Would you buy a dump?

[Anonymous]

A broker showed me a 4,000 sqft dump today. Across the street from it is a 5,000 sqft super laundry. Two blocks from it is a nother super laundry. They both opened about two years ago. He is vending doubles cheaper than them by a margin of 50 cents. He is making in on the price sensitive segment of the market. He is actually making good money. The equipment is all old, while the other guys are brand new. It might be nice for once to be the spoilers and have all the other owners forced to have low vend prices because you can :)

[Glenn]

The owner of a dump has his prices low because he has to have them low. Not because he can.

[Anonymous]

You think so? Duhh.

I know that, the point is he is actually making good money, and hurting the big guys that invested a LOT of money.

[Kitty]

So is this a bad thing? It seems bad that he does not upgrade and that the clientelle gets very little for very little.

The dump is making great cash, but the need to upgrade is domninate, so what is it the broker is selling? A dump that makes money until you put a loan in the economics and do the inevitable upgrades?

[Andy]

If the economics of any operation, dump or not, were favorable, I would buy.

[Howard]

I would Buy, providing I felt comfortable with the underlying systems (plumbing, electrical, gas) and the theft/vandalism potential.

A good money maker is hard to find and you can probably get a good deal.

[Kitty]

If it is a money maker now, with dumpy equipment, as well as cosmetically challenged. Would this mean after serious upgrading the store would be profitable? The equipment is so expensive as is the upgrade in plumbing and electrical. The cost to upgrade could run as much as building new! Any upgrade would force an increase in vend prices, thus the clientelle could be swayed to the other stores as the price difference has now decreased. The store may break even after the repayment of the debt, but it could be 10 years before good profit is seen.

How about the pain of upgrading while maintaining business hours? A dump, whether it is a money maker now, may or may not be a money maker after upgrades are complete.

[buddy]

If it is making money and it is a dump only because of the old equipment, I would buy it. Ofcourse if everything else is okay like
plumbing, drainage, gas lines and make-up air.

To make it decent you do not necessarily have to spend big bucks and buy brand new equipment. You can buy refurbished Gen5 or Gen4 Wascos real cheap. Also, Refurbished decent Dryers are not expensive either.

With cheaper vend prices and Refurbished Waso Machines, It should be able to capture more market.

One important thing in this business is that people care about pricing and their clothes being cleaned properly. They don't care if you have shiny mint condition machines or not because utlimate goal of every customer is to get their clothes cleaned and spend less doing so.

[pete f]

If the terms are right it could be a good cash flow, which is harrd to find with dumps. I agree with Buddy, you could keep the place slowley upgraded with good used stuff, keep the market share it has. I have always been a newer machine and price leader format becuase it has worked in most cases, however it might not work in all cases, like the one you state. Repairs and extra time at the store are the cons. I do not like owning a mat directly across the street from a new one, but if it has been a couple years you know what the impact is. Maybe I should lower prices at my little place and become the "nice dump" price leader...