Karl Sanft - COVID, Bankruptcy, and Back: The 24 Hour Fitness Turnaround

Hey friends, welcome to the Future of Fitness, a top-rated fitness and wellness industry podcast for over five years and running. I'm your host, Eric Malzone, and I have the honor of talking to entrepreneurs, innovators, and cutting-edge technology experts within the extremely fast-paced industries of fitness, wellness, and health sciences. If you like the show, we'd love it if you took three minutes of your day to leave us a nice supporter review wherever you consume your podcast. If you're interested in staying up to date with the future of fitness, go to future of fitness.co to subscribe and get weekly summaries dropped into your inbox. Now on to the show. One theme keeps coming up the right technology can make or break your business. That's why I'm thrilled to introduce our new presenting sponsor, Perfect Gym. Perfect Gym isn't just another gym management system. They are part of the Sport Alliance Group, Europe's leading fitness software company that has officially entered the US market. Now, I've seen this movie before, but here's the difference. They've opened up a US headquarters in Boston because they understand that the American market deserves dedicated, localized support. After digging into the platform, one benefit especially stood out. They are simplifying the nightmare that keeps business owners up at night migrations. These guys were able to migrate one mega client with more than 250 locations in six different countries in just 20 days between two payment runs, no disrupting operations, no member loss, one seamless operation that simply works. Now, if you have ever switched platforms, you know how terrifying that process can be and how truly impressive that feed is. They've invested a ton into this platform, and now they're bringing that European engineering excellence to America. The migration experts have arrived. Check out perfectgym.com where enterprise level sophistication needs operator freedom. All right. Here we go. Carl Stamp. Welcome to the future of fitness. How are we doing?

Thank you very much.

How'd I do in that last name? Pretty good.

You did great. You know, it's a tricky one. It needs another vowel at least.

Yeah, it was that you gave me really good coaching on that one. You're like, hey, you just gotta go. You just gotta get in there, you just gotta say it. And uh I didn't have a lot of practice, so I'm glad I went well.

One of those names growing up where you knew you knew you were next to be called in school and the teacher just paused, then you knew that it was your name, you know.

Man, Carl, you're at a very uh interesting place at a very interesting time. You have uh a lot of opportunity to to make a huge impact on not only the organization that you work with in, but our industry as well. So, you know, uh we just I just recently interviewed Mark Mastroff, who came on board and and reacquired 24 Hour Fitness. You're at the helm as a CEO. Um, there's so many exciting things for for you to to pull as far as levers on the growth and got some money in your pocket, man. You know, you got some capital to to deploy and you know, an iconic brand with 24 hour fitness. And uh yeah, I just I'm excited to extract some information out of you. So um, you know, maybe maybe maybe we'll start with this. Uh, you know, we'll we'll put a briefing of your background. I know you've been doing this for 30 years. Uh, you've been a member of 24 Hour Fitness since 1993.

Yeah, I joined Family Fitness in San Diego and UTC, and it's such an incredible story. You know, I I spent over 30 years in retail, you know, grew up at 24 Hour Fitness, you know, and in multi-unit. You know, I'd planned, you know, store visits. Where's the gym? Where am I gonna work out? Where I'm gonna get ready. I can remember like it was yesterday talking to my lifting buddies about, you know, what are we gonna do with our lives? And who knew this is exactly what we'd be doing with our lives is you know, running gyms, never was in it. But after uh you know, 20 years with Best Buy, got the call to you know come over to 24 Hour Fitness and Southern California base, where I've lived, you know, uh for the most part since 1993, is in California a couple of years in Texas. And, you know, I just came running, you know, a brand that I love and uh you know, first venture into PE, learned a lot, that's for sure. But um it's been uh it's been pretty incredible.

Yeah. You know, I I feel like I barely talked about private equity three years ago on this podcast. And I have gotten such a crash course in the whole investment world, especially PE, over the last few years, which all the major transactions and all the capital flying in. I'm sure we'll touch on that in multiple places. And let's let's kick it off with this. Carl, like how long have you been CEO now? You're you were CEO.

I just starting my fifth year.

Fifth year. Okay. So maybe just help me understand like what did you inherit, right? When five years ago, and I know you're COO for a period of time before that. Um so yeah, like what did you inherit and what have you you built so far since since you've been at the helm?

You know, I think that um, you know, I came in in 2019, you know, the CEO at the time, Tony, you know, had just come in in 2019. You know, none of us knew what was right around the corner, you know, with COVID. So I think, you know, 2019, square into COVID, you know, square through bankruptcy, you know, people wondering if the industry was even going to be around. If you really, if you really think about it, we were wondering if our lives were ever going to return to normal and what normal would look like. You know, it's not like that experience had an end date. But uh, you know, amidst everything we were going through as humans and you know, community members, family members, et cetera, we were navigating our company through bankruptcy. And um, you know, really what we had to do is we had to get free cash flow positive. We had to get uh we had to stop borrowing, and uh, you know, we had to turn a profit is what we had to do. We had a group of owners who showed patience and showed resilience, rightfully showed frustration, you know, kind of a little bit of all of it as they went through their, you know, their thesis and their experience with us. But they were ultimately, you know, resilient. You know, that's really the word that I would use with them. And um, so they kind of got us through that. So what I inherited was, you know, a tumultuous once-in-a-generation pandemic, followed by bankruptcy. And then a few years later, you get a chance to do the job that you always wanted to do. And we had a couple of years of doing that together and showed great levels of turnaround and success. An iconic brand, you know, built on the shoulders of the people that came before me. Um, you know, along the way, you know, had the opportunity to build a relationship with Mark. And um, you know, after, you know, years of you know, talking about it, we have a chance to work together, which I'm really excited about.

Yeah. Well, he speaks highly of you. I mean, on this podcast at least.

It's uh it's a unique, it's a unique relationship. And, you know, it's it's a it's a really interesting way of looking at life. But um, you know, when it came to the company, I saw no reason that any company should be at odds with its founder. So, you know, I reached out to him famously now, nervously at the time, and said, I'm a 30-year member. I just joined the company. No company should be at odds with its founder. I'm not looking for any type of investment. I'd love to talk. And uh, you know, you hit send and you just sit there and stare at your inbox. And seemingly right away, you know, we said, How about tonight? We were on the phone that night. And uh Mark is uh is is graceful and open and willing to share his decades of experience. And you know, that basis of that relationship grew and you know, here we are at that's awesome.

Yeah, and I I wasn't aware of that that moment in time. But so far, uh, with my extremely minimal experience with Mark from the interview and prep and a couple emails afterwards. And and even the the the post I did promoting his interview this week, the way people responded was very unique. You know, like I think one when someone was a CEO of another company said he's the best CEO I've ever worked with before, right? And we're so glad to have him back. And even just my, you know, I didn't think he would ever email me back, but he did. And he, you know, gave me some suggestions for other people he thinks I should interview on this podcast. And it was it was just really uh genuine, I guess, for someone at that level um with that much success behind him. And I think that's that is so my short experience with him very much mirrors what you you you've experienced over the last five years, I'm sure.

Yeah, I mean, I think he carries himself in a very unassuming way. Yes. I think that he's he's genuine, he's authentic. You gotta be on your game. You know, he's got decades of experience, and you know, he's gonna bring real questions and he's gonna want real answers. So, you know, you can't take that uh that genuine engagement and personality as less than prepared. He's prepared for every dialogue. So as long as you do your homework and and you know your answers and you know you're ready to go, you're in great shape. Your answer can be I don't know, but it better be followed by I'm gonna find out. Uh and is so as long as you're in it and you're you're all in and you're working hard, he's incredible.

Yeah. He pushes you to be better. To be your best.

You'd be better every single day.

Yeah, that's great. Uh, I love that. So over the last five years when you've been doing this, is there any when you look back, and I'm sure it went fast. I mean, it went slow, it went fast. The pandemic was a weird thing for our industry. It was like grinding some slot, but I'm I'm it's like a distant memory now.

Right.

But what were some of the major shifts, like kind of aha moments when you're like, okay, there's a there's a couple moves you made where like this is strategically, this is the direction we're gonna go. We gotta push this way. Let's go.

You know how strategy is. You know, when you look back at it, you can if it works, you can look at it with a halo. If it doesn't work, you know, you look back at it and say it was iterative and uh was never meant to stay that way the whole time, you know. But if you're if you're really being transparent and I pride myself on authenticity and transparency, I'm you know, 56 years old, I'm uh I'm a husband, I'm a father, you know, I'm a community member, all those things, you know, mean a lot to me. But when I when I look back at the things that meant the most, you know, one of the ones that, you know, was at the time the most provocative, but ended up having some of the most meaning is is, you know, when we opened up outdoor operations during the pandemic. And and we gave access to um, you know, we really went from an access to a usage model and we got people working out outside. And uh I remember those conversations like they were yesterday, because every internal conversation was what you'd expect about would it make money? And, you know, are you losing money when you're closed? Would you lose less money if you just stayed closed? You know, all the kind of conversations that you'd expect. And what I really articulated is that, you know, we have to, you know, we have to show signs of life. You know, people are are, you know, choosing other industries, people are leaving, people are fleeing the state. We have to fight. If you ever want people to fight for you again, then you get a fight today. And I remember getting on the phone, talking to our P partners about it, and they were wonderful about it. But I tell you, the first 60 seconds of saying we're gonna have these outdoor tents were as stressful as anything you could ever imagine. But that was that was really a great foundation of we're gonna, we're gonna fight to stay alive, we're gonna fight that it matters and we're gonna be a part of it. I was really proud of that. Um, you know, as we went through, we made tough decisions. You are a corporate office, you know, a third of the size that it was when I took the job today, lots of efficiencies as we were building back the business and you know, promoted transparency through the whole thing. Yeah, got some you know, sayings that I didn't mean to go viral, but did with my team of, you know, first we have to survive, then we have to thrive. I think I effectively called one year, you know, it's gonna be a grind. It's like who says those things? And I think, you know, the people that say those things are the people that mean it. You know, this year's not gonna be a lot of fun. You know, we're gonna, we're gonna grind it out, we're gonna, we're gonna get to where we need to get, and then we're gonna do greater things in the future together. But I think that kind of transparency, you know, set people's, you know, psyche, you know, for what needed to be done in the chapter that it needed to be done. So, you know, the people within the walls, the members, the vendors, and the financial communities, they all came together and rallied on behalf of 24 Hour Fitness. It wasn't just me, it was everybody. There was there was give and take in every constituency that was involved to get to 24 hour fitness where it is today and to transactions. I mean, if it wasn't for the resilience of our owners, if it wasn't for the flexibility of our landlords, if it wasn't for vendors who said we'll support you today and you can pay us tomorrow. I mean, it was it was a pretty incredible set of communities that came together and made us successful.

Yeah, that's great. Great. And I I want to unpack a little bit of something that you you said in there that caught my attention. So you said you moved from an access to usage model. And traditionally, anyone who's been around the industry for long enough knows that we are most gym models were built on simply an access model. Yeah. There's the classic like, we just want people, we only want 20% of our people to show up, right? We want to sell a ton of memberships. So walk me through that. What does that mean to you when you say that?

Well, at the time, it was, you know, what we had to do, it's not where we are today. But in the moment, you know, you couldn't uh and you were operating outside and you only had so many gyms open. And if you remember it, which I know you do because you're a gym owner yourself, you know, in California you couldn't be open at all hours of of every day, et cetera, et cetera. So you really had to come up with a model that made sense for people. And uh, you know, so at that point in time, what they were paying for is they were paying for usage. And you know, now obviously we're back to, you know, an access model, you know, monthly um, you know, tap and, you know, yearly um, you know, uh memberships and things of that nature. But at in that moment in time, it was a it was a shift that we had to make. And um it was a shift that wasn't about, in my mind, profit, but it was about showing our team members that we had fight and then showing our members that we're available to them uh when they want us to be available to them.

Right on. Um okay, so Mark's back, right? Just announced about a month ago prior to the recording of this this interview. He's back, owner, executive chair. Walk me through that. What what does that mean for you? What does that mean for day-to-day operations? How are things actually changing within the business?

You know, I always knew Mark coming back would be exciting. Um, and you know, as I said earlier, I um, you know, I've known him for years, so I knew you know he'd bring energy and I knew he'd bring excitement, but I underestimated it. I mean, the way that the industry has reacted to Mark um has been, you know, absolutely a seismic event, you know, catalytic energy, people excited all the way through. I think the you know, the operator in me then says, what do you do with all of that and energy? And then how do you create tangibility underneath it so you can take advantage of that energy? Because energy on its own won't last forever. So I think that, you know, where um, you know, Mark and I and you know, long range and the team at you know 24 are really looking to do is, you know, to build out that plan of tangibility that says, so therefore what as it relates to who we're going to be, how do we take advantage of that energy? How do we take advantage of that network? I mean, people coming from, you know, literally all around the world wanting to work for 24-hour fitness, it's uh it's an embarrassment of riches from a talent, you know, standpoint. You know, you go from, hey, are you guys doing okay? You know, I don't know if I want to work at 24 to just, you know, more resumes than you can even process. So it's uh it's an incredible thing.

You know, one of the things I that impressed uh that was impressed upon me during my conversation with Mark, and even just starting to do a little bit of research is, and I mentioned during the interview, it's like it's like the Bill Walsh coaching tree, right, of leadership. And I've talked about this numerous times. I think Alex, Alamanistiano, and Paul Byrne and um a lot of kind of OGs through the industry. We've we've identified this as like so many times, especially when you look at these public companies, they're always bringing leadership from outside of the industry in to fill these seats. And what I think about Mark is he's been able to develop leadership within our industry that grows up the ranks and maybe goes and works for what he would call, consider or anyone will consider a competitor, but then maybe comes back at some point. So it's like it's very much like this coaching tree in the NFL where you see like you develop coaches, but they inevitably have to leave and maybe they'll be competitors someday. But still it's it's and that's critical to me for this industry. Because I think we need to develop talent more within so we can raise it up because you know, a lot of people can come from outside of the industry and and take on a company like uh a Peloton or an Exponential or something like that. But frankly, like selling tacos is very different than selling fitness. And you have to have an understanding of that.

I'd say a couple of things. I'd say one, you know, Mark's selfless with his time. He's amazingly available, you know, uh morning, noon, and night, seven days a week, amazingly available, you know, traveling all over the country with us. We spent you know a couple of weeks here on this last month, you know, hitting you know, every major DMA that we serve without the state of California. And you know, him and I are gonna jump in a car and drive up and down the state, and then we'll have we'll have literally have hit every DMA, you know, in his first 90 days back with the company. That's that's impressive. Wow. For a guy that could literally sit back and just say, send me the reports, right? Like he's he's out there, you know, you know, talking to people. So he's amazing, amazingly selfless, amazingly, you know, available. The industry itself um will give you a chance. I mean, bear in mind, you know, seven years ago, I was I was one of those folks, you know, I was a retailer. Oh, granted, I was a gym member, but I wasn't I wasn't a fitness leader. I think as long as you, you know, like go all the way in and and you, you know, are willing to learn and you're willing to listen. There's a there's an amazing amount of tenure and talent that exists in the industry with people who will help you learn and help you get there. I think I had a bit of a help in that it was COVID and there was like coalitions, you know, so a lot of the you know CEOs got together for coalitions, but it was still a choice. You know, you still had to show up on the coalition, you still had to engage in the coalition, you had to, you know, like, you know, spend time with people, listen to people. So there's amazing people within the industry who've been incredibly kind to me, you know. Um, you know, a couple names come to mind. Angel, Angel Bagnos, you know, from Golds, you know, has me over the house and is willing to, you know, teach me uh, you know, all that there is to learn about the industry, you know, Kirk Gilliani, you know, on the East Coast, you know, Golds and One Life, you know, him and his brother John, you know, being gracious with their time and you know, teaching me all that there is to learn about the company. There's a lot of names, but but you know, I think the reason that I've been welcomed into the community is because I've been willing to learn and I've been willing to listen. And I think the key is for anybody coming in the industry, is this industry is unlike any other. You know, so any analogies that you want to draw between, hey, this is kind of like, you're probably on your way to a bad sentence. You know, you really gotta get, you gotta get under it, you gotta get in it, you gotta work out, you've gotta, you know, put your sweats on and and go work out with people and engage. You don't have to be the most fit, but you gotta be striving to be the best version of yourself. I think as long as you, you know, really become a part of the industry, the industry is very accepting.

I wish the medical industry was like that a little bit, you know. Yeah. I wish all the doctors looked healthy. Anyway, that's a whole other conversation. But that's really that's really great to hear.

It's an incredible balance. You know, you don't want everybody in the industry looking like um, you know, something that's unattainable, right? Because then you have, you know, everything as it relates to you know gyms being intimidating. But but you should be able to speak to the health journey that you're on, the wellness journey that you're on. You know, as people are saying this is what I'm trying to accomplish in my life, you should say, This is what I'm looking to do in mine. And um, you should be trying you know, striving to be the best version of yourself if you're in the industry as much as you are as if you're a member in the industry. But uh so I don't think you necessarily need to be a poster, but you do have to be engaged and you do have to be.

Yeah, it is, and I think there's also some self-fulfilling prophecies there where people who are into fitness and health want to get into the industry because it's probably changed their life like in some pretty significant way, or someone near them, right? And I I think that's that's part of it too, is like it's not just once you're you gotta walk the walk, but also it's attracts these people who are dying to walk the walk. Like that's you hear it a lot.

You hear I've heard so many general managers say 24-hour fitness changed my life. I lost 50 pounds, 75 pounds, 100 pounds. I used to be this, I used to be that. You know, this industry, unlike most, people would be in the gym anyway, you know, right? I just so happen to work here, but I'd be in the gym anyway. And uh so it's it's a it's a great culture and environment. And like anything, you gotta mine the line. It could be taken too far, right? It's not about our fitness as team members, it's about you know meeting our members where they are and having them be um in the best version of themselves, think about the art of the possible, one step further, etc. But there's a lot of good energy in the gym. You know, people aren't, you know, people are, you know, for the most part, people are happy when they go in the gym. You know, I call it, you know, the best hour of the day. You know, I mean, most of the time, and I'm sure your life is no different, you know, you're you're doing multiple things at once. You know, you're a family member and you're a professional and you're a professional and you're a community member. You have all this going on. You know, that that hour that you're in the gym, at least for me, is the one hour dedicated to myself. You know, I can, you know, focus on my well-being both mentally and physically. I can you put music on that is loud and you know, I don't have to be apologetic for the band that I choose, you know. And uh, you know, it's a great, it's a great hour. If I get that hour, I have a great day.

What's uh what's your favorite workout music? Do you have a band that you're gonna do?

You know, I'm a big Lymph Lynch fan. I'm a big Lymphiskit fan. I like I still like it less. I still like it. You know, I might slow down a little bit and do like Blink 182, but I I like hard music when I'm lifting. I I like it loud for sure.

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I've been promoting a book for the last seven years of my time at 24 Hour Fitness. I I didn't know that was the name of it, but I um I'm a I'm a big believer in it, you know. And I had a boss one time who his name is Phil, and he told me, you know, like, I'm not sure I want to see you unless you've gotten your workout in or and your smoothie. Like, get your workout in, get your smoothie, and then come to work. You're a different person. And I believe that's still true today.

Yeah, yeah, awesome. Um, so let's let's turn into the uh the member experience. How, you know, with what you guys are doing now, what what is the member experience that you want to shape for the future? I guess is the question.

Um I think, you know, member experience really comes down to, you know, giving people, you know, access to a world-class facility, which, you know, we could we could spend too many words talking about the fact that we got great real estate, great gyms. Um, you know, we're remodeling, you know, 50 clubs a year. I think the 24-hour fitness gyms got tired over the years. They needed to be remodeled. People, you gotta be funny when you you gotta be careful when you say things like, hey, we're remodeling, because people will say, well, not my gym, but like it look, it's 50 a year, it's 50 last year. We're getting after it. You know, in a short period of time, we're gonna have um refresh, good-looking gyms um, you know, everywhere. The member experience is about, you know, access to community. It's about access to fitness professionals, and it's about access to, you know, information and modalities. Because, you know, and again, you've been in gyms, so I know who I'm talking to, you've owned gyms, but you know, modalities change. And, you know, one year this is hot, the next year that's hot. So you've got to kind of, I don't think you sell out on one modality per se, but you, you know, keep it in context around, you know, what are you really trying to do? You're trying to create longevity and movement and flexibility and strength. Um, you know, usually people are worried about, you know, their body comp and you know, muscle mass and fat loss and things of that nature. But the, you know, there's some percentage of people that are trying to achieve elite degrees of fitness. For the rest of us, it's like we really want to just live for our best lives. Fitness isn't the outcome, but it's the enabler. So when you do the things that you want to do in your life, you know, you're enabled and you're strong and you're vibrant and you can do those things, you know. So I think if you keep all those things in check, you know, that's really what it comes down to. And then depending on who your member is and where they are in their in their in their journey, it's all different. You know, like we've got silver sneaker classes where oi, are they busy? We can't add silver sneaker classes fast enough. I mean, you know, 50 people at a time, you know, the that is their community. They're engaged, they're focused. The more classes you add, the more they do, you know, together. So they're focused on longevity. You've got, you know, a youth movement and strength that's unlike anything I've ever seen, you know. Like it's astonishing, you know, just think like 18 to 26 and you know, more protein and creatine than you can shake a stick at, but all they want is strength and you know, women and men alike, you know, half you know, racks and Olympic lifting. You know, you can't get enough strength equipment in your clubs, you know. So a huge strength movement. Um, you know, lots of compound movements, you know, that changes over time too. You know, first it's Spartan, then it's IROX. And you know, there's a lot of different ways that people start thinking about what you know compound functional movements look like. But you know, people like finding ways to engage and gamify and measure and compete. You know, it's exciting.

Yeah. Yeah. The the strength movement has been so cool to see. And even in my little corner of the world here in the gym I go to, it's it's you you just it's so noticeable. It's so obvious. Like there's kids of all ages. Like I go in at, you know, if I go in at like four, there's high school kids everywhere. And I don't think their coaches are making them be there. I think they're there because they want to, I think it's like the cool place to hang out. Like they're lifting. That's what it's like fashionable, right? It's trending, as the kids would say. So it's it's really, especially the women, like and the young females, and just seeing them with barbells, like lifting heavy. I'm just like, I wish they had a little bit more coaching personally, but yeah, you know, that's I don't know what to do about that.

Well, we could all use more coaching, you know. I wish, you know, when I was 16 lifting weights, 26 lifting weights heavy, someone had talked to me about joint health, someone had talked to me about longevity, someone had talked to me about, you know, how to do movements for life, not just for the moment. That saved me, you know, a lot of pain as I get older. Um, but I agree with you. I mean, I've got, you know, a wife and three daughters. My daughters are, you know, 21, 13, and 11, and uh, and they're all in the gym. They're all in our gym. They don't listen to Limp Biscuit, they listen to techno, but you know, there's not a lot I can do about that. But I think that uh, you know, uh they're all lifting. Like, you know, every single one of the girls are lifting, and you see it in gyms all the time. You see it, you know, everywhere you go. They want to be strong. And uh it's it's great to watch and it's great to see. You know, a lot of it, you know, is sports oriented, you know. My girls play volleyball, you know, so you know, there's certain lifts and movements that are associated with that. Um, you know, we see a lot of basketball players, we see, you know, young boys playing football. It's amazing the percentage of parents that you know get kids trainers at an early age for functional movement. So I think that's good for the industry, you know. There's a nice there's a nice tailwind with you know, youth sports, parents engaging with their children in youth sports. I mean, that's it's real good for the industry.

Yeah, yeah, I agree. The um give us some uh uh some insights into the capital deployment that you guys have. So you mentioned gym renovations is obviously huge. Um, yeah, like uh whatever you can share, amounts, where are you gonna put it? Like there that must be a fun thing. I think it's a fun thing to have.

You know, and I've been telling the same story, whether it's a team member or board member, um, you know, alike, you know, I think that you need a strong foundation. And we've been strengthening the foundation over, you know, the last 12, 18 months. You know, um, you know, Mark's asked us to accelerate it since he's gotten here. You know, we've got you know clubs that have needed to be remodeled. And I could say where we remodeled, the the results are incredible. You know, I mean, all the quantum, you know, numbers and organic numbers are enviable in what we can do in a in a remodeled club. So we got to strengthen the foundation. You know, we'll find opportunities to leverage the platform. Leverage the platform means, you know, we know how to run gyms. We we've had more gyms. 24 got, you know, well over 400 clubs domestically, you know, we're only at approximately 250 right now. So there'll be some MA opportunities for us, you know, in the short term where we can expand the platform and provide access to network for our members, more choices on where they can go when they live and work. I think they'll be excited about that. And then, you know, on top of that, you'll see organic growth with things like new clubs. It's always a question everybody asks you, you know, like it's uh there's one of the toughest parts about being the CEO is I had I had nothing sexy to say for the first 24 months. You know, it's like you're the CEO, how many clubs are we gonna are we gonna build? It's like zero, you know. But you know, now we're at a time where you know we can, you know, start building. But that pipeline takes a bit of time, call it you know, 12, 18 months to get the leases signed, to get the clubs opened, etc. So I think it's kind of a one, two, three, you know, it's strengthen the foundation, leverage the platform, and then grow organically. That's what we'll do.

Yeah, awesome. Um, I want to zoom out a little bit. So just on on kind of the state of big box in 2026. I mean, there's still you know, still boutique models popping up everywhere. There's, you know, a lot of innovation. I kind of look at the boutiques as, you know, where a lot of the innovation happens within the industry. Um, you know, Econocs is going luxury, uh, budget chains are expanding. You know, where where do you think 24-hour fitness wants to land in that that landscape now?

I think that, you know, we're gonna embrace the middle, you know, and a lot of people like to talk you out of the middle, but there's a lot to be said about the middle. You know, I think that, you know, a lot of the, you know, just call it entry-level gyms, you know, first of all, if you really believe in our mission statement, which is a healthier and happier world, and if people say they're working out, you gotta just say that's awesome, no matter where it is. Like we hope it's with us. But if you're working out and you're focused on your longevity, kudos to you. You know, it's uh it's a commitment, it's a lifestyle, and and we think that's terrific. If you start at a you know lower end gym and you move along in your fitness journey, you'll learn over time that things are missing. You know, then that, you know, whether it's free weights, whether it's kettlebells, whether it's, you know, wet areas, whether it's uh recovery, basketball, access to fitness professionals, you'll figure it out over time. And we'll step people up off the bottom into our um gyms, greater amenities, bigger size, fitness professionals, access to community. We do that all day long. And um, and I'd say the same thing about the top. Like, look, if you're in a place where you can pay $300 a month for a gym, you you're you're winning, you know. Like, congratulations on what you've been able to get done in your life. There's there's not that many people that fall into, you know, that um, you know, bracket, if you will. And in most cases, you're paying for things outside of the functional gym floor. You know, you're playing for you're paying for a you know, a cafe or a studio or a restaurant or massage or things of that nature. When you look at our functional floor and what we're able to accomplish, you know, our weight room floor, it's enviable. I mean, we've got a great weight room floor, so at a great value. So, you know, I'm comfortable being in the in the middle. We'll add amenities and we'll say things like value premium to make ourselves feel good about being in the middle. But at the end of the day, if you look at it from you know, an investment standpoint of, you know, just call it, you know, $30 to $50 a month, it's it's it's a great value.

Yeah, maybe um clarify what what you mean by the middle a little bit, Carl. And I mean this is a better way to ask it. Like, who are you serving and who are you okay with not serving?

Yeah, I mean, you know, you'd be crazy to say you didn't want to serve people, but I can tell you that our primary member, I can kind of tell you, you know, it's interesting, you know, like you know, who came back and what changed about the industry, you know, post-COVID. You know, if if the young male ever left the gym, which I'm not sure that they ever actually did, I think they just worked out in any gym that was open during COVID. You know, you know, the young male, 18 to 26, young female, like like strength-based, that's everywhere. Everybody is expanding their strength floor, everybody's consolidating cardio. That's not unique to 24-hour fitness. That is, that's inclusive of 24 hour fitness. So we've got this, you know, if you look at Gen Z, if you look at Gen X and you look at the percentage of people that are joining us in the demographic, it we're definitely trending younger, as I think the industry is, and we're doing that, you know, for sure. I think that if you go all the way to the other side of the continuum, you know, the silver sneakers population, which, you know, I have to admit I'm in now, you know, is you can see that um, you know, that population's in the gym and and their classes are going crazy, like I mentioned earlier. You know, uh, you know, we're doing a great job of creating modalities that you know, inspire that group, communities that inspire that group. When you look in the middle, anybody that had some type of money and some type of square footage, I think you needed both. You replicated something in your life to say it's like a gym at home, right? And you kind of created during COVID something that was good enough. And uh we all did it. We all said, hey, the gym's closed. This is what I'm gonna do to keep in shape. And that group's probably been, you know, the slowest to come back, but we've seen them come back, which is why we've seen, you know, year over year positive comps and traffic. But they were the they were the last to come back is is people that did that. And then, you know, with hybrid work offices and such, you know, the way that people, you know, work out, you know, work, live, the daily commute, that all changed too. So you had to be careful of that, right? And then gyms, it was like cards in the air, right? Some of them reopened, some of them didn't. You know, we closed clubs, other people closed clubs, some people opened clubs, you know, so like the whole ecosystem changed. And I think they're probably, you know, trying to fight over um, you know, that kind of you know, urban professional in, you know, you know, in where they go and what they do. I think that's honest.

Yeah, yeah. I wanna shift a little bit of time to to your your cap so long range capital. Um, you know, I I've I feel that within this industry, they're kind of like the invisible players within the industry. I mean, you get the executives, you get the leaders in health sciences, right? All out front, right? But the the capital people are I don't know a lot of them. I only know like 10 of them really compared to how many people I know across the industry. And so they they talk a lot about patient capital, like being patient and longer term thinking. And I'm curious, you know, from an operator perspective, like what does that actually enable you to do differently, you know, and and where where do you where do you see the value in in a partnership with them specifically?

Well, first of all, your PE uh is the best education you could ever get as a business leader. You know, um having spent a lot of time in in public companies and everybody talks about things like earnings releases every three months, et cetera, board meetings every three months and such. PE is fully loaded data, raw data, spreadsheets, uh, you know, like high degrees of acumen focused on return and time frames that are precise. So it's a it's a wonderful um, you know, education and experience. If I could do my career over again, I'd go into PE first and I'd go into public second because you'd walk into public with a sharper eye, in my opinion, in the way that you think about how businesses should act, be responsible for things of that nature. You know, long-range capital, you know, um, you know, Bob and you know, Sonny, Austin, Michelle, they're they're wonderful, you know. Um, and don't confuse wonderful with easy or wonderful with, you know, like a lack of expectation, but they're truly inspired by the business. Um, you know, it starts with, you know, Bob Berlin, who's, you know, quite the athlete himself, and you know how he spends his time. And um, you know, he he loves the gym industry, you know, talks about it decades back on forwards. You know, there's a lot of you know, energy, not only about the business, but the work itself. And I think that matters a lot, you know. So they've been great partners. I mean, they've been you know quick to react. You know, let's get in clubs. Great. How's Tuesday sound? And then you know, you think it's gonna be the, you know, we're gonna hit two clubs and a long lunch and I'll get you on your way. Nope. We had 12 clubs on the dance card. We went through all of them. They wanted to see good ones, bad ones, you know, new ones, old ones. I mean, they're they're active and engaged in the book. They want to be helpful and they're here to partner and grow in the business.

What do you uh is it just me and Carl and my my sole perspective, but is private equity playing a tremendous role in our industry right now compared to the last few decades?

It's like this, uh, it's like your eyes are open once you open the door to PE. I mean, you know, just tens of billions of dollars at work in all of these businesses. Then you go and you see like all these businesses that are household names, and you're like, you know, that's PE, that's PE. You know, you can kind of see it everywhere. You know, PE is driving uh investment across, well, across the world, but certainly, you know, in the United States, they're fueling businesses, they're retooling businesses. You know, there's a whole arm of PE that helps distress businesses, there's ones that help grow businesses. It's uh it's it's quite the education and um it's quite the expectation. I actually, when I started, uh one of my dear friends um who had been in PE said, you know, his name's Eric Gerber, Dr. Eric Gerber. He said, if it, if it, if, if it was a year to get done in public, you've got three months. If it was three months in public, make the decision this week. And um uh he was a hundred percent right about that the speed by which you have to be, the precision by which you have to answer it. And it's not speed and absence of form or data, but it's bring the data, you know, bring the information, make the decision, drive a business. Yeah.

Huh. Yeah, it's it is. And I think for me personally, it's like, you know, pre-pandemic, my wife and I started looking for, you know, like a conversion van. They're everywhere now, right? Yeah, and I like as soon as I started looking at, I'm like, oh, they're everywhere. But I didn't see them anywhere before I started looking. And I think that's kind of what's going on from my perspective.

That's exactly right.

Oh shit, there's private equity everywhere. Oh my god, it's like the end of the movie Sixth Sense. You look back and you're like, the kid was dead the whole time. Sorry, spoiler. Yeah.

It's it's right, it's exactly true. Uh, and then there's a network, you know. So there's a network where if you run one PE company and you do well, then you know they've got a whole family of brands, and you know, then that family of brands knows, you know, another PE network, and they kind of see you. So you, you um, you know, as a leader, as executives, have access to a lot of different opportunities. I'm sure the opposite's true. I'm sure if you don't do well, then everybody knows that too. But I think that uh, you know, if you if you get out there and you get after it and you work hard, um, there's a lot of great opportunity in PE.

Yeah, right on. Last little segment here. And I'm shocked and impressed we didn't bring this up yet. Artificial intelligence. So there, I'm gonna I'm gonna ruin the interview now because I'm gonna bring it up. But I think a lot of operators are overwhelmed with AI as the answer to many things, right? And I think it's still early, but it's also moving very fast. So in some ways we're late, but when we're, I don't know. It's a very confusing time and it's not just our industry, it's the world is kind of changing around us, and we have to adapt to it. So I mean, maybe if you could give operators a gift of like, you know, when you look at uh like very new technologies, AI driven or not, like what are one or two things that you felt have actually moved the needle for you guys in this in a meaningful way?

First of all, I think, you know, AI uh in a lot of ways, it I think it's like anything else that you do in business, you know, you've got to really just kind of cadence it and start thinking about, you know, where you're at and where you want to go, what things um you can you can rely on AI for, and then what things you actually need to maintain, you know, a personal, you know, touch. And you know, I think, you know, an example is is you know, we've all stared at a blank screen and tried to put together, you know, whether it's an email or a business plan or you know, something as such. I mean, if you're not using chat GBT or alike to start a rough draft, then you know, then you know, you're you're missing out on a of a world of efficiency. Yeah. If you think that's your final draft and that uh, you know, you don't have to go through and nuance it and personalize it, then you've kind of lost the idea. So I think if that's just a small tangible example of, you know, it's a starter, it can save you a bunch of time, but you know, don't have Which I've had, and I'm sure you've had two people from the same company send you the same note on LinkedIn and you read them both, they're exactly the same. And you're like, Make it stop. Make it stop. Do you not realize that you did that? Do you not realize that you put the name of my competitor in and I'm 24-hour fitness, you know, not another one? So, like, if you're not careful in, you know, if you're sloppy, if you really want to be candid about it, AI can be really embarrassing. But if you but if you use it as a as a foundation and a frame and a draft, I think, I think it's a great start. You can aggregate a lot of information, you can data query things very, very quickly. So I think all those things are wonderful. I think we've all been in a doom loop on a you know, IVR on a phone before where you're just hitting buttons, pissed off, saying, you know, I want to talk to a real person. And so there's always gonna be the need for human interaction, but there's places where it works, but maybe not in totality is the way that I would explain it. Yeah.

Yeah, that's uh a topic I could probably spin off for another 45 minutes. Yeah. Last question I always ask here, Carl, is uh what can we, as a as an industry, you know, what what can we help you with? And what I mean as, you know, what are you looking for? Is it partnerships? Are you looking to grow your team? Are you doing all these things? And you know, what would you like to hear from people about?

Well, I think as an industry, the fitness industry's really done, you know, incredible work, which is less about me and more as relatively new in the industry and more about what all of you should be so proud of. You know, you know, you can just see it in writing. You could see leases and retailers that said, you know, we're gonna have an exclusive and not allowed, you know, fitness, you know, in our centers. We don't like what it does, you know, to parking. And now you've got, you know, centers, you know, begging for fitness to go in because it's a traffic driver and it's an enabler for so many other businesses. So when you look at the very foundation of what the fitness industry has done, you know, just another small example, you know, with commoditization and you know, ubiquitous access to, you know, consumer goods and and products with, you know, the internet, you know, the gym, the fitness industry is one of those places that, you know, still requires human interaction, you know, and you know, you can't get a computer to do your workout for you yet, you know. So you got to go, you know, get it done yourself. So when you really look at what the fitness industry has done for itself through decades of hard work, then I think it the industry has an opportunity to continue to build on that success and leverage the success accordingly. I think the the industry's grown up in a major way, um, you know, and gone from, you know, whatever people thought about it. I'll just say, you know, as a simple business, you know, decades ago to now, you know, one of the most prolific traffic driving industries, you know, in the world and, you know, an offshoot for so many other things in the way people think of their wellness. So, you know, my short seven year stent in industry in the industry so far, I would say, you know, be proud of what you know the fitness industry has accomplished and continue to build on it together. You know, yeah, there's competition, everybody wants to be the best, things of that nature, but there's so much room for um, you know, us to be better together. And, you know, uh, you know, there's still, no matter what the numbers are, you know, whether it's 25%, 35%, you know, there's still, you know, half of the US population that can engage in, you know, some sort of wellness activity, mental or physical. There's a lot of room for us all to grow together. Right on.

Right on. And where would you like people to go, Carl? If they want to get in touch with you or your team, um, is there any specific place you'd like them to uh there's all different places you can get a hold of us.

You know, obviously on our website, we have the ability to get a hold of us. You know, you can you know shoot me an email. If you know me at all, yeah, you always say, you know, uh, you know, email me if it's interesting, text me if you want me, call me if you need me. You know, I'm uh I'm a I'm still a big, you know, feet to the ground kind of a guy. I've been in every club in 24 more than once. And um I like it out in the clubs with the folks. That's my favorite thing to do.

Right on. Carl, well, thank you, sir. I'm looking forward to seeing what you guys do this year in the years to come. I think it's a really exciting time, you know, for someone who's you know, um, right around the same age as you are. 24 was a very important brand to me and um, you know, helped me get on my my start as well. So it's cool to see it rejuvenated and see what the future holds. And um, excited to have you on board. So, ladies and gentlemen, Carl Samps.

Thank you for your time.

Hey, wait, don't leave yet. This was your host, Eric Malzone, and I hope you enjoyed this episode of Future of Feminists. 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, Castbox, 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 and 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 feature of fitness.co. You can subscribe to our newsletter there, or you can simply get in touch with me as I'd 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.