The 2025 Beauty and Wellness Benchmark Report

THE DATA, INSIGHTS, AND GROWTH TRENDS DEFINING THE INDUSTRY

The beauty and wellness industry has experienced a shift in growth, with a modest 2% increase this year compared to 5% last year, signaling changes in market dynamics and consumer spending trends. Digital touchpoints, such as online booking and virtual consultations continue to enhance customer experiences. Service businesses that embrace these trends blend convenience with care to meet evolving customer preferences. Three key trends highlight strategies that beauty and wellness businesses can leverage to drive growth in 2025 and beyond. 1. Membership revenue models continue to hold their own as the steadiest source of growth. 2. Fostering customer loyalty is crucial, what with a fraction of repeat clients driving a significant portion of total revenue. 3. Center expansion drove revenue growth, continuing a trend noted in last year’s report. Although the industry grew by 2%, brands that focused on adding locations saw a 5% increase, reinforcing the ongoing impact of expansion on revenue growth. This report serves as a key resource for beauty and wellness brands, helping them understand consumer trends, check business performance against benchmarks, and identify tactics and technologies to drive success and support overall growth. INTRODUCTION 01

ABOUT THIS REPORT WHAT’S INSIDE Notes from the CEO Key findings and trends 2024 recap: What drove revenue growth? 2025 industry benchmark and trend data Salons • Includes full-service salons, brow and lash salons, and other specialty salons Nail salons Barbershops Waxing centers Membership-based spas • At least 30% of revenue comes from memberships Non-membership spas Medical spas (medspas) To provide accurate data for a variety of business categories, the Beauty and Wellness Benchmark Report covers these seven business segments: In January 2025, Zenoti reviewed performance metrics gathered from our technology platform for the year 2024. Given that Zenoti powers over 30,000 businesses worldwide, this data serves as an authoritative standard for identifying trends and uncovering key insights. This report delivers the most comprehensive and current industry benchmarks for the United States and Canada, featuring data across three tiers: top earners, high achievers, and average brands. 02

What sets today’s leading beauty and wellness brands apart? Their secret isn’t just talent or dedication – it’s access to data. With the right insights, business owners and managers gain a powerful advantage. They can pinpoint what works, identify areas for improvement, and focus their efforts where they’ll make the biggest impact. However, raw numbers only tell part of the story. To unlock their true value, you need context – industry-wide benchmarks to compare against. That’s where Zenoti steps in. With over 14 years of expertise and a database spanning more than 30,000 businesses, Zenoti’s benchmark report has become the go-to resource for understanding the trends driving the industry. Now in its fourth edition, this report offers clarity and guidance for businesses of all sizes. Dive into the data, see how your business measures up, and discover strategies to fuel your success. As always, we welcome your thoughts, questions, and feedback – because your input helps shape the future of this vibrant industry. NOTES FROM THE CEO Sudheer Koneru Zenoti CEO and Co-Founder 03

KEY FINDINGS AND TRENDS Businesses that focus on selling memberships had 5% revenue growth. Brands that added locations also grew revenue by 5%, with medical spas and salons leading the way. The industry experienced an overall positive revenue growth of 2%. Even top performers saw a drop of 9% in their average ticket size. Pricing pressures significantly impacted medical spas, forcing them to balance profitability and affordability. BOOK 42% of guests who visit more than once a year contribute 80% of sales. By contrast, 58% of single-visit customers contribute just 20%. Retaining customers is just as important as acquiring new ones. This correlation highlights the importance of enhancing digital touchpoints for customers. Businesses with high rates of online booking have higher rates of staff utilization. With 24% of gift cards redeemed by new customers, this payment method doubles as a tool for guest acquisition. Gift card sales increased by 20% across the industry. Salons led the way with an impressive 93% sales growth followed by medical spas (23%). 04

Knowing which revenue channels drove the greatest growth gives insight into trends to leverage. The data on page 06 recaps how each business type performed in 2024, highlighting the revenue channel that drove the most growth. WHICH BUSINESS TYPES ADDED THE MOST LOCATIONS? The number of medical spa locations grew by 15%. Waxing centers increased their locations by 8%, and nail salons expanded their presence by 7%. 2024 RECAP: WHAT DROVE GROWTH 05

Membership- focused spas Non-membership spas Nail salons Salons 3% Growth area: Memberships 3% When including newly opened locations in 2024 4% 3% Growth area: Services 7% 7% Barbershops Waxing centers 1% Growth area: Memberships 5% 8% 5% Growth area: Memberships 7% 6% 2% Growth area: Gift cards 3% 4% Medspas 1% Growth area: Memberships 10% 15% 1% Growth area: Memberships 2% 1% Location count growth Same-location growth 2024 revenue growth per category 2024 beauty and wellness industry revenue 2% growth 06

FAST FACTS Ticket sizes went up 15% for both membership-based and non-membership spas. Salons, medspas, and waxing businesses saw a 24% improvement in membership sales. Footfall data shows guest visits are down 1% overall, and new guest visits fell 9%. The good news: existing guest visits are up 1%. 2025 BENCHMARK DATA Benchmark metrics featured in this report refer back to the most pivotal key performance indicator: annual revenue per location. Using results from that metric, we identify three benchmark levels of performance: Top earners The top 10% in revenue collection for each business category High achievers The top 25% Average Revenue for the median business (50th percentile) These three designations are referred to throughout the report, allowing for a quick check on how businesses at each of these revenue levels perform across other tactical KPIs. 07

Salons Top earners $1,249,558 High achievers $727,698 Average $459,949 Nail salons Top earners $1,565,846 High achievers $1,189,496 Average $775,812 Barbershops Top earners $477,304 High achievers $356,912 Average $258,379 Membership-based spas Top earners $2,489,304 High achievers $1,842,982 Average $1,320,716 Non-membership spas Top earners $2,098,232 High achievers $1,347,780 Average $795,057 Waxing centers Top earners $974,055 High achievers $716,384 Average $463,384 Medspas Top earners $3,219,354 High achievers $1,776,829 Average $1,035,229 2024 revenue per location 08

Helping beauty and wellness businesses create reliable recurring revenue, memberships stood out as the top growth area for these categories: salons, waxing centers, membership-based spas, and medspas. Data shows that salons, waxing centers, and medspas averaged a 24% boost in membership sales in 2024. Memberships foster customer loyalty, encouraging clients to return regularly. This consistency helps smooth out fluctuations in bookings, providing a steadier workflow and added revenue from repeat visits. Additionally, memberships help build long-term relationships with clients, turning one-time visits into ongoing commitments, helping sustain growth in a competitive industry. 2025 TREND: MEMBERSHIPS FUEL BUSINESS GROWTH 09

Salons Top earners $113 High achievers $51 Average $44 Nail salons Top earners $85 High achievers $74 Average $69 Barbershops Top earners $37 High achievers $32 Average $28 Membership-based spas Top earners $140 High achievers $130 Average $118 Non-membership spas Top earners $181 High achievers $144 Average $109 Medspas Top earners $454 High achievers $323 Average $164 Waxing centers Top earners $65 High achievers $62 Average $58 Average ticket size / guest spend per visit For medspas, the drop in average ticket size from $500 in 2023 to $454 for top-earners reflects the pricing pressures for this business category. On the other hand, top-earning membership-based spas enjoyed a 23% increase in their average ticket size, up from $114 in 2023 to $140 in 2024. 10

Data shows strong customer preference for digital convenience: 97% of medical spa clients and 80% of salon and spa guests want mobile appointment booking, according to our 2024 beauty and wellness consumer surveys. Salons Top earners 59% High achievers 43% Average 30% Nail salons Top earners 78% High achievers 71% Average 42% Barbershops Top earners 75% High achievers 71% Average 60% Membership-based spas Top earners 40% High achievers 30% Average 25% Waxing centers Top earners 56% High achievers 46% Average 37% Non-membership spas Top earners 89% High achievers 73% Average 61% Medspas Top earners 31% High achievers 20% Average 11% Online booking rate Percentage of appointments booked by the guest online, via mobile app, or at an in-person kiosk 11

Percentage of appointments booked within 24 hours of the latest visit Rebooking rate The easiest way to keep your appointment book buzzing is by encouraging your clients to rebook right away. It helps to plan ahead while they’re still enjoying the results of their service and looking forward to doing it again. Salons Top earners 30% High achievers 17% Average 10% Nail salons Top earners 35% High achievers 19% Average 9% Barbershops Top earners 5% High achievers 2% Average 1% Membership-based spas Top earners 43% High achievers 38% Average 33% Waxing centers Top earners 59% High achievers 48% Average 39% Non-membership spas Top earners 29% High achievers 19% Average 12% Medspas Top earners 69% High achievers 54% Average 40% 12

Data shows the critical role returning guests play in the success of beauty and wellness businesses. With 42% of loyal clients driving a whopping 80% of sales, it's clear that focusing on customer retention can yield greater returns. By contrast, one-time visits from 58% of clients contribute only 20% of revenue. With repeat visits driving a significant portion of sales, retaining loyal guests should be a top priority. Memberships top our list of customer retention strategies because they were the strongest growth area for salons, waxing centers, membership spas, and medspas in 2024. 2025 TREND: REPEAT GUESTS KEY TO DRIVING SALES They increase the number of customers who visit 5 or more times a year by 10%. Offer membership programs When businesses add a mobile app for customers, the number of guests visiting 5 or more times a year goes up 12%. Add digital touchpoints Hyper-personalization increases retention rates by 30%. Tailor every aspect of the guest experience TOP 4 CUSTOMER RETENTION STRATEGIES FOR BEAUTY AND WELLNESS BUSINESSES Programs that incentivize repeat visits increase the number of guests visiting 5 or more times a year by 9%. Introduce loyalty rewards 13

When guests book appointments and cancel too late to fill the slot or don’t show up at all, the revenue impact is real. Cancellations and no-shows Life happens! Cancellations and no-shows can’t be avoided, but streamlining processes, staying proactive, and fostering accountability can minimize their impact on your appointment book and bottom line. TIPS TO AVOID NO-SHOWS AND CANCELLATIONS Salons 8% Cancellation rate 3% No-show rate Nail salons 16% Cancellation rate 1% No-show rate Barbershops 2% Cancellation rate 4% No-show rate Waxing centers 14% Cancellation rate 3% No-show rate Non-membership spas 11% Cancellation rate 1% No-show rate Membership-based spas 14% Cancellation rate 1% No-show rate BOOK Send automated reminders Use scheduling tools to remind clients about appointments and allow easy rescheduling. Set clear policies Communicate cancellation rules and consider no-show fees to encourage accountability. Require prepaid bookings Partial or full deposits collected in advance commit guests to keeping their appointments. Use online booking systems Enable clients to self-manage appointments effortlessly. Keep an automated waitlist Fill sudden openings to reduce lost revenue, with no staff time lost to manual list management. Medspas 16% Cancellation rate 5% No-show rate 14

The sign of a healthy appointment book, high utilization means your service providers are busy, with more guests serviced and fewer unfilled slots in your schedule. Percentage of available time in which services are delivered Staff utilization Salons Top earners 84% High achievers 76% Average 67% Nail salons Top earners 81% High achievers 75% Average 69% Barbershops Top earners 84% High achievers 73% Average 62% Membership-based spas Top earners 77% High achievers 70% Average 64% Waxing centers Top earners 64% High achievers 57% Average 48% Non-membership spas Top earners 89% High achievers 76% Average 60% Medspas Top earners 78% High achievers 64% Average 47% 15

2025 TREND: SALONS SEE SHARP UPTICK IN GIFT CARD SALES Gift card sales saw year-over-year growth industrywide, with salons and medspas benefiting the most. Salons nearly doubled gift card growth (up 93%), and medspas expanded gift card sales by 23%. Sales growth for gift cards touched 23% across all business types, up from 16% last year. Non-membership spas saw the highest growth in online gift card sales (81%). It was 54% for medspas and 39% for waxing centers. 16

Tip rates A generous tip often signifies outstanding service and a high level of customer satisfaction. The low tip rates at medspas is consistent with staffing norms at these businesses: Treatments are often performed by salaried medical professionals who don’t work for tips. Percentage of transaction amount designated for tips Salons Top earners 18% High achievers 16% Average 14% Nail salons Top earners 16% High achievers 15% Average 12% Barbershops Top earners 20% High achievers 18% Average 16% Membership-based spas Top earners 14% High achievers 12% Average 10% Waxing centers Top earners 16% High achievers 15% Average 14% Non-membership spas Top earners 14% High achievers 12% Average 9% Medspas Top earners 6% High achievers 2% Average 0% 17

18 WRAP-UP Three primary growth drivers for beauty and wellness service businesses are membership revenue models, strong customer retention, and the addition of new locations. Memberships are a key growth area for five out of seven business types, offering predictable, recurring revenue. At the same time, prioritizing retention strategies, such as boosting rebooking rates and offering loyalty progams, can transform occasional customers into long-term clients, fostering sustainable growth. High online booking adoption is another critical factor, improving operational efficiency and maximizing revenue per hour worked. Besides, top-earning nail salons, barbershops, and non-membership spas see the majority of appointments booked online, showcasing the impact of integrated, tech-forward systems. Finally, keep monitoring industry benchmarks to see where you stand and identify areas for improvement. You’ll make better decisions, set clearer goals, and stay current on trends that matter. Some key recommendations: The rise in gift card sales provides an opportunity not just for immediate cash flow but also for attracting new clients. Ensure flawless redemption to convert these recipients into loyal customers. On the other hand, addressing the 9% drop in new guest footfall requires proactive outreach. Targeted marketing campaigns, social promotions, and revenue-enhancing software features such as automated follow-ups and abandoned cart recovery can help draw in new and existing guests. To capitalize on membership growth, use digital, mobile-first membership, referral, and gift card programs to help your best brand advocates spread the love.

ABOUT ZENOTI As the leading cloud-based software solution for the beauty, wellness, and fitness industries, Zenoti offers an AI First all-in-one platform designed to deliver business growth for its customers. Trusted by more than 30,000 businesses worldwide, Zenoti is dedicated to helping clients succeed. Zenoti is also the force behind the industry’s premier event, , which hosted nearly 1,000 business leaders and innovators in 2024. For more information, see zenoti.com. Innergize 19