CCI News & Blog

Business Investment Opportunities: Laundromats, Fast Casual, Fitness & More

Have you ever asked yourself if Laundromats are a good investment, the cost of operating a retail store, or if “fast casual” is a smart investment for your hard-earned money?

Certainly, starting a business or searching for the right investment business may sound like a daunting task, and it is, but there are plenty of ways to trim your time and avoid reinventing the wheel, while still turning your store into a profitable commercial hub. It’s important to consider all aspects of an investment before jumping in, and which kind of investment will be the right fit for you. In this article, we will highlight several different kinds of investment opportunities along with with the pros and cons of each. Of the many different investment opportunities you may be considering, including fast food (or “fast casual”), fitness, and retail franchises, the laundromat business offers several key advantages that make it ideal for many investors. Low startup costs, a proven business model, and a stable customer base results in high success rates among laundromat owners. For more information on what it takes to get into the laundromat business, download our Laundromat Investment 101 ebook.

Before getting too far into what goes into running a laundromat, let’s take a look at the pros and cons of some other investment options.

 

Franchise Investing

storefront franchiseOne option is to work with an established franchise. In general, franchises are less risky because you are working with a proven model and business. Instead of creating something from scratch you can ride the coattails of another company while still making plenty of profit. The general downside of working with a franchise is the boundaries placed on you. You can’t modify your business (add services, etc.) when working within the confines of a franchise. That’s why this piece will cover both franchises of all types and other business investment opportunities.

Pros

  • Turnkey system: Franchises with this model use a system proven to make profits. If you are unsure about sales or marketing, consider a turnkey franchise.
  • Formal training program: Established franchises succeed by training their franchise owners. Formal training may include lessons on hiring, opening procedures, security, FDA compliance, marketing, equipment procedures, daily operations, and so on.
  • Marketing: Recognized brands benefit from the company’s established successful marketing. Franchises also have prepackaged marketing strategies, like this one.
  • Lower overhead and inventory costs: The franchise network has a high purchasing and negotiation power when it comes to stock and equipment purchases.
  • Easier recruiting: Brand recognition, benefits, and potential promotions are just some of the reasons the unemployed apply for franchise positions over independents.
  • Support staff: When you have a problem, there is always someone to turn to for questions and additional training.

Cons

  • Less freedom: Franchises must sell a certain product or service, conform to company policies and procedures, and share all financial information and decisions. Independent businesses can tailor their business as they see fit.
  • Royalty payments: As the company provides you with services, they expect royalties.
  • Higher start-up cost: Bigger brand names tend to have higher start-up costs.
  • Legal complexities: Franchises require a franchise disclosure document (FDD). Complying with the FDD can be a rather intensive process.
  • Impersonal reputation: Instead of building your own reputation, your reputation depends mostly on brand reputation, whether good or bad.

 

Fast Casual

fastfood franchiseThe year 2015 is not the time to invest in McDonald’s or other traditional fast food franchises. As a result of the recent economy, low-income consumers are avoiding the dollar menu. Chains like Chipotle and Chick-fil-A provide what’s called “fast casual” are cornering the market. This means that consumers are looking for more bang for their buck.

 

Pros

  • Very structured training and marketing
  • Low start up costs

Cons

  • High volume of consumers with widely desired product
  • Very little freedom

Remember that each franchise is unique in its focus so be sure to do plenty of research on what the franchise opportunity looks like. For example, you can open a Chick-fil-A for only 10k but they are specifically looking for operators “seeking a full time, ‘hands-on’ opportunity.” The translation is you won’t be able to step away for weeks or months at a time or operate as a more hands off investor. McDonald’s total investment will be $1,000,708 to $2,335,146, with a franchise fee of $45,000. Subway will be $99,000 and $243,000.

For example, after diving into the pros, cons, costs, and liabilities of a few fast food restaurants like Taco Bell, KFC, or McDonald’s, if you find that the initial investment costs to be paid in cash or liquid assets are too steep, the particular ROI and brand image not healthy enough, and the liabilities too numerous, you may begin to look elsewhere.

The idea of buying a franchise like Chipotle Grill at first seem like the perfect fast casual investment alternative. They have a solid marketing strategy which includes a green corporate social responsibility efforts, positioning as a healthy-yet-quick restaurant by serving only organic, non-GMO ingredients, and of course, there’s their “Cultivating Thought” campaign, which saw the printing of famous author’s short stories on their cups and to-go bags. But sadly for potential franchisees of the popular Mexican grille, Chipotle retains complete control and corporate ownership of their some 1,700 storefronts and doesn’t look to be franchising new restaurants any time in the near future.

 

Fitness

fitness franchiseThe fitness industry is booming, and unlike other sectors that are in direct conflict with online shopping (think retail or personal services), the vast majority of people still need a place to go to work out. And all these new fancy apps that help people improve their fitness are frequently used within gyms instead of outside of them. 

 

Pros

  • High profit potential
  • Choose franchise or independent
  • Brand recognition

Cons

  • Start up costs can be steep
  • Franchise cost if you want to use a brand name
  • Little chance of remote operation
  • Low business creativity
  • Upfront license fee

Franchises cost more at start up and limit your freedom, but consider Crossfit. The owner has a philosophical view that Crossfit operators should have the freedom to run their gyms how they want to. A famously low franchise fee gets you in the door of Crossfit but you better be a true believer! Also check out Gold’s Gym with a franchise fee of $40,000. Anytime Fitness lists  $78,700 to $371,175. Retro Fitness lists from $1,000,000 to $2,000,000.

 

Retail Stores

cashregister retail franchiseRetail stores can fluctuate significantly with the product market and economy, but they tend to have high levels of marketing strategy support, freedom, and holiday sales bonuses.

 

Pros

  • Holiday sales figures
  • High level of inherited marketing strategies from sales associates
  • Cash transactions
  • Freedom to set the rules of your business
  • Selling merchandise you are passionate about

Cons

  • Occasional low sales figures
  • High start-up costs
  • Time investment is high at start up
  • Few vacations except when traveling for business purposes
  • Difficult customers
  • Bounced checks
  • High level of personal responsibility for marketing and bookkeeping
  • Lost cost of damaged merchandise
  • Higher than average dependence on the quality of your sales staff

For start up costs, Batteries Plus ranges from $208,450 to $385,750. A UPS Store will range from $150,152 to 420,299. Radio Shack lists theirs from $144,875 to $607,351.

 

Services

hands for serviced-based franchise

Pros

  • High level of freedom and flexibility
  • Choosing a service you love
  • Lower start-up costs
  • Customize your service
  • Remoter operation potential
  • Business growth depends on your personal ambition

Cons

  • Subject to seasonal fluctuations
  • Dependent on customer reviews and your reputation
  • Equipment costs and overhead
  • Personal time investment for training employees

The start up for services like 1-800-Got-Junk range from $111,800 to $143,600. Servopro painting service lists $138,550 to $187,200. Supercuts lists $113,750 to $233,600. Cruise Planners lists $2,095 to $21,990.

 

Laundromats

washingmachine in laundromat franchiseLaundromats provide a very unique and attractive investment opportunity. There is little to no name recognition comes with Laundromat franchises. However, this can actually turn out to be both boon and blessing. By working with distributors you can get into a proven business model but without all of the franchise fees associated with other investment opportunities. With a laundromat investment, your profit is yours alone, there’s no monthly fee as with traditional franchises. Laundromats have a proven and stable market and new technology, such as card payment systems for laundry machines. Investors can operate these businesses remotely, even work at home as an absentee owner, or with less time in-store as they have no need to collect coins and can even see each turn of every machine from a smartphone or laptop.

Pros

  • High success rate
  • Impressive ROI
  • Recession resistance
  • All-cash business
  • Low labor costs
  • Tax advantages
  • Stable customer base
  • Lower start up cost than a franchise
  • Small staff
  • Potential to manage remotely
  • Proven business model
  • As an owner, customize your business as you like, such as adding services to maximize profit
  • Built-in customer retention in the Loyalty Card programs

Cons

  • Mature market
  • Equipment costs

Reach new sales goals by implementing a loyalty program.

Encourage your customers to return through loyalty programs and enticing new customers through marketing specials, LaundryCard will help you take your business to the next level.

Learn How

Check out resources for calculating the start-up cost for investing in a Laundromat franchise. Additionally, we’ve compiled a Laundromat Investment 101 ebook which looks at this in greater detail. When you compare all of these options for 2015, laundromats present a great balance of cost and independence. The absence, for the large part, of name-brand franchises enables new owners to compete on a more level playing field while avoiding costly franchise fees. And the addition of a card system to your location gives you the option of remote management—turning a profit while requiring less of your time and physical presence. All of these advantages make laundromats a solid business investment for your future.

Investment