Carolyn DeVito didn’t want to answer the phone when it rang late in the evening on April 1, 2014. “It was an out-of-state call, and it was usually debt collectors,” she said. At the time, DeVito was sole owner of Unique Salon & Spas, with locations in Syosset, Plainview, Bellmore and Massapequa. She had 120 employees and while revenue for the combined salons was $4.2 million, she was in a tangled mess of debt.
DeVito has been in the hair business all her adult life. Eighteen years ago she partnered with Joe Secreti, founder of Cactus Salon & Day Spa, a chain with 11 locations on Long Island. Over the years they operated and sold a number of salons together. But in 2011 things got hairy. DeVito said one day the landlord of the Plainview location stopped by with a potential tenant. She said that’s how she discovered that Secreti, who was in charge of bookkeeping, hadn’t been paying the rent on the salons for months. A lawsuit followed.
“I have different opinions of what was going on, but I’m afraid of violating our confidentiality agreement so I can’t get into specifics of what happened,” Secreti said in a telephone interview.
In their settlement DeVito, a single mother of three, received ownership of three salons and about $150,000 worth of debt. After the lawsuit, she said, “I started a new company, but with banks you can’t get a business loan unless you’re in business for three years. My credit was shot. The salons were falling apart, and I didn’t have money to renovate.”
Then on April 1, 2014, while watching TV, she came upon the CNBC reality show “The Profit,” in which millionaire mogul Marcus Lemonis invests in struggling businesses, places himself temporarily 100 percent in charge of operations and attempts to turn the businesses around to prosperity. DeVito answered an online casting call to the show that night.
“A half-hour later the phone rang,” she said. She didn’t recognize the number, and the Los Angeles location made her wary, but on the other end of the line was a producer from the show, asking her dozens of questions about her business, then casting her for an upcoming episode.
According to Lemonis, “The Profit” has had applications from 50 to 60 hair salons across the country. He was drawn to this particular business for a variety of reasons: He saw in DeVito someone hardworking and trustworthy, he said, and she had a long history in the salon business. Partnering with her “was a way to enter the beauty and hair space and learn what opportunities there are in that industry. It’s a high-margin business, and I’m always fascinated by the service industry. . . . I’m able to test different software in that environment.” Lemonis was also attracted to a hair-care product line DeVito had created but wasn’t marketing effectively.
On the episode, which aired in November 2014, Lemonis settled DeVito’s back rent and other debts, rebranded the salons, which are now called Erika Cole by Raquel (for DeVito’s three children) and funded new packaging for the product line. He’s since renovated the Syosset and Plainview locations and closed Bellmore and Massapequa, which he said weren’t making money.
“I probably have $800,000 in total invested,” said Lemonis. The two remaining salons are now together generating $3.4 million in annual revenue, according to DeVito, as they have added more salon and spa services and, now with 80 employees, have streamlined operations.
“He’s brilliant,” said DeVito of her white knight. “He’s always thinking and coming up with great ideas.”
For instance, the 6,000-square-foot Syosset location has just undergone a second renovation with the addition of another Lemonis turnaround, Denim & Soul, an apparel chain he invested in on a “Profit” episode last year. The clothing and accessories will be sold in a section of the salon, creating a one-stop shopping experience.
“The salon will take a percentage of every transaction,” said Lemonis, who projects that Erika Cole by Raquel will pocket $180,000 to $200,000 a year from the deal.
At a Glance:
Name: Erika Cole by Raquel
What it does: Full service salon and spa
Revenues: $3.4 million