The Canadian laundry sector generates about CA$1.6bn in annual revenues and is still mostly populated by mom-and-pop operators.
It is a mature market and is highly competitive with many longstanding businesses fighting over fairly static levels of demand. This grows marginally by 0.4% between 2020-2023, according to Statista projections.
Nevertheless, well-run laundries or laundromats in the right location can provide owners with a reasonably reliable income: 72.8% were classified as profitable by Canadian government statistics as of 2016 – a slightly higher proportion than liquor stores (69.2%) and florists (71.2%) and not far short of grocery retailers (73.7%).
US Coin Laundry Association CEO Brian Wallace, quoted in ‘Coin-Operated Laundry: Entrepreneur's Step-by-Step Startup Guide’, said 35 percent profit margins are realistic for a proprietor who keeps their laundromat “clean, repairs its equipment quickly, uses energy-efficient systems and offers good customer service.”
Washing machines represent a hefty upfront investment, but ongoing overheads are modest for coin-operated establishments, which invariably have one attendant on hand, if anyone at all.
No wonder so many operators have long opening hours – sometimes trading round the clock – although late night, staff-free opening prompts many to invest in CCTV and other security measures.
Sources of laundry demand
Laundry is, of course, an essential undertaking – indeed, laundries were permitted to remain open as an essential service during the Covid-19 lockdown. That said, most people own washing machines so the best locations, for anyone considering buying a laundry, are low-income areas or those with a significant student population.
Nevertheless, washing machines do break down frequently – especially in rented accommodation, which typically has ageing, low-grade models fitted – which represents another source of demand.
Many forward-thinking laundry owners have decided that demand isn’t sufficient to justify cramming their premises with washing machines, or that they simply want to diversify their revenue base.
Instead, they double as dry cleaners, offer alterations, key cutting, or shoe repairs, or sell complementary retail items.
With many customers waiting a while for their laundry, some take the opportunity to sell snacks and drinks, generate revenue from slot machines, or provide a play area with toys to give parents of young children a reason to choose them over their competitors.
Upgrading washing machines and driers, while initially expensive, can pay off in lower maintenance costs and higher margins. The latest models are less likely to break down, use energy and water more efficiently, and can justify higher prices.
However, there are venture capital-backed operators revamping the business model itself.
The laundry disruptors
Aimed at cash-rich, time-poor customers, Rinse and 2ULaundry are among those “bringing technology” and a little Silicon Valley glamour “to old-school industries”.
Their services, provided in Canada by the likes of Vaundry and Simply Laundry, eliminate inconvenience for the customer by picking up laundry from their home and returning it when done.
However, Rinse co-founder and CEO Ajay Prakash admits the concept is operationally complex and challenging to scale up, and believes mom-and-pops can thrive as their partners.
The laundry owner role
Most laundries for sale in Canada are still traditional walk-in, coin-operated establishments, whose business model is fundamentally quite simple.
It’s self-service, so owners only periodically need to assist customers, as well as call in engineers when machines need repairs. Otherwise, they keep the premises tidy and clean and keep on top of the financials.
So it’s not the most complex business to get to grips with if you’re new to the sector – although if you’re doubling up as a dry cleaning operation then that requires a little more specialist expertise.
And you need enough business savvy to understand the local market and make the right judgement calls, such as whether to squeeze in one more washing machine or install a snack vending machine instead.