Ratner Companies

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Ratner Companies

2815 Hartland Road
Falls Church, Virginia 22043
Telephone: (703) 698-7090
Toll Free: (800) 874-6288
Fax: (703) 876-2897
Web site: http://www.ratnerco.com

Private Company
Incorporated: 1974 as Creative Hairdressers Inc.
Employees: 10,000
Sales: $204 million (2004 est.)
NAIC: 812112 Beauty Salons

Ratner Companies is the Falls Church, Virginia-based parent company of six hair salon subsidiaries. The main enterprise is Hair Cuttery, a 800-unit value-priced salon chain found on the East Coast and the Chicago area, comprised of both company-owned and franchised operations. Although Hair Cuttery offers a full complement of hair care services, no appointment is necessary. A similar concept is employed by Hair Cuttery United Kingdom, a chain located in northwest England. With 23 locations, Bubbles Salons is a more fashion-conscious full-service salon that also offers spa services. A fourth member of the Ratner Companies, Salon Cielo and Spa is an upscale offshoot of Bubbles. Of the ten Cielo locations, eight offer spa services. Another upscale format is ColorWorks Salon, a six-unit chain that specializes in a full range of hair color services. Finally, Ratner Companies is home to Salon Plaza, styled by the company as "beauty malls." Ratner Companies is privately owned by chief executive officer Dennis Ratner, his family, and ex-wife.

Getting into the Beauty Industry in the 1930s

Dennis Ratner learned the hair styling trade from his father Louis Ratner, who was born in Washington, D.C., in 1912. A high school dropout who went to work to help support his family, he became a professional piano player, then in the 1930s established himself as a Washington hairdresser. Soon he was running one of the largest salons in the country. He struck out on his own in 1936, establishing Louis Ratner Creative Hair Designs in Washington, D.C., which became a pioneer beauty parlor chain. An astute marketer, he conceived of the $5 permanent wave, thus becoming "$5 Louis," the king of permanents. He then built an empire of 25 District of Columbia-area beauty salons before retiring in 1971. At the age of 18, Dennis Ratner took up the scissors and went "behind the chair" full-time in one of his father's salons and learned the business from him. Years later, Ratner told Washington Business Journal in a 1991 company profile, "Dad was brilliant, a visionary. He related to me everything he knew. He's 80 now, lives in Florida, and we talk four or five times a week. There's nothing better than a family in business." Dennis Ratner married a British-born stylist, Ann, and one night they conceived of a new kind of salon, using a cocktail napkin to sketch out their idea for a unisex shop that catered to the family trade, offering inexpensive haircuts with no appointment necessary. Ratner was 29 years old when he and Ann invested $5,000 to open the first Hair Cuttery in West Springfield, Virginia. He did not even have a logo for the business when he approached the Washington Star to place the salon's first advertisement. For $50 the newspaper's display ad department offered to provide him with ten different logo ideas. He selected one that featured a pair of shears cutting through the Hair Cuttery name, a logo that would become well known in the Washington, D.C., metropolitan market. The first Hair Cuttery salon caught on quickly, and Ratner opened two more stores in Virginia later in 1974, laying the foundation for the Hair Cuttery chain.

Because Ratner was brimming with other business ideas, he elected to create a parent company to house them, along with the remaining salons of his father that he continued to manage, choosing the name Creative Hairdressers Inc. He and Ann eventually divorced but remained business partners. In 1978, she branched out on her own, adding an element to Creative Hairdressers with the founding of a more up-market salon, which she called Bubbles. It too grew into an area chain, albeit on a much smaller scale than Hair Cuttery, numbering only seven salons by 1991. In contrast, Hair Cuttery added about 350 units, picking up the pace of openings as the years went on, adding nearly 100 units in the Washington, D.C., area and another 50 or so in the BaltimoreAnnapolis, Maryland corridor; 60 in southern Virginia; 50 in Pennsylvania, New Jersey, and Delaware; 50 in Florida; and another two dozen stores in Atlanta and other locations in Georgia. To find enough qualified stylists, the chain sometimes took unusual steps. Once it mailed surveys to every licensed hair dresser in the Washington, D.C., area, listing Creative Hairdressers' offices as the return address but making no mention of Hair Cuttery. The survey asked where the people worked and whether or not they had any interest in changing jobs. Hair Cutters contacted everyone who indicated they would entertain an offer to switch salons and successfully convinced a number of them to join Hair Cuttery. As the chain grew, it added its own line of hair care products and used its size to align itself with such hair care giants as Clairol, Redken, and Paul Mitchell, promoting their products and in turn receiving steep discounts.

Wide-ranging Ventures Launched in 1980s

Along the way, Ratner launched other enterprises under the Creative Hairdressers umbrella. He started a beauty school called Image Makers, which he sold in the mid-1980s, and earlier in the decade he tried to establish a vitamin store chain and made a stab at a nail care salon, which he told Washington Business Journal had "a cute name, but I can't remember what it was." By the early 1990s, with the U.S. economy lapsing into recession, Ratner took a step back and concentrated his efforts on the salon business. Hair Cuttery, which on average had been opening a new salon each week, now cut back to about 35 new units a year, and instead of breaking into new markets, Ratner elected to fill in the markets where the chain was already represented.

The 1990s brought the death of Louis Ratner, who succumbed to leukemia at the age of 82 in late 1994. His son continued to build the family empire founded on the legacy of the king of permanents. By the end of the 1990s, after a quarter-century, Hair Cuttery grew to 800 salons in size. In addition to entering nearby markets in North Carolina and South Carolina, the chain also entered the Chicago area in 1999 through the acquisition of 30 salons owned by hairstylist Peter Poggi and Poggi Enterprises, Inc. The Salonsoperating as Chicago Hair Cutting Co., Chicago Hair and Tans, and Hair Americawere gradually converted to the Hair Cuttery name.

New Directions and a New Name:
Late 1990s and Beyond

In the late 1990s, Hair Cuttery went international. A United Kingdom couple, Gary and Michele Levy, who owned a salon chain in Altrincham and Stockport in Great Britain, came across an article in the Manchester Evening News which profiled the career of Ann Ratner, a Manchester native. Interested in what they learned about the Hair Cuttery concept, the couple faxed Ratner, who promptly telephoned them. Weeks later, the Levys traveled to the United States to meet with Dennis and Ann Ratner and forged a franchising agreement to bring Hair Cuttery to the United Kingdom. The first U.K. salon opened in 1998 and within a year five more shops followed, including a Manchester flagship salon that featured a state-of-the-art training facility. The goal was to launch 300 Hair Cuttery salons by 2010, although by 2005 the chain had only reached 30 units.

Meanwhile, Creative Hairdressers launched Salon Plaza. Billed as a "beauty mall," this operation is in essence a booth rental business in which independent operators lease individual private salon suites sharing a common lobby. Maintenance, utilities, styling chairs, shampoo bowls, and professional liability insurance are also provided. By the end of the 1990s, the company was operating three of the beauty malls in Maryland and Virginia. In 1999, Creative Hairdressers celebrated its 25th anniversary with a number of changes. A new corporate name was adopted, Ratner Companies, which both reflected the Ratner family connection and the holding company nature of the business. The company also tightened controls, for the first time bringing together all the subsidiaries' back-of-the-house functions to be run out of the corporate headquarters in Virginia. Furthermore, there was as a change in attitude at the top. "The first 25 years was about building a business," Dennis Ratner told Chantal Tode of Salon News in March 2000. "For the next 25 years, giving back to our people is the sole reason this company is going to survive. We have the luxury of being a large company now and of being able to do something significant."

A major element in helping associates to "earn a better living and live a better life," as well as to retain talented people, was education. According to Salon News, it "quickly dawned on [Ratner] that he would need to partner with a manufacturer to provide the necessary educational support. But, rather than pick a company himself, he let the employees make the choice. The stylists chose Redken [Fifth Avenue], says Ratner, because the two companies seemed the most aligned on the idea of helping stylists to earn a better living." In exchange for becoming the exclusive provider of products at the "back bar" at Hair Cuttery, Redken set up an educational program that dealt with both technical and non-technical subjects. Unlike previous training, the stylists helped to choose the subject matter, from new styling techniques to how to handle finances. Although it was expensive to do so, the technical classes took place in the salons for the sake of convenience.

Company Perspectives:

At Ratner Companies, we understand that the success of our company depends on the success of our Stylists. We're a large organization that strives to focus on the well-being and education of every one of our 10,000 Stylists. That's why we offer them a lot of creative freedom, plenty of growth opportunities and a work environment where fun and individuality flourish. We only have happy clients if we have happy Stylists. That's why we put our people first.

The alliance with Redken also provided focus, since stylists now had to be educated only on one product line. However, they would not be required to promoted Redken products. Hair Cuttery continued to take a multi-line approach to its retail area, running product-based promotions about once a month, a number of which were done on an exclusive basis. Some nontechnical aspects of being a stylist were conducted offsite at local beauty schools, where students learned what Ratner called the "softer side" of the business. Among the principles Ratner believed successful stylists should practice every day were communication, making sure they truly listened to what customers wanted; doing something for customers that was unexpected but appreciated, such as his favorite, a quick shoulder rub; and teaching customers how to take care of their hair at home. By doing these things, stylists could build relationships and keep customers. He urged stylists to not be afraid to hand out business cards to build a customer base. On the personal side, Ratner urged stylists to take good care of themselves, to make sure to wear comfortable shoes and clothes. Another facet of the softer side of the business was for stylists to view tips as part of their income, not throwaway money. As a young stylist, for instance, Ratner lived on his tips and saved his salary.

As Ratner Companies expanded the Hair Cuttery chain in both the United States and the United Kingdom, as well as grow the other brands, it continued to look for new opportunities in the 2000s. Dennis Ratner even talked about the possibility of again becoming involved in the beauty school business. Out of Bubbles emerged the Salon Cielo and Spa minispa concept. Ratner companies also found niche opportunities in coloring, launching a salon concept called ColorWorks. Although ColorWorks salons offered hair cuts, the primary focus was on hair coloring. Ratner Companies attempted to launch a down-market version called Easycolor, but it failed to take hold. By the summer of 2005, Colorworks could be found in six Maryland and Virginia locations, with two more salons set to open in Maryland and Jacksonville, Florida.

With a number of its brands prospering, Ratner Companies appeared well positioned to grow for some years to come. As for selling the business or taking it public, Dennis Ratner showed no interest, telling Salon News, "We will stay privateselling the company is just not appealing to me."

Principal Subsidiaries

ColorWorks Salon; Hair Cuttery; Hair Cuttery United Kingdom; Bubbles; Salon Cielo and Spa; Salon Plaza.

Principal Competitors

Mascolo Ltd.; Regis Corporation.

Key Dates:

Hairdresser Louis Ratner opens his first salon in Washington, D.C.
Hair Cuttery opens its first salon.
First Bubbles salon opens.
Louis Ratner dies.
Hair Cuttery is launched in the United Kingdom.
Parent company Creative Hairdressers Inc. changes its name to Ratner Companies.
ColorWorks is launched.

Further Reading

Kretikos, Eleni, "Falls Church Salon Streaks Color Shops Across Region," Washington Business Journal, September 5, 2003, p. 6.

"Louis Ratner, 82, Founded Salon Chain," Washington Times, January 2, 1995, p. C9.

"Redken and HairCutteryA Unique Relationship," Salon News, November 2000, p. S4.

Toda, Chantal, "Hair Cuttery Cuts A New Swath," Salon News, March 2000, p. 48.

Wells, Melanie, "Cuttery Clips Away During Recession," Washington Business Journal, June 10, 1992, p. 1.

Ed Dinger