Why Isn’t Every Laundromat Successful?

You know what stat we’ve all heard a million times?

“Laundromats have a 95% success rate.”

Scroll through social media for five minutes and you’ll find a “laundry business guru” using this stat as the primary selling point for their 12-week “Secrets of Laundromat Domination” course or whatever they’re calling it this week. “With a 95% success rate, it’s nearly impossible to fail!” they claim.

But it’s not just the influencers talking about this stat. It’s been plastered across the internet, cited in countless articles for years and years.

I’ve been thinking about that number a lot lately, so let’s have an honest conversation about where it comes from and what it really means for us in this game.

I’ll admit it, 95% is an awesome number. Who wouldn’t want to have a business where you have a 95% chance of making it? 

But here’s the thing: I’ve never heard anyone say the source of this data.

And that’s a problem.

Thinking about the thinking of laundry:
When you realize that our industry is not just fragmented regarding ownership, but also the data used and shared.

I decided to dig deeper and found that the 95% figure seems to have originated with Speed Queen Financial Services based on their loan data from 2001 to 2013. To them, “success” means “the number of NOT charged off loans per laundry business divided by the total number of loans originated during that time.”

Let that sink in for a minute.

This isn’t a comprehensive study of all laundromats across America.
This isn’t an analysis of whether or not the businesses were profitable.
This isn’t even a measure of if those businesses even stayed open.

It’s simply looking at loan performance for ONE lender during a specific timeframe, yet somehow this limited metric has taken on a life of its own in our industry.

How This Number Keeps Changing

You want to know what’s really interesting? This statistic continues to change over time. What started as loan performance data somehow turned into statements like “laundromats have a 95% success rate.” 

It just keeps getting repeated and changed and repeated and changed without stopping to check the source and validity of the statement. That’s a HUGE problem when people are making real investments with real money.

It reminds me of the telephone game we played as kids where you whisper something to one person and by the time it reaches the last person, the message is completely different. Except in this case, the whisper has reshaped an entire industry’s perception of itself.

The Smoke and Mirrors of “Success”

My mind has always been blown by the fact that you can find laundromats right across the street from each other in New York City, and they both manage to stay open somehow.

Laundromats that are killing it don’t just close up shop. They keep running and generating that cash flow we all love. In my experience, the ones that aren’t doing so well rarely disappear. Instead, they get sold to someone else who thinks they’ve got the magic touch to turn things around (or they were sold a dream). 

The new owner typically does one of three things:

• Pumps cash into repairs, cosmetics, and additional services
• Takes over as is and works their tail off to improve things through sweat equity
• Completely overhauls the whole operation with a retool and renovation

All of these scenarios create an interesting situation where even struggling laundromats stay open, just under new management. They don’t “fail” in the traditional sense of a business closing its doors permanently, which skews how we evaluate their success.

I’ve even seen laundromats that were clearly built just to flip to the next hopeful owners, creating another way for laundromats to technically “succeed” even when the original business model wasn’t all that great. It’s kind of crazy when you think about it, but it happens more often than people realize, especially in high-demand markets.

Reality Check

So what do we know for sure? Despite the questionable stats floating around, people are always going to need clean clothes. According to the CLA (formerly the Coin Laundry Association), there are 29,500 laundromat businesses in the country. The industry is still healthy, generating billions in revenue each year, and serving a stable client base regardless of what the economy is doing. That’s the real strength of our industry.

But just because the laundromat business is strong doesn’t mean every laundromat is guaranteed to make money. Like any business, success depends on location, competition, how much capital you can invest, how efficiently you run the place, and the quality of your management. 

The “laundry business gurus” have turned our industry into the latest quit your job/side hustle  scheme, and the scheme is thriving on misinformation. Don’t get me wrong, some people are genuinely sharing valuable information. But plenty of others bought a laundromat five minutes ago and are already calling themselves experts or don’t even own a laundromat/laundry business.

The reality is that many of them make more money selling the dream/lifestyle of laundry business ownership than they do from actually operating laundry businesses. 

I’m not saying the 95% figure is completely wrong, but it lacks the context we need to understand the full story and make informed decisions. A laundromat is a solid business opportunity with real advantages over many other retail and service businesses, but like anything else worth doing, it requires due diligence, proper capital, and running a tight ship to really thrive.

That's all I got for you today.

Waleed

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Echoing the thoughts of William G. Pollard.

Information is a source of learning, but unless it is organized, processed, and available to the right people in a format for decision making, it is a burden, not a benefit.