click image to zoom How does the professional beauty industry define success? When it comes to business acumen, sustained business growth, and managerial leadership, it’s spelled S-A-L-O-N-T-O-D-A-Y-2-0-0.
While there are many industry competitions that reward artistry and technical talent, the SALON TODAY 200 (ST200) is the first and only one that maintains a singular celebratory focus on salon and spa business. When we launched the program 17 years ago, we had multiple goals. We wanted to celebrate, recognize and honor the accomplishments of the salon and spa owner. We wanted to create a forum where owners could share best business practices with one another. And, we wanted to begin collecting the important data that both painted an accurate landscape of the salon business environment, but established important benchmarking goals against which owners across the country could measure themselves.
Today, the SALON TODAY 200 remains all those things, but it’s evolving into much more. While the phrase ‘SALON TODAY 200’ has become a badge of honor, its members are forging into a community of business-minded owners who recognize, support and share with one another. And, together they’re defining what success in the professional beauty industry truly looks like.
THE ST200 Landscape
This year, the number of applications continued to be high, a positive reflection on the recovery of the economy. The South and the Midwest regions accounted for the highest number of applications, with seven states capturing the most applications: Florida (9%), Texas (7%), California (6%), Ohio (6%), Colorado (5%) Massachusetts (5%) and Illinois (5%).
Since the inception of the SALON TODAY 200, the honored salons have shown a pattern of growth year after year, but the rate of that growth definitely reflected the ups and downs of a turbulent economy. For example in 2010, the competition still showed the pre-recession robustness of 21% growth from 2007 to 2008. But the following year, showed the impact of the recession, as growth rates shrunk to an average of 10%. Since then, we’ve been on a slow and steady climb back upward, and this year post an average growth rate of 19 percent.
This year’s class posts average gross sales of $1.823 million for 2012.
The ST200 Salon Profile
For a mental picture of success in 2014, we can create a composite profile of a ST200 salon by showcasing the averages of the entire group of honorees.
The average SALON TODAY 200 is:
ESTABLISHED—the majority (61%) opened their doors in 2000 or earlier with only two in five opening since 2005.
FOCUSED—most of the honorees (73%) have one location. Of those companies who have more than one location, on average they operate four.
LARGE—the average ST200 salon boasts 5,200 square-feet of space, with salons in the Midwest being significantly larger than the West. In addition, at 79%, the majority of honorees lease their space.
DIVERSIFIED—an overwhelming 98 percent of this year’s honorees consider themselves to be both a salon and spa.
INVOLVED—Seventy-five percent of honorees belong to one or more professional associations, and more than half of the honorees have hired a professional salon coach or consultant in the past three years.
PRODUCTIVE—racking up a total of 26,000 client transactions in the past fiscal year. Transactions for the ST2000 increased 3% over last year’s honorees. The average ticket came in at $70.45.
COMPETITIVELY-PRICED—charging an average of $49 for a shampoo, cut and style and $67 for a single-process color. On average, salons in the Midwest ($45) and West ($47)charge significantly less for shampoo, cut and style compared to salons in the South ($51) and Northeast ($56).
FUELS THE ECONOMY—employing an average of 37 employees. Interesting to note: the average number of employees has decreased by two employees each year for the past two years.
FULLY ROOTED IN HAIR-RELATED SERVICES—the average ST200 salon receives the largest portion of its gross revenues from hair color service sales and hair cutting service sales, which at 34% and 31% respectively, each representing about a third of gross revenues. Interesting to note: for salons in the West, retail captures a higher percentage of the gross revenues than elsewhere in the country, and for salons in the South, hair color captures a significantly higher percentage of overall sales.
The Habits of SALON TODAY 200 Owners
Among the SALON TODAY 200, 66 percent of salon owners still perform client services. Of the owners who do, they report spending an average of 25 hours a week performing services. Not surprisingly, owners of salons and spas grossing less than $2 million per year are more likely to perform client services than business grossing more than $2 million.
At this point, only two in five (44%) of the SALON TODAY 200 have put non-compete/non-solicitation agreements in place.
Owners of SALON TODAY 200 salons/spas on average look to three key performance indicators for assessing the health of their businesses: Productivity, Average Ticket and Client Retention. Salons in the Northeast are more likely to rely on productivity while salons in the West are more likely to use client retention.
When asked where they feel vulnerable, SALON TODAY 200 owners reported they feel they have the least control over inventory, shrinkage and service supplies, including backbar and color. They feel they have the most control over retail commission and service payroll.
When asked what keeps them up at night, SALON TODAY 200 owners report tossing and turning over a lack of ability to reduce expenses and worrying that their staff is not kept busy enough.
Over half (56%) maintain an annual budget for salon improvements.
Three in four of the SALON TODAY 200 salons order their retail products once a week, and the majority of the honorees count and adjust their inventories either weekly (36%) or monthly (28%).
To be eligible for consideration in the ST200 for 2014, salons had to meet the following criteria:
ESTABLISHMENT: The salon or spa opened on or before January 1, 2011.
VOLUME: The salon/spa generated annual service and product sales revenues of at least $250,000 per year since 2011.
WILLINGESS TO SHARE: The owner completed the application information portion of the form, providing statistical information about the business, and completed at least one of the Best Practice sections, including the essays.
VERIFICATION: IF the applicant competed in the Growth category, the owner submitted tax documentation to verify financials for 2011 and 2012. If the applicant competed in the Planned Profitability section, the owner submitted signed verification from a third-party professional (business coach or accountant) that they projected a certain profit percentage, then what they actually reached.
The ST200 Selection Process
The SALON TODAY 200 is comprised of 100 honorees in the Growth category, and 100 honorees divided among 10 different Best Practice categories. All applications appearing in Growth are sorted based on the percentage of growth in gross sales revenue from 2011 to 2012 and the 100 highest become the first 100 honorees. For the remaining 10 Best Practice categories, judges evaluate applicants in each category including statistical information and essays, identifying the remaining 100 honorees. Salons may capture honors in more than one category, but are only profiled once in this issue. For additional wins, they are listed under “Additional Honorees” under each category. For the first time in ST200 history, we had a two-way tie for the final ranking position in Growth, necessitating an “Additional Honoree” in that category as well.
SEE THE HONOREES IN EACH CATEGORY:
• 2014 Honorees in Advanced Education
• 2014 Honorees in Compensation and Benefits
• 2014 Honorees in Customer Service
• 2014 Honorees in Enviromental Sustainability
• 2014 Honorees in Philanthropy
• 2014 Honorees in Planned Profitability
• 2014 Honorees in Recruitment and Training
• 2014 Honorees in Retail and Merchadising
• 2014 Honorees in Retention and Referral Programs
• 2014 Honorees in Technology
• 2014 Honorees in Growth, Part One
• 2014 Honoress in Growth, Part Two