Tap Into Explosive Growth In The Fitness Industry

America’s fitness industry is now a $24 billion business and is forecast to grow 23 percent over the next ten years

Over the past two decades, America’s fitness industry has enjoyed dynamic growth, despite the ups and downs of the economy. Now a $24 billion industry, it services some 51 million Americans of all ages and income levels and is forecast to grow 23 percent over the next ten years.

What’s the secret of its growth? According to Eric Casaburi, the founder and CEO of Retro-Fitness, one of America’s fastest growing franchise companies, the industry has continued to grow because it’s filling an important need. Baby boomers are flocking to gyms in record numbers to counteract the effects of aging, and at the other end of the scale, the younger generation is using fitness centers to combat the effects of a sedentary lifestyle, especially weight gain. “Unfortunately, we’re a very unhealthy country,” observes Casaburi, “and there will be no shortage of people going to doctors or the gym in the future.”

The Retro Fitness Advantage

And the fitness industry is changing in order to meet the challenge. The local one-off gym is increasingly a thing of the past, supplanted by sophisticated national chains like Retro-Fitness, which outperform the competition with high-tech equipment, national and regional advertising campaigns, and state-of-the-art marketing programs that build brand awareness.

“Unfortunately, we’re a very unhealthy country, and there will be no shortage of people going to doctors or the gym in the future.”

“We’ve done what Dunkin Donuts has done by standardizing our stores,” says Casaburi. “We’ve given fitness a brand, painted our machines the same colors, made our gyms look the same, so that the consumer could have a consistent experience.”

Although concentrated in the northeastern states of New York, New Jersey, and Pennsylvania, where it began,Retro-Fitness now has over 90 facilities in 11 states across the country, with another 16 clubs scheduled to come on line by the end of 2013. Traditionally, most gyms have had business models based on cost-per-square-foot, but Retro-Fitness focuses on revenue per square foot, just like retailers. “That’s why we have wonderful top-line numbers, “says Casaburi, claiming that their average regular gyms generate $500,000 in net revenue annually, and their larger operations average nearly $900,000 in annual net revenue.

(Retro-Fitness) regular gyms generate $500,000 in net revenue annually, and… larger operations average nearly $900,000.”

Low Cost

Of course, controlling costs is important too. When Retro-Fitness was just getting started, Casaburi was confident that by trimming unnecessary frills and unprofitable programs such as aerobics classes, he could deliver a quality gym experience for less than $20 a month, where other gyms were charging $40 and $60. Their highly affordable membership fee made it possible for Retro-Fitness to survive and even flourish when the economy faltered in 2007-2008.

Interested in owning a Retro-Fitness gym? Click here for more information.

Why Customers Choose Retro-Fitness

At $19.95 a month, the membership fee is a major attraction, appealing to a wider demographic than more expensive gyms, and the environment is bright, colorful and clean — values emphasized in the operations manuals. Further, the gyms are filled with top-grade exercise equipment: computerized treadmills, elliptical and resistance machines, and of course free weights, painted in Retro-Fitness’s trademarked colors. If you are new to fitness, or have specific training goals, Retro-Fitness has personal trainers at every location. After workouts, members can stop by the juice bar for rejuvenating protein shakes, and even order them in advance from their cellphones.

The Retro-Fitness USP for Franchisees

“If you’re in our investment range of $1.2 to $1.5 million all you have to do is look at our financial disclosure documents,” says Casaburi. “The return is outstanding. We don’t have to do much selling; it’s been done over the last eight years.

While a history of healthy profits by their franchisees is comforting, what makes Retro-Fitness truly compelling is their extraordinary attention to detail. For example, they employ a real estate director in their Colts Neck, New Jersey, headquarters to determine the precise location of each new franchise, employing a $250,000 software platform which not only locates the demographic sweet spot in a prospective area, but also discovers the impediments, such as roadways and highway systems that might make it difficult for members to reach the gym in a timely fashion.

Click to See Retro-Fitness CEO Eric Casaburi in the CBS series “Undercover Boss”

Marketing Support

To ensure that franchisees build a quality membership quickly and efficiently, Retro-Fitness has established a multi-million dollar national ad fund and billboard campaign to build brand awareness, plus regional co-op dollars to blanket local markets. Further, a national marketing director works with franchisees to create a marketing calendar just for their market. It’s the lifeline of the business according to Retro-Fitness.

Benefits of Being An Owner

High Customer Retention

While advertising is important, nothing takes the place of satisfied customers. By following the system, keeping their facilities spotless, and encouraging referrals, Retro-Fitness has minimized their membership churn rate. Retention is now at 16 months, among the best in the industry. Price point, early intervention and adoption are the keys to keeping customers in place, but at the end of the day, what matters are the little things: remembering a customer’s name, knowing which drink they like from the juice bar, and how easy it is to reach the club from the customers house. “You have to press all the buttons,” Casaburi stresses. “Not just one or two of them.”

“Whether it’s hamburgers, hot dogs, coffee, or fitness, going with a franchise is always a better opportunity. For the small amount of money that you give away in royalties, it mitigates a lot of risk.”

Profile of a Retro-Fitness Franchisee

Potential franchisees are evaluated both on their finances and their skills as a businessperson, and Retro-Fitness says “no” more often than they say “yes” to franchise applicants. They want to make sure that applicants are a good fit for the company, every bit as much as applicants want to make sure that Retro-Fitness is a good fit for them.

Typically, their franchisees are on their second or third business venture, which is important for two reasons: they have the net worth (approximately $1.5 million, and $250 thousand liquid) to get bank financing for their franchise; and equally important, these individuals usually have hands-on business experience in one field or another. Fitness experience is not crucial, Casaburi claims, but knowing how to run a business is a real plus. If a franchisee needs training in accounting or bookkeeping, Retro-Fitness is glad to help, but common sense is hard to teach. Still, Casaburi feels that if you’ve got the finances to invest in a Retro-Fitness franchise, you should be smart enough to know what got you to that level of success.

What makes franchisees successful? According to Retro-Fitness, it’s having a combination of passion, aggressiveness with open-mindedness. One such franchisee is Peter Loukeris, a Greek immigrant who invested in a Retro-Fitness franchise and built it into a $1.1 million business. Read how he did it here.

Why Franchising Makes Sense For Immpreneurs

Casaburi jokes with his franchisees that he’s made lots of $15 – 20 thousand dollar mistakes so that they won’t have to, and “that’s what franchising is all about.”

“Regardless of whether it’s hamburgers, hot dogs, coffee, or fitness, going with a franchise is always a better opportunity,” says Casaburi. “For the small amount of money that you give away in royalties, it mitigates a lot of risk. It doesn’t mitigate all the risks, but it mitigates so much of the risk that you’ve got an excellent chance to succeed.”

Get more information on owning a Retro-Fitness franchise here or call (201) 867- 5309.