When you run a service business, it takes qualified workers to operate.
That’s something workers themselves notice.
“When asked to identify the greatest barrier to delivering exceptional products and services to customers, employees most often cited staffing shortages. More than one-third (37%) named staffing as the top obstacle, far exceeding training (16%), tools or equipment (9%), and unclear standards (8%),” according to a 2025 Gallup poll.
In some service-based areas, like salons, there simply aren’t enough trained workers to meet the industry’s needs.
“In addition, due to challenges facing the for-profit education industry, cosmetology schools have experienced declines in enrollment, revenues, and profitability in recent years,” Regis shared in its 2026 annual report
That comes at a time when the Bureau of Labor Statistics (BLS) sees demand growing.
“Overall employment of barbers, hairstylists, and cosmetologists is projected to grow 5% from 2024 to 2034, faster than the average for all occupations,” the agency reported.
It’s a problem that has contributed to years of struggles for Regis, which has been steadily closing unprofitable salons.
Regis has been shrinking
CFO Kersten Zupfer talked about Regis’ results during the chain’s fourth-quarter earnings call. The company, she noted, has made progress in its turnaround efforts.
“We generated $32.8 million of adjusted EBITDA, an increase of $1.2 million compared to fiscal year 2025, and $13.5 million of unrestricted cash from operations, up from $5.4 million in the prior year,” she shared.
That profit growth happened as the company continues to shrink.
“We ended fiscal 2026 with 207 closures, offset by 8 openings for a net decline of 199 salons. The locations that exited the system were predominantly lower volume salons, resulting in a smaller impact on royalty revenue than the unit count alone would suggest,” she shared.
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The difference between the remaining salons and the closed locations is dramatic.
“The average unit volume of the closed locations was approximately $136,000, roughly $364,000 below the average unit volume of stores in our highest performing quartile,” she added.
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Closing Regis salons may help in the long run
The CFO also believes that the shutdowns create opportunity for the remaining locations.
“While the decline in salon count continues to affect franchise revenue, we believe the remaining salon base is becoming stronger and more productive, which should support improved franchisee economics over time,” Zupfer said.
She also delivered some somber news for fiscal 2027.
“For budgeting purposes, we identify salons at risk of closure based primarily on lease expiration dates and key operating metrics, including average unit volume and rent as a percentage of revenue. Based on the visibility we have today, we do not expect fiscal year 2027 closures to be materially different from fiscal year 2026,” she added.
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Regis faces real challenges
Gordon Miller, a salon industry veteran and founder of Chicago-based Social Beauty Makers consultancy, thinks that several factors are working against a Regis turnaround, he told Twin City Business.
The labor shortage is especially challenging for Regis, he says, since its wages tend to be at the low end of the industry spectrum.
“The question is how much run room is there for Regis to come back from their fall. Great Clips, Sport Clips, and others have absorbed much of what Regis has lost and created significant national brand awareness and client loyalty along the way. It’s difficult to say how much room there will be to build demand, given Regis has been out of sight to many for close to a decade,” he added.
The median hourly wage for barbers was $18.73, while the median hourly wage for hairdressers, hairstylists, and cosmetologists was $16.95 in May 2024, according to BLS data.
Regis has been struggling, but the company does have a long history.
“In 1922, Paul and Florence Kunin opened Kunin Beauty Salon, which quickly expanded into a chain of value-priced salons located in department stores. Their son Myron bought the chain in 1958 and changed the company name to Regis,” the company shared on its website.
CEO Susan Lintonsmith remains convinced that Regis has the right turnaround plan.
“We finished the year with $224.5 million of revenue, $32.8 million of adjusted EBITDA and more than $13 million in cash from operations, extending our track record to 7 consecutive quarters of positive cash from operations,” she shared during the Q4 earnings call.
The company, she noted, has also returned to growth.
“We delivered positive comparable sales growth in the fourth quarter with consolidated same-store sales up 0.1% and Supercuts up 2.6%. For the full fiscal year, consolidated same-store sales increased by 0.9%, driven largely by Supercuts, which achieved 3% growth, delivering growth for the 5th consecutive year,” she added.
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