Great Clips' mission is simple: Save the world from bad hair.
The Minneapolis-based chain is doing it, not one haircut at a time, but rather 57 million haircuts in a year.
The business is fairly recession resistant. "Hair still grows during
recessions," Steve Overholser, Great Clips' CFO says. And since 65 percent of customers are men who sometimes don't have the luxury of growing out their mane in bad times, business is moving along at a nice clip. Revenue in 2007 was $700 million.
Founded in 1982, Great Clips is a significant player in the value/walk-in
segment of the $55 billion hair-care market. And even though Great Clips boasts 2,660 units today, that's a drop in the bottle compared to the estimated 40,000 to 50,000 salons out there, ranging from home-based businesses to full-service, luxury salons, he says.
Value salons account for 25 percent of the total market, so Great Clips isn't messing with its winning formula, although Overholser says the chain did attempt to do drive-thrus at one time. "We could do the left side of the head, but not so well on the right," he deadpans.
Like its CFO, the chain also has a sense of fun. The headline for one of its early ads reads: "Why pay $30 for a bad haircut when we can do it for $10?"
The salons are not destinations, but rather stops on the way to someplace else, Overholser says. There are no corporate-owned salons, so all "180 employees are devoted to franchisees," he adds.
As far as franchisees, unlike McDonald's, where the joke is they seek out people who bleed ketchup, Overholser says they're "not looking for people with shampoo in their veins." "Ninety-five percent of franchisees have never been in the hair-care business," he says. The right prospects are business people, and franchisees are often encouraged to work the business part time "until you want to make it full time," he says. Still, franchisees are required to live within a radius of 90 miles from the salon so they are hands on. The vast majority of operators, 650, have one to five salons, and about 130 own six or more salons.
Franchisees leave the hair cutting to the pros by hiring stylists who are both quick and customer service oriented in order to attract repeat customer.
When management was looking at a way to get their name in front of their target audience, they turned to car racing. "The NASCAR profile of a fan was the same as our customer's," he says. Plus, NASCAR has a 35-week cycle, which means the logo'd cars are in front of the audience longer than sports with shorter seasons. The beauty of NASCAR, Overholser says, is having your company's logo prominently positioned on a winning car garners all sorts of media attention, and "our name was associated with Fortune 100 companies" that were also sponsors.
And while he wouldn't give the exact terms of their contract, their level of sponsorship averages around $4 million a year.
Sometimes you get lucky, Overholser says. Their driver, Jason Leffler (car No. 38), was selected for several commercials highlighting track rivalries, plus one of his wins in a Toyota led to him being interviewed continually on TV sports programs wearing the Great Clips logo.
"We didn't pay a dime for any of that," Overholser says proudly. Spoken like a true CFO.