Key Terms in Laundromat Listings
Seller says "$450K asking, SDE of $120K, 3.2 turns/day." Is that a steal or a trap?
Every laundromat listing is packed with financial jargon designed to make the deal look good. But unless you understand exactly what each term means — and how sellers manipulate them — you're flying blind.
This guide breaks down every key term you'll encounter, with real examples and the questions you should ask about each one.
Revenue Terms
Gross Revenue
What it means: Total money collected from all sources before any expenses. Includes coin, card, wash-and-fold, vending, and any other income.
⚠️ Watch out: Sellers often quote gross revenue prominently because it's the biggest number. A store grossing $400K might only net $100K after expenses. Always ask for the expense breakdown.
Net Revenue (Effective Gross Income)
What it means: Gross revenue minus credit card processing fees, sales tax (where applicable), and any refunds. This is the actual money that hits the bank account.
Typical difference: Net is 3-8% lower than gross, depending on card payment mix.
Revenue Per Square Foot
What it means: Annual gross revenue divided by total rentable square feet.
Industry Benchmarks
- • Below $150/sq ft: Underperforming — potential value-add opportunity
- • $150-$250/sq ft: Average performance
- • $250-$400/sq ft: Strong — well-run store in a good market
- • Above $400/sq ft: Exceptional — verify carefully, may include WDF
Profitability Terms
SDE (Seller's Discretionary Earnings)
What it means: Net profit after all operating expenses, plus the owner's salary and personal benefits added back. This represents the total financial benefit to a single owner-operator.
SDE = Net Profit + Owner Salary + Owner Benefits + Non-recurring Expenses + Depreciation + Interest
Why it matters: SDE is the standard basis for valuing small businesses. When a listing says "3x multiple," they mean 3× SDE.
⚠️ Common manipulation: Sellers inflate SDE by adding back "unnecessary" expenses. An employee they "don't really need" or advertising they "could eliminate." Verify every add-back with documentation.
NOI (Net Operating Income)
What it means: Revenue minus all operating expenses (rent, utilities, supplies, maintenance, insurance, etc.) but before debt service, taxes, and depreciation.
NOI = Gross Revenue - Operating Expenses
Operating expenses typically include: rent, utilities, supplies, maintenance, insurance, property management, cleaning, card processing fees
Key difference from SDE: NOI does NOT add back owner salary. If the owner works 20 hours/week, that labor cost is excluded from NOI but included in SDE.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
What it means: Similar to NOI but more commonly used for larger businesses. For most single-location laundromats, SDE is the standard — EBITDA is more relevant for multi-store portfolios.
Operating Expense Ratio
What it means: Total operating expenses as a percentage of gross revenue.
Typical Ranges
- • Unattended coin-op: 55-70% expense ratio (30-45% margins)
- • Attended full-service: 65-80% expense ratio (20-35% margins)
- • WDF-heavy stores: 70-85% expense ratio (labor-intensive)
Valuation Terms
Asking Price Multiple (Price ÷ SDE)
What it means: How many years of current earnings you're paying for the business. A "3x multiple" means the price is 3× annual SDE.
| Multiple | Interpretation | Typical Scenario |
|---|---|---|
| 1.5-2.5x | Below market — potential opportunity | Tired owner, aging equipment, distressed sale |
| 2.5-3.5x | Fair market value | Average store, decent equipment, good lease |
| 3.5-4.5x | Above market — needs justification | New equipment, premium location, strong growth |
| 4.5x+ | Overpriced unless exceptional | Real estate included, multi-location, or unrealistic |
Cap Rate (Capitalization Rate)
What it means: NOI divided by the purchase price, expressed as a percentage. Essentially the inverse of the price-to-NOI multiple.
Cap Rate = NOI ÷ Purchase Price × 100
Example: $90,000 NOI ÷ $350,000 price = 25.7% cap rate
Laundromat cap rates typically range from 15-30%, much higher than real estate (4-8%) because of business risk and active management requirements.
Cash-on-Cash Return
What it means: Annual pre-tax cash flow divided by your total cash invested (down payment + closing costs + initial improvements).
Cash-on-Cash = Annual Cash Flow ÷ Total Cash Invested × 100
Example: $60,000 cash flow ÷ $120,000 invested = 50% cash-on-cash return
Operational Terms
Turns Per Day
What it means: How many times each machine is used per day on average. The most important operational metric in the industry.
Industry Benchmarks
- • Below 3 turns: Underperforming — too many machines or poor location
- • 3-5 turns: Average for most markets
- • 5-7 turns: Strong performance — well-located store
- • 7+ turns: Exceptional — may need more machines or higher prices
Vend Price
What it means: The price charged per wash or dry cycle. Varies by machine size and market.
2026 averages: $3.50-$5.50 for standard washers, $1.75-$3.00 per dryer cycle (varies by time increments).
Washer-to-Dryer Ratio
What it means: The ratio of washer capacity to dryer capacity. Industry best practice is approximately 1:1.5 to 1:2 (dryer capacity should exceed washer capacity because drying takes longer).
Lease Terms
Base Rent
What it means: The fixed monthly rent payment. For laundromats, rent should ideally be 20-25% of gross revenue or less.
Rent Escalation
What it means: How much rent increases each year. Fixed increases (3%/year) are better than CPI-linked escalations, which can spike unpredictably.
Assignment Clause
What it means: Whether the lease can be transferred to a new owner when the business is sold. Without an assignable lease, the business is essentially worthless.
For a complete lease analysis, see our Lease Review Guide.
Red Flags in Listing Language
| What They Say | What They Mean |
|---|---|
| "Tremendous upside potential" | Current numbers don't justify the price |
| "Absentee owner" | May be well-run, but verify with numbers — not assumptions |
| "Recently updated equipment" | Could mean 1 machine or all 40. Ask for specifics. |
| "Revenue based on owner's estimate" | Unverified. Demand documentation. |
| "Includes real estate" | Separating business value from property value. Get independent appraisals. |
Run the Numbers Yourself
Now that you understand the terms, put them to work:
📊 Analysis Tools
- • Deal Analyzer — Input listing terms and get instant grading
- • ROI Calculator — Calculate true returns
- • Valuation Models — Compare against market data
📋 Due Diligence
- • Revenue Verification Guide
- • Full Glossary — Every industry term defined