Supercuts 2011 Annual Report Download - page 16

Table of Contents
evenly between men and women. Average annual salon revenues in a franchised Cost Cutters salon which has been open five years or more are
approximately $280,000.
In addition to the franchise salons, the Company operates company-owned Cost Cutters salons, as discussed below under Promenade
Salons.
Promenade Salons. Promenade Salons are made up of successful regional company-owned salon groups acquired over the past several
years operating under the primary concepts of Hair Masters, Cool Cuts for Kids, Style America, First Choice Haircutters, Famous Hair, Cost
Cutters, BoRics, Magicuts, Holiday Hair, Fiesta Salons and TGF, as well as other concept names. Most concepts offer a full range of custom
hairstyling, cutting, coloring and waving, as well as hair care products. Hair Masters offers moderately-
priced services to a predominately female
demographic, while the other concepts primarily cater to time-pressed, value-oriented families. The customer mix is split relatively evenly
between men and women at most concepts. Service revenues represent approximately 89 percent of total company-owned Promenade revenues.
The average ticket was approximately $20 and $19 for fiscal years 2011 and 2010, respectively.
The average initial capital investment required for a new Promenade Salon is approximately $60,000 to $80,000, excluding average opening
inventory costs of approximately $8,600. Average annual salon revenues in a Promenade Salon which has been open five years or more are
approximately $241,000.
Other Franchise Concepts. This group of franchise salons includes primarily First Choice Haircutters, Magicuts, Beauty Supply Outlets
and Pro-Cuts. These concepts function primarily in the high volume, value priced hair care market segment, with key selling features of value,
convenience, quality and friendliness, as well as a complete line of professional hair care products. In addition to these franchise salons, the
Company operates company-owned First Choice Haircutters and Magicuts salons, as previously discussed above under "Strip Center Salons".
Subsequent to June 30, 2011, the Company acquired an ownership interest in a franchise concept that combines modern grooming
techniques with classic barbershop elements. This ownership interest along with the Company's other men's franchise concepts will allow the
Company to expand its focus on the male demographic.
International Salons. The Company's International salons are comprised of company-owned salons operating in the United Kingdom
primarily under the Supercuts, Regis and Sassoon concepts. These salons offer similar levels of service as the North American salons previously
mentioned. However, the initial capital investment required is typically between £135,000 and £145,000 for a Regis salon, and between £55,000
and £65,000 for a Supercuts salon. Average annual salon revenues for a salon which has been open five years or more are approximately
£225,000 in a Regis salon and £
189,000 in a Supercuts salon. Sassoon is one of the world's most recognized names in hair fashion and appeals to
women and men looking for a prestigious full service hair salon. Salons are usually located on prominent high-street locations and offer a full
range of custom hairstyling, cutting, coloring and waving, as well as professional hair care products. The initial capital investment required is
approximately £450,000. Average annual salon revenues for a salon which has been open five years or more is approximately £826,000.
Salon Franchising Program:
General. The Company has various franchising programs supporting its 1,936 franchise salons as of June 30, 2011, consisting mainly of
Supercuts, Cost Cutters, First Choice Haircutters, Magicuts, and Pro-Cuts. These salons have been included in the discussions regarding salon
counts and concepts on the preceding pages.
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