Restaurant owners eye new franchise opportunities in fitness amid labor challenges

Two young women use a touchscreen ot order from the menu at a fast food restaurant.

Touchscreen kiosks are one of several ways restaurant owners are trying to control labor expenses.

After 14 years building a multi-brand restaurant empire, Trey Jasenski is branching out.

He owns nearly two dozen Subway locations as well as multiple 16 Handles yogurt stores and Auntie Anne’s pretzel shops throughout the Albany, New York area. But a few years ago, he started to invest in gyms.

The reason was simple he said: math.

“In New York, the minimum wage is going up to $15 an hour, and that’s a bit of a shot for us,” he said. “In general, it’s not nice having to worry so much about your margins.”

Jasenski opened his first Retro Fitness location in 2016, his second in 2019 and is looking to expand further. Startup costs are higher than his small quick service restaurant outlets, he says, but once the equipment is purchased, variable expenses are much lower.

“At my restaurants, I have to staff up for the lunch rush so we can sell as much as possible in a narrow timeframe. I have to hire and train and pay all those extra workers, and then I have to hope that the weather’s not bad enough to keep my customers away,” he says. “There are a lot of ways for your margins to get pinched.”

By contrast, membership dues mean the gym provides predictable income. Without as many variable costs, as the membership rolls grow gyms can produce much higher EBITDA (earnings before interest, tax, depreciation and amortization) than the 15% typical for restaurant franchises.

A high-growth industry

Two men and a woman lift kettle bells in a Retro Fitness gym. The gym industry has enjoyed consistent growth — even during recessions. From 2008 to 2012, during the worst of the Great Recession, gym membership in the U.S. increased from 45.6 million to 52.2 million, according to the International Health, Racquet and Sportsclub Association (IHRSA). Revenue reached $32.3 billion in 2018, according to the IHRSA, and is expected to grow another 20% over the next five years.

Demographic trends also favor continued growth. According to the Physical Activity Council, nearly 64% of millennials and 71% of Gen Zers are regularly involved in high calorie-burning activities. That compares to 41.6% of baby boomers.

Retro Fitness owner Rhandi LoPiccolo

Rhandi LoPiccolo

Less worry, more time

Rhandi LoPiccolo spent 25 years in the restaurant industry. At one point, she owned a full-service restaurant plus four bagel shops, but she grew tired of working 70 to 80 hours a week and wanted to spend more time with her teenagers. She sold her businesses and took a job at a bank while waiting for her next opportunity. A bank customer, David Vargas, evolved into a new business partner. As they explored opportunities, they discovered Retro Fitness.

“We started looking at numbers from a few different Retros in the area, and it seemed almost too good to be true,” she said. “We were looking at the P&Ls and member counts, and I thought, ‘Wow, that is a good amount of money to make.’ And these were almost absentee ownership models.”

She loves that she no longer has to worry about food waste, mistakes on orders, food being sent back, refrigeration going out, whether snow will keep customers away, and whether the tomatoes she bought last week for $12 are going to cost $75 this week because of a swing in commodity prices.

LoPiccolo says the fundamentals of the two industries are the same: keeping everything clean, providing friendly greetings and caring about the customer experience. Hiring great people is still essential — but it’s easier to hire and keep employees in an environment where customers are happy, and where you can see the positive impact you are having on customers’ lives.

“I love it,” she says. “When I owned my restaurants and people found out what I did, they were mildly curious, but when they find out you own a gym, they perk up. It’s something that gets people excited.”

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The eBook includes details about financial performance, an analysis of the fitness industry and its competitive landscape, and how Retro Fitness is positioning franchisees for growth. One of our team members will be in touch to answer your questions.

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Fitness franchises stepping in to generate foot traffic at retail centers

Commercial landlords are increasingly seeking out fitness clubs as part of their tenant mix, according to the International Council of Shopping Centers (ICSC).

The ICSC took a close look at fitness clubs and their growing impact on retail centers in its report “The Dawn of the Age of Omni-Fitness.”

Exterior of a Retro Fitness location. The gyms are typically 15,000 to 17,000 square feet.

According to the ICSC, retail shopping center operators have been attracted by:

  • The industry’s strong growth ($33.4 billion in 2018, according to the International Health, Racquet and Sportsclub Association).
  • The ability of larger gyms to generate foot traffic.
  • The opportunity to lease 15,000-square-foot and larger spaces to a single tenant.

Fitness clubs are also prized for their ability to deliver unique customer experiences that cannot easily be replicated online, The Wall Street Journal recently reported. The influx of health-and-wellness-driven consumers also attracts nearby tenants that provide healthy foods and athleisure wear.

With online competition forcing the closure of many traditional retailers, the ICSC report notes that “fitness centers, when carefully leased, can function in much the same way that former anchors once did — i.e., as locations that draw a consistently high volume of people.”

It’s nice to be sought after

Trey Jasenski has a lot of experience opening new retail locations. He owns 23 Subway locations, as well as several locations of Auntie Anne’s Pretzels and 16 Handles frozen yogurt shops. He has also worked alongside his father, Larry Jasenski, an area developer who has overseen the growth and development of hundreds of Subway franchises.

Trey Jasenski opened his first Retro Fitness gym in 2016 in order to diversify his business holdings and tap into the industry’s growth, and the profit potential and steady cash flow of a membership-driven business model.

An additional benefit: He says he’s been in a much stronger position when negotiating for prime locations. He opened his second Retro Fitness last year.

“When good space comes available, it’s a lot harder for people to compete against you for it,” he says.

“With 1,500- to 2,000-square-foot spaces, almost anybody can move in there. There is a ton of competition from fast-casual restaurants, nail salons, everybody,” Jasenski says. “20,000 square feet is a lot harder to lease out unless you’re willing to subdivide it, but then you have to deal with tenant turnover and collecting rent from 10 different people. So if you can fill that space with a single tenant — especially one with a strong track record and the ability to bring extra people consistently to your shopping center, that’s very attractive.”

New challenges on the horizon

A woman lifts weights on a bench press.

Of course, there are plenty of fitness concepts that are eager to occupy those 1,500-square-foot spaces, and they’ve been transforming the look of American retail.

“A visit to an upscale suburban mall or a city shopping district used to be marked by stops at Gap, Sharper Image and Barnes & Noble, ending in a pile of shopping bags,” New York Times reporter Katherine Rosman wrote in June. “Now it’s about taking a $36 Pilates class, maybe followed by a $36 indoor cycling session if you’re really committed, then hitting the organic market to slam a $10 coconut water before making a quick stop for $40 cryotherapy.”

The businesses often form health-and-wellness lifestyle clusters to attract enthusiasts eager to look and feel their best. The fitness industry’s success has been driven by social and demographic changes. America’s obesity epidemic has driven a greater commitment toward health and wellness — especially among people under the age of 40. According to the Physical Activity Council, nearly 64% of millennials and 71% of Gen Zers are regularly involved in high calorie-burning activities. That compares to 41.6% of baby boomers.

The industry’s growth has been driven largely by two categories of business: high value-low price (HVLP) gyms like Planet Fitness and Retro Fitness, and smaller boutique exercise clubs like Orangetheory, Pure Barre, Club Pilates, and 9Round.

HVLP clubs typically require 15,000 to 20,000 square feet and function as 24-hour gyms, with access to a lot of workout equipment as well as amenities.

Boutique clubs typically focus on one particular type of exercise — such as cycling, yoga, or high-intensity interval training (HIIT). Customers work out in a classroom environment and pay for individual classes or the right to attend a certain number of classes per month. When class is over, they clear out to make room for the next wave of customers.

Boutique customers currently outspend gym members — $66 a month vs $35 a month, according to a 2018 report by Piper Jaffray. But the same report says “53% of boutique members note they would leave their boutique if a similar class were offered at a gym for a lower price.”

Kristen Geil, editor-in-chief of millennial-focused health and wellness media company ASweatLife, recently told CNBC she thinks boutiques will be hit hardest when the next recession arrives because of the price premium they charge.

“Consumers are going to be dropping (higher priced boutiques) from their budget. It’s the easiest thing to cut, but gyms will try to up their experience to make people stay with the trainers they know and love,” she added.

Retro Fitness CEO Andrew Alfano said the company has upped its game to compete for boutique customers.

“Smart gyms owners will offer group fitness classes as part of their membership models,” says Alfano. “There’s no reason a person should need to go to three different clubs just because they want to go to spin, or yoga, or HIIT with their friends.”

GET THE RETRO FITNESS BUSINESS MODEL EBOOK

The eBook includes details about financial performance, an analysis of the fitness industry and its competitive landscape, and how Retro Fitness is positioning franchisees for growth. One of our team members will be in touch to answer your questions.

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Retro Fitness Targets Chicago for Expansion

Gym franchise with a dominant presence in the Northeast already has a foothold in Chicago; planning huge expansion.

Retro Fitness, the third-largest gym and fitness franchise in the United States, has targeted Chicago for expansion and is actively seeking franchisees to help build the brand here. Retro Fitness CEO Andrew Alfano has identified as many as 95 locations in the Chicago area, building upon the three gyms already operating downtown, in Portage Park’s Six Corners shopping district and in Carol Stream. The company is already a dominant brand in the Northeast. The downtown location at 310 S. Michigan Avenue is owned by Ike Tawil, who also owns two Retro Fitness locations in Brooklyn.  

“We know there is a need for a low-cost, high-value fitness center in Chicago, and the Retro Fitness model is the perfect gym concept to fill the void,” Tawil says.

For new entrepreneurs or those looking to diversify their investments, Retro Fitness’ track record is compelling. The top 50% of Retro Fitness locations averaged $1.4 million in sales in 2018, 3,785 members and an EBITDA of 24%, as noted in the Franchise Disclosure Document that Retro provides to candidates who inquire into ownership opportunities. For the top 10% of clubs, those numbers were $2.2 million AUV, 5,605 members and 31% EBITDA. The startup investment is similar to a restaurant franchise location, which typically only yields around 15% EBITDA and requires managing a much larger roster of employees. Financial considerations and details of the business model can be explored in greater detail by downloading the Retro Fitness Business Model eBook using the form below.

The fitness industry continues to grow

The gym industry itself is experiencing high growth. According to the International Health, Racquet and Sportsclub Association (IHRSA), Americans spent $32.3 billion at health clubs in 2018, and that figure is expected to grow 20% over the next five years. Millennials and Gen Z, in particular, are expected to drive long-term growth because they are much more fitness-conscious than their predecessor generations. According to the Physical Activity Council, nearly 64% of Millennials and 71% of Gen Z are regularly involved in high calorie-burning activities. That compares to 41.6% of Baby Boomers.

The industry has seen consistent growth — even during the Great Recession. From 2008 to 2012, while many other industries were tanking, total gym membership grew from 45.6 million to 52.2 million, the IHRSA reports.

How Retro Fitness stands out

Retro Fitness distinguishes itself from competitors by providing tremendous value at a low price point. Monthly memberships start at $19.99, which includes access to a full range of equipment including treadmills, ellipticals, stationary bikes, free weights, machines and more. For another $10 a month, members also gain access to unlimited group exercise classes including yoga, spin, Zumba and high-intensity interval training, as well as Zen amenities including massage beds and tanning.

Retro’s business model aims to attract members who are looking for a more balanced workout than they might have been accustomed to at cardio-dominant discount gyms like Planet Fitness, while also providing a compelling value to people who enjoy group exercise classes, which can easily run over $100 a month at boutique fitness centers like Orangetheory.

“Our slogan is ‘Get Real,’ because we provide a fundamentally-sound fitness experience that’s not based on fads, or limitations on member potential by limiting their workout with weight restrictions, or feeding pizza to members,” says Retro Fitness COO Todd Scartozzi. “We build membership communities in our gyms and help people achieve their goals by surrounding them with the right support, the right equipment, the right classes and the right nutrition.”

Combining community and value

A 2018 report from Piper Jaffrey showed that 53% of boutique members at cult-style gyms like Orangetheory note “they would leave their boutique if a similar class was offered at a gym for a lower price.” Retro Fitness aims to fulfill this desire through its $29.99 membership tier, which includes full gym access as well as unlimited classes. Retro Fitness also offers an app for iPhone and Android that allows users to sign up for classes and track their fitness goals.

CFO Robbie Sprechman notes that Retro Fitness is ideally positioned to capture business from fitness enthusiasts who are looking for ways to save money while maintaining their regimens. While the brand’s value has helped it thrive amid the current strong economy, it is well-positioned to capture market share in the event of a downturn.

“A lot of people will recognize the value we offer immediately,” he says. “Others who have been happy with their current workouts will be looking for ways to reduce $150/month memberships. We give them a way to save money, keep the same types of quality experiences and much more.”

Site selection considerations

Retro Fitness strategically targets new locations based on market segment and demographic density where Retro Fitness can provide scaled support to its franchisees. The corporate support team takes a hands-on approach to site selection and has helped develop over 2 million square feet nationwide.

Retro Fitness locations require at least 15,000 square feet of space and are typically located in shopping centers or malls/lifestyle centers with a direct exterior entrance and 80 feet of store frontage. The minimum required ceiling height is 20 feet in order to accommodate a mezzanine.

To learn more about site selection criteria or to inquire about franchise opportunities, fill out the form below.

GET THE RETRO FITNESS BUSINESS MODEL EBOOK

The eBook includes details about financial performance, an analysis of the fitness industry and its competitive landscape, and how Retro Fitness is positioning franchisees for growth. One of our team members will be in touch to answer your questions.

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New High-Tech, Low-Cost Fitness Center Coming to Chicago

New High-Tech, Low-Cost Fitness Center Coming to Chicago

Retro Fitness of Chicago Opens Preview Center to Prepare for July Grand Opening

Retro Fitness, a low-cost, high-value personalized fitness concept that gives members an elevated workout experience, will soon be available at its newest Illinois location at 310S. Michigan Avenue in downtown Chicago. Local residents interested in joining Retro Fitness can stop by the gym’s preview center located at 408 S. Michigan Avenue —in advance of the July opening—for a sneak peek into the state-of-the-art fitness facility, and sign up for a Founder’s membership at reduced rates.

The new Retro Fitness will be owned by fitness enthusiast and long-time runner, Ike Tawil. After working in corporate America for almost 30 years, Ike decided it was time to hang up his suit and tie to pursue something he’s always been interested in – entrepreneurialism. Tired of the 9-5 daily grind and stationary desk job, Ike was ready to combine his entrepreneurial spirit with his love of fitness by opening Chicago’s second Retro Fitness. This new location is Ike’s third Retro fitness, with two others located in his hometown of Brooklyn, NY. Ike is thrilled to bring Retro Fitness to the heart of the Windy City for all of Chicago to enjoy.

“Retro Fitness gives an incredible value because we offer the training, amenities and atmosphere members love at high-end gyms and boutique studios,” Ike said. “Members will keep coming back because we offer a fun and friendly, non-intimidating workout environment that we pride ourselves on keeping spotlessly clean. That’s the key to the brand’s success and why we’ll be a great addition to the Chicago community.”

The first 250 members who sign-up before the club opens will receive a limited time offer of a $0 enrollment fee on all membership types and 20% off all team and strong memberships. There are multiple membership types available, including several functional training options, to customize the experience for each member based on their fitness goals. In addition to the basic membership for $24.99 per month, the VIP membership for $34.99 per month, includes unlimited group training, massages, tanning and access to the sauna.

The Chicago gym has training for all, with a variety of class options and a membership model designed to help members reach their goals, no matter where they are in their fitness journey. Retro Fitness elevates the member experience by combining the benefits of a traditional large gym environment with a variety of personalized boutique-like fitness offerings including, training options, amenities and flexibility. Whether it’s classes, small group strength training, team training or one-on-one coaching, this new gym has everyone’s fitness needs covered.

Retro Fitness supports member’s personal fitness goals through three training tiers comprised of One-on-One Training (ONE), the premium training program with customized workouts and private coaching, Small Group Training (STRONG), involving 2-4 members building strength with a personal trainer and Team Conditioning (TEAM), a high-energy curriculum in a larger group atmosphere. This multi-level personal training program provides a solution to members of any fitness level or with any desired price point. All levels of training incorporate MYZONE heart rate monitoring technology, which displays real time heart rates, calories, and effort data on big screen TVs inside the gym. This technology will gamify the workout experience, encouraging members to perform to the best of their abilities and push themselves to new limits.

In addition to the latest tech and modern equipment, the 20,000 square-foot gym will include a variety of calorie-burning group fitness classes such as: Zumba, yoga, Pilates, cardio classes and more. The club will also be furnished with the latest in circuit and weight training equipment and cardio machines equipped with personal flat-screen TVs. The gym will also boast a functional training area, full-service locker rooms, a supervised children’s playroom, a Retro Blends Smoothie Bar for post-workout recovery and a sauna.

“We know there is a need for a low-cost, high-value fitness center in Chicago, and the Retro Fitness model is the perfect gym concept to fill the void,” Tawil added. “Nothing happens overnight, but we can help members reach their milestones by taking it one rep, squat and day at a time. We focus on progress and embrace and encourage our members that every time they walk into this gym, they have a new opportunity to be better than they were yesterday.”

The Chicago Retro Fitness Preview Center is open Monday through Friday from 8 a.m. to 7 p.m. and Saturday through Sunday from 8 a.m. to 4 p.m. Special registration discounts are available for a limited time at the gym’s preview center. For more information, call Retro Fitness of Chicago at 312-488-1827

Retro Fitness Continues to Expand in East Coast States

Retro Fitness Continues to Expand in East Coast States

National Low-Cost, High-Value Fitness Franchise Collaborates with Local Entrepreneurs to Develop Brand in New Jersey and Florida

COLTS NECK, N.J. (February 22, 2019) – Retro Fitness, a national low-cost, high-value fitness franchise, announced today it has added two new franchisees totaling four new franchise agreements with local entrepreneurs Joe and Shawna Liotine for Tampa, FL and Jim Sparling for Central, NJ.

“We’ve seen the brand do well in these prime expansion markets, and we are thrilled to see the impact of our unique fitness offering reach even more people,” said Eric Casaburi, CEO and founder of Retro Fitness. “The Retro Fitness business model continues to attract existing entrepreneurs and first-time business owners because of the comprehensive business model that gives franchisees the ability to set their Retro Fitness clubs apart from the rest in the industry.”

The anticipated business development indicates that Retro Fitness and its franchisees will infuse more than $1 million into their respective markets through local investments. Once complete, each new gym will employ at least 25 people.

  • Joe Liotine (Tampa, FL) has a strong fitness background, working as a general manager for Lifetime Fitness gyms in various markets around the United States over the last two decades. Joe decided to leverage that experience to open his first fitness franchises with Retro Fitness in Citrus Park. He and his wife Shawna will develop two more clubs over the next three years. The U.S. Marine Veteran recognized Retro Fitness as the best franchise platform in the fitness industry and loved the fact that it caters to many different needs.
  • Jim Sparling (Central, NJ) is a lifetime entrepreneur having successfully developed and operated businesses in real estate and construction. Looking to diversify and enter into the fitness world, he is now in the process of opening his first Retro Fitness club with plans to develop more in the coming years.

Retro Fitness has grown into a 155+ franchise by offering members everything they love about a big box gym – extra space, vast amenities, and bundling it with personalized classes and niche workout experiences. The brand is changing the way guests envision the modern gym environment.

In addition to all the training equipment needed for a world-class workout, when these Retro Fitness locations open, they’ll support its members’ personal fitness goals through three training tiers comprised of: One-on-One Training (ONE), the premium training program with customized workouts and private coaching; Small Group Training (STRONG), involving 2-4 members building strength with a personal trainer; and Team Conditioning (TEAM), a high-energy curriculum in a larger group atmosphere. These franchisees are passionate about making sure everyone’s fitness needs will be covered in their new gym.

Fitness enthusiasts in New Jersey and Florida should expect to see Retro Fitness join their communities in 2019.

About Retro Fitness
Founded in 2004 by entrepreneur Eric Casaburi, Retro Fitness has evolved from a regional Northeast gym concept into a national fitness system with more than 155 gyms open in 16 states. Under Casaburi’s leadership, Retro Fitness is expanding its footprint with more than 100 gyms in its development pipeline and plans to have 250 gyms open in the next two years in new, major markets, such as Florida, Illinois, California, Maryland, Michigan, New York, North Carolina, Pennsylvania, Texas, Utah, Virginia, and Washington, D.C. Each Retro Fitness location is equipped with a full-service fitness center, including 60-100 pieces of equipment supplied by leading manufacturers. For more information and to learn more about fitness franchise ownership opportunities, visit www.retrofranchising.com.

Fitness Franchise Retro Inks Agreements for New Jersey, Pennsylvania, North Carolina & Florida

Fitness Franchise Retro Inks Agreements for New Jersey, Pennsylvania, North Carolina & Florida

COLTS NECK, N.J. – Retro Fitness, a national high-value, low-price fitness franchise, announced that it has signed four new franchise agreements with entrepreneurs Scot and Mark Pinto (New Jersey); Luis Henriquez and Gene Truono (Pennsylvania/Delaware); Richard Garrison (North Carolina); and Steve Plattner and Ron Wuchko (Florida).

“All of these are prime expansion markets for Retro Fitness, and we are thrilled to be executing our strategic growth in these areas,” said Eric Casaburi, CEO and founder of Retro Fitness. “The Retro Fitness business model continues to attract qualified investors who seek job security, flexibility and the chance to secure their financial futures. We look forward to increasing the brand’s presence along the East Coast and are armed and ready to offer consumers a fitness experience of a lifetime.”

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