Navigating California's Minimum Wage Hike: How Phenix Salon Suites Can Offer Stability

The recent increase in California’s minimum wage has left many business owners wondering how it will affect their profitability and long-term sustainability. With fast-food workers at restaurant chains (+60 or more locations) now receiving a mandated 25% wage increase, the ripple effects on franchisees’ bottom lines are inevitable. This shift is poised to impact restaurant franchise sales across the board.

At Phenix Salon Suites, we are uniquely positioned to thrive in this new landscape, especially given our strong presence in California. Our franchisees operate within the property management sector, licensing individual salon suites to independent lifestyle professionals such as hairstylists and estheticians who run their own businesses. Unlike traditional franchises, our semi-absentee structure and single-employee model keeps direct labor costs for franchisees to a minimum, significantly reducing the impact of rising wages.

Why the Semi-Absentee Model Works

Phenix’s B-to-B business model is designed to minimize direct labor costs and soften the blow of wage increases. Our focus on property management—finding and retaining high-quality lifestyle professionals—allows franchisees to maintain a more predictable income stream without the headaches and increased expenses that come with managing a traditional, employee-dependent business such as restaurants. In fact, our latest FDD shows that the top 50% of locations boast an impressive 96% average occupancy rate, highlighting the strong demand from lifestyle professionals for salon suites.

This model is perfect for those who want to balance generating consistent revenue with the flexibility to keep up with other career pursuits or personal ventures. Most of the day-to-day operations can be managed remotely, requiring minimal hours from franchisees.

A Perfect Fit for Restaurant Operators

While the new minimum wage primarily impacts restaurant operators, it is setting a higher standard that is going to make wages more competitive across the franchise industry. As someone who’s spent many years in the restaurant world, I see how Phenix’s business model is a great fit for restaurant operators. Multi-unit restaurant operators typically have infrastructure and/or institutional knowledge on site selection, construction, local store marketing, and unit level management on KPI’s. Those same skills/resources can easily translate to the salon suite business with chances for a high degree of success.

Phenix allows franchisees to shift their focus from daily, hands-on management to strategic oversight and community building. It is a smart way to diversify your investment portfolio while enjoying the benefits of a semi-absentee model.

Interested in a Sustainable Business Model?

Five years ago, I had a vision. I witnessed private equity firms buying 100-unit restaurant operators with aspirations of turning them into 200-unit operators and realized the sharks were swarming. And, as an owner of 100+ restaurants, I found myself spending over 50% of my time on HR related matters. It was then I received the call that changed my life. Phenix asked me a simple question… “Do you want to change people’s lives?”

The answer was obvious. In 2024, Phenix Salon Suites will build the opportunity for approximately 1500 freshly minted entrepreneurs to hang their shingle. For any entrepreneur, there is no greater feeling than forging the way for others to chase their dream. I would love to chat more if you’re curious about how Phenix Salon Suites can offer you the same opportunity in this ever-changing environment.

Feel free to drop me a message or complete our inquiry form if you’d like to learn more!