Spa franchise brand Hand & Stone has grown exponentially since its founding in 2004, now operating more than 400 spa locations across the U.S. and Canada. Through its extensive understanding of the marketplace, the brand has structured its business model to afford franchisees multiple revenue streams on which to build their business, making Hand & Stone one of the most sought after franchise opportunities in its segment.
Created around the concept that luxury spa services should be available to the masses at a competitive price point, the business side of Hand & Stone has equal, if not greater draw. The brand’s membership model is a critical aspect of revenue generation and an aspect of its business that completely differentiates Hand & Stone from its competitors. As members, customers commit to one service per month at a reduced rate, up to 35% off Hand & Stone’s already reasonably priced services, plus additional discounts on products and gift cards. These strategies create a predictable customer base and a recurring revenue model as a result.
“We’re a service-based business, we just happen to also give massages,” said Bob McQuillan, VP of Franchise Development for Hand & Stone. “Our membership model keeps customers coming back, and allows franchisees to visualize membership and predict revenue streams. It’s an essential part of our business model.”
In addition to the overall value of Hand & Stone’s membership structure, franchisees benefit from a comprehensive offering made up of a catalog of different services and in-store product sales. Further still, spa services boat the No. 1 gift card industry in the world and the health and wellness segment is in the midst of a boom in popularity.
Hand & Stone’s multifaceted offering executed with impeccable customer service is the main business driver for its locations. Unlike its competitors, Hand & Stone’s services extend beyond just massages. While the brand still offers six types of massages seven days per week, Hand & Stone also provides nine different kinds of facials as well as hair removal, staying ahead of market trends by exploring innovative techniques and providing customers with services utilizing the latest facial technology.
“We really separate ourselves with facial services and hair removal,” McQuillan said. “Our focus on these ancillary offerings has catapulted us to approximately one-third of our revenue being derived from facial services. Expanding these offerings plays into the overall health and wellness component that we are emphasizing, plus they are affordable and rooted in customer service which helps drive traffic.”
When speaking big picture, McQuillan noted that 80 percent of Hand & Stone’s clients are female. Understanding this demographic helps the brand create opportunities to facilitate more frequent service use and product purchasing. The brand also has realized gift cards are big business and has taken steps to create opportunities for franchisees to capitalize on this popularity within the segment.
“Major holidays are key for us, yet we’ve gone above and beyond to create our own,” McQuillan said. “In addition to buy one, get one deals around the Thanksgiving and Christmas holidays, we’ve created special offers for ‘Relax the Tax’ day in April as well as Christmas in July. We also promote ‘staycation’ deals during for the long weekend holidays of Memorial Day and Labor Day. That way, even if you aren't a customer who utilizes our services, you become one when you buy a gift card,” McQuillan pointed out.
To further supplement revenue for its franchisees, Hand & Stone has built the retail component of its business around exclusivity by offering two specific brands: Dermalogica and ClarityRx, both of which estheticians use in the brand’s spa treatments. Dermalogica is the No. 1 skin care brand in Europe and maintains worldwide appeal, which has led to dynamic sales numbers. In the cosmeceutical category, Hand & Stone offers ClarityRx products. The dual lines keep things simple for franchisees and still give customers a choice.
“The light bulb has come on and people are realizing that this isn’t pampering any longer, it’s beneficial for their health,” McQuillan said. “Beginning and maintaining these regimens at a younger age helps people look and feel better longer, and we are in business to support wellness in every way.”