ROI (Return on Investment)
ROI, or return on investment, is a general measure of gain relative to cost. In laundromat purchases it is used loosely, which is why buyers should insist on knowing exactly which cash flow and which investment base a quoted ROI figure uses.
Why ROI Matters in a Laundromat Sale
Loosely defined ROI is where most laundromat marketing overstates returns. 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) — it is not a return to a buyer. A defensible figure states what was included: cash-on-cash after debt service and after valuing the owner's labor, or IRR including the exit.
Example
A listing advertises '30% ROI.' Investigation shows it is operating profit divided by purchase price, with no debt service, no owner salary, and no replacement reserve. Recomputed as cash-on-cash after all three, the figure is roughly 14%.
What to Check
- Ask exactly which cash flow and which investment base any quoted figure uses.
- Recompute it after debt service, owner labor, tax, and a replacement reserve.
- Distrust any advertised return that does not state its assumptions.
Where This Comes Up
- Laundromat ROI and Cash-on-Cash Return: Doing the Math Correctly
- Cash-on-Cash Return
- Are Laundromats Profitable?
- Laundromat Valuation: How Stores Are Priced and Why
- Sell My Laundromat: The Confidential Sale Process, Start to Close
Related Terms
- 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
- 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
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.