Market Analysis – Dry Cleaners in Canada
EBITDA Multiple Based on Comparables in the Targeted Dry Cleaning Market (DealStats)
The average EBITDA multiple for comparable companies is 4.8x.
What is EBITDA?
EBITDA = Earnings before interest on long-term and short-term debt, before taxes, and before depreciation and amortization.
EBITDA Multiple in the Other Services Sector (DealStats)
In the broader professional services industry, the average EBITDA multiple over the last 12 months is 3.6x (Q2 2024).
Competitors and Number of Businesses in Canada and Quebec in 2023 (Ibisworld Inc.)
Market share of the top 3 players in Canada:
Martinizing Dry Cleaning: 0.5%
Certified Restoration Drycleaning Network LLC: 0.2%
Perth’s Drycleaners: 0.1%
Number of establishments in Canada: 2,886 locations generating $1 billion in revenue
Number of establishments in Quebec: 549 locations (19%) generating $200 million in revenue
Montreal: 437
Quebec City: 38
Other: 74
Revenue distribution by service segment:
Retail dry cleaning and laundry services: 63.4%
Full-service commercial laundry: 15.6%
Commercial dry cleaning services: 14.7%
Strengths, Weaknesses, and Opportunities (Ibisworld Inc.)
Strengths
Low import rate Low client concentration Low capital investment
Weaknesses
Declining industry Low profitability compared to other sectors Revenue concentrated in a few services Low revenue per employee
Opportunities:
Attractive for highly specialized businesses Many businesses closed due to COVID-19 impact
Key Success Factors for Businesses in This Sector (Ibisworld Inc.)
Offer more value to customers through pickup and delivery services
Efficiently manage operating costs (solvents, chemicals, water, energy) to remain profitable
Adopt new technologies and continuously improve cleaning processes
Establish operations in densely populated cities
Use eco-friendly cleaning processes free of harmful chemicals (e.g., Ontario is regulating certain chemicals)
Maintain competitive pricing aligned with the target clientele
Target a high-net-worth customer base
Maintain a strong reputation by delivering high-quality service
Relevant Financial Figures (Ibisworld Inc. and DealStats)
a. Average current ratio: 1.1 (2022)
b. Average accounts receivable collection period: 28 days (2022)
c. Expense breakdown as % of revenue (2023):
Salaries: 38%
Purchases: 15%
Rent: 12%
Profit: 6.8% (Ibisworld)
d. Average EBITDA margin: 15.23% (DealStats)
Factors That Will Influence Industry Growth by 2028 (Ibisworld Inc.)
COVID-19 has significantly impacted the industry; people work more from home and dress more casually, negatively affecting demand
Improved at-home laundry technology poses a future threat
The industry relies heavily on household discretionary income, as its services are seen as non-essential
Industry growth is declining
The number of businesses affects the industry, which appears to be shrinking in 2024
Unemployment rate has an impact; it is expected to rise, negatively affecting dry cleaners
The number of adults aged 20–64 is projected to rise, positively influencing the industry
Electricity prices will affect the industry; expected to increase, causing a negative impact on dry cleaners
Key Questions to Ask During an Acquisition (Ibisworld Inc.):
How much does the business spend on advertising?
Is the business located in a high-traffic, densely populated area?
How does the company manage its operating costs?
Does the company use data analytics to track sales and collect customer insights?
Is the business up to date with new industry regulations?
Are sales seasonal?
How often does the business need to replace equipment?
Does the business offer a niche service?
Does the business have any area of specialization?
Sources
IBISWORLD
Dry Cleaners in Canada – NAICS (81232 CA)
Dry Cleaners in Canada – NAICS (81232 QC)
BVR:
DealStats – NAICS (44619) – Revenue between $1M and $5M
DealStats Value Index Q2 2024
Important Note
These are general guidelines, and many positive or negative factors may influence the above results. Every business is unique. Moreover, the selling price largely depends on the number of interested buyers, synergies with the target business, and desired returns.
Disclaimer
pntt makes no representation to anyone regarding the completeness or accuracy of the data or information contained in this document. pntt accepts no liability and disclaims all responsibility for any loss or damage suffered or incurred by any person as a result of using the information in this document.
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