Carolyn DeVito and her then-business partner Joseph Secreti opened Unique Salon & Spa in Long Island, New York, in 1998. The full-service hair and nail salon expanded to four locations on Long Island with over 120 employees. Carolyn and Joseph parted ways as business partners after an ugly, costly battle, and Carolyn took on a mountain of debt from the legal issues. She got to keep the salons, which were bringing in $4.2 million in yearly revenue and looked to Marcus Lemonis and The Profit for help making Unique Salon & Spa a profitable success.
Unique Salon & Spa on The Profit
The Profit Season 2 Episode 12
The first thing Marcus noticed when he arrived to meet with Carolyn was the prime location for the salon, in the middle of other successful businesses. The second thing he noticed was that next to the hair products for sale were displays of jewelry and clothing, a mixing of product messages, Marcus is not a fan of.
Carolyn arrived and started the tour with the space reserved for cutting and coloring hair, and Marcus was not impressed. The area was badly in need of some remodeling and upgrades. Carolyn told Marcus that the old and dirty room was preventing her from hiring quality hairdressers. Marcus noted that it was probably why there were no customers either.
They moved to the hair coloring storage area, where there was around $25,000 worth of color inventory. Carolyn estimated that waste and leakage were responsible for losing about 10% of their stock in the coloring room. Marcus calculated that to be about $30,000 in losses per year from that space alone.
Unique Salon & Spa grew so fast that Carolyn hired a general manager named Susan to help oversee all of the locations. Marcus observed that the reason many businesses go under is that they try to implement too many layers of management responsibilities and felt that was what had happened to Unique Salon & Spa.
A store manager arrived and got into an argument with Susan over the air conditioning in her Plainview location, saying it had been down for days. Susan said that a technician had been sent to fix the issue and told the manager to return to her store. Carolyn felt Susan should have gone to the Plainview store with the manager to make sure the air conditioning situation was handled properly.
Staff members began complaining to Marcus about Susan’s management style, questioning what her duties were since Carolyn and the individual store managers seemed to handle the bulk of the managerial workload. Susan had missed appointments and under-ordered product inventory. That these employees were going to Marcus and not Carolyn, who told him that it was time to change up the way Unique Salon & Spa was run at the top level of management.
Marcus sat down with Carolyn to discuss the financial aspects of Unique Salon & Spa. The business was generating $4.2 million in revenue. Three of the locations were breaking even, but the central location was losing money. Carolyn had not taken a paycheck in the last six months. When he discovered that 70% of the business at that location was through the coloring services, Marcus looked at the waste in that room as a primary concern.
Payroll at the main Unique Salon & Spa location was eating up 62% of their profit. Carolyn wanted to get it down to 50%, which would mean letting some employees at that location go. It would also be a savings of $400,000.
Though he had no particular interest in the hair salon industry, Marcus felt Carolyn had potential. He told her he wanted to get rid of the boutiques, simplify the management of the business, and remodel the primary salon location. While he wasn’t interested in partnering in the salon, he was willing to invest in the product line. He offered Carolyn $200,000 in exchange for a 20% share of the salon and 51% percent of the products. He wanted to revamp the product line, give the salon a makeover, and let her use the rest of the money for working capital to run the business.
Carolyn was happy with the offer but asked for a little more capital to work with. Marcus upped the offer to $250,000, and she accepted. He was now in total control of the operations until after the upgrades were completed.
Marcus had the hair care product packaging redesigned, which would allow them to raise prices by up to 25%. He felt the new packaging would draw outside distribution offers and catapult Unique Salon & Spa to a million-dollar operation.
He started selling their products in her ex-partner’s stores, which made them money and helped Carolyn get over the bitter breakup, which was still brewing inside her. Marcus even tried getting the two of them together to try to strike some sort of mutually-accepted business deal. That did not go well, as Carolyn used the time to yell at Joe the entire time.
Susan, the general manager, walked out on Carolyn in the middle of the day. After Susan hung up on Carolyn and Marcus, he told Carolyn that there was no place for Susan at Unique Salon & Spa any longer.
Firing Susan was the right move for the growth of the company, but Carolyn was emotional about it. She felt it would put her in the position of having to make all of the decisions on her own, something she feared for a long time. Marcus assured her that was what he was there, for now, to help her get over her issues with what happened with Joe and make her business decisions with logic rather than rage at what happened.
Unique Salon & Spa looked like a brand new store when it reopened following extensive renovations. Modern chairs, chandeliers, and open floor design. Product displays were smartly backlit and organized. A color bar inventory system had made the entire production more efficient and eliminated the 10% waste that was costing them so much money. A mobile system for the manager to open and close store locations eliminated the need for a general manager, also saving money and aggravation.
Where Are They Now? Unique Salon & Spa After The Profit
Carolyn returned to The Profit for a follow to share her successes with her business. Since the renovations, Marcus facilitated, Unique Salon & Spa was named one of the top 20 salons in the country. Her hair care product line, Erika Cole by Raquel, under Marcus’ guidance, had improved profits and margins.
The salon is now called Ericka Cole by Raquel to match the product line identity. Unique Salon & Spa boasts of a 98% rating on Groupon, though they have received mixed reviews on Yelp. The most common complaints have to do with laser hair treatments.
By all other measures, Carolyn and Marcus have grown Ericka Cole by Raquel into the multi-million dollar business Marcus had envisioned. The company sells a wide range of haircare, skincare, and styling products, and an entire section devoted to men’s products.
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