Cash-on-Cash Return
Cash-on-cash return is annual pre-tax cash flow after debt service divided by the total cash a buyer actually invested, including down payment, closing costs, working capital, and any immediate capital spending. It measures the return on money at risk.
Why Does Cash-on-Cash Return Matter in a Laundromat Sale?
Cash-on-cash is the honest answer to 'what will I make,' and it is far lower than the headline profit figures quoted around this industry. The CLA's surveyed median operating profit of 27% is before tax, before debt service, before owner compensation, and before any replacement reserve (Source: CLA 2024 Laundry Industry Survey). Only after all four are subtracted does a real return appear.
What Does It Look Like in Practice?
Total cash in: $62,000 injection plus $19,000 closing costs plus $25,000 working capital equals $106,000. Cash flow after debt service and a market owner's salary is $21,000. Cash-on-cash is 19.8% — before tax and before setting aside anything for the machines.
What Should You Check?
- Count all cash in: injection, closing costs, working capital, and immediate capex.
- Use cash flow after debt service and after valuing your own labor.
- Set aside a replacement reserve before calling anything a return.
Where Does This Come Up?
- Laundromat ROI and Cash-on-Cash Return: Doing the Math Correctly
- Is Owning a Laundromat Passive Income?
- Payback Period
- Laundromat Valuation: How Stores Are Priced and Why
Related Terms
- ROI (Return on Investment) — ROI, or return on investment
- IRR (Internal Rate of Return) — IRR, or internal rate of return
- Payback Period — Payback period is the time required for cumulative cash flow to return the cash a buyer invested
- DSCR (Debt Service Coverage Ratio) — DSCR, or debt service coverage ratio
See the full laundromat glossary for all 78 terms.
The Next Step
Sources
- Coin Laundry Association, 2024 Laundry Industry Survey — https://member.laundryassociation.org/hubfs/IndustrySurvey24.pdf
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.