Small Business

Making the Cut in Manhattan


By Amy Tsao At a glance, John Allan's Club in Midtown Manhattan looks like any number of sparely designed beauty salons in the Big Apple. Busy stylists dressed in black chat with clients while trimming hair and buffing nails. Several customers read magazines while waiting their turn.

But this isn't your typical salon. Investigate a little further and you'll notice a smaller room furnished with well-stuffed leather chairs, where clients can relax while watching TV and flicking cigar ashes into a large ashtray. In another room, patrons shoot pool and sip drinks from the bar, which is stocked with spirits and dominated by a shiny espresso machine. Then you notice that the only women at the salon are the ones who work there. All of the salon's customers are men.

Owner John Allan has been attracting men to his high-end, club-style salon since 1988. Despite the financial setback caused by September 11's attacks and the damage they inflicted on the original shop in the Financial District, Allan has plans to launch more salons in cities beyond New York. He envisions a Chicago location in 2003 and, after that, he'll start researching potential markets in places like Toronto and Ontario. The fortysomething New Jersey native also plans to revamp his line of men's styling and grooming products.

GROOM WITH A VIEW. The idea is to bring back a bygone era, when Allan believes men took better care of their looks. "The barber shop never really evolved much," Allan notes, adding: "I really like the attitudes and fashions of the Twenties, Thirties and Forties. So I built the clubs around that atmosphere. The music is blues, soul, and old country."

He has been able to convince a lot of guys - from bankers and brokers to executives and doctors - that grooming is a good idea. Salon members pay handsomely for their haircuts, which seldom cost more than $20 at New York's traditional storefront barbers. In return for an annual fee of $610, members get the whole nine yards -- hair wash, hot towel, haircut, manicure, shoeshine, and a beverage with each visit. Each monthly visit works out at around $51, not including tip.

The beauty-salon industry is highly fragmented, still comprised for the most part of independent operators catering mostly to women. In the '70s, men's attitudes toward grooming began to change and they now represent about 25% of the clientele at unisex salons, Allan estimates. And while salons like Allan's have seen some growth over recent years, there are still no more than a handful around the country. "I'm in a market now where direct competition is not another store like this," Allan says. "Here a man can get a haircut in a comfortable setting. I want to get guys into grooming again."

MALE BONDING. The salon's typical customer is in his mid-30's and so comfortable in the atmosphere Allan has created that he tends to think of a visit as a social occasion. Greg Morelli, an account manager at telecom carrier Broadwing, has been a John Allan regular for the past three years. "My boss was a member," he explains. "He took me there. We got haircuts, had a few beers, and talked for a few hours."

Over time, Morelli, who is 36 and lives in suburban Larchmont, convinced several co-workers to join. "We would all go together every

couple of weeks -- three or four of us. It made it an enjoyable

experience," he explains. Morelli, whose job demands frequent calls on potential clients, says good grooming is essential in his line of work. As far as he is concerned, that makes the annual fee a sound career investment.

Allan says that, from start to finish, a typical visit lasts between 35 minutes and 45 minutes. "Members can come in and just hang out," he explains. "They finish a day's work and diffuse a bit. That's important. I'm trying to teach men to take 35 minutes out for themselves. For a woman [going to the salon] is social, it's relaxation. With guys it's a matter of educating them." Men who are not full-service members pay a la carte prices, starting at $49 for a haircut.

UPTOWN CURLS. That might seem pricey, especially during an economic downturn. But a surprising number of members have demonstrated their loyalty, even despite the aftermath of September 11, which forced the downtown shop to close until March, 2002. In what Allan describes as a "triage of haircutting", the Roosevelt Hotel next door to the current Midtown salon provided a suite in which the salon's stylists washed and cut clients' hair during the stretch when the downtown location was being renovated and the Midtown salon had yet to open.

The new club, located just east of Fifth Avenue on bustling 46th Street, has been open just seven months, but is faring well so far. Just a few short blocks from heavily-trafficked Grand Central Station, it nestles in a part of town that is home to dozens of big businesses and corporate headquarters. Allan sees the Midtown location doing $1 million in revenues by yearend, and he's confident the figure will hit $1.6 million in 2003. In just the last six months, he boasts, his new location signed on some 800 members.

Many of those recruits are former members of the downtown Club,

located at 95 Trinity Place. This location was headed for total year

revenues in 2001 of over $1 million before September 11. Since the attacks, the downtown club has racked up about $200,000 in costs. "The shop was covered under four inches of soot," Allan recalls. "We had to rip out a lot and replace things down to the floorboards." Allan notes that the downtown salon typically chalked up $100,000 in monthly revenues -- but sales this past June rang in at just $27,000. Overall, he adds, his downtown business is down between 50% and 60%.

TONSORIAL WISDOM. Besides the two salons, Allan also plans to begin teaching visiting stylists from outside New York how to cut and style men's hair, as well as sharing his wisdom about the best ways to attract -- and keep -- a male client base. In exchange for his insights, stylists will be asked to return to their home salons with $800 worth of his signature styling and grooming products.

John Allan's salon isn't alone in coping with September 11's legacy of disruption -- plenty of other Big Apple businesses also are struggling to find their feet. Allan believes his downtown site will come back in time, gaining strength and a renewed client base as the Financial District itself recovers. Meantime, Allan clearly has an eye to the future. If he and salon industry watchers are right, men's services will keep growing and soon men's only salons won't be such a rarity. Tsao is a reporter for BusinessWeek Online in New York


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