Hair Care Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 119,400 hair care service companies in the US, including beauty shops, hair salons, and barber shops, provide hair cutting, coloring, and styling services. Hair salons may also provide skin and nail care services. Barber shops may shave or trim men’s beards. Companies often sell hair care products. The vast majority of hair care service providers (95%) are beauty salons.
Competition For Ancillary Services
Beauty parlors compete with spas, nail salons, and physician’s offices for ancillary services related to skin and nail care.
Dependence On Skilled Labor
The reputation and success of an individual hair care establishment is highly dependent on the quality of service and staff.
Industry size & Structure
The average hair care service provider operates out of a single location, employs 3 workers, and generates between $219,000 and $239,000 annually.00 and $301,000 annually.
- The hair care services industry consists of about 119,400 establishments that employ 352,400 workers and generate over $26 billion annually.
- The vast majority of hair care service providers (95%) are beauty salons.
- The industry is highly fragmented; the top 50 salon firms account for 13.6% of total revenue.
- The hair care services industry includes national chains, franchises, and independent operators.
Industry Forecast
Hair Care Services Industry Growth
Recent Developments
Mar 22, 2023 - FTC Proposes Ban on Noncompete Agreements
- A proposed ban on noncompete agreements by the Federal Trade Commission (FTC) would impact many hair care providers, who often require new hires to sign such contracts, according to the Wall Street Journal. About 30% of independent salon owners have new employees sign the agreements, which restrict workers from working for competitors or picking up side jobs, according to FTC and Duke University economists. In recommending the ban, the FTC said noncompete agreements restrict workers’ mobility and earnings and hinder businesses from hiring the needed staff. The FTC estimates that a noncompete agreement binds nearly 20% of American workers. Salon owners who use the noncompete agreements contend that they help them protect their businesses and trade secrets and will frequently legally pursue workers who violate the agreements.
- Consumer confidence levels declined in February 2023 for the second consecutive month, according to data from The Conference Board. The Conference Board’s consumer confidence index fell to 102.9 in February 2023 from 106 in January 2023, as high prices and rising interest rates affected consumers’ willingness to spend. According to Ataman Ozyildirim, a senior director of economics at The Conference Board, “Consumer confidence declined again in February. The decrease reflected large drops in confidence for households aged 35 to 54 and for households earning $35,000 or more.” Plans to purchase homes, vehicles, and appliances have cooled, in addition to a drop in vacation intentions, per Ozyildirim.
- A new bill proposed in the Senate would offer tax credits for tips to beauty service providers, including manicurists, hair stylists, and skincare specialists, according to Accounting Today. The “Small Business Tax Fairness and Compliance Simplification Act” was introduced by Ben Cardin (D-Maryland) and Tim Scott (R-South Carolina) in January 2023. The bill expands the tax tip credit under the Federal Insurance Contribution Act to include beauty businesses. The tax code currently allows food and beverage establishments to claim a credit against the business’ income taxes for FICA taxes paid on tip wages. The bill would amend the tax code to apply to tips for hair care, nail care, esthetics, and body and spa treatments. According to Cardin, “Workers in the beauty services industry are as reliant on tips as food and beverage workers, and it is time for the tax code to catch up.”
- The average hourly rate for a salon professional is $38.37 an hour, according to “The Pro Beauty Compensation Study” by Qnity in American Salon. The study was conducted across 330 salon locations with businesses representing over $184 million in payroll compensation from 36 states. Participating salon owners submitted the W2 earnings of about 3,400 employees and answered a survey with qualitative and quantitative information. About a quarter of those surveyed earned more than $48.08 an hour, which would add up to $100,000 annually if adjusted to a 40-hour work week. The average W2 in the study was $54,307. About 96% of salons offer benefits to employees, and 90% provide new hire training programs and ongoing education. Flexibility is a key benefit of salon jobs. According to the study, the average amount worked was 27.8 hours per week, and 99% of owners offer scheduling flexibility.
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