New Laundromat Location Dilemma

[Rony]

Hi Everyone, I am planning to build a new self-serviced laundromat and shortlisted a location in Melbourne, Australia (under lease negotiations). Demographics – No laundromat in 1.5 square miles (3.5 sq kilometres), 50% rented dwellings, 33% population in units/flats, 55% population is single/not married, high population density – 8,500 per square mile. The suburb is blue collar suburb (people on tools/trades).

Potential Location –
Advantages: Corner site with 2 street facing, adjacent to multi-storey council car park (hundreds of parking spots at nominal rates), free parking after 6pm to 6am next day. Near a national pizza shop chain and 24 hour Gym. High visibility because one of the road facing laundromat is the ONLY entry to council car park – approximately 2 million cars go through this road to council parking annually.

Disadvantages: No street parking – people have to walk from council car park across the street (less than 100 metre) The commercial complex of the location is run down – not high foot traffic. High rent for a long term lease.

DILEMMA
I am talking to 3 distributors. One (out of Melbourne) distributor has said that location is not favourable because there is no street parking and moms with children will not carry laundry from parking. Other 2 distributors from Melbourne liked the location and would have chosen the site over other sites.

Parking is a big problem in Melbourne. If I find a good location with parking then potential issues are
– it will be expensive or
– demographics will not work for you or
– parking will be mostly crowded and you have to wait.

I prepared Cash flow based on 3 turns per day for 1 year and I am in loss for 1st year. However, I see potential in this location that 3 turns per day is a reserve estimate. I know other laundromats with similar demographics are doing 6 – 7 turns per day. With 4.5 turns per day, I can make 20% to 30% profit.

What do you guys suggest to go for this location or not as the distributors can be sometimes biased?

[Author]

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