State-of-the-art laundromats face fee-filled challenge in Florida

cschelle@bradenton.comJune 2, 2014 

MANATEE -- Nobody wants to be at the laundromat longer than necessary but one company hopes to change the weekly chore.

Instead of dreary, humid laundromats, Speed Queen and its partners are offering air conditioning, automatic doors, bright lighting, WiFi, and the acceptance of credit cards at its 30-40 washing machines. Some even have drop-off service.

"It's no fun doing laundry," said Jim Rogers, who oversees Speed Queen's Florida distributor Statewide Laundry Equipment. "We can take some of the misery out of it, but we can never make it fun."

Speed Queen, through its distributors, are trying to build state-of-the-art laundromats in Florida but investors and distributors are running into a guessing game of impact and utility fees and little to no relief for energy efficient washers unlike in other metropolitan areas around the country.

The 106-year-old company sells through distributors and one here, Statewide Laundry Equipment, operates out of five offices in Florida -- Tampa, Hialeah, Fort Lauderdale, Orlando and Gulf Breeze -- that sell the Speed Queen products and operates laundromats. The company plans to add 100 laundromats this year across the country and wants to invest more in Florida, including the Bradenton area, said Tom Fleck, senior regional sales manager during the International Council of Shopping Centers Global Retail Real Estate Convention in Las Vegas.

"We feel that our distribution is trying to raise the level of the average laundromat to make it a more pleasant experience," Fleck said.

Distributors such as Rogers work with investors who have the money to start a laundromat and scout locations for a new location, which can be a $700,000 to $1 million investment. The coin laundry industry is a $5 billion business in the United States with more than 35,000 coin laundries in the country, according to the Coin Laundry Association.

"Florida is one of the largest laundromat markets in the country," thanks to its high renter population, said Brian Wallace, president and CEO of the Coin Laundry Association.

Impact and utility fees

The real challenge appears to be finding the right town or county to build a new state-of-the-art laundromat typically made up of 30 to 40 washing machines plus dryers. Impact fees vary from town to town, county by county, causing a ton of homework and some lobbying.

"One of the things that can haunt us in Florida more than other places is impact fees," Rogers said.

Certain areas even charge utility hookups per machine.

In Pinellas County, his laundromats wouldn't face an impact fee but in Tampa costs jump to $27,000 with impact fees, which is workable. But in unincorporated Hillsborough County the fees jump to $150,000 an average of about $5,000 per washing machine. St. Augustine would charge more than $8,000 per machine, Rogers said.

In many places, including Manatee County, if the laundromat is built in an existing tenant space the impact fee is waived while sewer/utility fees are charged.

Those fees mean laundromat distributors are more apt to add WiFi and other comforts to existing smaller laundromats instead of committing to the standalone mega-laundromats, Wallace said.

A lawyer from California wanted to open a laundromat in Cape Coral, which had a shortage of laundromats because most opted for Fort Myers, Rogers explained. The impact and utility fees would have been $150,000 for a new standalone laundromat.

"People aren't going to come from out of state or a different county to Cape Coral to do their laundry," Rogers said. "They're going to leave the old store that guzzles water and come here to Cape Coral and do some laundry and use half the water."

With that reasoning, Rogers and his team were able to convince Cape Coral officials to rework the fees to about $47,000 instead.

"Cape Coral was always the kiss of death," Rogers said. "There were always plenty of laundromats in Fort Myers but public officials couldn't figure out why."

He would consider coming to Manatee County and Bradenton if an investor would be on board and if the impact fees are right.

A new standalone laundromat in unincorporated Manatee would cost between $15,592 to $46,776 or a 2,000- to 6,000-square-foot space. Manatee County then bases the water/sewer fees on a meter size to determine how much water would be used, said Amy Pilson, public affairs liaison for the county. While a new laundromat might have 30 or so high-efficiency machines, it might end up costing just as much as a smaller laundromat that lacks high efficient machines, she said.

In Bradenton city limits, the impact fees for a standalone laundromat would range from $10,220 to $30,660 for the same size space. Water and sewer fees are also calculated on water usage. For instance, a 2-inch water meter would be $1,250 for tapping and service for a single machine, plus various other fees.

The water meter method is preferable and can save tens of thousands of dollars in fees, Rogers said. On the other end, Rogers is trying to get sewer savings as the water from the machines go to the dryer vent and not through the sewer lines, he added.

The good news is prices can be subject to negotiation, said Claude Tankersley, director of Bradenton's Department of Public Works and Utilities.

"We often can work with new businesses if usage would be less," he said.

Staff would walk through the submittal with the applicant and calculate the fees, he added.


Just like the parent company, laundromat operators can live hundreds to thousands of miles away. Electronic tracking systems open the possibility for an operator to run multiple locations with a minimal time commitment.

Fleck spoke of the same Cape Coral owner Rogers helped, showing how a long-distance relationship can work in the laundry business.

"On his desktop, he can watch his store with his cameras, he knows exactly what the deposit should be and gets a report every day of what the machines did and is alerted if there is a power failure," Fleck said.

Laundromats are considered a safe, recession-proof investment, probably explaining why the private equity arm of the Ontario Teachers' Pension Plan acquired an 82 percent stake in 2005. Teachers' Pension Plan also once owned the parent company that oversaw the Toronto Maple Leafs, Toronto Raptors and Toronto FC sports franchises -- that's a lot of sweaty clothes.

"The industry has responded to a consumer that is demanding more and the smaller mom-and-pop stores are going out of business and the larger, more sophisticated stores are taking over nationwide," said Dan Bowe, national sales manager for Speed Queen, a company aiming to reinvent the laundromat industry.

Speed Queen, based in Ripon, Wis., has been around since 1908 and is a part of Alliance Laundry Systems, which manufactures and markets commercial laundry equipment.

The business model for Speed Queen is more like a start-up business package than a franchise to allow it to be more of an investment than "buying a job," Bowe said. The cash-on-cash return on investment averages to be 25 to 30 percent, he added.

"It's a much more sophisticated investor that we're seeing today," he said.

The company typically operates in low- to moderate-income areas that has 35 percent or more of its residents as renters. It likes to open near places like Fiesta and Bravo markets, Dollar General, Dollar Tree, 7-Eleven and O'Reilly Auto Parts to create cross-business. Speed Queen managers believe that a laundromat can keep a shopping center humming.

"We're all good co-tenants for each other, but we're a very good co-tenant because we bring people in for 90 minutes," Bowe said. "We help create the destination for the center."

It's that combination of being beside places of convenience and folks having time to kill that makes a laundromat a good neighbor in a shopping center, Fleck said.

"They might go over to a dollar store and do some shopping, get some nails done, grab some food and do some grocery shopping," Fleck said.

Plus, no matter how bad the economy gets, there are always dirty clothes.

"Even in a recession, people still have to do laundry," Bowe said. "They may wear a pair of jeans one more time, but you still have to do laundry. If it comes down to people not doing laundry anymore, we're all in big trouble."

Charles Schelle, Herald business reporter, can be reached at 941-745-7095. Follow him on Twitter @ImYourChuck

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