Since launching in 2015, facial shop Heyday has sought to make the facial treatment less of a splurge and more of a regular part of a skin-care routine. Heyday’s treatments are a fraction of the cost ($65 for a 30-minute facial, up to $140 for 75 minutes) of traditional spas. Additionally, they are meant for busy metro customers and start with Heyday’s direct-to-consumer site — 98 percent of existing customers book online.
But with a new $8 million Series A funding raise, spearheaded by Fifth Wall Ventures and announced on Tuesday, Heyday is betting big on a larger store fleet. The company currently has five New York City locations and recently opened a sixth location in Los Angeles. As the U.S. skin-care sector is expected to grow from $18 billion to over $21 billion by 2022 — a forecasted percentage growth rate of nearly 15 percent, according to market research firm Euromonitor International — Heyday is betting on its established no-frills approach to lure its target customer base of millennials and Gen-Z consumers.
For its part, Heyday is attempting to modernize the somewhat stagnant $18 billion spa industry market. Fellow upstart Madison Reed has done this with the hair-color market through its color bars (it is on track to open 25 locations by the end of 2019), as has Dry Bar, opened in 2008, with its nearly 100 locations dedicated blow dry and styling appointments. Dry Bar founders Alli Webb and Michael Landau are now planning to upend the massage industry with their latest concept, Squeeze, for quick, affordable massages.
On the heels of their latest funding announcement, Heyday co-founders Adam Ross and Michael Pollak discussed their growth strategy for the next 18 to 24 months and their continued plans to redefine the self-care industry sans physical product.
Taking a localized store approach
Heyday has conducted over 200,000 personalized facials in just over three years, largely through its New York stores, and a major push in Los Angeles is next up for the skin-care company.
“Having a physical footprint as your core business costs a lot money, so we have been limited in what we could do, but the focus in the short term is to replicate what we have successfully done in New York with Los Angeles,” said Ross.
Citing similar metro-area demographic and psychographic similarities between New York and Los Angeles, Ross called the Los Angeles expansion a way to becoming a “national brand.” Ross said Heyday has spent a “modest” amount on digital marketing and that it all drives back to its physical experience. Rather than advertising, Heyday is now redirecting its digital dollars to in-house priorities like developing a better booking experience online and creating richer editorial-minded content.
According to Heyday, one-third of its over 100,000 client database are repeat customers (visiting locales at least once a month), so each existing Heyday store cannot fully accommodate demand. Ross expects to open eight to 12 locations in Los Angeles over the next two years, but will be tailoring store experiences based on neighborhoods.
“Although LA is one city on a map, we have to consider what is happening across the 405 [Interstate Highway], and the difference between east versus west density to be hyper-localized,” said Ross.
Post its Los Angeles plans, Ross is targeting three other metropolitan areas — Boston, Chicago and Dallas — to create a clustered approach to the Heyday business. “We are not going to have 10 different stores in 10 different cities,” he said. “These cities allow us to grow within them but also go north and south and east to west nationally and thoughtfully.”
Ditching a one-size-fits-all spa playbook
Heyday’s local and regional expansion plan takes cues from that of salad company Sweetgreen, which scaled from one store in the Georgetown neighborhood of Washington, D.C., in 2007 to 90 by the end of 2017. Heyday recently tapped a new chief of operations, Ashley Peterson, who previously served as Sweetgreen’s vp of experience, where she doubled revenue growth year over year. “Sweetgreen is a people-first business, and so is Heyday,” said Ross.
Heyday operates in a one-to-one model — one licensed “skin therapist” or esthetician per client — so increasing the store footprint will, of course, affect its field team. (Presently, Heyday employs over 200 skin therapists in six locations.) Rather than a quiz, Heyday’s human-touch point of view is driving results, according to Ross. “Our skin therapists are one of the biggest capabilities of the brand,” he said.
Heyday offers clients personalized skin-care regimens, developed by its employees with the support of technology. National skin-care trends across clients are considered, and individual treatments are tailored to customers. Putting its team first as the driver for solving skin issues versus a tech tool helps Heyday understand skin concerns, both individually and regionally, allowing it to dodge common misplaced diagnoses in skin care.
“Our older millennial customer will be going though different phases in the coming years, like pregnancy or aging issues, so our ability is to grow with them and understand how to serve them as they experience different life stages. That’s going to be through our specialists aided by technology,” said Ross.
Selling products in a unique way
In addition to its in-person facials, Heyday sells a curated assortment of products for targeted skin conditions, such as acne, dehydration and aging, from the likes of Grown Alchemist, Naturopathica and Image. This accounts for 25 percent of revenue.
Though Heyday certainly has the captivated audience to sell its own line of skin-care products, like blow-dry company Dry Bar with its line of shampoos, conditioners and styling tools, Pollak has no plans yet to sell a Heyday branded collection. “We do not want to be like a traditional spa where, when a customer checks out, they see something with our name on it at the end of a service,” said Pollak. “Clients feel that can trust us, and that will continue to be important as we grow.”