Ian Fuhr and his business partner Rudi Rudolph know they are an unexpected couple. They quip about their arguments over who would be the face of Sorbet, and delight in the reaction they elicit from newcomers who are not aware that the owners of Sorbet are less like Heidi Klum and more like Walter Matthau and Jack Lemmon in Grumpy Old Men.
And they have reason to be delighted –100 million reasons. From just four outlets in 2005, today the group has 37 outlets with group sales amounting to R100 million a year. Not bad for relative newcomers to the beauty industry. How are they doing it? Fuhr’s decision to focus on a retail model rather than a traditional salon model, an uncompromising dedication to customer service, and the creation of a firm footprint before franchising the concept, have all played a part in the impressive growth the group has enjoyed over the past six years.
A Revolutionary Business Model
In 2004 Ian Fuhr sold his retail start-up, Supamart, to JetMart, a member of the Edcon group. He had grown his business into a valuable asset, and he could have retired. A serial entrepreneur by nature, Fuhr loves building up people and businesses. Retirement was not for him. He was eager for a new challenge, but not sure what area he wanted to tackle next. It was his massage therapist who planted the seed for an idea that would germinate into Sorbet.
“She suggested to me that the beauty industry was on the rise,” says Fuhr. “And I had a gut feeling that she was right.” Beyond the gut feeling was a retailer’s keen eye that the current industry was not fully meeting market requirements. “There were hardly any branded chains in the industry. Done right, a branded chain can offer a consistent, reliable and branded service, and it’s a real vehicle for growth.”
The first question to ask in any industry when you spot a gap is why. Why does that gap exist, and why has no-one filled it before? “Often there is a real reason for a gap,” says Fuhr. “Perhaps others have tried to fill it and failed. It’s important to understand an industry before venturing into it, even if your idea seems perfect.”
What Fuhr soon realised was that there were two options in the beauty industry at the time: high-end spa resorts, or traditional salons. These were typically single salons owned by therapists who had started their own business. “They were wonderful salons, but they were one-man shows,” he explains. “Therapists do not typically have business experience, so these salons started off as home-run small businesses. Some grew into larger premises, but their growth was capped because they were essentially run as salons and not businesses. I wanted to create a different model: one that could be geared for real growth.”
Through a mix of logic and gut feel, Fuhr recognised the gap as one waiting to be filled with the right model. “And that’s when the real research began. There are hundreds and hundreds of salons in South Africa. In terms of numbers we were going to have a lot of competition. It was important to create a sustainable model that we could easily scale, but that was based on a brand people would come to recognise and respect.”
The idea behind Sorbet was to eventually franchise it, and this played a large role in developing the business model as well. “Going back to why there was a gap in branded chains, I was drawn again and again to the fact that most salons were opened by therapists with little or no business experience. The CEO of South African Breweries has not brewed a beer in his life, yet he runs a highly successful brewing business. This didn’t only need to apply to my lack of experience in the beauty industry, but the franchise model as well. It’s easier to teach a business person about the beauty industry than it is to teach a beauty therapist about business.”
The business model would be developed based on firm business practices, with beauty therapists hired to do the actual treatments.
“I also didn’t want to focus exclusively on treatments,” says Fuhr. “Most salons focus on treatments with products as a sideline. Coming from a retail background, I wanted to do this the other way around: Sorbet would stock products, and offer treatments as well.” The decision to have a retail focus led Fuhr to Rudi Rudolph, a well-known retail consultant who Fuhr had worked with before. At first just a consultant, Fuhr later offered Rudolph shares in the business, making the two co-directors of Sorbet.
Finding the Right Partner
Deciding to go the retail route is one of the key factors that has separated Sorbet from its competition. The chain’s ratio of products to treatments is 60/40 – the exact opposite of traditional models. “We buy as a group,” explains Rudolph. “This means head office has secured favourable supply agreements with our product partners. Franchised stores are responsible for their own product procurement, but we open an account for them with our suppliers, and they receive the prices and terms we have negotiated.”
Sorbet’s key suppliers are Dermalogica and Environ. Again, a lot of research went into choosing the right products. “We eventually settled on Dermalogica and Environ because they were dominant brands in South Africa,” says Fuhr. “These are high-end products, but they are not seen as a luxury. Instead, South African women view them as treatments – ‘must have’ products for their skin.”
Early meetings with Dermalogica went as expected: the MD of the local branch asked Fuhr if he was sure he wanted to open a retail beauty salon chain. “We were not a big deal for them at the time. We were launching with four outlets and the MD had serious doubts about how successful we would be in the beauty sector.” She took a chance though and signed a supply agreement with the new kids on the block. The chance paid off. Today Sorbet is Dermalogica’s single biggest customer in South Africa and the partnership has grown into exactly what Fuhr and Rudolph hoped it would: the Sorbet name is inextricably linked with that of Dermalogica.
“We expose our retail clients to treatments and vice-versa,” explains Rudolph. “Salons have high and low months as well. For example, during the winter months women are not having waxes and pedicures as frequently as they are in the summer months. The retail side of the business supports the outlets during these slower treatment months.”
The Sorbet Difference
Over and above their retail-focused model, Fuhr and Rudolph have a keen understanding of just how important customer service is. “We actually view each of our customers as guests and refer to them as such,” says Fuhr. “We have instilled a firm customer-centric ethic at the heart of the brand: a guest is always right, and the very best care must be taken of everyone who walks through our doors.”
If a customer isn’t happy with a treatment, they don’t pay for it – and no-one in the outlet will argue the point. Similarly, all gift cards will be honoured, regardless of when they were purchased, and all customer complaints are recorded and actioned on. “We ensure that each and every query is resolved,” says Rudolph. “Everyone makes mistakes. What’s important is how those mistakes are dealt with.”
Achieving this focus – and the customer loyalty it generates – has been the result of a number of key components. First, Sorbet’s Services Management will test every therapist’s technical competencies and verify qualifications before they can be appointed into the network. This practice includes appointments by franchisees. “We currently have two types of stores, head-office owned and franchises,” says Fuhr. “Our head-office stores are run by managers who we hand pick, and we are careful in our selection of franchisees.
This is in line with any franchised business. Where we differ is the level of involvement we have in the stores themselves. It is essential that each and every therapist is technically excellent at their job, and buys into our vision. If they don’t, we won’t offer the level of customer service that is now expected of the Sorbet brand.”
A customer loyalty programme offers free treatments and birthday specials, and can be claimed at any Sorbet. “The franchisees or head-office stores honour any loyalty card, and the therapist receives the same commission as she would if the treatment was paid for,” says Fuhr. This dedication to the therapists has resulted in an extremely low staff turnover as well, with the group’s commission structure a big draw card for experienced therapists.
“In most cases the owner/manager is not a therapist themselves,” says Rudolph. “We have focused on business people running the outlets, with excellent therapists performing the treatments. This means we need to retain and cultivate the best therapists in the business, which takes a good incentive programme.”
It is also based on the creation of a Sorbet ‘family’. “If you are happy at your workplace, or with your business, that satisfaction will naturally transfer to your guests,” explains Fuhr. “We have put a lot of energy into cultivating the Sorbet culture. We want everyone, from the owner or manager of outlets to therapists, receptionists and even tea ladies to really believe in the brand. They need to live and breathe the brand, and understand our own focus on the importance of our guests.” Regular training sessions, a strong focus on fair HR practices and incentive programmes have helped Fuhr – who has a background in employee relations – achieve this buy-in. He’s been so successful at it that all 17 of the group’s current franchisees were former guests who loved their Sorbet experience so much they wanted to buy into the brand.
Franchising the Business Model
Sorbet was launched in 2005 with the idea to eventually franchise the concept. Fuhr and Rudolph did not want to rush things though. “We wanted to establish a footprint and a strong network of stores before we began selling franchises,” says Fuhr. “Our franchisees will eventually be the ambassadors of the brand we have created, but we need something to offer them as well. We needed to build up a strong brand before we could franchise it.”
Head-office run stores gave Fuhr and Rudolph the ideal opportunity to perfect their systems and models as well. “Hiring managers allowed us to test the theory that the owners of Sorbet outlets did not have to be therapists, but business-minded,” says Rudolph. “As long as we have excellent therapists in each store, the owner or manager can concentrate on the business side of things, a system that has worked very well.”
Involved in every aspect of the business from day one, Fuhr and Rudolph have now scaled this model to include franchisees. “By 2009 we had grown from four outlets to 22,” says Fuhr. “It was at this point that we began opening franchise outlets as well.”
Today, of the 37 outlets in the Sorbet group, 17 are franchise stores. New stores are opening and some head-office stores are available for conversion into franchises. According to the partners, a few flagship stores will be retained by head office, but ultimately the group will be franchise-driven.
“We need to keep a few head-office outlets for two key reasons,” says Rudolph. “The revenue from the outlets gives head-office a revenue stream separate from our franchisees, and allows us to keep franchise fees to a minimum. Second, it’s always good to keep our feet on the floor. Running stores means we know exactly what our franchisees are experiencing on a daily basis, which is important if we want to continue supporting them in the way we have been.”
The partners have never focused on head-office stores to the detriment of franchisees, however. “Once we began franchising, our focus turned completely towards our franchisees,” says Fuhr. “Franchisees are the future of this business. We want a franchise environment of trust and support. We’ve kept our franchising fees low as a result, and marketing is free. We also capped royalties for new franchisees to help them get started. We’ve ensured good terms for our franchisees with our various suppliers, and even though we facilitate everything, franchisees deal directly with those suppliers. This means that if there are any savings to be made, the franchisee makes them, not us.”
Overall, the Sorbet group has focused since inception on a sense of community. While this was previously for employees, new franchisees are inducted into the group in the same way. “We have open and frank conversations about race relations, tolerance, success and working together,” says Fuhr.
“The success of this group will be built on how well we operate as a group and in turn treat our guests. Franchisees need to believe in this same goal. We are a young, fresh and exciting brand that has brought beauty and looking after yourself into the 21st century. We’re proud of our brand and we want everyone involved in it to be proud too. Not just because it’s new and successful, but because the foundations it’s built on are the foundations for personal wealth, happiness and success as well. The Sorbet community will be the driver of its own future growth.”
2005 – 1st full year trading; 4 outlets
2006 – 54% growth
2007 – 58% growth
2008 – 39% growth
2009 – 55% growth
2010 – Introduced franchised outlets; 45% growth
Over an average of three months, Sorbet’s 37 outlets perform:
- 25 000 treatments per month
- 9 000 – 10 000 waxes per month
- 4 000 pedicures per month
- 2 500 manicures per month
- 1 800 facials per month
Becoming a sorbet franchisee
Opening a Sorbet outlet will cost in the region of R900 000, of which 50% (R450 000) must be in unencumbered cash. Head-office offers an entire turnkey solution that covers every eventuality and includes special supplier terms and conditions for opening stores. No past experience as a therapist or in the beauty industry is necessary, although business experience is a plus. For more information visit www.sorbet.co.za