How Do Laundromats Make Money With Nobody Inside?

How does a laundromat make money at 10 at night with nobody in it? Not whether it does, how? There's no one at the counter. There is no counter. And whoever owns it has signed a lease on that empty room measured in decades. The Internal Revenue Service has written down how to check whether a laundromat is telling the truth about its income. It's a real document, used by real examiners, and the most useful instruction in it has almost nothing to do with counting money. The usual explanation for all this is volume. Nobody's inside, sure, but the machines run all day and coins add up. And underneath that sits an assumption most of us make without ever examining it. That a laundromat is a vending machine nobody has to restock. Nothing goes in. Coins come out. Whatever the machines take is what the owner keeps. There is stock. It's just plumbed in. Say a dollar goes into a machine. The Coin Laundry Association surveys its own members on where that dollar ends up and utilities – water, sewer, gas, electricity – come to about 21 cents of every dollar the store takes in. Rent takes a similar bite. And those cents aren't overhead the way lighting is overhead. That's the product, bought before it's sold, the way a cafe buys beans. It just arrives continuously, through a pipe, and the owner doesn't get to order less this month. How much arrives is decided by the customers, which is where the volume story comes apart. Run those machines twice as hard and you don't end up with twice as much left over. You get twice the water, twice the gas to heat it, twice the charge for sending it down the drain. The biggest changeable cost in the building climbs in step with the coins. Because it is the coins, in a different form. And the empty room isn't the trick either. Plenty of these places do have somebody working. The same survey found that in stores that do keep staff, payroll's a cost on the same order as the utility bill. Emptiness is a way of holding one cost down. It isn't the thing making the money. So the money leaves in two main directions, and both of them are rent. One landlord owns the room, the other owns the pipes, and the second one is the stranger of the two, because you never see a bill from them, and neither does the customer. It's baked into the number printed on the front of the machine, the way a hotel bakes hot watt water into the room rate. Except a hotel is also selling you a bed. Which brings us back to that IRS document. When the Sersomus suspects a laundromat's books are wrong, its audit guidance points examiners towards something called a Utility Consumption Analysis. The reasoning is blunt. Every washer model uses a known quantity of water per cycle. A common top-loading machine takes about 24 gallons. So the examiner pulls the water bill and sets aside the water that went to the taps and the restroom. What's left, divided by the gallons per cycle, and multiplied by the price posted on the machine, is an estimate of what the store took. Not from a till. There is no till. From the meter. The guidance is careful here. It calls the result a best estimate, not an answer, and tells examiners not to lean on it while ignoring the owner's books. But that it works at all is the whole point. Buyers run the same arithmetic. When somebody is about to buy one of these stores, the standard check, described in the industry's own trade magazine, is to hold the seller's claimed coin income up against the water and gas bills and see whether the two stories agree. Think about what that means. If a bakery worked this way, you could reconstruct its entire year of sales from its flour deliveries. The laundromat is the version where the flour arrives through a pipe in the wall and leaves through a drain in the floor, and the shop is just the room you stand in while the meter runs. Which is the answer. A laundromat isn't selling a wash. It's buying water, gas, electricity, and sewer capacity at commercial rates, heating most of it, and selling it back to you one cycle at a time, with a steel box wrapped around each one. It is, functionally, one of the smallest utilities in the country. It just happens to have a floor you can stand on, and a television bolted to the ceiling. It didn't begin this way. The Census Bureau dates the first public self-service laundry in the United States to the 18th of April, 1934. Where it stood is honestly disputed. The trade magazine, American Coin Op, reporting the government's account, says some put it in Texas and some argue for Indiana. What isn't disputed is how those first stores ran. They weren't necessarily coin-operated. There was an attendant on duty. Fixed hours. Sometimes you made an appointment because you were renting a machine and rented machines need somebody minding them. What changed was the coin meter. Bolt a meter to the machine and the attendant stops being necessary. The machine takes the money. The machine enforces the deal. The machine ends the transaction. By the late 1940s, the first unattended stores were opening and running around the clock. American Coin Op credits a man called Nelson Pewitt with the first of them in Austin, Texas. So the empty room isn't decay. It's a design decision and it's about 80 years old. Which brings us back to that lease. The Coin Laundry Association says coin laundries typically sign for 10 to 25 years. Nobody commits to that for a shop. You commit to it for what's behind the wall. Ask operators in the trade press what they check first on a new site and they don't start with footfall or parking or signage. They start with whether the building can actually be supplied with enough water, sewer, gas and power at a price they can live with. Once a room is connected to all four, it's a laundromat for the next quarter of a century. Whatever the street outside turns into around it. So here's the lens. Stop looking at the machines. Look at the meters. And here's my opinion, which you're welcome to throw out. I think we file laundromats under shops and then feel faintly cheated when they behave nothing like shops. There's nothing on a shelf in there. The association describes its own industry as having no inventory and no receivables. So there's nothing being marked up the way a shop marks things up. The stock arrives through a pipe, metered, and what you hand over is closer to a bill than a purchase. Which is why I think the price of a wash gets judged fee, unfairly. People measure it against what a shop charges. It's much nearer to what a utility charges, plus a room to stand in while it works. You can disagree with me on that. The lens still holds. Because once you've got it, the same shape shows up everywhere. The car wash down the road. The IRS has an audit chapter for that one, too. Self-storage. A locked cube. A monthly rate. Staff optional. The row of chargers at the edge of a supermarket car park. Buy electricity at one price, sell it back at another by the unit, with nobody on site and nothing on a shelf. Different products. Identical business. A floor. A meter. And nobody inside.