Lisa Kuecker - The State of Boutique 2024

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[00:02:21] All right, we are live. Lisee Kieker. Welcome to the future of fitness.

[00:02:25] It's a joy to be here. It's a pleasure. I've been wanting to get on the show for a while

[00:02:30] and you know it's this is really good timing, right? Q1, 2024. You're working on a lot of stuff.

[00:02:36] You have a lot of great insights from last year moving into this year with studio grow and your business

[00:02:41] and all the things you do. Every time I talk to you, I'm like, you do that as well. That's bananas.

[00:02:45] So it's really your mover and shaker and I'm glad to highlight what you do here on the podcast.

[00:02:52] So I think a great place to start is you have a really good background, really interesting

[00:02:57] background. So let's start with that and then we'll get into all the stuff that you're up to now.

[00:03:01] Sure, sure. Well, I mean background wise, this isn't where I ever expected to land. My first company

[00:03:07] was a tech company. I started it straight out of college and benefit to it was I got to see

[00:03:14] and understand a lot of things that were I guess in their very beginnings. We built the front-end

[00:03:19] of Mass.gov at the time, it was the most expensive web portal in the world and I was a little 20-year-old

[00:03:25] starting my first company and got the contract and thought this is insane and the fact of the matter

[00:03:30] is is I've learned more of understanding how technology and how the web and how our digital presence

[00:03:36] shaped because we literally got to build some of the most foundational footprints about how they

[00:03:41] would be shaped and how people would use them moving forward. Fitness was my passion, my second love

[00:03:47] and never expected when I would leave one company that I would have this opportunity but

[00:03:56] I fell into fitness haphazardly. I married my husband, landed in Washington state and

[00:04:01] an executive from Intel wandered into one of my classes that I was teaching and just said,

[00:04:06] hey, would you want to do something like this inside of Intel? And that was where my first studio

[00:04:10] was born. Yeah, it was wild. I was probably 24, 25 years old. It was just one of those shocking

[00:04:18] things and it gave me an enormous amount of freedom. I was 2006. It was a time when fitness was

[00:04:26] really a boutique fitness in particular was at its infancy and it was like a fertile testing ground

[00:04:31] to say, hey, this model works, this model doesn't work. I didn't have the overhead a traditional studio

[00:04:38] would have and I had a ready client source to test with and we were the strange blend of

[00:04:43] CrossFit yoga and Pilates because you know there's there's naturally go hand in hand but it was

[00:04:49] proof that even combinations that most people wouldn't expect can be powerful when you

[00:04:54] interweave them together into the right journey for a client and you really teach people how they

[00:04:59] can be utilizing their bodies to its fullest potential. So when I went to open a few facilities

[00:05:06] over the years, I had a 250 studio owners wander through my doors. My managers were ready to

[00:05:13] kill me in the process. They were literally like we're done. We never want to see this again

[00:05:18] and I realized maybe maybe instead of letting people just wander through our doors and learn what

[00:05:22] we're doing, maybe this is business. And so at the end of 2015 we started Studio Grow. It was very much

[00:05:28] like a kitchen table. Hey, we're not going to this will be a small growth and in 2016 I sold my

[00:05:35] facilities. We had all these unsolicited offers in about a three month period and now Studio Grow

[00:05:41] is a team where officially hired a 51st employee about two weeks ago. Our team owns and operates

[00:05:48] facilities in the US, Canada, the UK, Europe, the Middle East across Asia and in Australia. So

[00:05:58] in many segments of the world and I would have never pictured us as going there. But here we are.

[00:06:05] And now we're getting to do some amazing investments back into some incredible concepts in the industry.

[00:06:11] So it's fun to widen our doors and just see what's possible. Yeah, fantastic. You know,

[00:06:17] we're going to talk a lot about boutique fitness today and sometimes it strikes me like before

[00:06:22] you talk about things, probably define a thing. Right? So when you think of boutique fitness,

[00:06:27] how do you define that? Because I think a lot of people have different iterations of what it is.

[00:06:31] So let's start with that and then we'll dive deeper. Yeah, I mean, it's a strange thing. This

[00:06:36] parts of me goes, God, do we have to define boutique in big box? And yet the reality is,

[00:06:41] is I think about big boutique being selective towards a single modality or a set of unique

[00:06:48] modalities under one roof, but rarely having alongside of that, we would call it traditional open

[00:06:54] gym experience. You know, the boutique fitness world is wide. We see in home studios, some of

[00:07:00] what you're running 85% profit margins and whose owners are bringing in three to five hundred

[00:07:05] thousand dollars a year in net profit, single modality studios, private studios, small group

[00:07:11] training studios, group studios, multi modality studios, increasingly we're seeing what I would call

[00:07:17] a hybrid of medical and boutique fitness that I think is going to be a broader spectrum of our

[00:07:22] industry, which is really the wellness center. In the last year, we've probably had more doctors

[00:07:28] opening facilities than we've ever had. I think we've opened like six different doctors

[00:07:33] facilities, which they're adding in functional medicine, drip therapy, different recovery options.

[00:07:40] Most of them are former emergency room physicians, ironically and they're really saying like,

[00:07:45] what do I do to ensure someone doesn't walk in my doors? So boutique fitness, I think it's a

[00:07:50] it's a really wide spread field, but but encompassing that idea that there's an intimacy

[00:07:55] and a community does look a little bit different from big box. Yeah, very interesting. And so you work

[00:08:02] with studios across 42 countries, right? It's probably more now. I would imagine.

[00:08:07] And we yeah, we just added 43 and 44. So we're working on a we're working into some emerging

[00:08:15] markets, which has been incredibly excited when you realize that, you know, markets like Pakistan,

[00:08:20] which we haven't traditionally assumed, you know, they've got the horror for example, you know,

[00:08:26] 11 and a half million people. There's opportunities that are really sitting all across the world

[00:08:31] right now in this. And in the fact of the matter is boutique fitness is really only developed,

[00:08:35] I would say a full market in a handful of countries. And what countries do you think those are

[00:08:40] like full market? I mean, the US Canada Australia, the UK is in development and I would argue

[00:08:47] that London is developed but not the remaining portions of the UK. So I mean, you know,

[00:08:53] the US Canada Australia Singapore Dubai is starting to see that fleshed out on where this is Abu

[00:08:59] Dhabi alongside of it but not quite as much as Dubai. So parts of the Emirates. So, you know,

[00:09:04] there's only these handful of places where you're like, wow, the whole spectrum of boutique fitness

[00:09:08] is there. And I don't want to say it's a saturated market, but it's in a market that's fully immersed

[00:09:13] in boutique fitness. There's a huge amount of opportunities, you know, they've been building

[00:09:17] big box health clubs all over the world and the basic fits and midfits of the world have certainly

[00:09:24] penetrated a ton of markets. But I think there's a huge opportunity for boutique fitness worldwide,

[00:09:30] even though it's established, it's just not as established as it could be. Yeah, awesome. So,

[00:09:35] I was just at connected health and fitness last month and a lot of the talk around boutique was

[00:09:41] there was headwinds, right? I think this is probably just for North America but I'm sure you'll

[00:09:47] give some global insights into it. You know, stuff like well, you know, investor dollars are starting

[00:09:53] to thaw a little bit but very hesitant, right? And investing in boutique. You know, I think the cost

[00:09:59] of real estate here in the United States obviously is a tremendous challenge. People are trying to

[00:10:06] capture like the Gen Z market and that was a big point of conversation and of course,

[00:10:11] GLP won some of Glutide, right? Like all these things like the opportunities and the challenges

[00:10:15] boutique is very unique. So what say you, Lisey? Like when you look at this year, like what challenges

[00:10:20] opportunities do you see for 2024 that are maybe different than the past few years and, you know,

[00:10:25] given last three years of bananas? I would say that first of all, let's speak to each of these points

[00:10:31] and then let me add them on my own. So on investor dollars that have been relatively tight in the US,

[00:10:36] I think we can argue that some of the models that really developed early on in boutique fitness

[00:10:42] that were highly driven by private equity adventure capital weren't necessarily profitable models

[00:10:50] from day one. In other words, they weren't like a bootstrap model where you really needed to run

[00:10:54] a 30% EBITDA, you really needed to ensure where that was going and I think because of that,

[00:10:59] we've gotten into a dangerous stance of some people thinking this is not the best industry to

[00:11:04] invest in. In reality, I think the model is continuing to evolve and emerge and I think one of

[00:11:10] the biggest things we're going to have to see especially across the US is this understanding of what

[00:11:15] is a sales process and intensive marketing process need to look like. It just doesn't exist in

[00:11:21] most places and the idea that the products, stocks and pricing that are necessary to really guide

[00:11:27] people onto long-term consumer relationships. I mean, that's got to change and that's got to

[00:11:32] shift and I would say that that's the biggest issue confronting the US right now is that we're

[00:11:38] light years behind other people in the fitness industry and saying that, you know, sales is a

[00:11:44] necessary department in every single industry we've got to take it on. So that's the first piece.

[00:11:51] Internationally, we're seeing the flip side right now. Any enormous amount of international

[00:11:56] investment is going into boutique and it is interesting because I've sat in a number of these

[00:12:01] boardrooms around the world in the last six months and one of the conversations I have consistently

[00:12:07] with international investors is that they don't want what they're seeing out of the US market.

[00:12:12] They're recognizing that there's some there's some flaws that are there and they want to know

[00:12:16] about profitability. They want to know about how we're going to drive revenue. They're asking,

[00:12:20] you know, to see what our solutions are to these and I think that that's an interesting

[00:12:26] tidbit on where that's going and what that's looking like. Cost of real estate massive issue.

[00:12:34] We're seeing two significant issues and that's going to be the cost of real estate and the ongoing

[00:12:39] cost of talent. And by talent, I'm not just speaking of who's in front of a classroom or in front

[00:12:43] of a private lesson. I'm talking about your front desk, your managers, all of these things. We don't

[00:12:48] necessarily have... Well, we have a wide variety of trained and certified instructors and trainers.

[00:12:56] We have not necessarily built a career path for many of them to have a full-time lifelong career

[00:13:03] where they can really feed their family. Yeah, I can't tell you how many people I talk to and I

[00:13:08] realize that when I'm running their payroll and they're like, I'm making $50 an hour but when

[00:13:12] I calculate it out, they're probably making less than their babysitter between travel time,

[00:13:17] pre-class after class and all of these types of things. So we've got to figure out a different

[00:13:22] look for what the organizational chart is going to look like. For real estate, we're going to get creative,

[00:13:27] I think, with smaller and smaller concepts. I mean, I see that as the niche concepts are really

[00:13:34] going like wide wildfire. I mean, we've invested into a concept. We're going to make the full

[00:13:40] announcement on this but an average square footage size for us is going to be a thousand square feet

[00:13:45] and it's a concept that we had it running three mornings a week this year and it was doing just

[00:13:50] over half a million dollars on three mornings a week. Heavy duty, EBITDA, that's pushing 50%.

[00:13:57] We've got to look and think smarter with what we're doing this and the fact of the matter is is

[00:14:03] packing 50 bikes into a room or packing 25 reformers, which we're seeing some reformers do

[00:14:09] this hitting numbers that I've never even imagined would happen.

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[00:15:29] That may not be the best way is to assume that more square footage is ideal. Finally,

[00:15:34] you know when we look at alternative generations, I was interested to be quite frank in my

[00:15:38] parents' generation as I am in Gen Z and for very different reasons on this one. From Gen Z,

[00:15:45] I'm fascinated by the fact that obviously they are emotionally tied, I think partly because

[00:15:51] they've been exposed during the pandemic. They've gone through some ups and downs with some

[00:15:57] recessions and things like that. Their life has been a relatively, I'll call it some unstable

[00:16:02] life on where this is. That's fair. Yeah, I mean they're a little bit obsessed though with

[00:16:06] health and wellness. You know, they're looking very much for this internal stability.

[00:16:12] And with that, we get a chance to really offer some incredible opportunities, some incredible

[00:16:17] options. They're going to shift the way we market. They already are whether it's talking about

[00:16:21] you know video-based marketing and how we're leading a lot of top-of-funnel work with that because

[00:16:27] they're driving that. YouTube is their number one social platform, how we're going to utilize that

[00:16:31] moving forward as a marketing source when so many studios and quite frankly health clubs as well

[00:16:37] have been very meta-dependent for their ad flow. Mobile purchasing, recognizing that you know if

[00:16:44] you can't do very simple purchasing and if we can't use Apple Pay and some of the basics,

[00:16:48] we've got some real problems and that's going to come down to our CRMs being willing to embrace this

[00:16:53] and understand that these are critical for us moving forward. Even basic buy-and-out pay- later

[00:16:59] options. I mean, I can argue that you know if you're going to do a retreat or you're going to do a

[00:17:03] major pay-and-full or you're going to do a teacher training program, the US population that is an

[00:17:09] adult has used buy-and-out pay-and-out pay-and-after options in the last three years. It's even more so

[00:17:14] internationally. So recognizing that we're going to need some shifts in terms of our software

[00:17:20] capabilities and a recognition that hey, this generation is provoking change. We've got to follow it.

[00:17:27] In terms of concepts, I think Gen Z is looking for more and more intimacy. I think that you know the

[00:17:32] Andrew Huper-Mens of the world have brought an incredible level of intelligence to what our body

[00:17:39] can do, what we're looking at it. This is probably the best educated generation about what's possible.

[00:17:44] They're also looking at their parents who probably didn't take as good of care of themselves

[00:17:49] and are saying, wait a second. How do I ensure that that's not what I become?

[00:17:54] And so I think more and more bespoke options and I'm shocked at you know for everyone who's

[00:18:00] gone in the low cost route with Gen Z. We've had a couple of concepts that we've taken in the

[00:18:05] extraordinarily high-cost luxury count. Those have been some of our most successful among the Gen Z

[00:18:11] population because they're just wanting something more but something that's uniquely their own.

[00:18:17] In terms of let's just say my parents generation, you know we're hitting record-breaking,

[00:18:23] record-breaking numbers of 65-year-olds every year and by the time we hit 2032 we'll have more 65

[00:18:29] year olds than the more people over the age of 65 than under the age of 18. And there's two things

[00:18:35] that I think we've got to shift on this. You know the first is how are we serving them? You know

[00:18:39] any concept that right now is focused on that 50 plus march. I am fascinated with how we can add

[00:18:45] muscle to people that are historically losing muscle rapidly at this point but it's such an

[00:18:51] important piece of this. But secondarily you know we're going to see I think more and more people

[00:18:56] that are going to be coming into the labor markets in our industry, retired from maybe one if not

[00:19:03] two careers highly well educated and saying hey I still have something left to give. So I think

[00:19:09] we're going to see more of that and probably want to embrace what that is going to look like

[00:19:13] and how we're going to be working amidst a labor force. Now it's going to really span multiple

[00:19:18] generations. I see that as becoming maybe not 2024's biggest problem but I see that every year

[00:19:25] we're seeing more and more and more of that. So you know these are just a couple of the things

[00:19:31] in addition to that you know I touched on the marketing and sales can undram but I think

[00:19:37] I think that we have a twofold issue in sitting in boutique fitness and probably in fitness across

[00:19:44] the board. In my mind you know we sit at the crossroads of hospitality and service. We treated

[00:19:52] ourselves as a service industry this entire time. We're not. I grew up in a phenomenal restaurant

[00:19:58] family down both sides with a mother who was the consummate entertainer and you know recognizing

[00:20:05] that the hospitality world and what we're going to need to pull from that is critical these days.

[00:20:10] Our client journey our way that we communicate with people how we truly surprise and delight you

[00:20:17] know so often times the fitness industry has been built on this idea that I want to sell as many

[00:20:21] memberships and have as few people come as possible. That's not what we said anymore. That doesn't

[00:20:26] that doesn't work that has changed and radically shifted. So that's point number one in sales and

[00:20:31] marketing on the marketing front end point number two marketing looks radically different. You know we

[00:20:36] test last year we tested just over five hundred and forty thousand dollars in in marketing spend and

[00:20:43] we're across a myriad of platforms everything that met us so that's going to be Facebook, Instagram,

[00:20:50] WhatsApp and Messenger ads all of Google's platform so display search search ads and YouTube but

[00:20:59] then starting to poke our heads into things like how are we using LinkedIn especially for our higher

[00:21:04] tier personal training studios that are going to be attracting that more corporate client. How are

[00:21:09] we working with TikTok TikTok's the only local search engine which truly built on a local algorithm

[00:21:15] so if I post insure let's feel Virginia today people most likely to see this are within about

[00:21:20] a 10 to 20 mile radius of me so it's built for small businesses for organic content and while

[00:21:27] we're seeing a relatively cheap cost per lead we're still seeing a higher cost per acquisition

[00:21:32] than on platforms like meta so what does this look like going in and of course you know how are we

[00:21:38] continuing to evolve email marketing you know SMS and WhatsApp marketing and then the elephant in

[00:21:45] the room that everybody is whispering about how are we using AI to do this really well. You know right

[00:21:50] now for us we're using AI primarily as the best marketing analyst I've ever seen

[00:21:57] and it's ability to to roll through and really understand you know what data is coming from

[00:22:02] this and how can we use this better. So there's a couple of things. Yeah yeah a few things

[00:22:08] I want to circle back on one or two actually so are you familiar with the fit guide in what

[00:22:13] Jack Thomas is doing? Yeah I just sent him some notes on this. Yeah me too me too I just sent

[00:22:19] him some notes and you know from the data so it sounds like you're not got preliminary access to

[00:22:25] some of the data in the reports and I was asked to contribute just some thoughts on it overall.

[00:22:29] So there's two things that stood out to me number one was sales like conversions yeah it's

[00:22:36] really bad and you know we need to be able I don't know what that means at the ground level but

[00:22:41] you know at the meta level that we're looking at it's like or the macro level we need to convert

[00:22:46] sales we need to be able to ask for the money better and get that sold right. Their thing was

[00:22:50] hospitality in general and this is what I want to talk to you most mostly about is like

[00:22:55] we are in the hospitality industry right and there's a lot we can learn from you know

[00:23:00] Emirates Airlines or you know the four seasons right like do we have to be at bad level?

[00:23:06] Well not not serially but there's things we can learn I mean even stuff as simple as like

[00:23:11] the scent of when you walk in right or even just a fresh coat of paint or how you address people

[00:23:18] when they walk in their door, how you do it during a class session, could ever it maybe so when

[00:23:22] you talk about hospitality I think that's a really key point for people is like what does that mean

[00:23:28] to you expand on that and how can we be doing it better. So hospitality I think it has different

[00:23:33] layers to it but at its core it's giving someone an experience where they feel extraordinary

[00:23:40] you know and that really is what it is and I think you know so often times we looked the the big players

[00:23:47] and I brought in some consultants years ago who'd worked with the Ritz Carlton they'd worked

[00:23:52] with the four seasons this was probably 2014 2015 in our business and I was like how can we

[00:23:58] how can we expand how can we how can we provide something that's even more incredible and the one

[00:24:03] take away that I really had from this is that it starts with very much the individual perspective

[00:24:10] and connection you know we're so we talk so much on how we're eliminating people and I think this

[00:24:16] is where we've got to save the humans and save the human connection on this because you know I

[00:24:21] love the sense and I love having an extraordinary experience when you walk through the door but

[00:24:26] really you can do a lot by having a front desk team member the most important team member you have

[00:24:32] by the way sitting at that front desk if they're the one who stops and says oh my gosh welcome to

[00:24:38] our location and they ensure that you start the sales process there and they make sure that they

[00:24:43] use their name that they're looking up by the way who's coming in and they know that they can

[00:24:46] recognize them playing these are simple steps that when you walk through the door your first time

[00:24:52] in a studio if someone's like Eric I was waiting for you to come in we're so delighted by the way

[00:24:58] I've got just a simple bottle of water here for you let me just take you for a quick one minute

[00:25:02] tour of the club of the studio and by the way that's going to be coming she's going to be leading your

[00:25:07] class she's going to walk you in and get you all set up that's hospitality at its core you know

[00:25:12] we've taken it to be all this big these big things that I think are overwhelming and instead I look

[00:25:19] at like the simplest things I look quite frankly at my mom's dinner table like my mother used to

[00:25:25] host dinner parties I don't know for for five people to 50 people multiple times a month that are

[00:25:31] house and you never left without feeling like you just belonged and that you were completely welcomed

[00:25:39] and if that's what the essence of this is we're doing it right and if you can start with your people

[00:25:45] and start with your team that's that's the critical piece of it and I think that's the part that

[00:25:49] we're oftentimes missing out on you know we don't necessarily have a recruiting pipeline across

[00:25:55] fitness that's doing very well the second thing many people are missing is a strong on boarding

[00:26:00] and training platform and to understand how are you going to guide people to give this level of

[00:26:05] experience it's simpler than we think but my god we make it hard yeah it's in a lot of things

[00:26:14] that you mentioned are not monetary investments right it's just human human it's training right

[00:26:20] it's having to write people having people have the right mindset around what they're doing

[00:26:24] people who enjoy the work right and that's I think that's probably a big part of it too is that

[00:26:30] you as you alluded to earlier like we don't have a direct career path in fitness arena I mean

[00:26:35] I think probably 10 plus years ago perhaps we did like you know you could do a personal trainer for life

[00:26:42] right you could you know work up to director level you could do all kinds of things and there was

[00:26:46] there was a path I mean I feel like we've kind of fallen into this gig economy as far as trainers

[00:26:51] or it's like okay I'll get a certification I'll do it for some or sure it's like life-guarding

[00:26:54] right I'll just do that right and then next you know and so I think that's that's a big problem

[00:27:00] I don't know how to address that I don't know if it's because the pie is not big enough to give a

[00:27:04] big enough slice to get the talent that we need you know that's independent of course per studio or

[00:27:09] per gym but like why do you think we're having trouble making that career path let me go back to

[00:27:15] your your first point you touched on that's the sales piece of this before we hit hospitality I

[00:27:20] actually think this is a root problem of why we're sitting with the career path issue that we have

[00:27:26] an average boutique fitness studio converts between five and 15 percent of its introductory packages

[00:27:32] into long-term memberships okay this is a massive problem it's a number that five to fifteen

[00:27:37] yeah wow and we're talking some major brands that we get to peek inside of that we're like oh

[00:27:44] I mean it should give you pause for like that's horrifying it's hard it's hard it's the first thing

[00:27:51] we work on with people you know we haven't I just we just did our a massive survey and we've got

[00:27:55] an average 56 percent conversion rate from intro package to 12-month membership amongst our clients

[00:28:01] that's a radical change that's the difference between having five out of every hundred new marketing

[00:28:07] introductory introductory packages popping through your marketing versus 56 it's a game changer

[00:28:12] in terms of your revenue and we have what we know pre pandemic we think it's roughly the same now but

[00:28:18] it's been hard to track with the post-pandemic falloff but pre pandemic the rolling 13-month

[00:28:24] attrition rate and boutique fitness when we would survey this out it was about 9 percent which

[00:28:30] means nine out of every hundred people would still be a member of your facility 13 months later

[00:28:36] and these are very dangerous dangerous numbers for any industry I mean I sit right off the

[00:28:43] University of Virginia's campus loads of my friends or professors at Darden when we talk about

[00:28:48] this at dinner you know they just kind of shake a little bit because they're like from business

[00:28:52] school perspective this doesn't work out and because of that we're sitting in this constant revenue

[00:28:59] roller coaster that I think even the brands that are you know doing well and are sitting at you know

[00:29:04] hey we are seven figure brand they're sitting at a revenue roller coaster and because their

[00:29:10] budget is not necessarily focused on revenue driven positions that are growing them they're running

[00:29:15] with much leaner profits than they should be running on and so that leads us to a place where I think

[00:29:21] a lot of people are afraid to build out a permanent org chart that really is going to allow for

[00:29:27] those positions it's let it be easy where you know part of our problem with our sales our sales

[00:29:33] and retention issues is that you're right we are living in a gig economy we've got front desk

[00:29:37] staff that work for you know eight hours a week here and 12 hours a week there and have rarely been

[00:29:44] properly trained or onboarded they're happy to sit there and wave people into their favorite studio

[00:29:49] we've got instructors that might pop in for one or two classes a week and can't even you know

[00:29:54] articulate that a teacher training or a major promotion or a major referral event is going on but

[00:29:59] they don't even know that's happening and in many cases we have no sales management team so our

[00:30:05] ROI driven positions just haven't even existed inside of boutique fitness on that org chart so

[00:30:12] so I think that there is this fear that comes and I mean I get that fear you know when I sit

[00:30:16] in a look at these PNLs early on when I I start to work with people I've looked over at this point

[00:30:22] probably 3500 3600 PNLs I mean it's scary when you see those numbers so you've got to almost bite the

[00:30:28] bullet and say okay what revenue driven positions can I put into place first to stabilize

[00:30:34] and then what's the long-term sustainable org chart that we're going to have I mean no business

[00:30:39] exists without a sales and marketing department none yeah I mean you know and yet we're trying

[00:30:44] to do this every day in this in this brand I think because we're sitting in that fear factor

[00:30:51] it's uh when I was when I sold my jim is in 17 I for a while I was like coached just

[00:30:58] you know one-offs here and there I would coach jim owners and the thing I was told this

[00:31:02] and then I always pass it on is like okay look around at your staff meeting and if you can't recognize

[00:31:08] the salesperson on your team and guess what yeah it's you right it's you and uh and a lot of people

[00:31:15] didn't recognize that they're the salesperson so it's like there is no sales concerted sales efforts

[00:31:20] and it's it's a it's a big problem and do you see a light at the end of tunnel like what direction

[00:31:25] can we go to make this yeah yeah because it's huge it's massive you know I think every business

[00:31:32] needs three things I had somebody share this with me and it is it was a game change for me they

[00:31:37] they need the artist who is obsessed with the product they need an entrepreneur who's obsessed

[00:31:42] with revenue and they need an operator who's obsessed with process and and those can oftentimes

[00:31:47] overlap and switch amongst amongst you know even just two people it might be at some point that

[00:31:53] you are holding all three of those with you early on but the fact of the matter is is you know

[00:31:58] the process is simpler to put into place it's comes you you alluded to it but it comes first in

[00:32:02] the recognition of the fact that you need it and second in a decision to make this at the forefront

[00:32:08] of where you're at it you know people look at sales is a very dirty dirty business yeah I'm amazed

[00:32:15] at how many people cringe when we talk about it and yet I think sales is simply you know helping

[00:32:21] someone invest in something that's critically important to them it's a very different ballgame

[00:32:26] and we're gonna have to paint a very different picture of this so I think the first thing is

[00:32:31] recognition the second thing is going to be to say we're going to prioritize it no matter what

[00:32:35] maybe you don't have the the staffing in place to do a sales manager but my god you can train every

[00:32:40] every front desk team member to be that that person when we get we fit studios doing extraordinarily

[00:32:45] well and running extraordinarily strong profit margins you know the the other elephant in the room

[00:32:51] is how many facilities are not profitable right now they're running extraordinarily large profit

[00:32:57] margins off of a front desk team that's properly trained yeah yeah it's a difference but this is

[00:33:05] going to come down to recognition process and training it's it's those three things anyone could

[00:33:10] have this in place in 60 to 90 days awesome awesome I want to make sure we give a good amount of

[00:33:15] time to something you've been working on I know it's kind of a new well you're working on it so it's

[00:33:20] not new it's something that you're gonna be releasing out there and you know how you were effectively

[00:33:24] opening studios profitably from day one right that's that's no small feat so maybe give us some insights

[00:33:32] on on how you're doing that and yeah just expand on yeah yeah so you know when I open my facilities

[00:33:38] and when I open brick and mortar facilities I guess this would have been like end of 2008 early 2009

[00:33:44] 2010 2011 bought a facility in 2013 was opening another facility in 2016 when we were um selling

[00:33:55] when we sold and we sold that one before it was opened we opened every facility profitably

[00:34:00] uh one of our facilities technically opened was profitable about uh about 60 days in but there

[00:34:07] was this reassuring moment that hey we could have such a strong presale and we could have such a

[00:34:11] strong build up a founding memberships that we could open our doors and know that every bill was paid

[00:34:16] including our own personal salaries which I think is a critical piece so in our mastermind we started

[00:34:23] it just working with more and more clients in 2022 we saw this resurgence of people who were saying

[00:34:28] hey I'm gonna leap back into the industry and uh as we started tracking our numbers in early 2023

[00:34:35] we realized that every facility was opening profitably they were selling out of their founding

[00:34:40] memberships and they were consistently on this beautiful path that was really gonna put them in

[00:34:47] in my mind what was a critical place they had everything they had everything done right from day one

[00:34:53] and so uh we started playing together a team I would say probably about six months ago and saying

[00:34:59] what would an ideal team be like almost like uh your war chest to open a studio profitably you know

[00:35:06] attorneys accountants engineers for buildouts and people who were experts in construction costs

[00:35:13] people who were hyper well first in real estate and uh and were licensed and and had dealt in

[00:35:18] commercial real estate extensively uh digital marketing uh experts media buyers uh and then some

[00:35:25] sales and operations experts and we we built this lovely team of uh I guess we have about nine of us

[00:35:33] that are have collectively we've opened about 60 of our own locations and uh and we decided to

[00:35:39] say what if we could do everything alongside of you you know from uh from building out and ensuring

[00:35:45] you're in the right market and that that market has the right will hyper readiness and that you've

[00:35:50] gotten your right avatar there and that you're going to be able to afford that market it's gonna make

[00:35:54] sense on a pro forma to you know what is your pricing and product stack and it'll look like what are

[00:35:59] all the ways you're gonna make money because if the only way you're making money is because you're selling

[00:36:03] like group classes or small group training whether it's the form of memberships or class packs or

[00:36:09] private session packs or drop-ins you are missing a significant around revenue to you know really

[00:36:15] in-depth metrics goals and projections and budgets rolling out not only through pre sale in the first

[00:36:22] year but all the way to year three building out full pre sales you know ensuring that we have

[00:36:27] all the pre sale pricing and uh all of the pre sale marketing which is a unique beast unto itself

[00:36:33] it's its own beast it gets put away when you're done when you open studios two three four five you

[00:36:38] can take it back out and use it again choosing the right choosing the right location making sure

[00:36:43] that you can afford that location understanding what your buildup really should be I mean we're doing

[00:36:48] full-scale designs in house at this point where we may not be interior decorators but you know

[00:36:53] we can ensure this is gonna be the best use of space and having attorneys who are used to

[00:36:58] reading fitness leases who are in their negotiating on your behalf all the way through to

[00:37:04] hiring training your sales team building your org chart you know choosing equipment making sure

[00:37:09] it's fairly done and we went through basically every mistake that we saw studio owners make which

[00:37:15] we get to see lots of them because we work with lots of existing studios and we were like how could

[00:37:20] we have fixed that then and now we've opened every studio profitably in the last year and a half

[00:37:26] that's a feat that I was I was pretty shocked by and kind of at my jaw dropped and

[00:37:31] and now we're really rolling this out where we're working with a wide variety of clients on that

[00:37:36] some of them already have five to seven locations they want they want to have you know all the support

[00:37:41] that they need across the board some of them are coming to us as franchisees that are like yes

[00:37:45] we paid a fair franchise fee we have the model and modality but we want an even additional layer

[00:37:51] of support and some of them are franchiseors who are making leaps into like the US market and

[00:37:56] things along those lines that are saying you know how are we doing this but right now we have studios

[00:38:00] opening in Canada the US and Scotland and we'll have a few more opening in Australia coming soon so

[00:38:08] it's it's a different mentality but but I think we've spent too long saying

[00:38:13] and having people ask if studios really can be profitable and it's making the leap to the mindset of

[00:38:19] this should be one of the most profitable businesses on the planet fitness should be

[00:38:24] and how do we get you there and when you work with studios on this level is this something like

[00:38:30] do you guys come in and charge a consulting fee do you look at equity do you how do you arrange it

[00:38:37] just so straight I mean it depends here's what I would say it depends on the project 90% of 99%

[00:38:42] of people are coming in and start your studio profitably we just do a flat consulting fee you know

[00:38:48] and I think that that's that's the right thing for 99% of studio owners we have we've been offered

[00:38:53] a lot of projects with equity in them over the years we've just taken the first one and I don't see

[00:38:59] us doing an enormous amount of that just because we recognize the long-term bandwidth we're

[00:39:04] we're gonna be selective when you're approached by this many it's a blessing and an opportunity

[00:39:10] for us to be selective where we're going to invest our time and energy but but this is something that

[00:39:17] you know I think for most people I don't want someone paying me for the next 10 years for what

[00:39:22] we've done I want them to also not have that line on their P&L because that's a that can be a

[00:39:27] line that adds up real fast yeah yeah for sure you know by the time this interview comes out

[00:39:34] probably Ursula will've come and gone but tell us about what you're doing in Ursa I know you're

[00:39:39] going to be on stage what what are some of the topics you're gonna be you're gonna be getting into

[00:39:43] yeah the state of the boutique fitness industry so a lot of what we talked about today but but going

[00:39:48] into even more detail and you know especially what are we seeing how are people buying

[00:39:53] what are they buying what is that doing for long-term revenue and you know when we we have people

[00:39:59] that are using a facility potentially differently than they did especially pre pandemic you know what

[00:40:04] are some of the other ancillary services and revenue revenue sources that we need to be looking at

[00:40:09] I think that that that product stack that you know I alluded to before is something that really needs

[00:40:14] to be more developed in our industry going to a lot more depth on marketing and how we're utilizing

[00:40:20] AI there in fact we we filmed a really great training so if you're there alive we're gonna give

[00:40:26] everyone a nice little link I realized I couldn't put it all in there but we wanted to to make sure

[00:40:32] people have a link to really dive in and see how we're using it because I think AI can be a great

[00:40:37] junior copywriter can be a great junior graphic designer I mean excellent analyst for you but the

[00:40:43] fact of the matter is we're using it very differently than what I typically see which is hey I'm

[00:40:47] gonna put in three lines into chat gbt and hope it gives me what I want it's a different level of

[00:40:53] where this can be so it's it's understanding that this is a tool that can very much level up your

[00:41:00] business it can provide any enormous amount of support for $30 or less a month but it does

[00:41:05] mean you're gonna have to take the time to really understand and know it just a little bit better

[00:41:10] so it's I'm excited it's uh as I was finishing my my presentation a couple of weeks ago and we

[00:41:17] were looking at all these numbers coming in the most excited thing was you know hey we're looking

[00:41:23] a lot of profitability this is a year we're gonna spend a lot of time talking about profitability

[00:41:27] and and I'm really excited by what we're able to share on what's really been the difference

[00:41:32] between studios that are enormously profitable that are making giant leaps ahead you know what

[00:41:37] have been the difference between those and everyone else that can be great yeah I hope I

[00:41:41] hope I can make it I mean run around doing interviews all kinds of stuff but I'm gonna carve that one

[00:41:45] out for sure let's uh your podcast I mean you do the business of boutique fitness podcast right over

[00:41:51] at last we're gonna check 597 episodes over a million downloads so tell us about the podcast

[00:41:58] and you know because people listen to one podcast and listen to seven so maybe uh yeah

[00:42:03] there should be another one for people here to listen to yeah I just filmed the 600th episode

[00:42:07] which is just well held I know it's crazy crazy I felt a little bit shocking considering I

[00:42:12] filmed the first one of my mother's dining room table when I was having a visiting a new world

[00:42:16] it's a little weird uh yeah but no it's you it's really everything you need to know about the

[00:42:24] industry from you know in-depth region-wide downloads you know we just had you know our team who's

[00:42:29] based in the UK you know discussing you know what is the industry looking like in very specific

[00:42:33] markets whether it's Europe the UK the Middle East to very specific practical measures like

[00:42:38] you know what are we seeing when we're dealing with marketing what are the practical steps in

[00:42:42] the client journey what are shifts and responses that we're seeing in the sales process you know

[00:42:48] how do you build referrals how do you how do you choose independent contractors versus employees

[00:42:52] what do all the great org charts look like I think it's not only the high level overview

[00:42:58] and some amazing interviews with some incredible people but it's also like really practical this is

[00:43:04] what we're seeing today steps and ideas that you can implement into your studios and ideally

[00:43:10] probably beyond across the fitness industry yeah right on right on last question I always ask is

[00:43:17] as an industry as a community how can we help you we see what do you what would you like to hear

[00:43:22] from people about oh my gosh I love data that's gonna sound like a strange thing but I think

[00:43:27] or we I think the more we share what's really happening from a numerical perspective the more we

[00:43:33] can help you know we're always trying to get to the root of where the biggest problems are and

[00:43:38] we've got a team that's just dedicated problem solvers they're not even members of our team that

[00:43:43] are not even coaches that are not even other it's not even working client facing yet they're working

[00:43:48] with client data to see how do we solve some of the biggest issues in our industry and the more we

[00:43:54] know of what's really happening the better off we are and so that that to me it's always the

[00:44:00] the greatest pieces to really share you know the nitty gritty of what's happening you know behind

[00:44:05] your doors on top of it you know come and say hi to me if you're a dorsan or any of these other

[00:44:10] events I'm a I'm a I'm a Southern girl I like big hugs and high fives and all those things so

[00:44:17] so don't don't shy away come say hi because that that's the best way you can help me help help

[00:44:23] help me get to know all y'all as I as I see you at more and more events this next year

[00:44:28] awesome awesome well I look forward to meeting in person and where would you like people to go

[00:44:32] people are listening what would you like to do next oh gosh okay so they can go to

[00:44:36] Instagram that studio grow co-compine me on LinkedIn that's where I actually do most of my work

[00:44:42] leacy keeker I know it's the worst last name in the whole wide world so uh Eric I'm gonna

[00:44:46] break you to put a link in there so people can actually get that spelling without having to listen

[00:44:51] to this unrewine and and and and come say hi on LinkedIn and of course we're going to be at a lot

[00:44:57] of big events over the next couple of months we're going to be in Singapore with Beyond Active

[00:45:01] and in New York with Beyond Active so please come and say hello and person right on well I will

[00:45:05] definitely see you in a few weeks and thank you so much for joining me I love the work you're

[00:45:09] doing very valuable insights uh you have a really nice viewpoint on everything it's going on

[00:45:16] and you're actually doing it right like you're in the trenches and we can talk about next time

[00:45:20] the thing that you're doing now that we can talk about a whole lot um but it looks really exciting

[00:45:25] and I know that's such a uh clandestine ending to this but thank you for joining me

[00:45:29] Lazeljemen we see keeker thanks out

[00:45:34] hey wait don't leave yet this was your host Eric Malzone and I hope you enjoyed this episode

[00:45:40] of Future of Minus if you did i'm gonna ask you to do three simple things it takes

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[00:46:23] as i'd love to hear from our listeners so thank you so much this is Eric Malzone and this is the

[00:46:28] future of finnis have a great day