Supercuts 2011 Annual Report Download - page 9

Table of Contents
During fiscal year 2011, 305 salons were closed, including 245 company-owned salons and 60 franchise salons (excluding
78 franchise buybacks). We expect to close approximately 160 company-owned salons in fiscal year 2012.
During fiscal year 2010, 269 salons were closed, including 204 company-owned salons and 65 franchise salons (excluding
23 franchise buybacks). In June of 2009, the Company approved a plan to close up to 80 underperforming United Kingdom company-
owned salons in fiscal year 2010, in addition to the normal closure activity of salons at the end of a lease term. As of June 30, 2010, 36
stores under the June 2009 plan ceased using the rights to use the leased property or negotiated a lease termination agreement with the
lessor in which the Company ceased using the right to the leased property subsequent to June 30, 2010. The plans are substantially
complete.
Economies of Scale. Management believes that due to its size and number of locations, the Company has certain advantages which are
not available to single location salons or small chains. Economies of scale are realized through the centralized support system offered by the
home office. Additionally, due to its size, the Company has numerous financing and capital expenditure alternatives, as well as the benefits of
buying retail products, supplies and salon fixtures directly from manufacturers. Furthermore, the Company can offer employee benefit programs,
training and career path opportunities that are often superior to its smaller competitors.
Centralized Control Over Salon Operations.
The Company manages its expansive salon base through a combination of area and regional
supervisors, corporate salon directors and chief operating officers. Each area supervisor is responsible for the management of approximately ten
to 12 salons. Regional supervisors oversee the performance of five to seven area supervisors or approximately 50 to 80 salons. Salon directors
manage approximately 200 to 300 salons while chief operating officers are responsible for the oversight of an entire salon concept. This
operational hierarchy is key to the Company's ability to expand successfully. In addition, the Company has an extensive training program,
including the production of training DVDs for use in the salons, to ensure its stylists are knowledgeable in the latest haircutting and fashion
trends and provide consistent quality hair care services. Finally, the Company tracks salon activity for all of its company-owned salons through
the utilization of daily sales detail delivered from the salons' point of sale system. This information is used to reconcile cash on a daily basis.
Consistent, Quality Service. The Company is committed to meeting its customers' hair care needs by providing competitively
priced services and products with professional and knowledgeable stylists. The Company's operations and marketing emphasize high
quality services to create customer loyalty, to encourage referrals and to distinguish the Company's salons from its competitors. To
promote quality and consistency of services provided throughout the Company's salons, the Company employs full and part-time artistic
directors whose duties are to train salon stylists in current styling trends. The major services supplied by the Company's salons are
haircutting and styling (including shampooing and conditioning), hair coloring and waving. During fiscal years 2011, 2010, and 2009, the
percentage of company-owned service revenues attributable to each of these services was as follows:
7
2011 2010 2009
Haircutting and styling (including
shampooing & conditioning)
72
%
72
%
73
%
Hair coloring
18
18
17
Hair waving
3
4
4
Other
7
6
6
100
%
100
%
100
%