Laundromat ROI and Returns Explained

Laundromat returns are best measured by cash-on-cash return and payback period, not just a vague yield. Your return depends on the price you pay, how much you finance, and the store's real cash flow after debt service. This guide explains how to measure and improve it.

Contents

• What return to expect
• Cash-on-cash return
• Payback period
• What affects your return

What return to expect

Because laundromats trade on a multiple of earnings, the implied yield is meaningful, but your actual return depends on financing and price. Rather than rely on a rule of thumb, model your specific deal. The cash-on-cash calculator and SBA loan calculator let you do that in a few minutes.

Cash-on-cash return

Cash-on-cash return is your annual cash flow after debt service divided by the cash you invested, including down payment, closing costs, and working capital. It is the number that tells you how hard your money is working. A larger down payment lowers risk but also lowers this figure; a smaller one raises it but tightens your coverage.

Payback period

Payback period is how many years of cash flow it takes to recover the cash you invested. A shorter payback means lower risk. Compare it against the remaining lease term, because your return is only secure for as long as you control the location.

What affects your return

The biggest levers are the purchase price, the lease, equipment age, and your ability to grow revenue by adding wash-dry-fold or improving the payment system. Overpaying is the fastest way to ruin a return, so confirm the price with how to tell if a laundromat is overpriced before you commit, then browse laundromats for sale.