Laundromat Valuation: EBITDA and FCF

Gross revenue, SDE, EBITDA, free cash flow and net income all describe what a laundromat earns, but each one measures something different. Ian Gollahon explains what each metric includes, how they compare to each other and when a buyer, seller or bank would use each one. This is Part 3 of Ian's laundromat valuation series, written alongside his Full Cycle Magazine article from the CLA. Part 1 covered leases and assets, and Part 2 covered gross revenue and SDE. This episode focuses on EBITDA and free cash flow. EBITDA takes out the costs that depend on who owns the business, so it shows what the laundromat could earn for any owner. Free cash flow works the other way. It reflects your own loans, your own taxes and the cost of replacing machines, which is why banks use it to judge whether a laundromat can carry its debt. What's covered: • Gross revenue, SDE, EBITDA, free cash flow and net income: what each one measures and how they compare • Why EBITDA takes out interest, taxes, depreciation and amortization • Why a buyer's interest, taxes and depreciation could be higher or lower than yours • How entity type affects what a laundromat pays in taxes • Asset sales, depreciation and goodwill • CapEx and the cost of replacing machines • How banks use free cash flow • Where the owner's salary shows up in each metric • Why laundromat listings often use these terms loosely 00:00 Introduction and Part 3 of the Valuation Series 01:04 Recap: Leases, Assets, Gross Revenue and SDE 03:29 What EBITDA Is 05:06 Earnings Before Interest 07:03 Taxes and Entity Type 09:00 Depreciation and the Asset Sale 10:59 Amortization and Goodwill 11:52 Why EBITDA Differs From Net Income 12:28 Free Cash Flow 13:11 CapEx: Who Pays for New Machines 14:56 EBITDA Depersonalizes, Free Cash Flow Personalizes 15:33 Why Banks Use Free Cash Flow 16:38 Owner Salary and Free Cash Flow vs. SDE 18:00 Next Episode: Net Income 18:38 Clearing Up the Confusion in Laundromat Listings Ian Gollahon is co-owner of Liberty Laundry, a three-store laundromat chain in the Tulsa, Oklahoma area that did $2.5 million in revenue in 2025, and co-founder of Wash-Dry-Fold POS, the original point-of-sale system for laundromats. He has spoken with more than 3,000 laundromat owners over the last decade. washdryfoldpos.com libertylaundryok.com laundromat-ownership.com laundryassociation.org/fullcycle/2026/09/how-much-is-your-laundromat-worth/