|Originally Posted 04/09/10
There was a
lot of response to the last blog about the changes in the market and the total
confusion many owners are enduring.
most important point I have been emailed about is that a name is no longer a
business concept. For example, in the old days of fitness, meaning the 80’s and
90’s, you could slap Gold’s Gym on the front of your building and everyone knew
who you were, what you stood for, and what they would find in the business.
That simply is no longer true for all the great names of that era including
World’s Powerhouse and 24-Hour Fitness.
Now you can
walk into a Gold’s and pay $9, $19, $39 or $64 and the clubs might be strong
fitness clubs, strong group, or simply horribly out of date. The name no longer
has the impact on a national basis because the local owners make their own
decisions as to what business concept they choose to run and what price they
for the franchise is to find a way to establish a national brand that has some
type of consistency from market-to-market and even neighboring town-to-town.
The analogy here would be letting McDonald’s franchisers choose what sandwiches
to offer in each location and let the individual franchisees make up their own
menus, set their own prices and change anything they want in the restaurants
while still having the McDonald’s sign on the building. That would never happen
in the real world but it does happen in the fitness world as most of the last
generation franchises let everyone who owns one runs freestyle.
discussed in the last blog, the newer generation of franchises coming into the
fitness world all have a specific delivery system attached to their name. As
mentioned for example, Anytime was the first company to own the 24-hour concept
and did an amazing job tapping the market. In their case, it will be
interesting to see how they evolve as everyone else in the market copies that
idea. Even McDonald’s comes up with new sandwiches now and then.
that needs more expansion here is the price you choose in today’s market also
has to have a concept attached to it. In other words, your price has to dictate
how you run your club. Many owners in today’s market will radically alter their
price but not change their operating system, and this almost always spells doom
for that client. Price and operating system have to match to stay in business
in tough markets.
Look at these
prices and some of the specifics you would have to consider if you adopted that
price for your business:
• The $49 and
higher level: This is where a lot of clubs have gotten into trouble in the last
several years, especially those that compete against a low-price/value club
such as Planet Fitness. Way too many of these owners have nice clubs based upon
1995 reality, meaning that they are large, nicely finished but are just copies
of what a top-of-the-line club looked like in 1995.
The guys in
this group-and this is the harsh reality that most can’t accept-are not
prepared for business in 2010. They have antiquated sales systems, weak group
programs, limited penetration one-on-one training and do nothing more than just
also the same guys who bitch and moan when Planet Fitness opens and takes all
their business. Of course the consumer is going to leave: you charge $49 and
the competition charges just $10 to walk on the same brand tread. The consumer
has no relationship with the club, only with his favorite treadmill and when
that tread is cheaper down the street he is gone.
If you charge
$49 or higher, you have to master training, group exercise and train your team
at least four hours per week in service. You are not entitled to make money
because you spent $5,000,000 to open a club. This just gets you in the game; it
doesn’t guarantee success.
This is the
classic case of hoping your name becomes your brand, but this old style
operator has been beaten by someone who has a specific delivery system geared
on their price model.
• The $39
price is the alternative to $10 memberships: Full service clubs can directly
compete with a price of $39 versus a low-priced guy. Three years ago I would
have never said that but that was before low-priced guys, maturing competitive
markets, a sick economy and weak operators that live in the past.
The $39 price
is a must-do for almost any full service club in any market. For example, you
might offer $39 for 18 months and $49 for 12 months. This allows you to claim
that you have memberships that start as low as $39.
The next jump
to $29 isn’t a good one. If you are going to go that low, just go all the way
• The $19
full service business plan is making a strong comeback although very few have
done it well. An exception is the Fitness Edges guys, led by Vinny Sansone and
company, that has done well with it in Connecticut.
This is a
doable model if you have volume potential but would be tough in a smaller
market. The goal here is to offer the same offerings as a full service club but
at a volume price. This is a hybrid model that only fits certain markets but we
will see more of this in the future and I believe it can work with owners who
can control expense and generate sales volume.
• The $10
generation: This is the most talked about model these days in the industry and
the leader here is Planet Fitness. Shear volume, heavy cardio presence, limited
expenses and unique marketing are the hallmarks of this brand. The delivery
system is the marketing and you just tear it up on volume. The problem here is
that when you compete on price, you open the door to guys who copy you and then
go under your price. Keep in mind Curves and Anytime, both unique concepts at
the time and now both are somewhat diluted by dozens of imitators.
• The $8 new
guys: Yes, there are clubs now charging $8 as the next, new Planet Fitness and
expect more to go after the current leaders in every market. When price is what
you are all about, then price is how you live and die and someone more crazy
than you can take that away from you by simply charging less.
The big picture news here is that if you have the right delivery system, which
matches your price structure, you can compete against other price systems in
your market. Each one of the price/structures mentioned above captures
different clients in the market, if the clients can see the differences between
This is where
some of the big chains, such as Gold’s, are having trouble because the consumer
doesn’t understand, and the owners haven’t established, clubs that truly
differentiate from the competitors.
By the way, my advice to Gold’s on a national level is to establish $39 as the
prime price, go full service, and most importantly, become the workout/Mecca of
training information in the world again, a position it held for over 30 years
before it gave it away to the small training centers. Stop worrying about $10
guys and start fixing your franchise. The issues are within no external.