There are quite a few people who would like to talk shop with Sydney laundromat chain owner Omer Tas. After opening Stacks Laundry in the inner-west suburb of Marrickville three years ago, he has expanded the self-service outlet to a chain of seven.
His inbox has become bloated with messages from real estate agents and property developers, as well as plenty of entrepreneurial types, eager for tips on how they, too, can make good money by doing what he does.
The interest is not unwelcome, but has come with an annoying side effect: it has attracted new rivals nearby.
“Because of the interest in this as an investment, it’s getting more saturated, it’s getting more competitive,” he says. “It’s a bit like, if you want to open, go find another suburb, you know?”
In Melbourne, Soap Bar co-founders Constance Bernard and Ben Shaw have spent 13 years smoothing out the wrinkles of their business, both figuratively and literally. When they first opened their laundromat in 2013, they did something unusual at the time: added a coffee machine, put on some music, and let people play Jenga while they waited for their clothes to wash and dry.
Within five years, the number of rivals in a five-kilometre radius tripled. Bernard also runs a Facebook group of laundromat owners across the country as a community forum to exchange advice, but more than 20 new people join the group every passing week.
Most of them underestimate the amount of work that goes into it. “The depth of technical knowledge needed to successfully establish and operate a laundromat goes far beyond what any Facebook group can provide,” says Bernard. “Many come in feeling well-prepared, only to find that the gaps in their knowledge translate into very expensive lessons.”
Unlike their fluorescent-lit predecessors with hard plastic chairs and the vibe of a hospital waiting room, the new generation of swish-looking laundromats – backlit by neon lights and furnished with free Wi-Fi, pot plants, and sometimes massage chairs – are designed to be inviting spaces to linger in.
Most of them are built with the same frictionless feel of a fast food franchise: while the majority of laundromats still take coins, newer washers and dryers are built for tap-and-pay readers. Done well, some laundromats have become an unofficial urban third space – public places separate to home or work.
One obvious explanation for the boom in fancy laundromats is the post-COVID population surge, the growing number of apartment towers and shrinking unit sizes, all of which have naturally lifted demand in high-density, high foot traffic areas.
But its appeal as a business opportunity has also been fanned online: social media content from corporate-suits-turned-launderers flogging the merits of laundromats as a passive income stream has inflated interest in buying and owning one as a legitimate commercial venture.
Operators upload their experiences to YouTube, divulging financial breakdowns and sharing lessons learnt. Some TikTok videos are essentially coin ASMR (which stands for autonomous sensory meridian response, and is a popular category of online content where people enjoy the sound of something) of people filming themselves pouring buckets of loose change. In a video typical of TikTok account laundromatmoney, which has amassed two million views, Californian entrepreneur Carlos Ochoa pulls out fat wads of bills from a machine and feeds it into a cash-counting machine.
“A lot of people think, oh, having a laundromat is such a great business, it just runs itself,” says Tas.
“But you also get phone calls for things that go wrong … people’s washing getting stuck in the machine, a burst water pipe,” he adds. “People don’t see that side of things.”
Not everyone who wants to have a crack will make a good go of it. “People constantly misjudge the amount of investment required to open a laundromat,” says Kishore Aggarwal, who founded a payments platform that specialises in laundromats.
“You do get people rushing in, you know, like it’s a gold discovery, but it’s actually not. It’s like any other business.”
The work involved in this “passive income investment” is understated. “I wouldn’t call it passive income,” says Tangerpay chief strategy officer Damian Hudson. “Maybe semi-passive.”
The business of washing
The upsides of running a laundromat are intuitive: as a self-service venture, the wages bill isn’t excessive; unlike retail stores or cafes, there’s no inventory or perishable goods to manage; and washing your clothes is essential, making it fairly recession-proof.
But the numbers can add up quickly. The upfront investment in opening a new laundromat sits at around $300,000, according to Tangerpay estimates, but this figure can easily increase depending on the equipment, amenities and the design and quality of the fit-out.
It costs around $700,000 to open a Stacks Laundry, says Tas, who engaged Adelaide boutique architect firm Faculty Designs. Each commercial-grade washer and dryer starts from about $10,000 per machine and can go upwards of $30,000; for Stacks Laundry, the outlay for machines alone amounts to $400,000. Then there are the costs for the engineering designs and the ventilation ducts, which alone costs about $40,000.
An average laundromat will bring in about $9,000 to upwards of $20,000 a month for highly patronised outlets.
But the busier it gets, the heftier the bills; gas, electricity, water, and hospital-grade detergent and softener cost around $1,500 each a month. Cleaners, who come in every day to clear out the lint drawers and tidy up, cost $2,000 a month. Rent can cost between $2,500 to $8,000 or more a month.
For Tas, expenses round out at $12,000 per laundromat, per month. Most operators aim for a profit margin of about 30 to 40 per cent, according to Tangerpay estimates.
“Some of our stores need to hit about $15,000 to break even,” says the Sydney-based entrepreneur.
But industry newcomers are eroding profit margins. Kirrawee, in Sydney’s south, was once “dominating” as Stacks’ best-performing store. Once rivals opened nearby, revenue dipped by 20 to 30 per cent.
“I’ve got seven laundromats; three of them are doing really well, to help pay for the other four. And I’m opening so many, so it’s kind of balancing each other out.”
It’s here that serious operators’ investment in equipment and service quality, attentiveness to customer experience, and prompt maintenance can cut through. Tas has invested in high-grade American Speed Queen washers, branding and architectural design, and has learnt to seek locations in shopping centres and car parks to capture high foot traffic.
Operators that have learnt to manage the machines themselves and can diagnose and fix equipment will save significant sums on calling out technicians, says Soap Bar’s Bernard. “Those who can’t will find it very difficult to sustain the business, let alone achieve a return on an investment that can exceed half a million dollars.”
Tas is a one-man show, and does basic maintenance, bookkeeping, admin, customer service, and social media by himself. Despite growing competition, Tas has observed a few new entrants open and close down. “It’s all about habits.”
Wash this space
Globally, the demand for self-service laundromats appears to have come at the expense of another group: the traditional dry-cleaner. The proliferation of fast fashion, hybrid work and the casualisation of office attire has shrunk the need to clean suits and formal gowns.
Overall, Australia’s laundry and dry-cleaning industry has returned to growth: IBISWorld puts industry revenue at $2.5 billion, with profit and profit margins also inching upwards. The number of new businesses has increased 3.8 per cent to 5,370 operators.
It’s certainly not just entrepreneurs keen to cash in on this space: major investors are surveilling. In Australia, private equity is moving into the wash-and-dry space. In early March, Brisbane-based firm Fortitude Investment Partners acquired a majority stake in laundry equipment and cleaning chemicals business Richard Jay after 55 years of family ownership. Last November, Nash Capital paid $20 million for a 50 per cent stake in laundromat chain Blue Hippo, which has about 40 stores across Victoria and is aiming for a national footprint of 100. In 2023, one laundromat in Melbourne’s outer western suburbs attracted 115 auction bids before being sold for $741,000, 16 per cent above its reserve price, and on a yield of 4.7 per cent.
Tangerpay receives interest in its specialised self-service payment technology from countries Aggarwal and Hudson hadn’t even heard of. “It’s rolling out in South-East Asia right now,” says Aggarwal. “Self-service in itself is a trend.”
Tas is preparing to open three more stores this year. He is inundated with queries to franchise or sell individual stores, but he would like to see Stacks grow to 20 before he hands the keys over.
“Hopefully one day we get someone that’s cashed up giving me a phone call. I’m waiting for that phone call,” he says.
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