Articles

The Milwaukee Business Journal

ENTERPRISE

From the May 14, 2004 print edition " Massaging an Idea: Stockbroker Nurtured Massage-chair Concept to Sales Breakthrough " Rich Rovito When Mark Eberhardt was suffering from a backache while stranded in an airport a decade ago, he visualized the relief he might enjoy from the vibrating chairs he'd seen at The Sharper Image stores. He felt so strongly about the concept that he formulated a business idea to provide similar chairs for weary travelers in airports. Traversing from the idea stage to the product stage was not quite as instant. Eberhardt started by purchasing a vibrating chair and rigging it up to accept cash. He spent the next couple years trying to convince operators of airports and shopping malls to buy into the concept. "It's been a huge struggle," said Eberhardt, 51, a native of Indianapolis who worked for more than 20 years as a stockbroker at PaineWebber in Wauwatosa and Robert W. Baird & Co. Inc., Milwaukee. The concept finally is beginning to pay dividends for Eberhardt. Today, Eberhardt's company, First Class Seats® Inc., Racine, supplies and maintains automated commercial massage chairs at 110 shopping malls in 26 states. Revenue has grown from $180,000 in 2001 to $2.3 million in 2003. Sales for 2004 are projected to be about $4 million. Eberhardt expects the next growth surge to result from the company shifting its sales focus from malls to other public venues, primarily airports -- his original idea. Eberhardt began developing the concept for a commercial massage chair in 1994. Two years later, he convinced the operators of General Mitchell International Airport in Milwaukee to allow him to test-market the concept. Although First Class Seats® lost its spot at Mitchell in 2001 when the airport launched a major renovation, Eberhardt said the airport's willingness to allow him to test-market the massage chair gave life to his business. "It seemed like something the passengers might like," Mitchell spokeswoman Pat Rowe said. "At the time, we had the space." Eberhardt estimates he's invested more than $750,000 of his own money to grow the business. He said he's used bank debt over the past few years for additional expansion. The company has six employees at a cramped leased office suite at 310 Fifth St. in downtown Racine. Eberhardt shares an office with his wife, Marsha, who also works for the company.
Larger Quarters
The company soon will move to a building it recently purchased a few blocks away at 566 State St. that has more than 5,000 square feet of office space. First Class Seats® purchased the building for about $275,000, and is financing the deal through a combination of cash and bank debt, Eberhardt said. Eberhardt had contracted with a variety of small manufacturers to fill his orders. That changed in 2000 when he teamed up with Christopher Wu, owner of Shiatsu Plus, a Toronto company pursuing the same type of business in Canada. Eberhardt shared his chair designs with Wu, who in turn agreed to handle all manufacturing operations and to not do business in the United States, Eberhardt said. The chairs are manufactured in Taiwan. After the trial run at Mitchell, Eberhardt shifted his focus to shopping malls, where there were fewer layers of bureaucracy, he said. A mall in Spartanburg, S.C., was the company's first customer. First Class® leases space from its customers, who also receive a cut of the proceeds. The company has chairs on site at eight shopping malls in Wisconsin, including Brookfield Square in Brookfield and Regency Mall in Racine. Eberhardt said he's closing on a deal with Southridge Mall in Greendale. First Class Seats® operates anywhere from four to 14 chairs, mainly located in high-traffic common areas, at each of the shopping malls it serves, Eberhardt said. The First Class Seats® use a system of rollers to provide a deep-muscle workout, Eberhardt said. "Our chairs deliver a very intense massage," Eberhardt said. "For some people, it's too intense." The chairs provide an inexpensive alternative to a hands-on massage, Eberhardt said. "We are becoming the fast food of massage," he said. The price for a massage in First Class® chairs is $1 for three minutes, $5 for $15 minutes and $10 for 30 minutes. "Customers have gravitated to this in a healthy way," said Dean Spieker, vice president of business development for General Growth Properties, a Chicago-based real estate investment trust that owns and operates regional shopping malls, including Mayfair Mall in Wauwatosa. Massage chairs have been installed in about half of General Growth's 170 properties, with much of the business going to First Class Seats®, said Spieker, former assistant manager at Mayfair. However, it's unlikely massage chairs will appear at Mayfair Mall anytime soon, due to demands for floor space, Spieker said. Eberhardt said he is negotiating to install massage chairs at several airports. First Class Seats® currently serves only one airport, in Albany, N.Y. However, the company recently landed a deal to place its massage chairs in Delta Airlines' Crown Rooms at airports in Los Angeles, San Francisco, Salt Lake City, Cincinnati and Orlando, Eberhardt said. First Class Seats® also provides massage chairs for home use, although it accounts for only a small portion of the company's overall business. The deluxe Shiatsu massage recliner sells for about $3,000. Eberhardt continued to work as a stockbroker until 2000 in order to fund First Class Seats®. He said he didn't give up on the business during the early years of struggle because he believed commercial massage chairs were a viable concept. "I knew it would work," he said. "I hung in with this business. There was a lot of blood, sweat and tears. I was banging my head against the wall for six years. Finally, it's paying off."