Supercuts 2012 Annual Report Download - page 16

Table of Contents
The average initial capital investment required for a new Supercuts salon is approximately $80,000 to $130,000, excluding average
opening inventory costs of approximately $8,800. Average annual salon revenues in a company-owned Supercuts salon which has been open
five years or more are approximately $270,000.
The Supercuts franchise salons provide consistent, high quality hair care services and professional products to guests at convenient times
and locations and at a reasonable price. These Supercuts franchise salons appeal to men, women and children, although male guests account for
approximately 71 percent of the guest mix. Service revenues represent approximately 92 percent of the Supercuts franchise total revenues.
Average annual revenues in a Supercuts franchise salon which has been open five years or more are approximately $340,000.
Cost Cutters (franchise salons). The Cost Cutters concept is a full service salon concept providing value priced hair care services for
men, women and children. These full service salons also sell a complete line of professional hair care products. The guest mix at Cost Cutters is
split relatively 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, Head Start, 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 guest 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 $19 and $20 for fiscal years 2012 and 2011, respectively.
The average initial capital investment required for a new Promenade Salon is approximately $75,000 to $125,000, excluding average
opening inventory costs of approximately $9,300. Average annual salon revenues in a Promenade Salon which has been open five years or
more are approximately $245,000.
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".
During fiscal year 2012, the Company acquired a 60.0 percent ownership interest in Roosters MGC International LLC, 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 £110,000 and £130,000 for a Regis salon, and
between £60,000 and £80,000 for a Supercuts salon. Average annual salon revenues for a
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