodman]

Just go with your gut feeling. works every time. My gut feeling has kept me out of trouble many times. Technically speaking look at ROI calculated on 25% less projected gross to account for new mats and see if figures work.

[pete f]

A new store opening nearby will likely cut 25% or more revenue, so 2 opening, who knows. The only way I would buy depends how the stores are located. If the new stores are built on the other side of town then maybe, as not everyone will drive a distance to do laundry. Still, you must factor in less revenue when assessing the profit. You may also find spending the money on your existing mat can make a good investment also.

[Ken]

I always go with my feeling and go over the book since I like to buy run down store or the store not doing well in good location,good parking,so I can buy them in good price,I know,no many people want to sell their cash cow.
The store is in good location,has good parking.Both new stores and the store I am interested are on the same street,first new one about 1/4 miles,2nd new one about 2 miles from the store.If no new stores,I will jump into the deal ASAP but the 2 large stores ....
That street is the largest street across town,5 laundromats with in 2 miles now(it was 3),it is a little over built.
I have one store in a over built market already(5 stores in 3 miles,3 new one),make ok money and pay for the realstate(I only have 2 more years to pay it off),I understand people will not wait to use washers and dryers in those market,customers will shop around,I am just asking myself,do I want to buy a store in those market and I will not own the building?remodel my stores maybe a safer move.