FDD Talk 2016: The Drybar Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk 2016 post, you’ll learn the following:

• Section I – Background information on the Drybar franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Drybar franchise, based on Item 7 of the company’s 2016 FDD

• Section III – Presentation and analysis of Drybar’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• average gross revenue, total shop consumables, manager wages, total hourly labor, total controllable expenses, total non-controllable costs, and total operating profit for 8 franchised Shops during their first 12 months of operation

• 2015 average gross revenue, total shop consumables, manager wages, total hourly labor, total controllable expenses, total non-controllable costs, and total operating profit for 7 franchised Shops that have been open for longer than 2 years

Section I – Background Information

Drybar Plans Hundreds of New Locations, International Expansion

Drybar, the salon company that offers only blowouts, is looking to expand.

The company has projected more than $100 million in sales in 2016, with about a fourth of the revenue coming from its branded hair-care equipment and products. Drybar also expects to finish the year with 75 salons. Looking further ahead, the company has plans for 300 to 400 locations.

Currently, Drybar has more than 60 locations, with new stores opening soon in Boerum Hill, New York; Culver City, California; and Huntington Beach, California.

Drybar is looking at London as its first international location, as blow-dry bars are relatively new in the United Kingdom. The company has raised more than $55 million in funding for expansion.

Chain Started Due to Stylist’s Busy Workload

California-based Drybar was created in 2010 by Alli Webb, who was then a stay-at-home mom. A longtime professional stylist, Webb started out with a mobile style business for her friends, but found herself unable to keep up with the demand.

Webb opened her first salon in Brentwood, California, with her brother Michael Landau, former vice president of brand marketing at Yahoo, and her husband, Cameron Webb, who was previously creative director at Secret Weapon Marketing, an ad agency.

‘No Cuts. No Color. Just Blowouts.’

Drybar keeps it simple, offering only blowouts. Its motto is “No Cuts. No Color. Just Blowouts.” Whether customers want silky, straight hair or like to pump up the volume, the cost ($40-$45, depending on the market) includes a glass of white wine or champagne, part of the brand’s bar atmosphere.

Customers can also pay extra for scalp massages, hair treatments, braiding, updos and dry hairstyling. Children 10 and younger get special rates. A Barfly membership for $75 a month comes with two blowouts a month, $5 off additional blowouts, a free birthday blowout and 10 percent off products purchased at Drybar. Unused blowouts roll over.

A customer can even book a blowout at home for $75 through the chain’s iPhone app and can rate the stylist and pay through the app.

Cashiers are called “bartenders,” hairstyles are named after cocktails (a Manhattan is sleek, while a Mai Tai has loose and airy waves), and clients sit facing a bar with the windows behind them. Some states don’t allow for alcohol to be served to clients, but stores also offer free coffee and cookies.

The first Drybar cocktail bar debuted when the chain opened its first Nevada location in Las Vegas in July 2016. The store, located at Planet Hollywood, has cocktail waitresses taking drink orders.

The atmosphere at Drybar is also enhanced with sunny colors, such as vases of yellow roses that are changed weekly. Romantic comedies play on flat-screens, although the blow dryers mostly cut out the sound.

Drybar Products Also Available at Sephora, Nordstrom Stores

Over several years, Webb developed a line of products, working with board member and investor Janet Gurwitch. Drybar initially placed the products, which range from the signature $165 Drybar-mascot blow dryer (known as the Buttercup) and brushes to hair accessories and various hair products, in Sephora stores and marketed them on QVC. The products are also sold in Nordstrom stores.

The blowout, generally more than what the average woman can get with her own blow dryer and brush, is popular among women who want to look their best, whether for a party, a wedding, a fun night on the town, or an important job interview.

New Book Will Give At-Home Drybar Tips

Then again, the average woman can get some Drybar style tips, as Webb will publish “The Drybar Guide to Good Hair for All,” her first book, with Abrams Publishing in October 2016. The book will feature full-color photos illustrating the hairstyles.

Roark Capital Group Invests in Drybar

Roark Capital Group, a private-equity firm based in Atlanta, Georgia, announced in June 2016 that one of its affiliates had acquired a minority interest in Drybar. Roark’s brands, including Anytime Fitness, Arby’s and more, have about 22,000 locations in 75 countries.

Section II – Estimated Costs

• Please click here for detailed estimates of Drybar franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis