A Laundromat Valuation Worked Example, Line by Line
This laundromat valuation example runs a single store from tax return to indicated value: normalize to SDE, place the multiple on seven factors, subtract the discounted replacement program, and cross-check four ways. Then it changes one lease clause and shows the value fall by six figures on identical cash flow.
Key takeaways
- Normalized SDE of $132,000 from $44,000 of reported net income — the add-backs are most of the number.
- A 4.0x multiple is justified by four of seven factors scoring at the top, inside the 2.72x-4.50x range.
- The capex deduction is $54,392, the present value of a real replacement program, not a percentage.
- Change one lease clause and the indicated value falls from $473,608 to $341,608 — $132,000 on identical cash flow.
- Four cross-checks agree, which is what makes the number defensible rather than merely calculated.
The Store
Illustrative throughout. Every figure is an assumption.
| Attribute | Detail |
|---|---|
| Size | 2,800 square feet |
| Machines | 34 washers (12 × 20 lb, 16 × 40 lb, 6 × 60 lb), 28 dryer pockets |
| Payment | Card system installed 4 years ago, coin retained on 8 machines |
| Staffing | Unattended, part-time cleaner 12 hours/week |
| Services | Vend plus drop-off wash-dry-fold; no delivery |
| Lease | 6 years base remaining, one 5-year option the tenant controls |
| Rent | $4,850/month plus $780 CAM |
| Revenue | $312,000 ($268,000 vend, $44,000 WDF) |
Step 1: Normalize the Earnings
Starting from the filed federal return.
| Line | Amount | Source document |
|---|---|---|
| Gross revenue | $312,000 | Return |
| Cost of goods and supplies | ($11,000) | Return |
| Rent, CAM, insurance | ($58,000) | Lease and return |
| Utilities | ($64,000) | Original bills |
| Payroll (cleaner) | ($22,000) | Payroll register |
| Repairs and maintenance | ($17,000) | Return — recurring, not an add-back |
| Card fees, insurance, other | ($19,000) | Return |
| Owner compensation | ($42,000) | Payroll register |
| Depreciation | ($26,000) | Depreciation schedule |
| Interest | ($9,000) | Loan statements |
| Net income per the return | $44,000 | |
| Add back: owner compensation and payroll taxes | +$46,000 | Payroll register, W-2 |
| Add back: depreciation | +$26,000 | Schedule |
| Add back: interest | +$9,000 | Loan statements |
| Add back: personal vehicle, 70% personal | +$7,000 | Mileage log, registration |
| Normalized SDE | $132,000 |
Note what is not added back: the $17,000 of repairs, because a mechanical business incurs them every year, and the $22,000 of cleaner payroll, because a buyer will pay someone to do that work.
Utilities at $64,000 are 20.5% of revenue — essentially at the surveyed median of 20% (Source: CLA 2024 Laundry Industry Survey). Rent and CAM at $58,000 are 18.6%, against a surveyed median of 18%. Both are unremarkable, which is itself useful information.
Step 2: Place the Multiple
| Factor | This store | Score |
|---|---|---|
| Controllable lease term | 11 years (6 base + 5 tenant-controlled option) | Top |
| Revenue evidence | Returns, deposits, card settlements, machine exports all agree | Top |
| Equipment remaining life | Documented serials; partial replacement due year 4 | Middle |
| Utility cost share | 20.5%, at the median | Middle |
| Owner dependence | Unattended; owner does collections and oversight only | Top |
| Service revenue mix | WDF is 14% of revenue, diversified across walk-in customers | Middle |
| Competition | Stable trade area, no new capacity known | Top |
Four factors at the top, three in the middle, none at the bottom. Against a 3.50x median and a 4.50x upper quartile, 4.0x is defensible — above median, below the top quartile, with a reason for each.
$132,000 × 4.0 = $528,000 indicated value before capex.
Step 3: Subtract the Capital Program
The equipment schedule and technician inspection identify a partial replacement due in year four: 12 of the 20 lb and 40 lb washers, which are approaching the end of their service life on bearing condition and drain performance.
Installed distributor quote for that program: $74,000, covering equipment, freight, rigging, demolition and disposal, pads, plumbing and drains, electrical, permits, payment hardware, and two days of partial downtime.
Discounted at 8% to year four: $74,000 ÷ 1.08⁴ = $54,392.
| Line | Amount |
|---|---|
| Indicated value before capex | $528,000 |
| Less: present value of the year-4 program | ($54,392) |
| Indicated value | $473,608 |
For scale, the CLA's valuation discussion frames retools on a 15-20 year horizon and notes they can exceed $200,000. This is a partial program on a fleet that is not yet due for a full retool, which is why it is $74,000 rather than a six-figure number.
Step 4: Cross-Check Four Ways
| Test | Result | Verdict |
|---|---|---|
| Implied revenue multiple | $473,608 ÷ $312,000 = 1.52x | Inside the 0.93x-1.64x quartile range |
| Revenue per square foot | $312,000 ÷ 2,800 = $111 | Near the $120 surveyed median; slightly below |
| Physical ceiling | 34 washers × avg $5.60 × 3.1 observed turns × 365 = $215,000 vend capacity... | See below |
| Replacement cost plus lease-up | Full buildout would exceed this price, plus 12-18 months of lease-up risk | Consistent |
The third test needs care and illustrates why it matters. A ceiling of $215,000 against claimed vend revenue of $268,000 is a contradiction — the store cannot have produced $268,000 at 3.1 turns and a $5.60 average vend price.
Resolution: the observed turns figure was taken on two weekday visits. Re-observation across a Saturday and a first-of-month period puts turns nearer 3.9, giving a ceiling of about $271,000. Claimed vend revenue of $268,000 sits just under it, at 99% utilization of the recalculated ceiling — which is high, and worth one more round of observation before relying on it.
That is the cross-check doing its job: not producing a number, but producing a question that had to be answered before the valuation could be trusted.
Step 5: Change One Clause
Now suppose the five-year option belongs to the landlord rather than the tenant.
| Original | Variant | |
|---|---|---|
| Controllable lease term | 11 years | 6 years |
| Financed buyers available | Yes | Largely no |
| Lease factor score | Top | Bottom |
| Selected multiple | 4.0x | 3.0x |
| Indicated value before capex | $528,000 | $396,000 |
| Less capex, discounted | ($54,392) | ($54,392) |
| Indicated value | $473,608 | $341,608 |
$132,000 of value, from one clause. Same machines, same customers, same cash flow, same utility bills.
That is the single most important thing on this page, and it is why the lease gets read in week one of any engagement on either side of a transaction.
Step 6: How a Lender Would See It
| Line | Amount |
|---|---|
| Normalized SDE | $132,000 |
| Less: market-rate salary for whoever runs the store | ($48,000) |
| Cash flow available for debt service | $84,000 |
| Annual debt service on a $420,000 loan, 10 years at 10.5% | ($68,100) |
| DSCR | 1.23 |
Just under the 1.25 threshold many lenders apply. The buyer's realistic responses: a larger equity injection reducing the loan, a longer term if any portion qualifies, or a lower purchase price.
Note that this is computed with every add-back documented. Strike one unsupported $8,000 add-back and coverage falls to 1.11, which most lenders decline. That is the practical reason the documentation discipline on add-backs matters more than the multiple argument.
What Each Side Does With This
The seller. Arrives at market with the normalization already documented, the equipment program already quoted, and the lease option already confirmed as tenant-controlled. That store attracts offers near the top of its justified range, because a buyer has nothing left to discover and therefore nothing to discount for uncertainty.
The buyer. Runs the same analysis independently, from original documents rather than a seller's summary, and treats every disagreement as a question rather than an accusation. On this store the productive questions are: can the observed turns figure be confirmed across a full week; is the year-four equipment program complete or does the technician see more; and has the tenant-controlled option's notice deadline been diarized.
Both. Reach the same number, or find the specific fact they disagree about. That is what a defensible valuation produces — not agreement, but a small and nameable set of open items.
Where This Store Could Go
| Change | Effect on the multiple | Effect on value |
|---|---|---|
| Extend to 16 controllable lease years | 4.0x to 4.3x | +$39,600 |
| Push utilities from 20.5% to 18% of revenue | 4.0x to 4.2x, and SDE rises ~$7,800 | +$60,000 |
| Add a fifth independent revenue source | 4.0x to 4.1x | +$13,200 |
| Complete the year-4 program early, at seller cost | Removes the deduction, but costs $74,000 | Roughly neutral |
| Raise the asking price with no other change | None | None |
The last two rows are the ones sellers most often reach for and the two that do least. The first three cost almost nothing and take between a week and two quarters.
Summary
Normalize from the return with a document behind every add-back. Place the multiple on seven factors inside the 2.72x-4.50x range. Subtract the discounted installed cost of the real replacement program. Cross-check four ways and take the contradictions seriously. Then read the lease, because one clause in this example was worth $132,000 — more than any other single item in the entire analysis.
The Next Step
Frequently Asked Questions
Are these figures real?
The store is illustrative and every figure in it is an assumption, chosen to be plausible rather than to represent any actual business. The market data the example is anchored to is real and sourced: the 3.50x median and 2.72x-4.50x quartile range come from 855 laundromat sales reported to BizBuySell for 2021-2025.
Why does the value change so much when one lease clause changes?
Because the clause changes who can bid. With eleven controllable years, SBA-financed buyers can fund a ten-year loan. With six, they cannot, and the pool narrows to cash purchasers who price for the risk of losing the location. The multiple falls because demand falls, not because the store earns less.
Should I use a different discount rate on the capex?
Eight percent is a reasonable planning rate for discounting a near-term replacement program. What matters far more than the rate is whether the program itself is real: an installed distributor quote covering site work, permits, and downtime, rather than a machine sticker price.
How would a lender see this store?
They would recompute SDE after striking any add-back without a source document, deduct a market-rate salary for whoever runs the store, and divide the remainder by annual debt service. On this example that produces a coverage ratio comfortably above the 1.25 many lenders require — but only because every add-back is documented.
What would make this store worth more?
Longer controllable lease term, a fifth independent revenue source, and pushing the utility share below the 20% surveyed median. Those three would support the upper quartile. Cosmetic work and a higher asking price would not.
Sources
- BizBuySell, Laundromat and Coin Laundry Valuation Benchmarks, 2021-2025 closed sales — https://www.bizbuysell.com/learning-center/valuation-benchmarks/laundromats-coin-laundry/
- Coin Laundry Association, 2024 Laundry Industry Survey — https://member.laundryassociation.org/hubfs/IndustrySurvey24.pdf
- Coin Laundry Association, How Much Is Your Laundromat Worth? — https://laundryassociation.org/fullcycle/2026/08/how-much-is-your-laundromat-worth-2/
- U.S. Small Business Administration, 7(a) Loans — https://www.sba.gov/loans/7a-loans/
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.