If the professional beauty industry was a high school, then the SALON TODAY 200 issue would be its yearbook.
Think about it a minute. The ST200 issue shines the spotlight on the activities of the best and brightest salons and spas. Like the hand-written well wishes in a yearbook, the quotes in each honoree’s profile offer sage advice for their owner peers. In addition, the issue chronicles a specific year in time—in our case we’re closely examining the world of salon business in 2016. And, our 11 best-practice categories group honorees who excel in particular areas of business while offering specific measurements on that specialty.
Much as they would a treasured yearbook, salon and spa owners tend to hold onto a ST200 issue, not only for the valuable information it conveys, but also because it helps them identify and network with the industry’s achievers. Should a salon and spa be fortunate enough to be featured in the ST200, then the issue becomes a keepsake, a validation and a witness to their success.
In mid-January, the 2018 honorees will gather after Serious Business in New Orleans at a certificate reception—a celebration not unlike a graduation—where they will have their chance to cross the stage to cheers from their peers and pick up their ST200 certificates.
Before we introduce you to the ST200 class of 2018, let’s look at what their data tells us about salon business in 2016.
Class of 2018: The Big Picture
While most of our ST200 coverage focuses on the specific achievements of individual salon and spa businesses, looking at them as a collective group illustrates the power of the professional beauty industry.
In calendar year 2016, the ST200 brought in total gross sales of $351,950,800. That means on average, these salons brought in an average $1,759,754. While that number is about $210,000 less than last year’s average, that is more likely a reflection that we had a few less multi-million dollar salon applicants this year than last year, rather than a dip in the economic situation.
The ST200 does a fair job of representing salons and spas of all sizes. In this year’s class, 7.6% of our honorees posted 2016 gross sales between $250,000 and $499,999; 29.6% brought in between $500,000 and $999,999; 33.7% hit sales between $1,000,000 and $1,999,999; and 29.1% had gross sales in excess of $2 million.
As a group, the ST200 honorees grew their revenue from 2015 to 2016 by 15%, a slightly higher growth rate than last year’s 13%. Collectively, these salons rung up 4,252,600 client tickets last year. (That’s a chorus of ka-ching!)
Our applicants represent states throughout the U.S., with a handful of salons and spas hailing from Canada. The Northeast U.S. accounted for 11% of the 2018 ST200; the Midwest represented 29%; the South claimed 39%; and the West showcased 19%. The states with the most applicants included Texas (7%), Florida (6%), Colorado (6%), California (6%), Illinois (6%) and Indiana (4%).
Although many statistics in the ST200 go up and down from year to year, the breakdown of expenditures has remained relatively unchanged for years. It continues to serve as an important guideline for owners to measure their own P&L statements against. At 48%, the cost of labor tops the list of salon/spa expenditures, followed by supply costs (10%), rent/mortgage (7%), profit (7%), taxes (5%), owner compensation (5%), marketing/advertising (3%), and education and training (3%).
The Definition of A ST200 Honoree
By examining the collective data gathered from all the ST200 honorees, we are able to sketch an image of what salon business success looks like in 2018.
The average ST200 salon and spa…
ST200 Salon Behavior
On average, two in three ST200 owners (67%) report that they work in their business, performing client services. Of those owners, they spend an average of 25 hours a week performing services for clients. This has gone up by two hours since last year.
At 99%, almost all hold regular staff meetings, with most holding them monthly. Smaller salons have the benefit of being able to gather employees more easily. ST200 salons with lower revenues were more likely than higher revenue salons to hold weekly meetings.
At 43%, two in five ST200 salons have non-compete/non-solicitation contracts with their team members. This has declined in recent years, with 48% reporting that they had these contracts last year. Of those who have had non-compete/non-solicitation agreements, 27% have found themselves defending them in court.
When asked what Key Performance Indicator (KPI) owners reviewed most frequently, productivity got top marks at 25%, followed by average ticket at 23%, existing client retention at 12%, pre-booking rates at 10% and new client retention at 8%.
When it comes to managing the salon, owners believe they have the least control over inventory and shrinkage, and the costs associated with adding new talent. They feel they have the most control over the retail commission they pay stylists, service payroll, advanced education and training costs, and non-service payroll.
During the past five years, little has changed in what causes owners to toss and turn at night. Top concerns include their lack of ability to reduce expenses and their concern for keeping service staff busy enough, followed by the threat of a walkout, lack of understanding on how to improve profitability, and ineffective service managers. The one exception on the worry chain—owners are less concerned about their local economy and less worried about the ability to find