Gym franchise with a dominant presence in the Northeast already has a foothold in Chicago; planning huge expansion.
Retro Fitness, the third-largest “high value, low price” gym and fitness franchise in the United States, has targeted Chicago for expansion and is actively seeking franchisees to help build the brand throughout the city.
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 visiting retrofitness.com/franchising.
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 declining, 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 SVP of Marketing Victor Bao. “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, visit retrofitness.com/franchising.