Dry Cleaners Valuation

     
The valuation of dry cleaning businesses depends upon many factors:

1. Type of location (free standing versus shopping center).

2. Wholesale versus retail operation.

3. Inclusion of pick-up routes.

4. Drop store locations, if any.

5. Lease terms.

6. Verifiable income and expenses.

7. Location.

8. Customer mix.


A rule of thumb valuation for a free standing plant with a retail location is a price ranging from 75% to 150% of annual sales.

Customer mix becomes important when considering value of wholesale versus retail customers. Wholesale customer base carries more risk than a diversified retail customer base because the loss of a single wholesale account could be devastating. A wholesale customer base is valued less than a retail operation. 

Routes do not help the valuation as much as a person would normally think because the route salesperson can leave and you could have difficulty retaining the business base. A non-compete agreement for route salespeople is not effective because they are typically not the person or persons selling the business. 

Alterations are a minor consideration and do not add much to the business overall value. 

Age of equipment is important to make sure efficiency is adequate and repairs or maintenance costs are not abnormally high. 

Employee turnover should be reviewed to make sure you are buying a plant with a stable work force and not immediately subjected to staffing issues. 

Stand alone plants have more value than shopping center locations due to the issue of EPA exposure and Mall owners charging higher leases due to exposure. 

Some dry cleaning and/or laundry businesses do not have an in-house plant and operate as "drop stores" only. This type of operation has both advantages and disadvantages. Some advantages are the lower price of typically 35% to 50% of annual sales, ability to get bids from wholesale operations for dry cleaning and laundry services, ability to expand without additional plant equipment, and reduced or eliminated EPA exposure. Disadvantages include lack of control over quality and susceptibility to price increases. 

An ideal situation is typically described as a free standing plant/retail location with two or three drop store satellite locations with favorable lease terms. 

For a buyer the aspect of seller financing is always considered beneficial. 

To access our pricing model for dry cleaners please click on the following link:

Dry Cleaners Pricing Model