Nearby Competition

[Steven Murphy]

Hi everyone. I’m looking around at laundromats for sale and doing back of the paper calculations on a few of them. I found one at a glance I really like, but there’s a state of the art, picture-perfect laundromat 3.8 miles away. Is this too close? I wonder if there is a rule of thumb for the distance that competition stops affecting you? I’ve heard a mile but I’m not sure… Thanks for any help/advice!

[John Menton]

I’m in the same situation! Looking at one for sale but it is sandwiched between 2 within a mile. P&L shows it is cash flow positive but the close competition worries me.

[Dave “Laundromat Millionaire” Menz]

Hi Steven and John,

There is no hard and fast rule because every community is different. Think traffic patterns and how people flow throughout your community. If a fellow laundromat is 3 miles away but they offer a significantly higher value proposition than you do, then people will drive by you to get to them. Really the ultimate question here is whether the community can support multiple mats. Look at population, demographics and if there’s other competitors around. If you were to buy this store, you could and should upgrade the location and service level to meet or hopefully exceed ANY competitors anyway. If it’s a small town that’s already being well served by the one competitor, then it’ll be tough to gain market share.
Here’s a link to a podcast on competition in our industry and how to approach it. It’s from the perspective of a new competitor opening up but I think you’ll see value in it in your situation too. Best wishes!

https://americancoinop.com/podcasts/answering-competition

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