Day Spa Financials

Part
01
of five
Part
01

US Dat Spa Pricing: New York City

The average cost of spa services at day spas in New York City is $131.92 for massage services, $52.45 for waxing services, and $123.94 for facial services.

MASSAGE

WAXING

  • The average cost of waxing services at day spas in New York City is $52.45.
  • Allure Day Spa had the most expensive waxing services with an average price of $181.85.
  • Haven Spa had the least expensive waxing services with an average price of $25.15.

FACIAL

  • The average cost of facial services at day spas in New York City is $123.94.
  • Oasis Spa had the most expensive facial services with an average price of $161.50.
  • Laura Beauty Spa had the least expensive facial services with an average price of $65.

Research Strategy

In order to determine the average cost of massage, facials, and waxing services at day spas in New York City, your research team utilized sophisticated search strategies to collect information. Primarily, we relied on information derived from individual spa corporate websites such as Allure spa website and Red Room spa website. Your research team entered information on the cost of spa services at 15 day spas in the attached spreadsheet, New York City tab. Using spreadsheet formulas we calculated the average cost of massage, facials, and waxing services in New York City
Part
02
of five
Part
02

US Day Spa Pricing: Philadelphia

The average price for spa services of massages, waxing, and facials are $108.62, $41.06 and $118.86 respectively. We have included a list of 15 sample spas which represent the calculated average. The complete data, including links to each spa, is available in the "Philadelphia" tab of the attached spreadsheet.

AVERAGE PRICE OF SPA SERVICES AT DAY SPAS IN PHILADELPHIA (MASSAGE, WAXING, FACIAL)

TOTAL AVERAGES 108.62 41.06 118.86


RESEARCH STRATEGY:

In order to provide the average price for the requested spa services, we combed through dozens of websites of spa facilities in Philadelphia. Though we found multiple facilities, we tried to stick to ones which appeared again and again across different ranking websites, as we assume, this makes the database more credible and fit for the sample array. We made sure all the cited facilities provide all three of the required services. After forming the final list of 15 spa facilities, we reviewed all of their pricing tiers

In order to determine the average, we listed all the prices for a certain service and removed reappearing prices, as the base of the average calculation is the range of the prices per service and not for sub-services. For example, if a Swiss massage and a Thai massage each cost $100 and full body massage costs $80, we removed one price count of the $100 and eliminated the sub-service count. Please see the following calculation example to better clarify our calculations.

WHAT WE DID

Service sample—Swiss ($100), Thai ($100), Full ($80)
Eliminate the price duplicate: Revised sample—$100, $80. Average is (100+80)/2 = $90.

WHAT WE DIDN'T DO

Service sample—Swiss ($100), Thai ($100), Full ($80)
Not eliminate the price duplicate: sample—$100, $100, $80. Average is (100+100+80)/3 = $93.33.

Had we not applied the above methodology, the average would be inaccurate in larger price samples existing in this industry due to the large variety of sub-services (for example facial waxing can cost $10 for multiple surfaces).
Part
03
of five
Part
03

US Day Spa Industry: Start Up Costs

The average start-up cost for a franchise day spa in the United States is estimated to be $562,843 while the average startup cost for a stand-alone day spa in the United States is estimated to be $460,000. This document and the research brief below provide the details of our findings.

START-UP FRANCHISE COSTS FOR A DAY SPA

MASSAGELUXE SPA

  • The total start-up franchise cost for MassageLuxe Spa is estimated to be between $412,400 and $565,600.
  • This start-up cost includes the franchise fee, leasehold improvements, spa equipment and supplies, signs, furniture and decor, fixtures, start-up marketing, initial pre-opening inventory, prepaid rent, insurance, licenses, training expenses, professional fees, security systems, computer hardware and software, and phone and music systems, among others.

WOODHOUSE DAY SPA

  • The total start-up franchise cost for Woodhouse Day Spa is between $652,350 and $835,200.
  • This start-up cost includes the franchise fee, construction management services fee, spa development package, computer systems, additional IT components, leasehold improvements, signage, business licenses and permits, architect fees, training expenses, online reservation system, professional services, insurance, advertising program, website development and setup fee, initial inventory and additional funds for the start-up phase (for initial three-month period).

SPAVIA DAY SPA

  • The total start-up franchise cost for Spavia Day Spa is between $282,940 to $646,717.
  • This start-up cost includes the initial franchise fee, initial training fee, travel and living expenses during training, site selection, insurance premium (3 months), security deposits for leases and utilities, business licenses and permits, rent, professional fees, architect, leasehold improvements, construction management, signage, graphics, equipment package, advertising (3 months), and additional funds.

START-UP COST FOR A STAND-ALONE DAY SPA

  • According to an article published by Truic, the total start-up cost for a day spa is between $120,000 and $800,000.

RESEARCH STRATEGY

To determine the average start-up cost for a day spa in the US, we began the research by looking for articles and reports which stated the average start-up cost for a day spa in the United States. We scoured articles such as CNN and Forbes. While this search did not yield the average startup cost for a day spa, we found the total cost for day spa start-up franchise for Woodhouse Day Spa, MassageLuxe Spa, Pamperzhou Day Spa and a range for the cost of a day spa start-up in articles published by Franchisechatter and Truic. The start-up cost for Woodhouse Day Spa franchise was estimated to be between $625,350 and $835,800, $412,400 and $565,600 for MassageLuxe Spa, and $282,940 to $646,717 for Spavia Day Spa, while Truic estimated the start-up cost for a stand-alone day spa to be between $120,000 and $800,000.
To find the average start-up cost for a day spa in the United States, the first thing we did was to find the average start-up franchise costs for the franchise spas. We summed the start-up franchise cost of Woodhouse Day Spa, $625,600 and $835,800 and divided by 2. This value gave an average start-up franchise cost of $730,700 for Woodhouse. We summed the start-up franchise cost for MassageLuxe, $412,400 and $565,600 and divided by 2, this gave an average start-up franchise cost of $489,000 for MassageLuxe Spa. We also summed the start-up franchise cost of Spavia Day Spa, $282,940 to $646,717 and divided by 2. The result gave us an average start-up cost of $464,829 for Spavia Day Spa.
To get the average start-up cost for a day spa, we continued by summing up the new franchise start-up costs for Woodhouse day spa ($730,700), MassageLuxe spa ($489,000), and Spavia Day Spa ($464,829). The sum gave a total franchise start-up cost of $1,688,529 million. Then we divided the total franchise start-up cost of $1,688,529 million by the total number of franchise day spas, which is 3. This result gave us an average start-up cost of $562,843. Therefore, we assumed that the average start-up cost for a day spa in the United States is $562,843.
To get the average start-up cost for a stand-alone day spa, we also summed the start-up cost estimate provided by Truic, $120,000 and $800,000 and divided by 2. This summation gave an average start-up cost of $460,000 for a stand-alone day spa. Therefore, we assumed that the average start-up cost for a "stand-alone" day spa in the United States is $460,000.

CALCULATIONS

AVERAGE START-UP FRANCHISE COST FOR A DAY SPA
Woodhouse Day Spa start-up cost range = $625,600 to $835,800
Average start-up cost for Woodhouse Day Spa = $625,600+$835,800/2 =$730,700
MassageLuxe Spa start-up cost range = $412,400 to $565,600
Average start-up cost for MassageLuxe Spa = $412,400+$565,600/2 =$489,000
Spavia Day Spa start-up cost range = $282,940 to $646,717
Average start-up cost for Spavia Day Spa=$282,940+$646,717 = $468,829
Total start-up franchise cost for three day spas = $730,700+$489,000+$468,829 = $1,688,529
Average start-up cost for a day spa = $1,688,529/3 = $562,843
Therefore, the average start-up franchise cost for a day spa in the United States is estimated to be $562,843.
AVERAGE START-UP COST FOR A STAND-ALONE DAY SPA
Estimate for the start-up cost for a stand-alone day spa range (according to Truic) = $120,000 to $800,000
Average start-up cost a stand-alone day spa (according to Truic) = $120,000+$800,000/2 = $460,000
Therefore, the average start-up cost a stand-alone day spa is $460,000.
Part
04
of five
Part
04

US Day Spa Industry: Trends

Some of the biggest trends in the US day spa industry include mermaid treatments/products/services, virtual reality spa integration, and treatments/services that combat blue light damage.

MERMAID MARKETING TREND

  • Skin Inc. Magazine lists the mermaid trend as on of the top trends for 2019.
  • With all the social media focus on anything mermaid, day spas are capitalizing on this trend to market new and existing products/treatments/services.
  • Using sea-based ingredients day spas can customize "mermaid" treatments.
  • Marketing mermaid products/treatments/services can attract adults and children.
  • Products focused on capturing the mermaid trend are available for day spas to sell and incorporate in their services.
  • The company Soapy Bliss has introduced a mermaid cupcake bath bomb, sugar scrub and body butter, using ingredients like: black Tahitian sand, coconut husk, sea kelp and coconut milk.
  • Additional companies capitalizing on the mermaid trend are Elina Organics, Sorella Apothecary, and Repechage.

VIRTUAL REALITY TREND


TREATMENTS/SERVICES THAT PREVENT OR TREAT BLUE LIGHT DAMAGE


Research Strategy:

We began our research by compiling "top" and "trending" lists from respected spa industry press sources. We compared and contrasted these lists, looking for items that appeared often and that represented meaningful new sets of services or marketing positions within the spa industry.

While any "top" list necessarily involves some subjectivity, our research team believes the items presented above represent a reasonable picture of the top current trends in the spa industry as described by industry leaders.
Part
05
of five
Part
05

US Day Spa Industry: Case Studies

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.

RESEARCH STRATEGY:

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.


Sources
Sources