Welcome back to Wednesday’s Spotlight. Today, we are looking at Queen City Laundry, a four-store laundromat chain on Cincinnati’s east side. Dave Menz built it from an $85,000 store that was losing money, and the chain expects about $2.38 million in revenue this year.

Dave and Carla Menz bought their first laundromat in 2010 for $85,000. Dave was working full time at a local phone company, and the store was run-down and losing money. They had saved $35,000 over four years and used $20,000 for the down payment. For the remaining amount, they were turned down by 25 lenders before a local credit union approved an SBA loan. 

The purchase also gave them working infrastructure that Menz says would have cost about $400,000 to set up from scratch. That allowed them to start improving an existing store without spending another six months building one. About 11 months after buying the laundromat, it was bringing in $3,000 to $4,000 a month.

Once the first store became profitable, Dave looked for a second he could turn around. He found a closed laundromat within 20 miles and approached the shopping center’s owner, who gave him nine months without rent to renovate it. Dave left his job at his phone company three weeks before closing on a third, and the couple eventually reached four locations on Cincinnati’s east side. The chain now has about 250 machines and roughly 40 employees, with reported annual revenue of about $2.38 million. Menz found three of the stores through his equipment distributor, giving him access to owners who had not publicly listed their businesses.

After reaching four stores, Menz’s first instinct was to keep buying. But each new location would mean another acquisition and another store to staff and manage. Additionally, the stores he already owned had machines capable of handling more work. His three smaller locations each brought in $250,000 to $300,000 a year at roughly a 30% margin, so he focused on increasing their earnings.

His priority was the 80-pound machines he calls monster loaders. Each costs about $16,000 and brings in $200-$250 per day. At $250 every day, one would generate more than $90,000 in annual gross revenue. That is about nine weeks of revenue to equal the purchase price, before utilities, labor, rent, and maintenance. 

Menz put those machines to work more often by adding drop-off wash-and-fold, pickup, and delivery alongside self-service laundry. Full service now accounts for about half of the chain’s revenue. He also says the stores make as much money when closed to the public as when open. To handle the added volume, he documented procedures, trained managers, and moved away from 24-hour unattended operation. All four stores now have attendants during set hours, while the full-service business also requires folders and drivers.

Menz says he now works about two hours a week in his businesses and margins have increased to about 40%. That is possible because he trained managers and established procedures across the stores. For business owners, the core question is how much more their current locations can earn before they open another. If there is room to grow, they can add services, use existing equipment more often, and build the team needed to handle the extra work.

Peachtree City liquor store asks $350K on $1.8M revenue

Asking price: $350,000
Annual revenue: $1,800,000
Cash flow: $540,000
EBITDA: $144,000
Asking multiple: 2.4x EBITDA or 0.65x cash flow
Rent: $18,666 a month
Seller support: 30 days

The 20-year-old store operates from a leased 6,340-square-foot space in Peachtree City, Georgia. It has two full-time employees and one part-time employee. Annual rent is about $224,000, or roughly 12% of revenue. Fixtures and equipment are included in goodwill. About $500,000 of inventory is not included in the asking price, so a buyer would pay for it in addition to the $350,000. The owner is relocating and says the store is run absentee.

Translation, if you own one: the seller describes the store as absentee-run, but a buyer needs to know who handles purchasing, staffing, and cash when the owner is away. The buyer must also fund the inventory and obtain the right to remain in the leased space. Documenting those responsibilities, reconciling the stock, and confirming that the lease can transfer would make the business easier to value and finance.

Source: Liquor store for sale in Peachtree City

Letting go of a friend who helped start the business can be difficult. On Friday, we look at the cost of slowly reducing that person’s role and how to handle the exit conversation, severance, and communication with the rest of the team.