The Perfect Profitable Salon Blue Print

Episode Transcript
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Speaker 1 (00:02):
Have you ever wondered what actually changes
as your salon grows from, let'ssay, five chairs to eight, then
16, and eventually 22?
You know most homeowners thinkmore chairs equals more money,
but here's the reality.

(00:22):
Bigger doesn't always meanbetter.
Sometimes the most profitablemodel isn't a giant 22 chair
salon.
Sometimes it's three or fourperfectly run eight chair salons
.

Speaker 2 (00:39):
So good.
You know and here's anotherreality check Too many salon
owners confuse profit with theirpaycheck, you know, and that
that can be a rookie mistake,because you should be paid for
the role you play inside of yourcompany.
And you know profit isn't yoursalary.
Profit is the reward, the bonus, the overflow, you know, for

(01:05):
running a healthy company.
And today we're going to walkyou through the perfect salon
blueprint, stage by stage, fromfive to eight to 16 to 22 chairs
and beyond.
You know, and we will share thereal stories from our own salons
and salon owners We've had theopportunity to work with over

(01:26):
the years.
And we'll look at companieslike Starbucks, chick-fil-a and
Dutch Bros to see how they'vesolved the same problem.
You know, and since we'retalking about blueprints, you
know we, we love how many of youguys if you've ever maybe seen
the movie or sorry.
You know we, we love how manyof you guys if you've ever maybe
seen the movie or sorry, notthe movie, the show, um, the

(01:47):
profit, uh, you know, we lovethe way that, marcus, is it
Lemoyne?
How?

Speaker 1 (01:53):
do you remember?
Yeah?

Speaker 2 (01:54):
Lemoyne yeah, yeah, just the way that he views
things.
You know, um, one of his mostinfamous lines is people process
product, you know.
And?
And if one of infamous lines ispeople process product, and if
one of those three is broken,the whole thing collapses.
And so we're going to kind ofweave what his perspective would

(02:15):
be into every stage of the game.

Speaker 1 (02:19):
So good, I love that show, so excited that we're
calling that forth today to kindof marry that into the salon
world as well.
And so let's start with stageone, which we mentioned, the
five chair salon, and I like tocall this the hustle stage.
I remember when we had fivechairs, you know I was hustling

(02:39):
hard.
You know sometimes somebodywould call out and superwoman
would step in.
Her name was Jen and she wouldsay no fear, jen is here, I'll
take on that client.
I'm already working 12 hours.
Perfect, I'll work 13 hours.
Great, you know, I was cutting.
I was answering the phone, Iwas checking in guests, folding

(02:59):
towels, closing the register atnight, and it was exhausting.
But it was also the foundation.
You know, when you think aboutthe five chair salon, most of
the time your profit margins runabout eight to 12%, and that's
if we had a good month.
And right now you might besaying, jen, I'm at five chairs
and we're at a big fat zero.

(03:20):
I understand that too.
This is just a stat zero.
I understand that too, this isjust a stat.
But every missed shift sometimesfelt like a gut punch.
Like I said, one stylist calledout sick and suddenly the whole
week looked shaky and I thinkabout this from the perspective
of what Marcus would say, and hewould say at five chairs, the

(03:42):
people are everything and hesays people over.
I can't remember what he says,but the people were everything.
And.
But here's the problem, you arethe business, so like if I'm
pointing at myself, it's me, Iwas the business and in the long
run that's not trulysustainable.
Like you've got no processes yetand your product, which is just

(04:03):
the haircut, the color, thefacial, isn't just about hair or
skin, it's the brand experience.
And you know, if your bathroomlooks like a broom closet,
you're not sellingtransformation, you're just
selling haircuts.
So if you think of it like afive-chair salon like this,
think of a chef with afive-table bistro, like he's

(04:25):
cooking, he's serving, he'swashing dishes, like it's
magical but fragile.
You know, starbucks actuallystarted the same way, one tiny
Seattle store obsessed withbeans.
But no systems, just passion.
And that's truly what fivechairs feels like it's grit,

(04:45):
it's passion and it's verylittle sleep.

Speaker 2 (04:51):
I love that.
That is so great, you know, andit reminds me of when we were
once an eight chair salon, youknow, and and we've got things
really pumping in there we had,you know, 16 service providers
in this eight tier salon, and sothe salon got loud, you know,
kind of in every sense.
And you know, I remember oneSaturday when three stylists had

(05:17):
overlapping guests, you know,the towels were running out the
front desk.
Thankfully we had finally gotone at that stage, you know,
when we got it up to 16, theywere overwhelmed, you know, and
I felt like I was running aroundlike a traffic cop, you know,
and it made me realize, hey, youknow, what worked when you were

(05:39):
serving and supporting lesspeople no longer does.
When you, you know, arestarting to get to that place
where you have 16 serviceproviders in an eight chair
space, you know, and we trulyneeded systems, we really needed
consistency and we absolutelyneeded leaders you know, and so

(06:00):
I love to think about, like,what would Marcus say in that
situation?
You know, and he woulddefinitely point out, you know.
Would Marcus say in thatsituation, you know, and he
would definitely point out, youknow, at eight chairs, you, you
can't wing it, you need process.
And you, because if you can'tleave for a week without things
falling apart, you don't have abusiness, you have a job, and I

(06:23):
don't invest in jobs, I investin businesses.
You know, that would be hisperspective on things.
You know, and it really makesme think about Starbucks, like
you mentioned earlier, Jen,because this was Starbucks
challenge as well.
You know, once they went beyonda few shops, they had to make

(06:43):
every latte taste the same.
You know, and here's where somesalon owners, you know, choose a
different path.
Um, you know, or or anybusiness owners really, instead
of going bigger, they start toreplicate.
You know, they build three orfour thriving eight chair salons

(07:06):
, you know, and that's trulysimilar to, like, the
Chick-fil-A model.
They don't have just onemassive store, but they have
some smaller, high performingunits, because each Chick-fil-A
I think this is so interestingthey average about six to $9
million a year.
That's a lot for a lot of thoselocations, you know that's way

(07:28):
more than Taco Bell, that's waymore than KFC, Burger King, you
know, and the reason why thishappens is because of all the
tight systems they have and theculture that they're creating,
you know, and so I think youknow, if we, if we look at this
truly from like an owner'smindset at this stage, you know,
when I was in that eight chairsalon, you know I was still

(07:52):
paying myself a stylist wagebecause I was still a service
provider.
Um, you know, I was doing alittle bit of leadership pay,
but you know I truly learned thehard way.
Profit is not my paycheck, youknow.
Profit is what I earn forbuilding a healthy business, you

(08:13):
know, and my salary shouldreally reflect the role that I
play and not the scraps leftover.
If you can relate to that,you've been there before.
I think that this is the stagewhere pay really does start to
become confusing, because you'relike gosh.
You know I'm starting to get sobusy.
You're not quite to that nextstage where you totally step out
, you know, maybe from behindthe chair or table or whatever

(08:34):
it is that you're doing, butyou're also not always paying
yourself the way that you shouldin this model, that's so true,
so true.

Speaker 1 (08:46):
And so let's think about going from.
We went from five chairs toeight chairs and then we grew to
16 chairs.
And when that happened, um,things started to break fast.
You know, I rememberspecifically one friday, you
know, I was fully booked behindthe chair, scissors in hand
edward scissorhand making somemagic happen.

(09:08):
Every few minutes a differentteam member would come over and
ask me a question.
I was like, hey, do you knowwhere the developer is?
Or hey, this guest is unhappy.
Or hey, the computer's notworking.
Or hey, do you think it'spossible that I swap my
Saturdays out with Jessica?
I think she wants to work thisSaturday and I'm laughing,

(09:30):
because if you've been there,you probably are laughing too.
And during that moment, that'struly when it hit me, it's like
I couldn't run the floor thesalon stage is what I like to
call it and the company at thesame time.
If I didn't step out frombehind the chair when we got to
16 chairs, like we would trulystall as a company.

(09:51):
And you know, it had methinking of like.
If you look at it from theinstance of like, hey, what
would Marcus say?
And if you've watched theprofit, you know exactly what he
would say you would say at 16chairs, it's not about cutting
hair anymore, it's about peopleyou have to think about, like
who's your super, who's, who'syour leadership team, who owns

(10:14):
what responsibilities?
You know, if everybody isresponsible, then nobody is
responsible.
And then he would also talkabout the process of you know,
really looking at numbers,retention, rebook, average
ticket, like if you're nottracking, you're guessing.
And he would say you know what?
And I don't gamble on guesses.
I actually think one time hedid a salon and I can't remember

(10:36):
it's been, I think you canactually see it on Hulu or Prime
.
So if you've never seen wherehe went in and transformed his
salon, it was really interesting.
And I remember him saying likeI don't gamble on guesses, like
your numbers are everything.
We have to see the numbers.
It was just such a cool episodeto watch, you know, and I think
somebody that's really good atnot gambling on guesses is

(10:59):
Chick-fil-A.
We've been talking about them alot, like they really nailed
this.
You know their operators aren'tjust managers, they're like
culture protectors.
You know less than is it onepercent of applicants?
I think it's one percent, right.
Yeah, one percent of applicantsget accepted because they know
leadership cracks will sink theship.
So interesting apple does thesame thing.

(11:21):
If you really think about it,you know they don't build super
mega stores.
They build smaller, consistentones that usually generate about
$5,500 per square foot.
It's not that they're 5,500square feet, but that's what
they generate per square foot,which is the highest in retail.
Isn't that so interesting?
Because every square foot isdesigned for loyalty and

(11:44):
experience and that's how a 16chair salon must think.
And so if you've never done themath to figure out what you
generate per square foot, thatreally is a huge opportunity to
open your eyes.
And once you get locked in onthat number is like how could we
improve our systems andprocesses to increase that
number, which is going to be ahuge win for everyone involved?

(12:07):
And you know, when you thinkabout it from an owner mindset,
at this stage you really and Iremember doing this myself too I
really truly had to startpaying myself a CEO salary.
You know profit wasn't whatkept lights on anymore.
Profit became my bonus.
You know it was like almostlike your freedom fund and your

(12:30):
business has to have profitbecause, at the end of the day,
profit is the oxygen for yourbusiness.
But I do feel like sometimes alot of saloners do get confused
about profit being theirtake-home pay and so when you're
at a 16 chair salon, if profitis your take-home pay, oh man,
we're going to have somechallenges.
That will come through.

Speaker 2 (12:52):
So good.
And really we've gone throughall of those different stages
five, eight, 16.
And by 22 chairs, I finallyrealized I wasn't leading
stylists or service providers orbeauty pros anymore.
At that stage, I was trulyleading leaders, you know, and

(13:15):
if you've been there before, youknow it's not all sunshine.
And I remember one meetingthere was, you know, three
different leaders, managers, whogave three different answers to
the same question, you know,and it had me thinking about
that old saying too many cooksin the kitchen.
And you know, that's when Irealized my job wasn't to manage

(13:39):
, it was to align, you know,because it doesn't always
necessarily mean that there'stoo many cooks in the kitchen,
it just means, hey, how do weget in alignment, how do we help
everyone fully understand theirrole and their purpose here?
Because margins can push 18% to22%, but only if communication

(14:00):
was tight and culture wasprotected.
And culture was protected.
And I think about, you know,what would Marcus say in this,
this instance?
You know, he would really say,at 22 chairs, you're running a
company within a company, youknow, because your people are
your leaders and your processhas to scale or it will collapse

(14:25):
under its own weight.
You know, and your product.
You really have to think aboutwhat is your point of difference
.
Why should a guest choose youover four smaller, eight chair
salons, you know, across town,and really even thinking about
that from the stylistperspective to the esthetician,

(14:46):
whatever beauty pros you have inyour, in your space, why would
they choose you over anyone else?
And if you can't answer thatone sentence, you're in big
trouble, you know.
And when we look at some otherbusinesses, you know that, you
know, have created similarthings.
Starbucks comes to mind.

(15:07):
They have a fifth Avenuelocation and that store brings
in about $20 million a year, youguys, it's not because it's
bigger, but because it's adestination, you know.
And Dutch brothers, they kindof have the opposite model, you
know, they don't have giantcafes, they just have thousands

(15:31):
of drive-through shops, you know, and each of them are doing
about $2 million with 31% profitmargins.
Wow, you know, that's atestament to their efficiency,
that's a testament to theirspeed, really, you know, and
truly creating that culture.
Because the one thing that we'velearned, seeing all of these

(15:55):
different models and the profitmargins and the team and the
leadership and the systems thatit takes to create, that is, we
know for certain, bigger isn'talways better, because if
there's no profit, uh, you know,I remember it's been years ago,
working with you know somebodywho had multiple locations and

(16:17):
absolutely no profit andeveryone was always like, wow,
this, you know salon owner is sosuccessful.
But you know, is that success?
Because one false move andevery person in that company
could lose their job.
Because profit is the oxygenfor a company.
And if there's no oxygen, youknow you, you walk up one little

(16:39):
steep hill, you're out ofbreath and you're done.
So what we know is bigger isn'talways better, but better is
better.
So what?

Speaker 1 (16:47):
we know is bigger isn't always better, but better
is better, better is better.
I love that.
I just did the quick math onwhat you said on Dutch Bros.
So, at 31% profit margins at $2million, they're bringing home
like $620,000 a year in profit.
Wow, I think we'd be good withthat for a small little
drive-thru coffee shop.
Sign me up.
$2 million a year with, yeah,six hundred twenty thousand

(17:10):
dollars, so that's so.
That's so incredible howthey've taken that one location
that is has a very stable umfoundation and been able to
duplicate that so cool um.
So let's settle this once andfor all.
As salon owners, is that yoursalary is what you get paid for
the role you play Maybe that'sstylist, manager, ceo but profit

(17:32):
is different.
Profit is the overflow, it'sthe bonus, the dividend, the
reward for running a healthycompany, and I remember when I
started separating my CEO payfrom profit, everything truly
changed.
I didn't panic when profitdipped because I wasn't relying

(17:54):
on it to pay my bills.
Profit became the reward forbuilding something that worked
without me, and then it actuallybecame a great asset where I
could go do other incrediblethings like real estate.
And so, when you know, when youthink about it.
Here is your blueprint.
You know, at five chairs you'rethe hustler, at eight chairs

(18:15):
you're the system builder, at 16chairs you're the company
builder.
And at 22 chairs you're the CEO, leading leaders.
But you don't have to chasebigger Like you truly could stop
at eight chairs and replicateit three or four times, just
like we gave you that example inDutch Bros.

Speaker 2 (18:39):
Yeah, you know, I love that.
It really makes me think ofactually a local restaurant that
we have, that there's just aline always waiting outside, and
people you know heard that theybought the little tiny property
behind it.
They were so excited that theywere going to expand.
And what did they do?
They opened up a totallydifferent restaurant, um, to
create that same bustlingculture, you know, and and they

(19:03):
also then now have a linewaiting outside of the door and
everyone's always like you needto expand.
But what they've learned is whatis profitable and what makes
sense, because you don't have tochase bigger.
You know you could stop ateight chairs and replicate it
three or four times, you know,and never confuse profit with
pay.
Pay yourself for your role.

(19:24):
Profit is the overflow, youknow.
Or, as Marcus would say, peopleprocess product.
If one is broken, the wholething collapses, you know.
So, wherever you are, if you'rehustling at five, struggling at
eight, stepping up at 16 orleading at 22, the blueprint is

(19:46):
clear.
Thanks for tuning in.
Share this with a salon ownerthat could really win from this.
Join us at our next challengeand let's build the perfect
salon blueprint together.

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