Fastest Growing Franchising July 2019 Past Issues

European Wax Center – Leading beauty lifestyle brand franchise continues to accelerate

July 11, 2019

European Wax Center

Leading beauty lifestyle brand franchise continues to accelerate

Business View Magazine interviews David Berg, CEO of European Wax Center, for our focus on Fastest Growing Franchise Companies.

At its very heart, European Wax Center (EWC) believes that revealing beautiful skin is the first step to revealing your best self. It reveals a more radiant you; a more honest you; a more confident you. Not only does European Wax Center promise a luxurious experience for guests, it is equally committed to delivering the ultimate franchise experience. From its headquarters in Hallandale Beach, Florida, to the marketing office in New York City, to over 730 centers nationwide, EWC’s unique company culture embraces the values and lifestyle of good business. Not surprisingly, the company leads the out of home waxing industry, with a thriving national footprint in over 40 states.

David Berg, CEO

Recently, Business View Magazine spoke with David Berg, CEO of European Wax Center, about this remarkable franchise model and the reasons behind the company’s exceptional growth. The following is an edited transcript of that conversation.

BVM: What is the back-story on EWC?

Berg: “European Wax Center has been in business just over 15 years. The original owners were brothers, David and Josh Coba, who started the business in the back of their father’s hair salon, with the phenomenal idea of providing exceptional waxing services at a good value. That idea has grown to a franchising model today of about 730 centers across the Unites States. We still operate as if it’s a family business, although the Coba brothers sold 70 percent to General Atlantic, a private equity firm based in New York.

“Our typical format is a 1,200 to 1,500 sq. ft. center that has six or seven wax suites, providing waxing services for everything from legs to bikinis to underarms to brows. We have about 13 million individual customers per year and perform over 20 million services per year, with nationwide annual revenues nearing $700 million from a total system standpoint. Throughout our franchise network, there are in excess of 10,000 dedicated franchise associates and about 125 employees in corporate. We’ve done a white space exercise and we believe there’s an opportunity to expand the brand throughout the U.S. to three times the footprint in our current format. Given available whitespace in the US, this is where we are currently focused but also believe EWC has broader international appeal in the future.

“The waxing service makes up 85 percent of our revenue. We also have our own proprietary product portfolio in all our centers and that rounds out the revenue curve. Most of those products are complementary to the waxing service, helping to care of skin in between services. For example, this includes products that exfoliate and moisturize the skin, help prevent ingrown hairs, while some also contain a hair growth inhibitor unique to EWC. So, retail product is a significant part of our business, as well.”

European Wax Center store interior showing items for sale on one wall of the store.

BVM: What is leading your amazing growth?

Berg: “This is a very fractionalized business in the United States; we are the biggest player in the out of home market by about eight to nine times. The next biggest national waxing company in the industry has about 90 centers, compared to our 730. There are some regional players that have 40 stores, and the rest are waxing services provided in the back of a hair or nail salon, or a massage location. We have over 300 franchisees and a lot of them own two or three centers. 70 percent of our growth comes from our current franchisee base opening another center. We think that’s the best testament to the strength of the brand and the belief in it.

“We’ve done a fair amount of work finding where the best growth opportunities are, so we’re going to be focused on those areas. We recently hired Jean Grossman, who was previously with the Dunkin’ Donuts network, as our Chief Franchise Officer. She is tasked with continuing to accelerate our development and building out a field support structure for our franchisees. Historically, we’ve relied on intermediaries called Area Representatives, and we are beginning to have a more direct relationship with our franchisees going forward.

“Our typical guest is in an age range from high 20s to close to 40; fairly affluent; living in the suburbs; college educated. And the ideal spot for us in a suburban area is a strip center, where you might have a grocery store and other services, like hair or nail salons. We’re not in the big retail mall settings; that’s not always a place where someone will go to have a service performed. So, it’s generally more freestanding and inline stores.”

BVM: What do you look for in a franchisee?

Berg: “We have a number of ways in which we identify prospective franchisees when we go into a new market. Some of this is word of mouth from our current franchisee base. A number of our franchisees have centers in multiple geographies, so they’ll introduce us to folks in their network. Oftentimes, these potential candidates have other franchises and are looking to expand with a better economic model like European Wax Center.

“We think it’s important to have really good operators. The financials aren’t all that difficult to get into a center. It’s not a crazy amount. Often, we’ll have folks who have retired and have a good network and a good business operations background, not necessarily as a franchisee. We spend a lot of time with training and onboarding; we teach you the system and, following our playbook, most people are very successful.

“There is a formal training program at corporate that gives an orientation to the brand, and what to expect when you open a new center. We help with site selection, understanding the lease terms, the financial model; we have pre-opening franchisee training before the launch, and infield support, as well, for a franchisee. As the brand owner, to ensure brand standards, we manage national marketing, social media, SEO/SEM, orientation, and website through our corporate offices. While there are a number of hyper-local marketing opportunities and guidelines we have for franchisees, we just want to make sure there’s consistency of the brand, so that goes through an approval process at corporate.”

BVM: Competition-wise, what differentiates EWC from the others?

Berg: “We don’t take competition lightly, but we have several things that distinguish us. The founders really built a solid foundation around this luxurious experience and we ensure that we’re delighting our guests when they’re in our centers. That is still our primary focus. Cleanliness is a critical factor. We are maniacal about making sure our rooms are clean and that we meet the highest possible standards. And, even though our wax specialists are professional, licensed estheticians they undergo extensive training on our wax and waxing technique so that really understand waxing and everything related to it, including how to best take care of waxed skin. We’re very selective in who we recruit and how we retain those folks. Getting the service is easy and convenient, and we have a high degree of loyalty from repeat guests. With over 730 centers, consistency is important. So, if you’re in a European Wax Center in Cleveland, we want that to be the same experience you get in Topeka.

“Every year, we have a franchisee business conference. This year, in May, we had over 1,200 attendees from our network. The event features a couple days of internal and external speakers, and dozens of teach-out courses for the franchisees, center managers, and the trainers. There are also quarterly and in-region meetings that go on throughout the year. The educational piece is important; teaching how we can better create an exceptional experience with our guests, how we think about profitability and expansion, understanding the new marketing campaigns, the brand asset we’re delivering. Our goal at the end of conference is making sure everyone is really excited about our brand, being part of the EWC family, and our network.

“We have some great partners–a curated selection of the best of the best agencies that are key to our success from Batallure Beauty that develops our products and packaging; to social media with Laundry Service, digital media planning and buying with SwellShark, and HvM Communications as our external PR partner. We’ve also made a real push in the Latina market and done some very creative outreach, thanks to RepublicaHavas – a strong partner that helps us understand and break into a new customer segment.”

BVM: What’s at the top of the agenda for the future?

Berg: “We have four key strategic initiatives we’re pursuing. One is to accelerate growth in a thoughtful and informed way that is respectful of our current franchisee base. Two, is an efficient enterprise mentality, where we have a strong focus on ROI and cost effectiveness. Third, is to ensure we have a relentless focus on a 360-degree guest experience. And the final one falls under the umbrella of having an incredibly caring culture of people plus performance – meeting and exceeding all the expectations.

“We are absolutely committed to delighting our guests with a safe, pristine service in a highly professional environment and offering the best products to enhance their experience. From a franchisee standpoint, this is a model where the repeatability of guests is second to none. It’s an opportunity for a fairly quick return on a franchisee’s investment, and a very attractive business and different experience from a lot of franchises out there. Our guests and our franchisees are both in the customer lens that we focus on; we have a true commitment to an authentic and genuine experience through the power of the European Wax Center brand.”