What Percent of Laundromat Revenue Goes to Utilities?

By Jason Taken, business broker · HedgeStone Business Advisors · Updated 2026-09-04 · 6 min read

The Benchmark and Its Limits

Twenty percent median, 21% mean, from a voluntary trade survey of 377 owner-operators describing 2023 operations. That population skews toward engaged operators, so treat it as a comparison rather than a target.

For context alongside it: rent ran a median 18% of revenue, payroll a median 20% among stores that have payroll, and operating profit before tax, debt service, and owner compensation a median 27%.

Diagnosing a High Ratio

A store at 28% instead of 20% on $300,000 of revenue is $24,000 a year — roughly $84,000 of value at a 3.5x multiple. Finding the cause is worth real money.

Work them in that order. The first three are cheap and fast, and buyers who leap to the last one without checking a running toilet make accusations they cannot withdraw.

The Denominator Problem

The ratio has two sides, and buyers focus on the wrong one.

If utilities look high as a percentage of revenue, either the numerator is large or the denominator is small. A store claiming $300,000 of revenue with utilities consistent with $230,000 of volume has a revenue problem, not a utility problem.

The check that separates them: compare metered water consumption against manufacturer per-cycle usage for the actual installed machines, producing a range of implied cycles. See water bill analysis.

Why State Averages Do Not Help

Electricity has a published state benchmark — the EIA reports all-sector average retail prices by state, with a 12.94 cents/kWh U.S. figure for 2024.

Water and sewer do not. They are set by the serving utility, and two stores ten miles apart can face different rate structures, different meter charges, different volumetric blocks, and different sewer calculations. Many utilities bill sewer as a multiple of metered water, which frequently makes sewer the largest single utility line in a laundromat.

There is no substitute for pulling the actual rate schedule for the specific address.

Can Efficiency Move It?

Partly, and less automatically than equipment marketing implies. ENERGY STAR reports that certified commercial washers are on average 9% more energy efficient and use about 45% less water than standard models — applicable to qualifying models, and to be modeled from a store's own cycle volume and tariffs rather than applied as a blanket percentage.

The order that produces results: find leaks, fix the water heater, check the softener, and only then consider equipment. The first three are cheap; the fourth is a capital decision that usually belongs to whoever will own the store for the next decade.

What Should You Do If Yours Is Higher?

Diagnose before pricing it, because three very different causes produce the same percentage.

Waste is an opportunity. A leak, a running toilet, a failed inlet valve, a machine cycling without a customer, or factory-default fill settings nobody changed. Cheap to fix and the saving is permanent. A store with a high ratio caused by waste is priced on suppressed earnings.

Inefficient equipment is a priced problem. An older fleet genuinely uses more per cycle. Fixing it costs a retool — a real capital programme with a real number. Neither a bargain nor a disaster: a deduction.

A high local rate structure is permanent. If the utility simply charges more, or bills sewer as an aggressive multiple of metered water, no operating skill changes it. This is a genuine discount.

The order of investigation follows, and it is cheap. Check for waste first by reading the meter with the store closed and everything off — any movement is a leak. Then compare consumption per cycle against what the installed machines should use. Only when both are eliminated is the rate structure the explanation.

Why Does the Trajectory Matter More Than the Level?

Because you are buying future earnings, not last year's.

Two stores with identical ratios today are different assets if one sits in a jurisdiction with a history of steady increases. Because rent and much of the utility base are fixed, a few points of margin lost to rate rises flows straight to the bottom line and then gets multiplied at exit.

The information is public and nearly free. Rate cases are filed and decided publicly, utilities publish schedules and revision histories, and a phone call establishes whether an increase has been approved but not yet implemented — a known future cost that appears nowhere in the store's historical bills.

Why Does This Ratio Move at Exit?

Because it feeds the earnings, and earnings get multiplied.

A store materially above the surveyed median carries lower earnings for that reason alone, and at a multiple the effect on price is several times the annual difference. That is what makes the diagnosis worth doing before marketing rather than during a buyer's diligence.

It also affects the multiple itself, not just the earnings. A buyer who cannot tell whether a high ratio is waste, machines or the local rate structure prices the uncertainty conservatively. A seller who can show the diagnosis — here is the meter test, here is the consumption per cycle against what these machines should use, here is the utility's rate history — has converted an open question into a known quantity.

The cheapest version of that evidence is a monthly series of cost per cycle. It costs nothing to keep and it demonstrates management rather than asserting it.

What Should You Do Next?

Pull 24-36 months of original bills, compute the ratio yourself against aligned revenue periods, and if it is above 25%, work the six causes in order. If you are buying, ask for the bills in your first document request — they answer a cost question and a revenue question at the same time.

The Next Step

This page is general information about laundromat transactions, not legal, tax, or investment advice, and not a guarantee of sale price, timing, or financing approval. Verify current rules with your own CPA, attorney, lender, and the relevant state or municipal agency before acting.