Regis Dominates the Hair Salon Business/Product Sales Enhance Salon Profits

The Coronavirus pandemic saw a dramatic decline in business at hair salons and barber shops. Many were forced to close for several months. The industry saw a dramatic rebound in business when widespread use of vaccines has taken place and infection counts drop. Regis Corporation is a dominant player in the hair salon business segment. It is a global owner, operator, franchiser and consolidator of hair and retail product salons. The company owns, franchises or holds ownership interests in more than 4,800 worldwide locations. Primarily, Regis’ locations consist of company-owned and franchised salons, but also is comprised of a few locations in which it maintains a non-controlling ownership of less than 100%. The company’s salons provide affordable haircuts, styling, coloring and waxing services. The shops also sell hair care products. Salons operate under the trade names of Regis Salons, MasterCuts, SmartStyle, Supercuts, Cost Cutters and First Choice Haircutters. In addition, Regis maintains ownership interests in Empire Education Group, Inc. (55.1%), which provides cosmetology education in North America. Regis is transitioning to being a fully franchised model, having sold and converted company-owned salons to its franchise portfolio.

Many hair salons are part of national chains or franchise chains. Mass market leaders include Great Clips, Fantastic Sams, Supercuts and Sport Clips. Hair stylists often rent their spaces from salon operators on a revenue sharing basis, typically with 50% to 60% of each hair service fee going to the salon, with the balance (plus tips) retained by the stylist.

Hair salons generate revenue not only from services such as haircuts, colors, blowouts and other treatments, but also from the sale of upscale hair care products including shampoos, conditioners and styling gels. The best practice in hair salons is to generate 40% of total revenues from product sales, with the balance from services. Most salons offer good commissions to their hair operators for product sales. However, few salons manage to achieve the 40% goal, despite the fact that they can vastly enhance net profits through product sales.

A small number of hair care product manufacturers specialize in developing products just for the hair salon market. Several mass-market hair product firms also offer professional salon product lines. Leaders in this field include John Paul Mitchell Systems, L’Oréal Professional and Coty Professionals. These firms tend to build strong relationships with stylists and salon operators by staging professional educational retreats, styling and color competitions and product demonstrations.

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