Brainstorm: Building a coin-op laundry route empire

[squiffy]

One very interesting possibility may be that you have found a sweetspot. It's possible this is a great profit opportunity for you, but that it's small potatoes for CoinMach so that they don't provide good service.

In other words, they may be paying some employee to manage a huge number of routes. And he may be rationally focusing 95% of his effort on large contracts, where most of his profit comes in.

And if a large apt. owner demanded new machines, coin mach might provide new machines rather than lose the contract.

Here, they may believe that it's not worth it to buy new machines since it will cut into their profits.

But be careful. You may be wrong about many of your numbers. Theory and reality are two different things.

It's also possible that you will be in the red for a very long time due to high purchase costs and repair costs for the machines.

It may be that your breakeven time is 3 years before you even start to see any real profit. And it may be that the machines start to break down a lot from misuse.

In which case, you will be in the same position as CoinMach, you have to hold onto the old crappy machines for a long time to make a profit.

But anyway. Keep us posted on your progress.

It could be that this is a situation analogous to high priced stocks and low priced stocks. Sometimes large fund managers with Billions to invest cannot take advantage of a stock with low trading volume and a low price, because their purchases would drive up the price very high and they really couldn't invest enough to make it worth their while.

So if this 12 machine operation is profitable for you, but not for CoinMach, then you may have found a nice niche and might be able to poach other small operations from CoinMach by providing new machines and better service.

But beware. There may be some hidden problems you didn't anticipate. And your numbers may be very very unrealisitic.

I still think you are way underestimating your costs and way overestimating your profits.

If it's profitable for you to install new machines, why wouldn't it be profitable for CoinMach?

[crazy canuck]

[ QUOTE ]

-Machines cost ~$750/ea. I assume this doesn't include tax or delivery, so let's call it $900/ea.

[/ QUOTE ]

I might be wrong but I think these heavy duty machines cost more than this.

[maxtower]

I average about 1 load per two weeks. Girls probably do more.
1.5/person/week sounds high.

[Groty]

What's not to like about a business with "captive customers" who generate a predictable, steady, annuity-like revenue stream?

[Lunger]

It can be a very profitable business however, there is more to it.

I think you have not considered the issues of vandalism, theft, machines eating quarters, and liabilty for damaged clothes. Other things can breakdown that you will have to take on that will not necesarily be your responsibility. Property owner not paying the utility bills, drain getting clogged, lights going out in the laundry room. Who will you get to empty the coin hoppers? Are you going to the bank every month to deposit $3200 in quarters? Are you thinking about security?

Also, this is a very competitive, mature industry. The more profitable locations are always in fierce competition. I have seen deals where the property owners get paid huge sums of upfront money. You better have an air tight lease with good lawyers to back you. If the place is profitable, the other companies are going to come around and tempt the owner to break the lease.

If the place was abandoned by Coinmach, I think your income calculations are way off. Coinmach knows this because the are the ones who have been collecting the quarters. They would not refuse to replace old machines if the profit numbers were there.