Normalizing Utility Expenses When Evaluating a Laundromat
Last reviewed 2026-09-12 by Jaken Energy editorial desk. Next review scheduled 2027-03-12.
Direct answer
Normalize laundromat utility expenses by adjusting trailing bills for weather, partial billing months, estimated reads, one-time credits, and rate-class changes before applying them to a pro forma. Coin Laundry Association guidance supports using one to three years of history, but raw averages overstate or understate run-rate if you skip these corrections.
Compare same-calendar-month usage year over year before averaging dollars.
Remove or flag estimated reads and rebill months that distort therms and kWh.
Separate supply from delivery so an expiring supplier rate does not look like permanent savings.
Adjust for seller actions during marketing—HVAC setbacks, reduced hours, or deferred maintenance.
Weather-normalize gas therms when winter space heating shares the meter with dryers.
Document every adjustment in a diligence memo tied to bill PDFs.
Why raw utility averages mislead buyers
A trailing twelve-month total hides seasonality, tariff changes, and seller behavior. Laundromats run long hours—CLA member surveys report a mean near 16.6 operating hours per day—so HVAC and water-temperature swings move bills even when coin volume is flat.
Utilities often represent roughly 20–25% of revenue nationally per CLA materials, so a few percentage points of normalization error flows straight into valuation multiples.
Adjustments every buyer should consider
Work through these categories bill by bill.
Partial months: scale kWh and therms to 30-day equivalents before comparing.
Estimated reads: replace with actual reads when the utility rebills.
Rate riders and supply price changes: isolate tariff effects from usage effects.
One-time credits or late fees: exclude from run-rate.
Equipment changes during the history window: note step-changes in usage.
Dual-fuel normalization
Gas dryers drive therms while electric bills carry washers, water heating, lighting, and HVAC. DOE data place water heating at about half of commercial laundry primary energy—normalize each fuel on its own axis.
Do not merge fuels into a single dollars-per-revenue ratio until each account is clean.
Building a defensible run-rate line
After adjustments, use a median or trimmed mean of normalized monthly costs rather than a single best month. Tie the final utility line in the pro forma to assumptions a new owner can control—hours, supplier contract status, and equipment plan.
Q & A
FAQ
Should I weather-normalize gas bills for a laundromat acquisition?
When the gas meter serves both dryers and space heating, cold winters inflate therms unrelated to laundry volume. Compare degree-day-adjusted therms or same-month prior-year usage before blaming the machines. Stores in mild climates may need less adjustment.
How do partial billing months affect utility normalization?
Utilities bill on cycle dates, not calendar months. A 19-day period looks cheaper than a 33-day period until you scale usage and fixed charges to a common day count. Always note billing days on your normalization worksheet.
Can I use seller utility spreadsheets if they show normalized totals?
Only if each adjustment links to underlying PDF bills. Spreadsheets without bill-level backup are not auditable and often omit demand charges, riders, and supply-versus-delivery splits.
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