Salon Today 200: 20 Years of Shining a Spotlight on Salon Success
In our industry, there are many inspirational competitions that showcase the creative talent and artistry of professional beauty. When they celebrate their elite, they often do so from large stages, filled with rows of coiffed models, vibrant music, and pulsing lights.
By comparison, the Salon Today 200 is a very different breed. For more than 20 years, it has recognized and celebrated salons and spas—and the people behind them—who shine in business success. Our applicants study and report their numbers, back them up with tax returns, and write passionate essays that prove they are sampling new business ideas and measuring their success. Our data researcher and our judges spend weeks analyzing performance numbers and studying, scoring and ranking thousands of business essays.
When we celebrate our elite, we do so through the pages of this issue, on our website and social platforms, and, more recently, with salon owner panels at industry shows. We foster a thought forum that encourages salons across the country to share their best ideas, measure their own performance by studying the ST200 benchmarks, and celebrate and encourage one another.
Although the efforts of our honorees might be quieter than an avant-garde hairstyle or complex color application, we’d argue that what they do—day in and day out—is just as important. They create opportunities for thousands of stylists, colorists, estheticians, nail technicians and massage therapists to support themselves and their families by practicing their craft. In turn, these service providers are changing the world (4 million times a year in fact) by creating memorable experiences and delivering impeccable service—one client at a time.
WHO ARE THE SALON TODAY 200?
First and foremost, they’re salon owners and managers just like you. It’s when you examine how they run their businesses, lead their teams, create experiences for their guests and make their mark on their communities that they are really impressive.
And when you look at them collectively, as a group, that’s when you begin to imagine the power behind them:
They bring in the cash…
In calendar year 2015, the Salon Today 200 honorees brought in total gross sales of $392,070.991. That means on average, these salons brought in $1,970,206. To keep you from thinking that a few big salons skewed the numbers, we’ll break them down. Six percent posted sales between $250,000 and $499,999; 35% brought in between $500,000 and $999,999; 29% hit $1,000,000 to $1,999,999; and 30% witnessed gross sales in excess of $2,000,000.
They are growing…
As a group, the 2017 ST200 honorees grew their revenue from 2014 to 2015 by 13%. Growth has slowed a bit in recent years, as growth rates averaged 17% in 2013 and 19% in 2014, but those might have been artificially inflated from salons picking up speed in the years after the recession.
They are busy and productive…
As a group, these honorees rung up 4,762,468 client tickets in 2015. That would be one long line at checkout! This year, we calculated gross annual sales per square foot to give you another way to measure yourself against the ST200 performance. For 2015, these honorees averaged $406 in annual gross sales per square feet. We want to give a shout-out to a handful of salons who are super productive, doubling that rate in the same amount of space. The teams from Frangipani Hair Studio, Signatures Salon, Hue Salon, Beehive the Salon, Privé Salon, Cobalt Blue Salon, Studio Be Salon, Samuel Cole Salon, Rituals Salon-Spa, Jamison Shaw Hairdressers and NVS Salon & Spa must be rubbing elbows while they work, as they all brought in annual gross sales of $800 per square foot or more.
They keep watch over expenditures…
Although some things change, other statistics that we’ve measured for decades, such as the reported breakdown on expenditures, have stayed about the same year after year. Yet the data still yields important benchmarks for owners to examine their own businesses against.
At 48%, the cost of labor tops the list of expenditures, followed by supply costs (11%), rent/mortgage (7%), business profit (7%), taxes (5%), owner compensation (4%), marketing/advertising (3%), education and training (3%) and employee benefits (3%).
A PORTRAIT OF A SALON TODAY 200 HONOREE
By examining the collective data gathered from all the Salon Today 200 honorees, we are able to sketch an image of what salon business success looks like in 2017. The average ST200 salon:
Opened its doors in 2005 or earlier. The majority (55%) were open before 2005. The longer a salon business had been opened, the greater its likelihood for posting higher revenue levels.
Operates one location. At 75%, the majority of 2017 honorees have only one location. Of the salons that do have more than one location, they operate three sites on average. Salon businesses whose gross sales eclipse $2 million are more likely to operate multiple locations.
Leases its space, but this is slowly changing. Although the majority of ST200 salons lease their space (77%), we’ve steadily witnessed a trend of honorees owning their salons and spas—17% this year versus 13% percent in 2015.
Occupies 4,665 square feet of space. This average is slightly higher than the 4,585 square feet average last year. This average rises with gross sales—for honorees grossing $2 million or more in sales, the average square footage is 8,809. Salons in the Midwest (on average 5,652 square feet) tend to be significantly larger than those in other regions.
Is a salon and spa. At 97%, almost all of the ST200 honorees consider themselves to be a salon and spa.
Listens to advice. Slowly trending up since 2013, now more than half (51%) of the ST200 salons report having hired a salon coach or consultant.
Networks. The majority (68%) report that they belong to one or more industry associations. The Professional Beauty Association (which now includes the National Cosmetology Association) claims the most honorees as its members, followed by Intercoiffure, the 2 to 10 Network, Cosmetologists Chicago and the International Salon/Spa Business Network.
Is raising the ceiling on average client ticket. On average, the ST200 honorees reported 23,932 client transactions in 2015. For the second year in a row, the average number of transactions has declined while the average gross sales have increased. The average client ticket was $82.33, up approximately 5% from last year. Since the average price for a shampoo, cut and style at $52.47 remained virtually unchanged from the past year, this means these honorees are doing a good job of upselling or selling retail to each client.
Pay by commission. On average, 58 percent of the staff employed by the ST200 owners are paid through commission. Salons with lower revenues (less than $500,000) have a higher portion of their staff being paid through commission (70%), while higher revenue salons have a higher portion of their team paid an hourly wage.
Meets with their team. At 99%, almost all of the honorees hold regular staff meetings; (64%) hold these meetings monthly.
Plans ahead. Three out of five of the ST200 honorees have established a budget for salon improvement.
TOP OF MIND
The data collected from the ST200 reflects on the business operations of these salons and spas, and our application also uncovers some interesting insight into the people who own these salons.
In addition to working on their businesses, two-thirds of the 2017 class report that they work in their businesses as a service provider. Of those who do, they spend an average of 23 hours a week performing services—two fewer hours than honorees in the past two years.
As a group, the ST200 owners keep a managerial eye on a number of key performance indicators (KPI) to measure and track their business. At 25%, average client ticket topped the list of most popular KPI, followed by productivity (percent of available time booked) at 20%, and pre-booking rates at 13%.
These owners feel they have the most managerial control over their retail commissions, their payroll, and their education and training programs. They feel they have the least amount of control over their backbar and color inventory, as well as their retail inventory.
When we asked owners what keep them up at night, their top concerns have been about the same for the past several years—their lack of ability to reduce expenses, worry that the service staff are not busy enough, and not understanding how to improve profitability. The one exception? The last four years, they’ve become less concerned about the local economy.
Meet our 2017 Salon Today 200 Honorees:
Originally posted on Salon Today.