In this FDD Talk 2016 post, you’ll learn the following:
- Section I – Background information on the Supercuts franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Supercuts franchise, based on Item 7 of the company’s 2016 FDD
- Section III – Presentation and analysis of Supercuts’ financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
- average gross sales during the 12-month period ending June 30, 2016 for the top third, middle third, bottom third, and all 1,046 franchised Supercuts Stores operating throughout the United States that were open for at least 2 full years as of July 1, 2015, the beginning of the 12-month period for which the numbers were calculated (meaning that the Stores were open for at least 3 full years as of June 30, 2016)
- average gross sales during the 12-month period ending June 30, 2016 for the top third, middle third, bottom third, and all 972 Supercuts-owned Stores operating throughout the United States that were open for at least 2 full years as of July 1, 2015
- average service sales, product sales, total revenues, labor, occupancy, product costs, continuing franchise fees, advertising, other expenses, total expenses, and operating cash flow during the 12 month-period ending June 30, 2016 for the top third, middle third, bottom third, and all 972 Supercuts-owned Stores operating throughout the United States that were open for at least 2 full years as of July 1, 2015
Section I – Background Information
Supercuts Continues to Excel for Price-Conscious Customers
Do you expect the same salon experience for a $55 haircut and a $500 cut? Probably not. But what about the haircut itself? Forty percent of shoppers at a Los Angeles shopping center thought a Supercuts haircut was from a luxury salon.
In August 2016, “Good Morning America” visited a Supercuts salon for its “Hair Experiment,” testing whether people would be able to tell the difference between a Supercuts haircut and a cut from a high-priced salon.
Two Long Beach friends, Mara and Marissa, chose the same haircut and visited two Los Angeles salons, one paying $55 at a Supercuts salon (for an upgraded haircut that includes the cut as well as shampoo and blowout) and the other paying $500 for an introductory luxury cut with the owner of The Benjamin Salon (where haircuts generally start at $135).
GMA then took the two women to The Grove, an L.A. shopping center, and asked shoppers to choose which woman had the expensive haircut. About 60 percent correctly chose the pricier cut, so 40 percent of the shoppers believed that the cheaper cut came from the expensive salon.
The takeaway from the experiment is basically that you get what you pay for. If you want a haircut experience that immerses you in luxury, go for the pricey styling salon. But for many people, all they want is a haircut, and they want it quick. That’s what Supercuts is built on, and that’s who it was built for.
Supercuts Offered Quick, Inexpensive Service
The company was founded as a single location in Albany, California, in 1975 by Frank Emmett and Geoffrey Rappaport, who developed a quick haircutting technique in order to offer speedy and inexpensive cuts with no appointment required. Franchising began in 1979.
Regis Corp. acquired Supercuts in 1996. Regis also franchises Cost Cutters Family Hair Care, Pro-Cuts and City Looks in the United States and First Choice Haircutters and Magicuts in Canada.
Supercuts is now headquartered in Minneapolis.
Haircuts and More
Supercuts serves more than 33 million women, men and children each year. The stores benefit from several revenue streams: haircuts (three levels of Supercuts and a Supercut Jr., for children 12 and younger); salon services (shampoo and conditioning treatments, blow drying and styling, beard/mustache/neckline trimming, Supercolor hair coloring services, and waxing; and hair products by brands such as Paul Mitchell, Redken, Matrix Biolage, It’s a 10, American Crew and Nioxin.
The brand is also known for its Hot Towel Refresher service, which clears away stray hairs off a customer’s face and neck so he or she is ready to pick up the pace of the day.
Franchisees Have Opportunities for Growth
Supercuts is seeking franchisees throughout the United States, Canada and Western Europe. Franchisees need not have experience in the salon business, and most do not. Experience in business management and working with people are considered more important to run a Supercuts business.
Many franchisees initially keep working in their current jobs, as a Regis-trained salon manager takes care of the day-to-day operation of a franchise while the franchisee supervises the business. This paves the way for a franchisee to open new locations later after becoming established.
Franchises benefit from technical consultants, artistic directors and vendor professionals who visit salons and conduct workshops. Educational DVDs are also provided to franchisees.
Section II – Estimated Costs
- Please click here for detailed estimates of Supercuts franchise costs, based on Item 7 of the company’s 2016 FDD (updated).