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Are We Coming Out of Hibernation or Being Lulled into a False Sense of Confidence?

Is this thing behind us? How are we feeling about the state we find our businesses in? Everyone is trying to recover, and we are cautiously optimistic. But what does this mean going forward?

Well, if you are a medical spa, you are probably thinking things are going great. You are feeling optimistic, and sales volumes are at or above where they were pre-COVID. Guests seem confident, are willing to return, and trusting that it is safe to do so. They want their Botox, and they are lining up to get it. It appears that Medical Spas have not raised prices even though it costs slightly more to perform our services. PPE is not cheap. It appears that vendors are trying to recover as well, and many have raised prices, cutting into our gross margin and cost of sales.

Day Spas are showing slower recovery. Social distancing and the length of time of our services is causing less volume, lower numbers of Guests, and more time between appointments. All this nets a decrease in revenue of 25-40% compared to pre-COVID. Many businesses are charging a COVID (PPE) surcharge, but there has been some pushback. Guests seem to be less critical of small service price increases than they do of these surcharges. Retail sales are on the upswing. For spas who market online sales, shipping, and curbside pickup, the sales of in-home care products have continued during closure and increased after re-opening. Overall, Day Spas are not quite where they were pre-COVID, but we are heading in the right direction.

Guests are getting used to the new check-in procedures. Spas that once provided more social water features, saunas, steam, salt, and relaxation areas are experiencing a slower growth back. Guests seem to be questioning the value of services that once included access to these areas. This has impacted the return of Guests to our spas and their expectation of more value for the price.

Slower growth is being felt by solo practitioners. Therapeutic massage seems to be recovering faster than solo aestheticians. Practitioners in medical offices and salons are coming back faster than those in salon suite locations.

Now is the time to actively manage your cost of sales. Know what the costs of providing your most popular services are. Identify the top 10% in terms of number of services provided and know what Gross Profit Margin (Service Sales minus Direct Costs) they are netting you. Make sure that your professional product and labor cost is in line. Negotiate with your product suppliers to make sure you are getting their best possible pricing. Work with them on “minimum orders” and order only what you need for the upcoming month. Know your breakeven in terms of the number of services you need to be providing each day in order not to lose money.

Hopefully, this gives you a point of measurement for your business. As we move quickly towards a fully vaccinated nation, we can anticipate our growth to continue. Unfortunately, the recent surge in cases is causing more uncertainty. We are not through this to the extent that we can project our future sales with confidence in our current boost in sales.

Our businesses are improving, and we are getting through this. Please know that we’re always here to help, and your first call is free.

Be well and stay safe.


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