Laundromat turnaround with real estate
I’m looking at a laundromat deal that includes the real estate and would appreciate feedback from experienced owners/operators.
The store has historically performed much better than it is performing today. Current revenue is down roughly 30%+ (historically $20K avg, now $15k run rate) compared to the same period in prior years. The drop seems to line up with a nearby competitor installing new machines earlier this year, but the store itself has also clearly been neglected for a while.
The deal has some things I like:
Real estate included
4000sqft
40 parking spots
Favorable laundromat demographics
Historical revenue was materially higher
Current issues:
Store is dirty and poorly maintained
Machines are old and unattractive
Pest issue observed
Weak signage/branding
Poor lighting
Poor online presence / hard to find on Google
Limited payment options
Layout could be better for folding/customer flow
Older water-heating system that works but is inefficient
Current operator has not kept the store up well
My plan would be a full reset:
New machines
New branding/signs
Repaint inside and outside
Better lighting
Deep clean and pest treatment
Better folding/customer layout
Direct credit card/mobile payment acceptance
Better staff/cleaning systems
Longer hours with automatic door locks
Fix Google Business Profile / online visibility
Raise prices after the store is modernized
The current return is not amazing, (6-9% CoC) but it is still positive. The thesis is that the downside is supported by the real estate and existing customer base, while the upside comes from bringing the store back closer to its historical performance. (15-20% CoC)
The big question is whether the recent drop is mostly due to neglect and the competitor upgrade, or whether the competitor permanently took market share or is this location on the permanent decline?
Questions for owners:
How much weight would you give historical revenue if the last few months are down 30%+?
Have you seen neglected stores win customers back after a full remodel/new machines?
Is raising prices after installing new machines usually accepted by customers?
What hidden costs should I be most worried about in a turnaround like this?
Would you treat a working but inefficient older boiler/water-heating system as a major red flag?
How long did it take your store to stabilize after a renovation/rebrand?
How much would you pay for this deal?
I’m trying to figure out whether this is a reasonable real-estate-backed turnaround or whether the recent revenue decline should be treated as the new normal.
Would appreciate blunt feedback from people who have actually owned or operated laundromats.