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Understanding the Laundromat Business Model

Laundromats are a needed service in many communities, but they can be a difficult business to bring to profitability. The laundromat business model has a number of variable cost factors to it that are outside of its control. To counter these variable costs, laundromats are branching out into non-traditional industries to make their businesses become more attractive. Not only do they offer self-service laundry, but you might find a restaurant, a bar, an arcade, or even a bowling alley attached to the facilities.

A Business Must Be Smart About Expansion

There are good methods of expansion and poor methods of expansion in the business world. Good expansion means that you’re coordinating new services and options that fit within your current business profile. For a laundromat with an extensive commercial building, for example, the addition of a snack bar would make sense because it would better utilize the existing structures for a minimal pricing upgrade.

Adding a new building addition to the existing laundromat to provide the snack bar, on the other hand, would be a poor method of expansion.

What we can learn from the laundromat business model is that different industries can co-exist in a meaningful way, but only if the customers find meaning in that service. A business must be able to solve problems for a customer in a unique way, yet still be able to market to different customer segments. Having a meal at a laundromat, for example, allows people to do their laundry, eat dinner, and solve two problems with one visit.

Service Expansion Is a Key Part of Business

Finding a way to expand the services that are being offered in a clear, concise way can also drive extra profits to a business. McDonald’s attempted a similar process, but wound up having a menu with over 100 items on it and this ended up increasing wait times while customer satisfaction ultimately plummeted. Laundromats, on the other hand, may offer a small set of complimentary services that add to the self-service laundry experience.

  • Drop off laundry services would allow customers to bring their dirty laundry in at the start of their work day and pick up their clean, folded laundry at the end of the work day.
  • Dry cleaning services would naturally compliment the laundromat niche for the community, especially if there isn’t a local provider.
  • High capacity laundry services for comforters and quilts would improve profits and decrease the amount of time someone needed to commit to their laundry.

When service expansion makes sense, then customer satisfaction increases and ultimately so do the revenues that can be achieved. When services are expanded in desperation, where options are more about trying to be something to everyone to grab a few dollars of revenue here are there, then a business is really on its last legs.

Change for the sake of change doesn’t make sense. Change that occurs with a specific plan behind it because there is a proven interest in what is being proposed does make sense.

What Can We Learn From the Laundromat Business Model?

A laundromat is ultimately a niche of the service industry. It can be a full service or a self service experience. To know which options are the best, each community must be segmented so that specific demographic information can be obtained. By knowing what customers need or want, a business can adapt their business plans to that changing environment.

Laundromats also teach us about how to achieve true efficiency. Because laundromats are already operating on thin margins, they are always looking for smart ways to diversify their income. That diversification must make sense with the business model that is already working for it to be successful. An espresso shop deciding to sell hot dogs isn’t going to be very successful. An espresso shop that serves a pastry, on the other hand, wold have a higher chance of finding more success.

The laundromat business model also shows that innovation must continue on. In the past, people would lug dozens of quarters in with them to operate the machines. Now laundromats offer pay at the appliance options with credit card readers so all of that change can just stay at home.

Laundromats may have a static business profile, but they still are able to achieve profitability when they stick to their business plan. That’s the primary lesson to take from this type of business.

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