Supercuts 2008 Annual Report Download - page 19

Hair Restoration Business Strategy:
In December 2004, the Company acquired Hair Club for Men and Women (Hair Club), the largest U.S. provider of hair loss solutions and
the only company offering a comprehensive menu of proven hair loss products and services. The Company leverages its strong brand, best-in-
class service model and comprehensive menu of hair restoration alternatives to build an increasing base of repeat customers that generate
recurring cash flow for the Company. From its traditional non-surgical hair replacement systems, to hair transplants, hair therapies and hair care
products and services, Hair Club offers a solution for anyone experiencing or anticipating hair loss. The Company's operations consist of
92 locations (35 franchise) in the United States and Canada. The domestic hair restoration market is estimated to generate over $4 billion
annually. The competitive landscape is highly fragmented and comprised of approximately 4,000 locations. Hair Club and its franchisees have
the largest market share, with approximately five percent based on customer count.
In an effort to provide privacy to its customers, Hair Club offices are located primarily in office and professional buildings within larger
metropolitan areas. Following is a summary of the company-owned and franchise hair restoration centers in operation at June 30, 2008, 2007,
and 2006:
Hair Restoration Growth Opportunities. The Company's hair restoration center expansion strategy focuses on organic growth
(successfully converting new leads into customers at existing centers, broadening the menu of services and products at each location and to a
lesser extent, new center construction) and acquisition growth.
Organic Growth. The hair restoration centers' business model is driven by productive lead generation that ultimately produces
recurring customers. The primary marketing vehicle is direct response television in the form of infomercials that create leads into the hair
restoration centers' telemarketing center. Call center employees receive calls and schedule a consultation at a local hair restoration
company-owned or franchise center. At the consultation, sales consultants assess
17
2008
2007
2006
Company
-
owned hair restoration centers:
Open at beginning of period
49
48
41
Constructed
3
—
1
Acquired
—
1
1
Franchise buybacks
6
1
7
Less relocations
(1
)
—
(
1
)
Site openings
8
2
8
Sites closed
—
(
1
)
(1
)
Total company
-
owned hair restoration centers
57
49
48
Franchise hair restoration centers:
Open at beginning of period
41
42
49
Acquired
2
3
—
Franchise buybacks
(6
)
(1
)
(7
)
Less Relocations
(2
)
(2
)
—
Site openings
(6
)
—
(
7
)
Sites closed
—
(
1
)
—
Total franchise hair restoration centers
35
41
42
Total hair restoration centers
92
90
90