Water Meter Analysis

Water Meter Analysis is the one method people in the Coin Laundry industry agree as a way to asses revenue. The results are not always precise but if done correctly one can verify income claims by going over the water bills. The idea behind this concept is simple. Washer machines at a Laundromat are the main drivers for revenue and each machine uses a certain amount of water every time it is used. Therefore, checking the volume of water used during a certain period of time can tell you how many times the washer machines have been used and thus one can come up with a revenue estimate.

Problems with Water Analysis

Sometimes water meters reading are wrong due to several reasons and the buyer should always keep this in mind. Water meters are sometimes not reliable if they are not working properly. Sometimes water meant for laundry operations are diverted or used by other tenants, and sometimes unscrupulous owners will leave the water running few months prior to the sale in order to give the reading a higher usage since he knows this will be looked at. The best way to inspect an operation using water analysis is with a professional third party consultant using the IRS method for auditing Laundromats. Seek a consultant to do this analysis and compare it to what brokers or sellers show, sometimes brokers will collide with sellers when it comes to this analysis.

How to Calculate Water Usage

Water companies sell water in HCF or Hundred Cubic Feet units. One cubic foot of water is equivalent to 7.48 gallons of water. Therefore, 748 gallons of water per HCF (Hundred Cubic Feet). There are some water companies that will write the actual gallons used as opposed to HCF. To analyse total usage, one gets the total number of HCF for 30 days and multiples that number by 748. We then divide the total number of gallons of water by 30, which would give us the total number of gallons of water used per day. So for instance, if top loaders at a Laundromat get used 100 times a day, one multiplies the number of gallons a top loader would use times the number of cycles (100) and come up with total usage. One could then match these numbers and see if they are congruent.

Dryer Income Estimates

Dryer income is usually 25-50% of washer revenue. There is no exact formula for this since habits vary depending on location or circumstances. But as a general rule of thumb there should be 20 minutes of dry time for every wash cycle.

Sources: Laundromat123.com