Why are these clubs popping up everywhere?

Why are these clubs popping up everywhere?

Soul Cycle, which is headed for an initial public offering with its “meditative fitness” spin class concept, didn’t happen in a vacuum, spiritual or business-wise.
One of the casualties of the Great Recession happened to be gym memberships, creating a survival of the fittest atmosphere in which middle-priced facilities lost members while discount workout spots engaged in a limbo competition for the lowest prices. Meanwhile, boutique fitness operations like Soul Cycle, Flywheel and others wooed the affluent, not only in their New York City hometowns, but nationally with spin classes priced upwards of $30.
The iLoveKickboxing fitness company, which is based in Long Island and has its oldest standalone location in Chelsea, is expanding rapidly through franchises, and with a formula that attracts women.
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The iLoveKickboxing fitness company, which is based in Long Island and has its oldest… more

I LOVE KICKBOXING

The result: a tale of two types of fitness businesses in New York City: one inexpensive and no-frills, the other exclusive and pricey.
“The industry has gone through a bit of an evolution for four or five years,” Blink Fitness president Todd Magazine, who was newly promoted to that post last month, said in an interview with the New York Business Journal. “There were the higher-end fitness companies and those on the lower end, and both groups were small. In the last few years, especially with the recession from late 2008 to 2010, it spurred the growth in the value segment, and the luxury area then expanded.”
Blink Fitness is part of that “value segment” of gyms with its relatively low prices of $15 to $25 a month for membership, a model that relies upon bringing in lots of members in order to turn a profit. It has benefited from consolidation among mid-priced gyms. One example: Bally Total Fitness, which once operated 440 gyms but went through two Chapter 11 bankruptcies, sold most of them off to competitors, including LA Fitness, 24-Hour Fitness, and Blast Fitness.

Blink is part of Equinox Fitness, the Manhattan-based company owned by The Related Companies. It operates five brands — most of them charging a higher price to participate, like Soul Cycle, which it bought in 2011, and its own eponymous brand of health clubs, which can cost between $163 and $225 a month, according to an analysis by Racked.
Magazine joined Blink in 2012. At that time, it had four corporate-owned locations and no real plans to expand as a franchise. But as the market changed, it since switched tactics and started running a franchise operation this year. It now has 38 Blink Fitness gyms in and around the New York City area, and expects to operate 40 by the end of the year, he said. Washington, D.C. will be its next market, and the company will go on to open about 15 or 20 more units annually, Magazine said.

On the other end of the price spectrum are the rise of boutique fitness clubs, a league that includes Soul Cycle. Another is iLoveKickboxing, which is based in Merrick, Long Island, and which opened its first freestanding location four years ago in Chelsea. It has seven corporate locations, and has grown nationally through franchises — it has about 150 already operating and another 327 franchises that have been sold and are in various stages of development to open in the next two years are so.
“By the numbers, we’re the fastest growing [fitness] franchise in the country,” founder and CEO Michael Parrella said. Two years ago, Anytime Fitness — which now has more than 2,000 locations — was selling at a similar pace of 30 to 43 franchises monthly, he says. The iLoveKickboxing brand just sold its first franchise in Hawaii, and there are perhaps five or six states where it doesn’t have a presence now or soon.
He anticipates about $60 million in revenues this year between the corporate locations and the franchises.

The iLoveKickboxing business was originally a licensed model that allowed some 350 martial arts centers to host classes within their facilities, but Parrella has been converting those licenses into franchises where the prices range from about $125 to $149 a month. Its members are 85 percent female, primarily in the 22-46-age range — women who get a sense of empowerment from the workout and enjoy the more intimate setting of working out with peers.
“They’re people who failed at the gym because they couldn’t do it by themselves,” said Parrella, who started out as a kickboxer in 1991 before turning it into a fitness business. For his boutique kickboxing studios, he looks for more affluent areas with higher population density. The newest New York City location is in Long Island City, in one of the residential towers on the edge of the East River.
Blink is growing somewhat more slowly, but it’s definitely using the same playbook with an emphasis on gyms that are clean (the top priority for gym-goers) and that have a sense of fun. They are focusing in on multi-unit franchise operators with professional experience running franchises, even if it’s outside fitness such as someone who has done a restaurant franchise.
“We’re looking for people who have professional experience. Just because you’re passionate about fitness doesn’t mean you know how to operate a gym, so we’ll teach them how to operate a gym,” Magazine said.
Blink offers some group instruction, for a charge, but it doesn’t hold classes, per se. Magazine sees a rise in fitness aficionados who buy a membership at a Blink for basic workouts and then use the savings to take various boutique fitness classes.
Indeed, that type of gym-goer could also make use of ClassPass, another New York startup that allows members to bounce from one boutique fitness facility to the next for a monthly fee of $125.
Parrella doesn’t think there’s much overlap between his members and those who attend lower price gyms like Blink Fitness. Instead, he considers his key competitors are boutique fitness brands. He doesn’t see kickboxing as a fad either, but one that has a long history of fans, and has gained greater exposure helped along by iLoveKickboxing’s shift from martial arts centers into locations that are standalone and more appealing.
“When I started kickboxing in Long Island, I was one of the first people to teach it here, and it was like Black Friday. I had lines of a hundred people deep waiting to get into my facility,” he said.