Guest: Mark Norman
Topics: Hair Cuttery Salons, salon real estate

Transcript:

Chris Ressa 0:00
This is Retail Retold, the story of how that store ended up in your neighborhood. I’m your host, Chris Ressa, and I invite you to join my conversation with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC Management.

Today’s episode is brought to you by East End Group. East End is a facility management solutions company and a trusted partner of ours at DLC.

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Ressa 0:43
Welcome to Retail Retold everyone. Today I’m joined by Mark Norman. Mark is the Chief Development Officer at Hair Cuttery Family of Brands. I’m excited for him to be here. Welcome to the show, Mark.

Mark Norman 0:55
Thanks, Chris. You know, this is my third time on your show.

Ressa 0:59
Oh my goodness, you’re a celebrity.

Norman 1:02
I like to think so. Right.

Ressa 1:03
But now you’ve done a great job building the audience. And I think it’s been a really good, good production with great insights that you’ve added to the industry.

Norman 1:13
Thank you, man. Thank you.

Ressa 1:15
So enough about me and the show. Let’s talk about you. Tell us a little bit more about you, what you do and where you are now.

Norman 1:24
Yeah, so I mean, not to go way back but I’ve been in primarily real estate for over 20 years, landlord work for a long time. I was at Mid America and the Twin Cities. That was at Regis Corporation for nine years, Super Cuts, Cost Cutters, Roosters, First Choice and Canada Hair Salon Brands.

Six as a dealmaker, three as a VP, that I was just most recently at Self Esteem Brands, as you know, well, Anytime Fitness, Base Camp Wax in the city, Bar Method for the last four years. So I’m a few months in now to Hair Cuttery as their CDO, overseeing real estate construction design and facilities. It’s exciting because I’m back with some familiar faces.

Ressa 2:07
So just to clarify, all those brands you named in the beginning were brands under the Regis umbrella. Those weren’t different companies you worked at. And then the fitness and health brands that you named are under Self Esteem Brands, though. So it was really two companies, not the tenant, right?

Norman 2:25
That’s right, correct. Yeah, I’ve worked primarily on the tenant side and companies with multiple brands. And, and yeah, all companies I’ve worked with, frankly, have multiple brands under them.

Ressa 2:36
Got it. So Self Esteem Brands, pretty cool company. I came and visited you at your office, exciting stuff going on. I went and I did a class with you at at Base Camp. It was really cool. And you were there four years, during the COVID era. And you made this move to Hair Cuttery. Why?

Norman 3:01
Yeah, that’s a good question. And it’s fair. As you know, I’m a huge fan of self esteem brands, I continue to patronize Basecamp as well. And as a side note, I may or may not DJ on occasion there too. I would also note that we took you to get waxed Chris, which I thought was very, very good. Have you, I have the picture of threatened release. So if you’re getting your face waxed and those ears, mouth, mouth and nose and ears. So it’s interesting.

You know, as I mentioned earlier, I was at Regis a long time, right, hair salon brands, multiple brands, US and Canada. My prior boss there who has been there for many many years was general counsel for a long time, eventually rose up to be president of franchise division as that company was shifting from corporate primarily to franchise and so I worked directly for him when I was there, especially the last few years. He is now CEO of Hair Cuttery.

And he reached out and and connected me with himself and also some of the board members to discuss an opening here that they wanted because they wanted true growth for Hair Cuttery, for Bubbles, 100% corporate, by the way, which I’ll touch on a few times. But essentially it was a great opportunity to work with someone I know well, I trust in an industry that I also know the competitive landscape very well.

So I’ve been in a long time, so it was an opportunity that I couldn’t pass up. To get back with someone I know well, and to try and elevate the Hair Cuttery Family of Brands, specially Hair Cuttery as a brand, which is now in growth mode after having been dormant really for the last four years since the reorganization.

Ressa 4:41
So a few things there unpack. Yes everyone. Mark did take me to get waxed, it was an interesting experience, it’s the first time I’ve ever been waxed. And so please keep those pictures to yourself. Yep, I got it. Second, I think you bring up something interesting. And I hadn’t thought about this before we talked about it, but one of the things, when companies hire really, really high level leaders, is they’re hoping there’s usually probably some change that’s going to go on to happen with the team.

And they’re hoping that they are great recruiters, it’s one of the skills of a, a c-suite individual. And, you know, and the gentleman that you’re referencing, was able to recruit you over. And I think it’s interesting for both people who aspire to be leaders, and people who are working for some leaders, that those relationships are critical, because you never know where they might take you. And here, you know, you haven’t been at Regis for over five years, or four years.

Now you’re working with someone that you worked with over four years ago. And it stemmed from that relationship that you built with that person and for, and for him. It, you know, I’m sure is a good look that when they decided to recruit for this role, he had people in mind, he knew what he wanted, and he was able to recruit someone. So it worked for both parties.

And, and I’m sure that was important to the c-suite. And so tell me a little bit like how you think about that and talk to people who are either, you know, working for somebody now a boss, for lack of a better word of manager or leader, and those relationships and how critical that looks.

Norman 6:39
And you know, this Chris, and most people listening know, this in our industry, primarily, it is a relationship business, first and foremost, commercial real estate development, I think most businesses, so your reputation is critical, right? How you treat others you work with, how you have been treated, those stay with you, those memories, and those, that reputation sticks with you. So you really want to make sure you’re thoughtful in how you engage with others in the industry, because as we both know, it’s very incestuous.

And it’s not a bad thing. It’s just, it’s a small, fairly close knit group. And I think one of the best things you can do, whether it’s in our industry or others, is work for someone that you know, and trust, because that eliminates 80% of the conflict right out of the gate, right? Then you can really focus on the blocking and tackling the necessary things you need to do as a company to move forward.

But that was one of those things where, as you mentioned earlier, Self Esteem is a great place. I loved working there. But when Eric called and I started looking into this opportunity, it was just that was the initial reaction was well, this is someone I know really well from my past who knows me well, who trusts me as a mutual trust out of the gate. And so that’s something you can’t replicate it a lot of companies.

Ressa 7:57
You definitely can’t. You’ve been there how long now?

Norman 8:03
This is, well, you’ll I think I am counting but I think it’s week nine now. So a little over two months. So it’s been a whirlwind though, and in a good way. Three ICSC shows, Chris, in the last few months, multiple tours, so I’ve been on the road a lot.

Ressa 8:17
Are you are you in Eric? Did you pick up right where you left off?

Norman 8:24
We did, I think the positive, so two things are positive, one is Eric knows me well enough, knows my strengths or weaknesses. Right? I know him, I know how he operates. And we both have worked in this industry a long time, right. So it’s not like it’s a brand new thing I’m trying to figure out. I’m really trying to pick up where Hair Cuttery left off and and promoting where they want to go.

And really a lot of the strengths they have, which was the other reason I came over when I started looking at the portfolio, 100% corporate, right, nothing against franchising at all. I’ve done franchising a long time. But corporate growth, you have a little more control over it, that’s a good thing. Our UVs, without giving the number on this on this podcast, are much stronger than our direct competitors. So you have corporate operations, stronger AVS. We pay our stylists the best in the industry.

We call them salon professionals. We have earmark money to invest in remodels across our portfolio over the next many years, we’ve already done about 120. So I’m just adding, adding in some of the reasons why it was compelling to come work for a company that has aspirations for more growth. It’s a strong brand, and so it’s not like you’re saying hey, we really need you to fix this brand. It’s a real, you know, real issue here.

We got to get someone excited about it. It’s a great brand that just hasn’t been ready to grow for the last four years. And now they’re ready to grow with new ownership, private equity backed, and let’s go, so that is compelling to me. That’s a real fun thing to get behind and an industry that I know well.

Ressa 10:05
Well, I thought you took this role because you have great hair, which you do. I have no hair. So that’s what I what I thought, but you got that great swoop going that I wish I could, I could, I could replicate.

Norman 10:21
I’m working on it. Appreciate it.

Ressa 10:24
So. Okay. So, Hair Cuttery, you mentioned they did reorganize. Why don’t you tell everybody what, you know, a little bit of the history of Hair Cuttery? What led to that reorganization? And now where they’re going?

Norman 10:40
Yeah, well, and again, I don’t want to misspeak, because obviously, I’m still learning some of the things but look, you know, I like a lot of retailers. When I look back at where they’ve been in the previous regime, you know, it was really COVID. That really was the impetus for some change. And that’s what, you know, and we saw that with a lot of other, especially corporate based retailers, you know, Lifetime Fitness, for example, is based here in the Twin Cities where I, where I’m based.

They had a lot of trouble coming out of COVID as well at the time. So I think that was the impetus for the reorg. Because they were shut down, right? They couldn’t cut hair service, as I know, well, from when I was at the fitness industry during COVID, we were really, really shut down and completely stalled out. So that allowed them to reorganize the closed down locations that were underperforming, and maybe some markets where they had not done as well as they had hoped. They’ve come out of it now.

And they have, we have 500 plus locations across many states, mostly up and down the eastern coast, right. We’re based in Washington, DC. MacLean is where our headquarters is in Virginia. We also have 60 plus salons in Chicago, Greater Chicago and Illinois, and also Indiana. So we have a really good footprint of 500 plus. But I think we can grow not only where we have existing salons today, but obviously in time into some new markets, right, some new states where we’re not today, either because we close in the past or we have never been.

So that’s really where we sit today, we’re really looking at, okay, our existing base, here’s where we’re at, we have a strong base, let’s reinvest in our salons to update them. I’ve toured many of them in Virginia, and some other markets in the last few weeks to see the updates. It’s great. It’s just, it’s necessary updates, makes the salons look very welcoming not only for our guests, but for our salon professionals or stylists, and then obviously work on growth.

And it’s a good time to be growing even with the headwinds right now, lots of opportunity for us to grow the brands, especially in markets already existing. So that’s the synopsis of where we’ve been and where we are now. And so it’s fun, because it’s not a new brand. It’s a, it’s a very well regarded brand that I certainly knew well, when I was at Regis Corp as a competitor, a lot of respect for Ratner and the Hair Cuttery Brand.

But now it’s one of those where they’ve kind of reorg for the good, come out of it in a strong place, and are now ready to fund both investment in existing and new. And so it’s an existing brand that has a lot of good reputation. But I’m excited to have been trying to help reintroduce the growth of that brand back to the marketplace because it’s been a lot.

Ressa 13:27
Good for you guys. That’s great.

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Ressa 14:09
So is there anything that, you know, might be a little outside of that, their corporate locations? I think you mentioned one about the salon professionals. Is there anything else that is a bit different about Hair Cuttery versus some of the other salons out there?

Norman 14:28
Yeah, you know, again, and hair salons are fascinating to me. Obviously I’ve been in the industry a long time. So I kind of know how they all operate to some degree, especially the big brands. I do think it’s interesting that I’ve learned since I’ve been here is we are very much unisex right and I say that in the terms of percentage of haircuts we do for men and women, very close to 50/50. We do 30%, in fact of our gross revenues generally in color services.

So I mentioned that, not that that’s earth shattering, but that is an interesting part to Hair Cuttery, that’s not typical with the other big chains like Super Cuts or Great Clips or Sport Clips, which are much heavier male, even Great Clips and Super Cuts. I would also say our hair cut price is higher than those, right we start usually in the 25 plus range, our salon professionals or stylist can actually set their own pricing, they can kind of as they as they graduate up, they can adjust their pricing as well.

So it’s a unique setup for us versus the other chains. And then again, our average ticket is tied to the haircut price. And the color we do is, you know, well over $40. So I just think that’s interesting for everyone to be aware of that might not have as much familiarity with Hair Cuttery. And again, as I said earlier, because I’ve been to three ICSCs, as I mentioned, Chris, and almost every time multiple landlords asked me about, well, where are your franchisees growing?

We are not franchise, we are 100% corporate, corporate operations, which is a phenomenal backbone for our growth. Right. So that’s huge as we look to do new locations. And as we look to staff and retain. We have a great internal corporate operations team. That coupled with our stylists pay is huge right now in the face of very competitive landscape for recruiting in general, right, across all industries, let alone an industry where you need a certification to be able to cut hair.

Ressa 16:30
All right, well, that was super insightful, though. A lot of stuff I didn’t know about Hair Cuttery. So thank you. And I’m sure the audience as well. So tell us a little bit about the competitive landscape. Right. We’ve got the brands you mentioned, there’s also this, this new concept that’s come on, since you’ve been that really exploded, I would say on the tail end of your Regis days, which is the salon suites.

And, you know, a lot of the landlords that you’re talking to right now, I’ve done a lot of deals with the salon suites. And you know, we’re one of them. They’re bigger, they’re very different business model. And I’m sure that, you know, that’s put some pressure on recruiting great stylists. So why don’t you talk a little bit about the entire, you know, collective landscape of hair and your take on the salon suites?

Norman 17:21
Yeah, I mean, good point. And obviously, salon suites are a major player in the industry, obviously, especially as you’re looking at it through the landscape of specific retail real estate, brick and mortar. So I would tell you, you know, a couple things in this, this spans a lot of industries to just to begin with, including fitness, where I just came from staffing, it’s really hard.

And we know this and so everyone knows this as consumers day to day, but it still is very challenging to attract and retain quality workers, especially I would say, for hair salons, right? We want to make sure we’re tied in with the education groups that we’re making sure we’re getting the best stylists to staff our locations. That is a challenge across the industry. I think the salon suites is a very compelling use because as you mentioned, Chris it’s a very different model.

Right, if you’re a franchise or a corporate owner of traditional salons, your business is cutting hair selling product. And by the way, before I go on, we also own Cibu, C-I-B-U, which is our our line of shampoo, conditioner styling products that we own that we obviously sell, not only in our salons, but also on some online marketplaces. Had to throw that out. But I would tell you, the model varies when you own a salon, or you franchise a salon as the owner, that’s your business.

As a salon suites owner, you’re a landlord, essentially, right, you’re a mini landlord, you’re renting your chairs. I think those of us in the industry that are with the larger chains that are typically in the one to 1500 square foot, 1000 to 1500 square foot range, acknowledge those can be a challenge to exclude from centers we want to be in with landlords given the size of them which are typically three to 5000 or more.

But I do think it’s an interesting model as well for stylists because it’s compelling if they go over and say look I can be my own boss and my own chair, I’ll bring my book of business. The flip side is they now are their own boss, they have to have their own book of business, and there’s nothing driving new business into their door, right, no one’s walking into a salon suites typically and saying, hey, I’m here to get a haircut, who can I see?

They don’t have marketing going on they don’t have you know a lot of the the other push that that a brand like Hair Cuttery or even some of our competitors would have to bring new foot traffic in and I do know that there’s no matter what type of of barbershop or salon you work in. There’s always turnover of customers. That’s just the nature of the beast. So I We’ve thought it’d be very interesting.

We have had people leave Hair Cuttery because we really compete a lot with those, those quality, those those that echelon of stylists, given our price points and some of the things I mentioned earlier about our pay and our ability to set pricing. But what we’ve learned, and I guess, in what I’ve learned in my short time here is that a lot of times the grass isn’t as green as you think, and they come back. And so that can be a compelling thing for all of us to deal with.

And that, frankly, is something that all the salon brands deal with, versus each other, right? Trying to attract quality stylists away to bring them over. And at the end of the day, it becomes, who is the oversight for that location? Who is the manager, the district leader, the regional leader, right?

You really build relationships there, like we talked about earlier in our industry, same way in staffing these salons. You want to work with people you trust, and you’ve known for a long time. So that’s my long winded answer to that, but it is definitely something that is not going away. And we’re watching closely.

Ressa 21:07
Anything else? Well, thank you for answering that. That was helpful. Anything else about like the salon industry that people might not know that you find interesting, you gave us some little interesting tidbits about Hair Cuttery that are fascinating, I think make it a very compelling brand, and one that landlords should want to do business with, and one that consumers should want to go get their hair cut at. Anything interesting going on that people might not know about the salon industry, you know, at large right now?

Norman 21:36
Well, a couple of things. I mean, again, you know, my lens, and this is real estate primarily. So a couple things, just knowing what I know about the industry. I think hair salons remain a very good piece of any development. Right? When you think about the puzzle piece, Chris, that you guys, you and your counterparts kind of put together in terms of a good tenant mix, right?

You love the Starbucks, the Chipotle, the food users, right, specifically, but you can’t load up on all food, you have to have some really good balance not only for code, and parking, but just in general, for your consumers to be generally happy coming and going from the center and not not be cluttered all the time. So I think it’s worth noting. And we all know this hair salons are in a lot of centers, but they’re a really good piece in the non-food space. I would argue fitness as well, where I came from.

So those are good, good things to be aware of. For any developer looking to fill space, you can’t fill it all with food, you want to have some really good non food users that complement the food. And also don’t don’t chew up parking all at the same time. The other thing I would add is what’s fun for me and in my visits to some of our salons. And I forgot about this a little bit when I left Regis, I was reminded of it when I was at fitness because there’s a lot of passion and excitement in the fitness industry.

It’s not much different in the hair industry, right? I mean, our salon, professional stylists, whatever name you want to give them, their cutting hair, because they’re passionate about it. They’re excited about making you feel better, making you look your best. I know that sounds certainly corny and cliche, but that is legitimate. And that is very powerful. And something I’ve forgotten about until I was back in some salons meeting with some stylists because you forget the passion behind the industry.

Right? This is not a boring industry. We’re not H&R Block. No offense to H&R Block, this is an exciting thing, you are literally hands on in an intimate way helping people feel better and look their best, which is pretty powerful. And I had forgotten about that. That emotional influence that I haven’t seen in the hair salon industry, obviously since I left.

Ressa 23:45
That’s cool to hear man for sure. Let’s, let’s talk about Hair Cuttery a bit more. So you mentioned this growth. Do you guys have a number of stores you’re trying to do in a year? Or how many, you know, in the next couple years? What does that look like?

Norman 24:04
Yeah, right now we’re still working out long term. But I can tell you for 2024 we want to open at least 20 new locations. Again, that’s not a massive number. But as we go and as we see some successful, continue to look at options to expand our pipeline, expand areas we’re looking, we already have several openings in the near future, two yet this year. We are growing the pipeline now for 2024. And frankly already negotiating deals for 2025 with some of these new developments.

So our focus is primarily again, where we are now, Florida, Virginia, Maryland, Philadelphia, we’re looking in some parts of Chicago. But again, those are the markets where we have the brand presence, we have the operations as we grow into 2024, which is almost here, then we’ll have a better idea of how many more we can add in 2025, 2026 and beyond. So there’s a lot of room to grow. But I do like the focus on our existing markets to start because we do have really good and loyal customers and brand awareness.

Ressa 25:07
Okay. That’s good to hear. I don’t think anyone sees net 20. That’s good. I mean, that’s, you know, I don’t think anyone sees net 20. Let’s talk about some of the physical and the intangible attributes of the real estate that you guys look at. So I think the first thing people always wonder, if you’re looking at a shopping center, do you care if another hair salon is in the center?

Norman 25:38
So you know the answer to that, the short answer is yes, I would say, to my point on salon suites, and in general, it depends, though, right? Obviously, the size of the center means something right? Whether it’s a small neighborhood or unanchored strip, that’s a big difference from a power center with multiple phases, the density of the trade area as well matters, right? How dense is the trade area surrounding?

Both those things play into it. So the short answer is yes, it matters, then it becomes who is it? Right? Because obviously some salons are bigger competitors than others for us, just like in a lot of industries, right, fitness or food? So the short answer is no. But again, it depends, depending on those two items I mentioned especially.

Ressa 26:21
Okay, and talk to us about size you mentioned earlier, but just to reiterate, what’s the size, anything that a landlord should know before engaging in a conversation about putting a Hair Cuttery in?

Norman 26:33
Yeah, for sure. Well, well, first of all, just because you mentioned it, I mean, we do have our essentially online brochure, which is a pretty simple overview of both Hair Cuttery and Bubbles, which I haven’t talked about much, which is our 15 locations, DMV, only upscale salon, very focused on color services. That’s a, that’s a great brand that we’re looking at doing some stuff with, hopefully next year in terms of some remodeling. But I will tell you, our website is corporate.haircuttery.com.

And I referenced that because it does give our site criteria, it gives some of our obviously advantages I mentioned versus competitors. But it also lists our local brokers in the markets, we’re active. So you can send sites over to them, or to myself and Cory Roberts on our team, who really oversees the real estate piece. But in short, we’re looking, you know, at 1000 to 1500 square feet primarily, obviously, if it’s smaller than 1000 square feet, but we can lay it out, we can make that work, right.

And same thing on the large size, not as worried about layout, but then we’re talking about rent, I will tell you the one interesting thing we haven’t talked about is, I mentioned our volumes and how we have higher SUVs, we lay out and we’ll do minimum of eight stations, eight chairs, typically we do 10 or more.

I mentioned that because in my history and when I was at a competitor, typically it was six chairs to start. Right. That’s something we wouldn’t even consider. So we we lay out our locations and minimally eight to 10 stations, which gives you an idea of the volumes we traditionally have done and expect to do a new sites.

Ressa 28:10
That is interesting, that does give you some perspective on, you know, volumes comparative to other traditional salon users.

Norman 28:19
Well, right, you want to guide yourself, Chris like, wait a second, why there’s so many stations in here, right? I’m like this is this is a lot. No, that’s that standard. So that was eye opening for me.

Ressa 28:27
Is a, is a former salon, a great space physically to take over or is it doesn’t matter?

Norman 28:36
That’s a great question. I would say in essence. Okay, yes, and no, it doesn’t matter on the one hand. On the one hand, though, it is a good condition to take in terms of cost to build, generally speaking, we’ll be able to reuse some of the things, not fixtures or furniture or anything specific to the prior brand. But you know, basic plumbing, power, HVAC, typically should be what we need in that market. I would tell you, though, like anything, if I see a location that’s being touted as a former salon, my first question you can guess is well, who was it?

Right? And if it’s a brand, like many of our competitors that I respect, that gives me initial pause to say, Okay, well, why didn’t that work for that? Right now, if it was a brand that doesn’t cut unisex hair as much as we do, or focus on female and color as much as we do, that might lighten that a bit, or if it’s more Mom and Pop local. That might lighten that concern, too. But obviously, you always want to understand why they may have to close, to understand that.

Try not to make the same mistake potentially. All that aside, though, yes, it is. It can be a good opportunity. Obviously COVID, as I mentioned earlier effect not only us, but obviously a lot of retail across the country. And so there are some good opportunities that we also want to look at and recognize that there will be opportunities like that for us to take that that are positive. So short answer is yes. It just, it’s not quite as good always as it seems because the build up piece will be lightened a bit, but not as dramatically as you might think.

Ressa 30:15
Well, that’s super helpful. Mark. We’re coming up on the end of the show. What last words can you give people about Hair Cuttery? And where can, how can they reach out to you for any reason and will you continue to be on your ICSC tour?

Norman 30:35
I will, so my email is mnorman@haircuttery.com Corey Roberts on my team oversees real estate he see Roberts or Cory at hair cuttery.com. We will be with Eric, who I mentioned earlier in this broadcast our CEO at New York ICSC Chris, obviously, I know, I’ll see you there. And we want to continue to reintroduce the brand, right.

So that’s really why I’m on here with you, Chris is you know you and I go way back. I’ve been at some other companies that have had more growth going on as I jump on the train, this is a train that is is really just starting to get going again. So it’s kind of a new day. I would say it’s Hair Cuttery Family of Brands 2.0, which is exciting.

So we’ll be at again New York in a couple of months. But please, please reach out to myself, to Corey, to our brokers who are listed on our website at corporatehaircuttery.com with any opportunities, especially in markets, where we exist today, we’re excited to grow.

Ressa 31:39
Well on that, that’s a positive we’ll end on, really appreciate you coming on and sharing your thoughts on the salon industry given us insights to Hair Cuttery and wish you nothing but success Mark.

Norman 31:52
Yeah. Thanks, Chris. Thanks for having me again. Appreciate it. Thank you.

Ressa 31:54
Thank you for listening to Retail Retold. If you want to share a story about a retail real estate deal that you were a part of on our show, please reach out to us at retailretold@dlcmgmt.com This show highlights the stories behind the deals from all perspectives. So it doesn’t matter if you are a retailer, broker, entrepreneur, architect or an attorney Also don’t forget to subscribe to Retail Retold so you don’t miss out on next Thursday’s episode.