By Diane Mastrull
The Philadelphia Inquirer.
Brothers Fred and Steve Vicario are blessed with heads of wavy Italian hair, the kind that can look perfect with little effort.
Their business model, however, counts on people who want far more pampering. And it employs a method that more businesses, from spas to job-search networks, have resorted to in recent years to ensure repeat customers: memberships.
Such membership or subscription-based models are proliferating at a time when online coupon networks such as LivingSocial and Groupon have elevated deal-hunting over brand or business loyalty.
“Our main focus is the memberships,” said Steve Vicario, Cherry Blow Dry Bar’s chief operating officer. “Generating that guaranteed revenue a month is what helps you to break even fast. You want to … get that break-even fast, and the rest is gravy.”
The Vicarios took over Cherry Blow Dry Bar, a franchise of just eight U.S. locations, in April, with a plan to grow to 200 salons in five years.
That’s right, 200 storefronts, each lined with swivel chairs and mirrors and offering limited hair-styling services (blow-drys and extensions) but not cuts and color. Average appointment: 40 minutes, starting as early as 7 a.m.
“It’s a hot concept. It’s not a fad,” said Steve Vicario, 42, saying that the Philadelphia-area salon where we met for an interview was booked that particular Friday with 70 appointments.
Despite Cherry Blow Dry’s lackluster growth since 2013, when its Australian founders expanded their 5-year-old company to the United States, the Vicarios say they are confident of their growth goal. Franchisees need about $250,000 for startup costs, including working capital, equipment and build-out.
Of the eight current locations, in California, Florida, New Jersey, Tennessee and Virginia, the Vicarios own just the Philadelphia-area site. It’s also corporate headquarters.
Another Philadelphia-area Cherry Blow Dry is expected to open in February. Three more are soon planned, for Miami and Virginia.
“We know nothing about hair, but we saw a niche in the market,” said Fred Vicario, 47, Cherry Blow Dry’s president. He and his brother were convinced of the wisdom of this pursuit after visiting Drybar, considered the blow-dry industry leader.
Headquartered in Irvine, Calif., Drybar opened its first shop in February 2010 and expects to have more than 50 U.S. locations by the end of 2015.
“But we knew there were different things they weren’t doing that we could bring into Cherry,” said Steve Vicario. One was to push memberships, which he said Drybar offered but did not emphasize.
Cherry Blow Dry offers two types: $59 a month gets customers two monthly blowouts; any additional blowouts each month are at the discounted price of $35 each (regular price is $45); $99 a month comes with unlimited blowouts. Makeup services also are offered.
Though hair care might not have been the Vicarios’ forte, franchising is. As regional directors for Hand & Stone Massage and Facial Spa, the brothers developed 25 sites and own two. Formerly an executive at Maaco (20 years), Fred Vicario helped grow the auto-painting and collision-repair shops franchise from 300 to 550 locations, and he has been a Goddard School franchisee for 15 years.
Each has a niche, as does Cherry Blow Dry Bar, Fred Vicario said: “We’re offering a luxury to the masses.”
Cathy Ettinger, 64, is one of the 250 paid members at the salon the Vicarios own. She comes twice a week.
“I treat myself,” she said of her $99-a-month Cherry Blow Dry membership. “I do my own nails.”
For the Vicarios, she represents a remedy to what ails most small businesses, said Lane Fisher, a partner at Philadelphia law firm Fisher Zucker LLC, which specializes in franchises.
“All businesses struggle with cash flow, so a recurring (membership payment) creates predictability,” Fisher said.
And that, in turn, provides the economic foundation for expansion. Fisher pointed to Massage Envy, the largest massage franchise, with more than 1,000 locations and 1.4 million members.
“The speed at which their membership model could grow allowed (franchisees) to open more than one,” Fisher said.