Jeff Stokes - Stride Franchise & The Wellness Economy

Hey everybody, welcome to the Future of Fitness, a top-rated fitness industry podcast for over two years and running. It is 2021, and I am your host, Eric Malzone. I have the absolute pleasure of talking to entrepreneurs, innovators, and cutting-edge technology experts within the fast-paced industries of fitness, wellness, and health sciences. Stop by futurofitness.co to subscribe and learn more. This episode of the Future of Fitness is presented to you by the Fit Tech Club, a business network run by the creators of the Fit Tech Summit, Europe's leading conference devoted to fitness and health technology. Look, friends, the fitness industry is changing faster than ever. The intersection of technology with fitness and health is growing bigger and more dynamic by the minute. Gyms are exploding figuratively, and their constituent parts are ending up at home, outdoors, on your wrist, or in entirely new places with brilliantly new concept. Investors are pumping astronomical amounts of money into the market like we've never seen before. The FitTech Club believes that collaboration is the advantage to these times of change. That's why the club aims to bring thought leaders together to inspire them by making the right contact at the right time and giving insights to the industry's most relevant and current trends. Here's what Melanie Lauer, CEO of Kettler and TriSports, says about the FitTech Club.

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Yeah, no, I appreciate that. It's uh it's hard to believe now when I walk into meetings that I'm one of the older, more experienced executives. And uh it just seems like yesterday where I was starting into this industry, and I like to say I've been one of the lucky ones. I really fell into this industry post-college, uh, played athletics, played baseball in college, and you know, I uh knew I was gonna get into some type of sales, marketing, management role, and um the fitness industry was really still kind of at the infant stages. Um, a lot of folks will know this name and and kind of cringe, but I got started with Holiday Spa's Bally's Total Fitness um back in the early 90s, and uh they were expanding in the Washington, DC area, and uh it was just a good fit. I really learned from the ground up. They had a great training program and they really prepared uh their entry-level employees on sales. It was really sales uh training, and how that uh kind of translated over the years has been pretty incredible, and you'll see a lot of crossroads of people that may have had that beginning that learned, you know, there was other things in the industry to grow into, but you know, really use that as a foundation. So yeah, it's uh crazy to think 25 years later uh I've transitioned more into the executive level positions uh over the last probably 10 years and uh ended up here with the you know arguably the the largest and most successful boutique fitness franchisor in the world uh at Exponential Fitness.

Yeah, man, it it is. I mean, what I was talking to a uh fairly new franchise or this morning, just in a personal conversation, we are really uh really admiring what Expo has done in the market. And uh, you know, even though it's it's the the big dog, right, that everyone's competing again, it's hard not to just admire how how Expo has done its done its job. And maybe if you can give people a little bit more background, Jeff, like maybe into the last 10 years. I mean, you know, you you've worked uh at Anytime Fitness, Lifetime Fitness, uh, you know, hypoxy, a bunch of different brands and a bunch of different companies. Give us give us a little more insights into like the last 10 to 15 years.

Yeah, no, it sounds great. And so uh, you know, I've worked with some great people, some great leaders, some great visionaries. And I'll start with uh with with Lifetime. You know, I was lucky enough to jump on board at the very early stages back in 1999, 2000, when Baron Akarate had a vision of growing that very large platform, that resort type um brand into a national player. They were really based in the Midwest, in Minnesota, uh, Detroit, Indiana. Um, but they wanted to make a big splash into Chicago and then eventually go to both coasts. And so right place, right time, jumped on board uh and had a really great 10-year run with them, opening up locations not only in the Chicago market, uh, but then also moving out west and being the senior director of operations for the West Coast and uh uh opening up the Arizona, California, Nevada, uh, Colorado. I even had a couple other markets in there, um uh Nebraska and uh Kansas. And so I was spread out, but really, really good um uh opportunity and went through an IPO with them in 2004. So again, much different than my role in boutique fitness, but just a lot of great learning opportunities and lessons and worked with some great people there, um, and then transitioned into franchising. And to be honest, that was my first step uh outside kind of the big box corporate world. And uh I wanted to do my own thing. So I got into Anytime Fitness with Chuck and Dave back in 2010. Uh, I ran their corporate studio, corporate uh club division out in the West Coast, and had some of my own locations uh spread out, and just really was that new uh eye-opener for me to see that uh the franchising side of the business and uh had some great years working with Chuck and Dave and the Anytime Fitness team, of which you know they still are the largest global fitness franchise uh in the world, and their international footprint has just grown tremendously over the years. And then the next step in my journey was to get involved in some international business, and I've always kind of positioned myself as an expert in the industry. Uh, private equity family funds would always reach out as they're looking to maybe invest in the industry. And um, I got uh a call from a large private equity group out of Sydney, Australia, that was the largest uh fitness wellness company in that part of the world. And they had bought the rights to a brand called Hypoxy here for the US. And hypoxy entrance, interesting enough, was distributed out of Austria. So I got a chance to work with an Austrian distributor and an Australian parent company, and I launched the North American division of what really is kind of now body shaping. It it's a little bit uh in a separate category from Fitness Center, and it's not your medical um uh clinic, and it kind of sat in this um uh body shaping space. And so again, just a great opportunity working with two great organizations. And to be honest, like a lot of my industry experience, uh it brought this call from Anthony and and Expo. And I've been watching what Anthony had been building over the last few years, and they were looking for a president to head up a brand that was brand new. One location, an opportunity to grow it into the size of a Club Pilates or a cycle bar, pure bar, some of our bigger brands. And it was just the uh the perfect next step for me in this journey in the fitness industry as I've been an owner, operator, franchisee now franchise or and it's just been a uh fantastic ride over the last two and a half years, you know, minus the curveball that we've all been thrown with the global pandemic and COVID. But I'm sure we'll get into it. How I feel like it's made our brand and our company, to be honest, overall, much stronger and more durable uh with how we see things. So again, long-winded answer, and that's just 10 years. Uh lucky guy that fell into the industry as an ex-jock. Uh, I have loved every minute of it. I really pursue healthy living passionately as a person, as a dad, as a father, as a husband. And so it translates into kind of my DNA and who I am. And so to you know, be involved in the fitness industry at this level is just a joy.

Right on, right on, man. You said ex-jock, what sports did you play?

Uh I played baseball in college, and that's still my go-to because I've now got a 10-year-old son that's uh entering into his prime little league years, and so it's uh it's fantastic now to relive through him and I coach and uh just really enjoy that. Uh, but I I did it all. Like I played football, I played basketball, even played lacrosse because I grew up in Maryland, and so funny story, in in that part of the country, the mid-Atlantic, lacrosse dominates. And so um, if you don't play lacrosse, you're kind of the uh the outcast. And so I would mix it in in the summertime just to play with my buddies. And the college I went to, Salisbury University, they're totally known for lacrosse. They've won 10, 12, 13 national championships, and I played baseball, but we did finally get a World Series, college World Series uh win last year. So um it's it's just been a fun piece of my life.

Yeah, that's great, man. You know, I I have a question that I always ask uh people who have been in the industry for a long time because I'm just genuinely curious. But the the fitness industry is young, right, compared to a lot of uh you know more established industries that people might you know normally consider. When do you think the fitness industry actually started and in what way?

Started. You know, great question because I I talk about this, I've talked about this on on uh previous podcasts, is how I have seen the evolution of it really being a um uh the wellness economy, really being about total health versus just kind of the vanity piece. And I'm not gonna lie, when I started, it was really about the vanity of you know being a member of these glamorous holiday spas and valleys, and a lot of people, you know, really didn't see the benefits of the exercise, right? How you can improve your quality of life, how you can reduce stress, how you can live longer and healthier, and all these now that really connect the dots, improve your immune system, right? That's a big one right now. And so all these things now that have been proven to be beneficial by folks that are healthy and choose to live a healthier lifestyle have come to fruition. Where early on, I guess Jack Lelane got would be your guy. Like he's the one that preaches. I agree, you know, and and and and Bally's was a spin-off of the Jack Lane uh you know uh holiday spas back in the the the 80s and even 70s, I guess. And so I would say he's he's gotta be the godfather of fitness.

Yeah, I agree. And that's that's exactly where I pinpoint the start of it, is when, you know, uh he was doing his little segment, because I lived to uh I grew up in the Bay Area, uh, so he was on TV, you know, every once in a while. I was very young, and I kind of remember this. Uh, you know, I'm 45 now to date myself. But and then the Jack Elaine juicer came out, right? And uh, you know, all the crazy things he did, like uh rowing or pulling a boat across uh from Alcatraz to the shore of San Francisco with his hands, his hands and feet handcuffed. It was just this guy was incredible. And uh, you know, what a what a master, you know, marketer and and starter of a movement. It was uh people who don't know him, I would say if you're younger in the industry, go go look it up, go spend a little time and and you know, research the history of which it's really.

If he were alive today and to see how this wellness economy had grown into a multi-billion dollar space with, and when I say wellness economy, it's not just boutique fitness or or health clouds. We're talking about you know, the Lululemons of the world, activeware has just grown tremendously. We're talking about the whole foods and sprouts and the type of grocery stores that are based on healthy choices to skincare. I mean, it it is just grown into uh an incredible uh space.

Yeah, for sure. And I I want to go back in your history a little bit because you mentioned, you know, you you got introduced to franchising and it really opened your eyes. What is it about, you know, compared to more of the executive role or you know, when you saw franchising as a vehicle for growth, what what are the points that attract you to that particular mode?

Yeah, look, I think everybody at some point or or a majority of us always have this fantasy or vision of owning your own business, right? And just being your own boss and being able to, you know, put your blood, sweat, and tears into something that provides some equity or even kind of a family business. And so that's what drove me. And and so I think the allure of the boutique fitness industry uh is for a lot of people. They might work long hours in corporate America, but they dream about owning their own fitness business because in their in their personal time, that's what they enjoy. So they they really enjoy being an active, healthy person. And why not invest in something that you're passionate about? And so I I had the kind of two-itch sword. I I lived that type of life. And then I also had several, you know, years now over a decade of experience. So I thought, you know, why not? This is the perfect fit for me. But the eye-opener for me, Eric, was that being in a corporate setting, especially as I had grown into a senior director for a public company, there were so many layers between me and the customer or me and the actual front line. And so when you are a franchisee in boutique fitness, even as a um semi-absent owner, there's still that, you know, you wear several hats, right? Especially as you get your business going in that first location as you're you're learning how to open and operate these studios. And so that was the biggest aha moment for me going from a corporate executive to owning a franchise. Is guess what? If the toilet's not working, I don't have a janitorial division that I call to say, hey, at XYZ Studio, we have a toilet that's broken. That person is me, that I need to go find that local service to help get that fixed. Um, you know, whether it's the count, the accounting side and doing your books, whether it's, you know, turnover and having to hire train a new, you know, general manager. So you just you wear more hats. Uh you know, you you you either enjoy that or you don't. Um and I think that's the biggest separation is when you go into franchising and you own your own business, yes, the franchise or provides a lot of support. And I think that's where Expo is got so so big of an advantage over the competition is because of our infrastructure and our systems. But again, the franchisee and or that staff, they're making it happen at the local level.

Yeah, great answer, man. I and it brings me back to my you know, independent gym owner days where I'm I'm off to a lot of floors. And uh, you know, I was answering the call at 555 a lot of mornings because maybe a coach didn't show up or was sick or something like that. It was uh quite a lesson in overall business for a decade. I can say that for sure.

I'll say with a little chuckle because a memory came to mind of a good example, and so I I was kind of spread out with my anytime locations. I had one up in LaGrange, Lagrande, Oregon, up in the very northeast corner. Uh, no easy way to get there from Phoenix, Arizona. I had one in Payson, Arizona, up in kind of the mountain area. I had one in Buckeye, Arizona, out in the suburbs of Phoenix. And so I could never physically be in my studios, my gyms in the same day. And I'll never forget I was on the latter stages of opening up the Payson, Arizona location, and um something had slipped through the cracks on just, you know, getting uh cable or digital to the studio for all the TVs to work in the cardio area. And in my lifetime days, I would simply call somebody and say, hey, this needs to get uh done. But I was scrambling, calling the corporate office of any time to see if somebody could do it for me. But the answer is here's how you can do it, but you need to do it. And so that was kind of that aha moment, like, oh, I'm not with corporate America anymore. I I've got to go online. There's a lot of support and training and how to do things, and you just got to figure it out. And so um, you know, it's more teaching you how to fish and not fish for you in franchising.

Yeah, well said. Well said, Jeff. So let's get into Stride a little bit. Um, how do you describe what a Stride franchise is? Um, the experience, how are you guys differentiating? And of course, I'm gonna ask you the challenging question because I know it's something that you guys um are really working to you know establish the value in the market of you know, what is a running studio, or is it a running studio, or is it an overall fitness experience? So let's I just lump that all into one big question, but but tell us what you're doing.

Yeah, no, that's a a great QA for me to tee up, you know, where we have gotten to after uh a year and a half, two years of launching this business. So if you go back to 2019. There was this growing trend in the industry, which we like to call at Expo verticals. And so yoga is a vertical and a modality, and Pilates is a vertical and a modality for us. And so what we were seeing is that these um being categorized as a running studio, but it's really treadmill interval training, right? At the end of the day, we'd that we'd rather be categorized as a treadmill interval training, total body workout. But we got pigeonholed kind of in this running category where you might come into the studio and just run on treadmills for an hour. And it's totally not that. It's all done on interval training with sprints and intervals with uh inclines. And then we have a combo class where it's very similar to a berries or an orange theory minus the the the rowers, a shred 415 are kind of in this category. So that's where we come now. Initially, there was this kind of growing in New York. There's a group called Mile High Run Club. Um, there's some other kind of smaller independents spread around the country. But we found that, especially coming out of COVID, you know, consumers really love this workout and they love the total body aspect where they can come in two, three, four times a week, torch calories, get a great workout, um, and feel good about the results. Uh, that's what they're looking for. And so it in summary, Eric, it's a it's an interval training, um, total body workout, utilizing treadmills as the platform and strength training uh mixed in.

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Yeah, big time. And so uh another, you know, I don't try to add another term to kind of our interval treadmill interval training, but we're also heart rate-based, right? And so um you are a minority if you are not using a heart rate monitor in our classes. Uh, we have leadership boards posted up in front of the treadmills, and so we are training to different zones. We want folks to maximize their their cardiovascular capacity and their to their caloric burn during their class. So we can manage to that if we have visibility to their heart rate during the classes, and that's how the coaches are trained to coach too. So it's not about distance or training for a marathon, it really is about maximizing your uh caloric burn and your heart rate zone uh during the class. With that, of course, we have an app so everything is automated. We track everything from you know your calories burn in that class for the week, for the month. Um, we have milestones where we say, congratulations on your fifth class, your 20th class, your 50th class. Um, we're working on the technology to coordinate that into miles as well, because we do have that running piece where we do have folks that are interested in getting their miles in. So they might do outdoor runs, they might do uh you know, marathon or half marathon, and they use stride as part of their cross-training. And so we tie that in now to the treadmills for distance. But yeah, very much uh we also are compatible with the Apple Watch. So we know how folks are uh geeked out about making sure they get their rings, and so that's all automated now, and um that allows uh folks with um with Apple Watches to also uh pull their data as well. So we'll continue to grow this aspect of the business era because you know it's about uh that data is important too, and and um and seeing the improvements of people's health from the time they start till you know six months or 12 month uh windows.

Yeah, I I really like uh I mean you guys have some sort of partnership or something with some kind of relationship with with the Apple Watch. Um, because I've talked to a couple different presidents and different brands across Expo, and that seems to be a very um I like it a lot. I mean, is there anything you can tell us about that partnership or is that something that you guys are holding close?

Yeah, no, number I mean, number one, I think to have the uh relationship with Apple just helps increase the um the value of your brand, right? I mean, if you are one of the chosen ones in this space to be able to be compatible and partner with Apple, um, that that obviously checks the box. And then the other part is you can win your your Apple Watch. And so what Apple has done uh very intelligently with us is create where if somebody is is coming on a regular basis, they can earn points and money back towards their watch. And so there's this incentive program that as you uh you know purchase your watch through our partnership and everything is tracked and traced, then at a certain point uh a person can uh earn enough points of value to paying back their watch. And so I think that's you know, very few that have that type of partnership. And for us to have that across all uh eight of our brands, and soon I'm sure Rumble will be added, and our most recent acquisition, BFT, will be added as well. So just really excited. And I know Apple looks at that, and that data has value and dollar signs behind it. So you think of the millions of workouts that happen across our ecosystem, there's quite a bit of value behind that as well.

Oh, that's great. So if I'm a consumer, I join um, you know, Stride, I get an offer, maybe a special offer for an Apple Watch. And then does that Apple Watch also tie into the actual training with the heart rate zones within your location?

Yeah, so um you can on the app, there is a section that talks right off the bat. I'm just kind of pulling it up here, um, and lets you immediately learn more about how to win an Apple Watch. So it says buy a watch, earn your watch challenge. It's right on the app. Click on that, kind of walks the person through the steps of being able to purchase that watch and then how you can earn that back. You can register for your classes, so it's branded. It's cool to be able to see the stride logo on an Apple Watch when somebody is checking in for the class. Um, and post-class. Now, here's where the separation is. So Apple gathers their data, and obviously there's proprietary information that they gather and they keep. And the reason why we are a heart rate uh zone uh focused is because we then gather that through our system and push that out post-class. And so you kind of get the best of both worlds if you're kind of an Apple uh, you know, I hate using the word geek, but you really like to use your Apple products and you want to gather that data and it goes into Apple Health. That keeps their data separate, and then all the heart rate um data and distance and things that we collect uh come in through the app to our member as well.

Right on. Man, it is the age of data. Is there uh with what you can talk about? Is there you know ways you guys are looking to leverage the data to understand, you know, maybe better buying behaviors or retention purposes or uh any any thoughts on that video?

Yeah, and the other side of that, Eric, is that large healthcare groups are now coming to us. And so there's value in our ecosystem across all these different modalities and all these workouts. Uh, I'm sure you've heard about X Pass that we are uh launching here uh in a few weeks nationally. We've been uh testing it throughout the year in different markets across the US. And so that's another um uh venue for us to gather uh market share out in this space. It's similar to a class pass, but yet it's just for our you know eight, eventually ten brands. Um, so all that data has value to your point. There's a price behind it, and we'll get like United Healthcare. We've done a deal with uh American Specialty Health. Uh, we're working on several other deals where it just opens up our locations um to these large healthcare groups, and then working with them, uh, the data starts to get sliced and diced and uh becomes very interesting information for us.

Yeah, it certainly does. It's uh it's a constant topic here on the Future Fitness Podcast is the data and what people are planning on doing with the new data sets coming in.

Yeah, look, I think we've known this. I go back, you know, again, because I've been in this for so long. It's great that we have the proof to that because I think the common sense factor has been going on for years where, oh my God, if somebody is working out and going to the gym two, three, four times a week, they absolutely have to have lower healthcare costs. They absolutely probably have less, you know, absent and sick days. They are probably more productive at work. And all these statements that we've been saying for years, there's now data behind it, right? And so that's where I feel like the industry has grown into a more mature, we're still young compared to some like you mentioned earlier. But now the data really speaks to this healthy living pattern and how that relates to just so many other pieces to our life.

Yeah, that that brings me to uh another question based upon a term you mentioned earlier of the wellness economy. Um maybe unpack that a little bit. What does that mean to you? Because that that could be a very broad term.

Yeah, I I think on the surface, it's where decisions are made by a consumer that potentially are based on their quality of life, right? And so am I gonna go and buy uh a um you know a membership and maybe decide not to buy that luxury good? Or am I gonna go out to a restaurant um and and make better choices that might cost me a little bit more, but versus going out to fast food. And so there's these daily decisions that people are starting to make more of that lean towards this wellness economy versus luxury goods, alcohol, tobacco, and seeing the patterns of look, our country is still unhealthy. And and not to get sidetracked, that's another reason why we've we've really struggled with COVID and and uh you know our immune systems uh being compromised. But at the end of the day, prior to COVID, there definitely has been this trend of folks taking more, um, using more of their disposable income and more of their time towards these healthy living choices that all kind of just roll into this wellness economy.

Yeah, I like that a lot. Wellness economy. That might be a good idea.

Here's an interesting one too, Eric. And so again, I'd like to see you know, Ursa maybe come out with some some uh data next year that that shows the true recovery. But prior to COVID, there was this growing trend of folks that had two memberships, right? So the 48% of big box members, and big boxes, you know, everything from a 24-hour fitness and an LA fitness and a crunch and a planet to a lifetime, right? And there's obviously a big price variance there, but 48% of big box members had a second membership. And that's where boutique was kind of coming in. Like you could have your Planet Fitness membership at 10, 20 bucks a month, but then you might have your stride membership because two, three days a week, you know you're gonna get a killer workout. And the other days, you know, it didn't cost you much to go and just throw some weights around or hop on a tread. Then the other interesting piece was 18% and growing had three or more memberships, and so that's kind of speaks to the wellness economy where you know I use my wife and I as an example, you know, we had more than that. So uh, you know, we each had uh the big box at lifetime, obviously. She had her yoga. I had prior to stride, I was an orange theory uh member, and then we had an elements massage membership, which that also falls into wellness economy. And so you see more and more consumers doing making those type of decisions where they really are focused on you know improving their quality of life.

Yeah, great description, man. And you know, so let's let's talk a little bit about COVID. I mean, obviously, we we all are familiar with the challenges, right, from a fitness and health industry standpoint of locations being shut down, um, people's hesitancy to go and work out on classes and you know, remote booms and the rise of Peloton, although I think we've all seen the earning reports lately. Um so I guess here's a question for you that maybe people don't ask. What were some of the unexpected benefits from the franchise or standpoint of this pandemic?

Yeah, look, we had to uh to really dig in, and and as a franchiseur, I mean, the number one responsibility is to support and train and provide for your franchisees. And so overnight, when you go from 160, 1700 locations open across the globe, most of those being in the US and Canada at this at that stage, being told that they had to shut down, that is a pretty incredible transition. But immediately, Anthony and all the presidents and the executive team just went into kind of a we created a war room and every morning we reported in. And uh, what did we need to do? Well, we needed to negotiate with landlords and make sure that there was some type of rent deferment or abatement or some type of assistance that we could provide from the franchise point of view uh to our franchisees. So once we got through that, at stride, we realized that we still could do outdoor stuff, even though we can't roll the treadmills outdoor in the parking lot. That's just too big of a burden. We can do what we pro which we we um branded stride outside. And that's a boot camp type class that incorporates some sprints and running, whether it's around the parking lot, whether it's around the parking garage, um all and above, we just realize we've got to be resourceful and be an outdoor product at uh you know during this time. And so we created that that uh library of workouts. The other part for stride, which is great, is you can always lay some up and go out for a run, but it's lonely. And so a lot of reasons why there's run clubs and run groups is because of that fact. And so we went back to our roots and we created outdoor run groups and outdoor walk groups so that people could utilize uh and keep stride on their mind during this very difficult time. And then last but not least, uh, you know, even though it's a separate division, all of our brands have a digital platform. And we just continue to produce as much content as possible for our Stride Go platform. And uh StrideGo has two options. One, if you have a treadmill at home and you're lucky enough to have a treadmill, then you can do our stride workouts uh that you would do at the studio, but at home. And then if you don't have a treadmill at home, we wanted to hit that audience with guided outdoor runs. And so the answer, Eric, is we looked at it as a time to just really, really focus on our library of uh programming and how we can hit the consumer. So we feel like today we can hit them in their living room. We could hit them obviously in the bricks and mortar, which is our backbone or bread and butter. But then we can also do outdoor um programming and be very successful. And so it allowed us to build those three categories. And to the point now, when a studio, when a stride opens during presale, they now have Stride outside as a way to start building their community of presale members. They have Stride Digital, the Go product, to also start building that community. And then when we open up the actual bricks and mortar, we've already gotten those folks tied into some Stride branded classes. Um, and so that you know, we're pretty excited about what we accomplished, as well as just supporting, you know, as a smaller brand inside the Expo portfolio, we didn't have to negotiate as many leases and deal with that as some of our larger, you know, brothers and sisters did. So we really just focused on the product.

Yeah, interesting. Well, what is out of curiosity, what is the uh what is a starting, I guess, unit for you guys' franchises from the you know, staffing to footprint to uh startup costs, things like that.

Yeah, so each of the expo brands have a different FDD um item nine there. But for us, you know, we have partnered with by arguably the one of the best treadmill companies uh out there, Woodway. Uh they're US based here in Wisconsin, and uh just have had a great product and a great reputation for many, many years in the fitness space, and really the only treadmill company that has you know been chosen by all the professional sports leagues, uh, major league baseball, NBA, uh, NFL, NHL to be their um their their key product, their key treadmill. And so with that, uh, we have 25 of those in our model that that drives air costs a little bit higher than maybe one of the other brands that doesn't have as much of an equipment package, but all of us are in that 500,000 range, the three to five hundred thousand range to open uh a stride studio. And we're about 2,000 square feet and uh really maximize that space where majority of that is two areas. One our front front lobby area, which is kind of where boutique fitness got its name from. That's really a boutique retail shop, is also where you check in and there's a kind of a communal area there when you uh start and finish your class. And then the the treadmill studio is where bulk of that space comes from uh to utilize 25 treadmills.

Yeah, right on. Uh curious from your standpoint too, Jeff. I mean, I've had uh Rick Mayo on the show recently who just launched uh you know his Alloy Personal Training franchises. Um Brandon Cullen is a good friend from Matabolic. Um I've found from them that it's been an interesting observation of who's buying franchises nowadays. I mean, we talk about Rick and I talked in a few episodes ago about the you know the great resignation that's going on in the United States and how people are really second, given a second thought to what they're doing with their lives and their occupations. Have you what have you seen from the franchisee buyer perspective? Has that typical persona changed? Or yeah, well, tell us about that.

Yeah, I think you know, for Stride specifically, that has been our target audience that uh executive that is either looking to diversify some of his earnings and coming into that mid to latter part of his uh executive career, uh, some that are just looking to walk away and just, you know, they they want a little bit more flexibility with their schedule and their time. Um and uh uh and then there's that piece, right? There's that piece that you know they they work out, they're they're passionate about this space. They they see that, oh my God, when I look at where do I spend my spare time, I'm I'm in the gym. So why not own a studio? Why not own uh you know a piece of this uh boutique fitness um emergence? So yeah, and you know, and some brands might be if it's personal training based or um if it's a lower entry level, you might get the fitness industry folks, somebody that just wanted to own their own business after working for a corporate studio or corporate you know business. Uh personal trainers are you know uh famous for you know eventually progressing to the point where they want to own their own personal training business or their own type of gym or studio concept. So I that's where we see a lot of if that latter group has the capital behind them, they could be great operators. The the first part, the group that are capitalized, they just need to find great operators. So whichever one comes our way, we just make sure that they offset their skills that they're the weaker, you know, with to make sure that they have the full package.

Yeah. How is it for those capitalized operators who may not have the fitness industry background and experience? How has it been to find that? Staffing to support those locations.

Yeah, look, I mean, I always say that this is why I feel like I've I've stuck to this and been so um so passionate around it because there's just not a lot of moving parts, right? When you get the boutique fitness, you've got your pricing tier, which that's set before you open up. So you know that you know, here is the the pricing range that you're gonna be in. And then it's about having a successful pre-sale and membership. So the sales and marketing side that I learned 25 years ago in the Bally days just hasn't changed, right? Maybe some of the tactics and some of the ways to um gain those members have changed, but it's still about your membership number. And then the other pieces providing a great product. So your attrition is is manageable. And you know, you knock off a point of attrition that goes directly to your bottom line. So, you know, when these folks come in that don't have the industry experience, like someone like myself, it's pretty easy to say, look, there's just not a lot of moving parts. You have recurring revenue, you've got pretty base uh set base operating expenses that aren't gonna vary, and you provide a great product. If you follow the footprint and you execute on this, you know, this playbook, you're gonna be successful. And so I think that's what attracts that type of person. And then immediately, you know, the general manager role is is the big piece to boutique fitness. And we don't have many owner operators. We want them to be kind of behind the scenes operating the business and a full-time general manager running the day-to-day. And that's where we do help them with identifying those people, doing final interviews. They ultimately have the final say because you know they need to get along with that person locally. But that's that's a part where we really come in and help them pick the best person for their business.

Yeah. Yeah, there's there's a lot of moving parts. And uh, you know, there seems to be, and I'm I'm wondering after a few conversations lately as well, is when you look at what's happened over the last two years, and you know, larger, well-supported franchises like in the expo ecosystem have been able to kind of ride out the storm. A lot of independents have not. Um, and that's you know, obviously it's it's not good for anybody. You always want to see the small business owner. But when you look forward, do you think there's gonna be kind of more of a monopolization of the boutique fitness area um as it goes? Or what do you looking five years into the future? What would what's your crystal ball tell you?

Yeah, look, sitting uh, you know, on the executive team uh of the group that is looking to dominate the space, it's easy to kind of look out five years and say, well, we have more than 10 brands, probably so. Um and so that really the infrastructure is so important and what I've learned over the years. And so what Anthony had built and quickly realized, and just brilliant in his thinking, is that you know, once you have the legal team on the FDD side, and once you've got the real estate construction, the finance and accounting, all those core pieces to being a good franchise or all these brands are really sales, marketing, and operation machines disguised by Stride, Yoga 6, Cycle Bar, right? So we have great brands and we continue to just drive brand recognition and and and grow the brand, but the engine behind doesn't vary a whole lot. Um, and so that infrastructure just continues to get stronger and stronger. And, you know, we've been very uh smart about not overlapping. And so we we we can have you know what we call our fitness malls in an area and have you know four or five, six of our brands next to each other and still do really well. And then the X Pass even brings that that next tier of dominance for us with being able to have one membership and and access to you know several of our brands. So you never like to see the independence, you know, go away. And I don't think that will be true because you're never gonna take away the the passion behind some folks that just want to start their own business. And I think it's healthy for the industry, it's healthy for our economy. Um, it's just been a tough couple years for that type of individual to survive. But that's what's grown our industry. And to be honest, I look at Stride. We call Anthony calls them passion projects, right? You get these people that are just so passionate about their business that even though they don't know everything they probably should know as if they were in a franchise system, they still survive out of just sheer determination and passion and blood, sweat, and tears. And then we come along and purchase them at an early stage where they don't really have the capital or the infrastructure to grow. And it's a it's a beautiful partnership. And so that was the marriage of Strive. There was only one location in Pasadena, California, two wonderful owners that were just doing everything they possibly can to learn. And then we came in and added our infrastructure and our systems and immediately grew despite COVID. So it's tough to grow a brand during COVID. And as everyone has seen, Expo has done that.

Yeah. Yeah. I mean, I me coming from the CrossFit background of having such a uh, you know, such a great philosophy and methodology of training, um, which, you know, people can argue whatever they want about it, but it really was, especially in its purest form, uh, and how fast it grew, right? The affiliate model just boom, took off, but there was no solidified business practices or organization behind it. And I think ultimately that's kind of why it hit such a critical point and then couldn't sustain momentum, is that you know, those a lot of these gyms were open, but they weren't profitable. They didn't know how to be profitable. Some of them, to be fair, didn't even know what the word profit meant. And uh, you know, to have those kinds of business practices and long-standing, you know, proven um, you know, systems behind it is extremely valuable. And especially for people who are coming in, you know, out of the industry who want something out of the box, I think it's great. Uh we're starting to run up on time.

I was gonna say, I think there was a missed opportunity in CrossFit, and then they kind of, as you know, stumbled upon something, and then it became much larger. But you know, if that was in a franchise model, I think there was a lot more sustainability and you know, uh branding the name, and then Reebok gets involved. And but I always I think the industry learned pretty quickly how culture and creating that um almost cult-like following, how how incredibly powerful that is. And we all were looking from the outside, looking in, going, how do we do that at air brands? And so there's a lot to be said about that uh that model and uh you know the good and the bad over the years and and what it's taught the industry.

Yeah, for sure. So, Jeff, um, I want to respect your time too, but I always like to ask this question towards the end. And it's in the spirit of collaboration and people listening maybe want to reach out and chat with you. But what do you what do you need right now? What are the challenges? What are one of the challenges you're facing that uh you could use help with?

Yeah, I mean, when you launch a uh a relatively unknown brand, even though the parent company is uh superior, it's still the basic blocking and tackling, right? And so every time we open up a stride in a new market, it is, you know, the back to old school. It is grassroots marketing, it is uh partnerships with other local businesses, it's the B2B, it's the good old, you know, membership sale and pre-sale. And so I don't say there's something that I need because we obviously understand what the task is ahead of us, but it's you know, if I could snap my fingers and we had 50 locations and we were in all the major metropolitan areas, the the year that's ahead would kind of be behind me. And so that's where we're at. We've got our 10th location that is opening up uh here in December. And then 2022 is really gonna be our coming out party as the youngest brand and the Expo family, because we never really got launched in in 2020. Uh, and so we're super excited. We're gonna continue to double and triple in size over the next two to three years and grow at the rate that Expo expects you know brands to grow at. But that would probably be it, Eric, is just the brand awareness. You know, just there's no easy way to do that. You've just got to open up locations, they need to be successful, and then you need to come back with second, third, fourth, fifth locations in those metropolitan areas. So then it becomes a pretty well-known brand. Um, we're getting there in California, Chicago, we've got uh four ownership groups, Texas, we've got uh five ownership groups, and so some of these markets are starting to happen.

Very cool. Jeff, thank you so much for all these insights, man. I've really enjoyed it. Uh, like I said, anytime I get someone with you know a quarter century experience in the industry, I'm always all ears. I always learn a little bit. Um, where if people want to get a hold of you or just learn more online, where would you like to send them?

Yeah, so our website is runwithstride.com. And that is a good resource, obviously, to learn more about whether it's the product or studio coming to you or about the franchise side of the business. And then my email, it's Jeff at Runwithstride.com. So if there's anything I can help somebody with, whether it's on the operations side or you're thinking about getting into franchising or boutique fitness, um, I always love just kind of helping people walk through that due diligence process to whether it's a stride's a good fit or not, or one of our expo brands has a good fit or not. Um, to your point, Eric, you know, being in the industry for so long, it's sometimes I take for granted the experience that I that I have and the knowledge, and I always love to share that.

Awesome. Well, Jeff, thank you so much for joining me on this conversation. And uh yeah, that was great.

Ladies and gentlemen, Jeff Stokes. Thank you so much, Eric. Have a great day. Have a great Thanksgiving, everyone.

Hey, wait, don't leave yet. This was your host, Eric Malzone, and I hope you enjoyed this episode of Future of Minutes. If you did, I'm gonna ask you to do three simple things. It takes under five minutes and it goes such a long way. We really appreciate it. Number one, please subscribe to our show wherever you listen to it. iTunes, Spotify, Catbox, whatever it may be. Number two, please leave us a favorable review. Number three, share. Put it on social media, talk about it to your friends, send it in a text message, whatever it may be. Please share this episode because we put a lot of work into it. We want to make sure that as many people are getting value out of it as possible. Lastly, if you'd like to learn more, get in touch with me, simply go to the futureoffitness.co. You can subscribe to our newsletter there, or you can simply get in touch with me as I love to hear from our listeners. So thank you so much. This is Eric Malzone, and this is the Future of Fitness. Have a great day.