Massage Envy's yearly revenue amounts to $1.4 billion. Hand & Stone Massage and Facial Spa's annual revenue is estimated to be $32.8 million, according to Zoom Info. Both of the companies are private entities. After an exhaustive search through credible sources, we were unable to provide information on the cost of services for each company, as well as details on their profit and general expenses.
1) MASSAGE ENVY
A) Overview of Services & Prices
- The company operates as a wellness franchise that provides skincare and massage services. In the year 2015, it held a market share of about 50% of the day-spa sector.
- The company functions on a franchise model and has over 1.5 million members throughout the United States and about 1,200 franchised locations in the nation. It is also one of the largest employers in the day spa industry, with over 25,000 massage therapists and estheticians employed in the country.
- Massage Envy offers a broad range of massage services, including Swedish Massage, Prenatal Massage, Deep Tissue Massage, Chair Massage, Reflexology, Geriatric Massage, Cranial Sacral Massage, Trigger Point Therapy, Hot Stone Massage, and Sports Massage.
- Massage Envy also provides many types of skincare and skin treatment services, such as customized facials, and advanced skincare treatments such as Microderm Infusion and Chemical Peel. Moreover, it offers total body stretching and waxing services.
- The company positions itself as with costs ranging from $65 to $90 a month (50-minute service) for members.
- The average cost for a 60-minute massage at Massage Envy is $95 per hour (non-members) and $50 (members). Non-member pay about $135 for 90-minute session and membership rates are $75. Meanwhile, for a 120-minute massage, non-member rates are about $199, while members pay $100. The cost of membership is up to $720 a year, or at least $60 per month.
- Its advanced skincare treatments like Microderm Infusion and Chemical Peel cost $90+ (members) and $130+ (non-members). A 60-minute waxing session costs $50+ (members) and $90 (non-members).
- The cost of facials ranges from $50-$75 for members and $90-$135 for non-members. The 30-Min Total Body Stretch costs $31 for members and $45 for non-members, while a 60-Min Total Body Stretch costs $50 for members and $90 for non-members. (Source#2)
B) Financial Data
2) HAND & STONE MASSAGE AND FACIAL SPA
A) Overview of Services & Prices
- The company is a facial and massage franchise, and it has expanded significantly since its inception (2004). Currently, it runs more than 400 day spa locations in both Canada and the United States. According to Forbes, the company has experienced a five-year growth rate of 25.41%.
- It was also listed number eight on Forbes' "Best Franchises to Buy" list. The establishment is acknowledged as the sole day and facial spa ranked in the high-investment category for the year 2019.
- The company offers three distinct service lines, namely facials, therapeutic massages, and hair removal services. Regularly, it has initiated brand-new and unique luxury services for both facials and massages.
- Regarding facials, the company recently launched microcurrent facials services and LED photo light therapy. For massages, it recently revealed a fresh Himalayan Salt Stone Massage and paraffin hand and foot treatments.
- The various kinds of massage services provided by the spa include Swedish Massage, Prenatal Massage, Deep Tissue Massage, Hot Stone Massage, Oncology Massage, Himalayan Salt Stone Massage, Sports Massage, and Decompression Therapy.
- The diverse types of facial services provided by the spa include Classic Facial, Detox Facial, Express Facial, LED skin photo-light therapy, Rejuvenating Facial, Teen Facial, Sensitive Skin Facial, Men's Facial, and NuFace Microcurrent Therapy.
- It also provides wax-free and botanical body and facial hair removal services for both males and females, beginning at about $15.
- For a one-hour massage, along with the one-hour facial, session, the initial trial price is $49.95. Furthermore, the price for the one hour long Hot Stone Massage is about $69.95.
- Also, the company offers a membership program, which allows members to take advantage of one special massage each month. This program lessens the cost of the massage by at least $20. The membership costs, however, were not disclosed on its website.
B) Financial Data
- According to Zoom Info, the company's estimated revenue amounts to around $32.8 million.
- Hand & Stone Massage and Facial Spa is a private entity. Hence, it does not provide any detailed filings through its website to garner data around profits and expenses.
Our research began by scouring through the company websites and its various sections, particularly the press releases as they are a primary source of information for financial results or performance-related announcements made by a company. We visited all the press release archives available for each of the companies. However, NO information on the financial performance parameters like profitability, costs, and expenses could be located. The information we discovered concerned the services provided, and the pricing of the numerous services offered by the day spas.
Next, we leveraged various credible company databases such as Owler, Crunchbase, Craft, Zoom Info, Hoovers, Bloomberg, Capital IQ, etc. to find detailed financial information. These databases serve as potential sources for financial data and contain various kinds of estimates around a company's financial performance such as EBITDA, NET Profit, IT spend, etc. However, none of these provided any pertinent data. While we were able to accumulate data around revenues for each of the companies and their expected spend and financing amounts wherever available, information on the profits, general expenses, and cost of services were not available for any of the businesses.
We then searched through media and financial articles from Forbes, WSJ, Business Insider, Bloomberg Quint, Seeking Alpha, and Reuters, among others. Additionally, we consulted finance specific blogs and sites such as Franchise Chatter, Pitchbook, and AltAssets, along with U.S. day spa industry reports from Market Radar, Market Intelligence, Grandview Research, Deloitte, and McKinsey. These are potential sources that typically quote financial performance metrics for companies, notably for an outlier performance. Although we could identify mentions of these companies in some media articles as leading players in the industry, there was no information found on any financial data around them.
Afterward, we consulted third-party broker reports from GS, RBS, JPM, Moody's, and Fitch, among others. Such publications usually contain details on any relevant financial events, such as strong/dismal bottom or top-line performance, as they constitute a material event and have an impact on company valuations, which brokers apply to revise their estimates or guidance around a business. However, since both the companies are private, there was no broker coverage available for them.
Next, we visited the website, filings, and press releases of the parent companies, wherever available. We discovered that Massage Envy operates as a subsidiary of Roark Capital Group (Source#5), and was acquired by the organization in a P.E. deal. Typically, parent group companies divulge information on their subsidiaries' financial performance, usually while reporting consolidated financial statements. However, we could not garner any relevant financial information for the company, as the parent company (Roark Capital Group) operated as a private entity, with no financial filings available either on a standalone or consolidated basis.
Finally, we searched for any pertinent SEC/EDGAR filings. Although private businesses are not required to file with the SEC, some provide 8-k statements to disclose material announcements for their investors. Such 8-K statements unveil material performance changes in the companies' financials. Additionally, we tried to locate relevant financial filings, presentations, annual reports, supplemental information, etc. around these companies from sources such as NASDAQ, Bloomberg, Reuters, and Capital IQ. Nonetheless, the sources did not provide any financial filings or appropriate 8-K statements for the two companies. Due to their private nature, we could not locate the companies on SEC, NASDAQ, or similar portals.
Due to the unavailability of information, we were unable to locate details on the profits, general expenses, and other detailed financials around the companies. A probable reason for the lack of data is that the industry is primarily unorganized and fragmented. Almost all the players operating within it are private and have no detailed financial filings or annual reports available for them to accumulate the required information on profitability, costs, and general expenses. We chose the case studies because the companies have sizable operations (based on the number of locations and revenue) in the U.S. day spa market and contained specific information on their services, prices, and revenues when compared to other day spas.