January 18, 2022

INDAC

Keep Fit & Healthy

How can gyms lure fitness buffs now that at-home workouts are routine?

8 min read

Before March 2020, retail landlords were working overtime to court gyms and fitness studios to fill spaces that had been vacated by stores struggling to compete with online retailers.

Landlords offered flexible lease terms, lower rent and prime locations.

On Long Island, the number of fitness and recreational sports centers increased by 65 locations, or 14.8%, to 503 from 2014 to 2019, according to the U.S. Bureau of Labor Statistics.

But months of COVID-19 pandemic shutdowns in 2020 put that growth on pause and pushed some operators out of business. And with the virus still a threat, many former gym members remain hesitant to return to in-person workouts.

Economic strategies

To attract members, gyms are focusing heavily on marketing and emphasizing their cleaning protocols, industry experts said. To survive, they’re also laying off staff, raising membership prices and taking on new debt, said Liz Clark, chief executive officer and president of the IHRSA (International Health, Racquet and Sportsclub Association), a Boston-based trade group.

A June study from the group found that IHRSA member clubs nationwide had taken on an average of $75,000 in new debt.

What many gyms are not doing is offering membership discounts, not even to attract the New Year’s resolution crowd, because they simply can’t afford to do so now, Clark said.

“We got hit bad. Five-and-a-half months of being closed, not much sympathy from our landlords and certainly not much sympathy from our government. We did the best we could. I was able to work with the landlords to get some concession, but not much,” said Lewis B. Breslau, who co-owns five Crunch Fitness franchises — in West Babylon, Bellmore, Amityville, Hauppauge and East Meadow.

“And we’re still not out of the hole,” he said. Revenue and memberships are down by as much as 20% at some of his gyms that opened before the pandemic, he said.

Several fitness chains, such as Orangetheory Fitness, Blink Fitness and 24 Hour Fitness, which before the pandemic were happy to chat with media about their expansions, declined to comment or didn’t respond when contacted by Newsday recently about how their businesses were faring.

24 Hour Fitness, New York Sports Club and Gold’s Gym are among the chains whose parent companies filed for bankruptcy protection due to pandemic-related losses, and closed some of their gyms.

After filing for Chapter 11 bankruptcy in June 2020, 24 Hour Fitness closed 133 gyms, including two on Long Island — in Massapequa and Bay Shore — and nixed plans to open three new local locations — in East Meadow, East Setauket and Hicksville. The Carlsbad, California-based chain now has about 280 clubs in 11 states.

Towns Sports International, former owner of New York Sports Clubs, Lucille Roberts fitness centers and other chains, closed 110 clubs, including 13 on Long Island, after filing for Chapter 11 bankruptcy protection in September 2020. New York Sports Clubs and its family of brands now operate 68 locations under new ownership.

On Long Island, 21 fitness and recreational sports centers closed between the second quarters of 2020 and 2021, leaving 483 locations, according to the most recent data available from the Bureau of Labor Statistics.

31% closed in NY

Statewide, 31% of fitness centers have permanently closed since the pandemic began, compared to a national average of 22%, said Clark, who attributed New York’s higher rate to stricter government mandates.

Fitness chains that survived pivoted to online classes, and did whatever else they could to keep the doors open.

“The demand is back [for physical gyms and boutique fitness studios]. However, the format that people are going to consume their fitness is more hybrid [with in-person and online streaming workouts]. So, they’re not going to the gyms and the studios at the same rate that they were, so there is not the need for as many of them,” said Jayson Siano, founder and chief executive officer of Sabre Real Estate Advisors in Garden City. He represents several boutique fitness chains on Long Island, including [solidcore] and F45.

The ownership structure and the condition of the business pre-pandemic has a lot to do with how well a fitness operation can be sustained. New franchisees and franchises in oversaturated markets will have a harder time, Siano said.

He represented F45 in its opening of seven locations on Long Island since March 2020, and Barry’s Bootcamp, which opened its first location on Long Island outside the Hamptons, in Roslyn Heights, in August 2021.

Expansion during pandemic

While many chains struggled during the pandemic, Crunch Fitness found its footing by offering virtual classes, said CEO Ben Midgley.

The Manhattan-based chain opened 40 clubs during the pandemic, including two Long Island sites, in Hauppauge and Lake Grove, and systemwide membership is up 31% compared to pre-pandemic levels in February 2020, he said.

“We didn’t know what was going to happen. We just did everything we thought would be the right thing to do,” Midgley said.

One thing that helped was the company’s digital classes offered through its Crunch Live platform. Before the pandemic, it was available only to top-tier members, but it was rolled out to all members during the health crisis, he said.

Participation jumped 150% to about 100,000 workouts daily by July 2020. When clubs started to reopen, that number declined.

“I think people have kind of settled into this hybrid approach” of in-person and online fitness, Midgley said.

The company also waived royalty franchise fees to help its franchisees.

New York Sports Clubs has increased its cleaning procedures, so that members feel safe while working out, CEO Roger Harvey said in a statement Wednesday.

In March 2021, the club’s former parent company settled a lawsuit filed by the state attorney general’s office for allegedly refusing to cancel memberships when its gyms were closed for months during the pandemic.

Some of NYSC’s changes include “implementing a customer-friendly ‘cancel anytime’ membership policy so that they know we have confidence in our ability to provide great workout facilities and programs. And investing in the training of our fitness professionals so that our members can get better results, reducing their health risk factors, strengthening their immune systems and helping them to live their best life,” Harvey said.

Big help from PPP

Of Crunch Fitness’ 405 clubs in the United States and five other countries, 92% are franchises. About 75% of franchises were able to obtain Payroll Protection Program loans, Midgley said.

Crunch emphasized its increased health and safety protocols to members with “over-communication from us,” he said.

“Looking back, we probably made 80% of the right decisions,” he said.

Breslau, the Crunch Fitness franchisee, said his business lost half a year of revenue, but he was able to pay some rent and employees’ wages using some PPP money.

“We’re not doing what we were pre-pandemic in some of the gyms, but we’re OK,” he said.

Joel Ledgister, 32, of Amityville, who works out at the Crunch Fitness in Amityville three to four times a week, tried working out at home during the shutdown but didn’t reap the same results, he said.

“It wasn’t the same. The motivation wasn’t there,” he said.

Uniondale resident Naomi Dossours, 26, and her husband have been working out at the Amityville gym for four months for free while they wait for a new location to open in East Meadow, which is closer to their home, she said. They factored in safety when choosing a gym, she said.

“I chose Crunch because I feel like it has more space than other gyms … that helps with social distancing,” she said.

Expanding into vacated gyms

Even as some chains and smaller operators have faltered, bigger gyms that were well capitalized before the shutdowns are taking advantage of the vacancies left by the closings of those gyms and other businesses.

“We’re seeing specifically Planet Fitness and Crunch Fitness are very aggressively looking for space on Long Island right now to take advantage … of these vacancies that may have been created,” said Jason Sobel, an agent who works in the Jericho office of Ripco Real Estate.

Kimco Realty Corp., a New Hyde Park-based company that owns 545 shopping centers and other properties nationwide, has signed discount gym chain Planet Fitness to lease two Long Island spaces since the pandemic started. One will be in part of a former Fairway Market grocery store space in Plainview and the other will be in a former New York Sports Club in Syosset.

“To me that speaks volumes about how some of the new fitness operations … are very bullish and they’re looking toward the future,” said Joshua Weinkranz, president of Kimco’s Northern Region. Both of the new gyms will open in the first half of this year, he said.

Discount gym growing on LI

Planet Fitness, a Hampton, New Hampshire-based chain, has 2,254 gyms in North America and Australia, 95% of which are franchises. The chain’s memberships start at $10 monthly. Group classes are not offered.

Since March 2020, Planet Fitness has opened four corporately owned locations on Long Island – in Lake Ronkonkoma, North Babylon, Massapequa and Commack. There are now 21 locations on the Island.

Planet Fitness declined to comment on its expansion plans for Long Island.

Seeing that COVID appears not to be going anywhere any time soon, many landlords are factoring the possibility of new shutdown mandates into gym leases. Some tenants are negotiating clauses that allow for reduced rent if they face capacity limits. For example, if they are limited to 50% capacity on occupancy, their rent would be 50% less until the restriction is lifted, said Daniel Glazer, a vice president at Ripco who is the exclusive broker on Long Island for Irvine, California-based Xponential Fitness.

Xponential’s 10 boutique fitness studio chains include Pure Barre, Club Pilates and StretchLab.

Looking for ‘flexologists’

Northport resident Christopher Tucker opened a StretchLab franchise in Woodbury in August 2019.

“I got to profitability in February 2020 [one month before the shutdown]. That was the first month I was profitable. And then I have not regained profitability,” he said.

StretchLab has nine benches where staff members provide one-on-one stretching sessions for clients for $189 to $620 a month, depending on the frequency of visits and length of the sessions.

“When we closed, we tried to pivot to virtual. … Very few members were interested in doing this sort of thing” because of the nature of the business, he said.

His StretchLab had 230 members before the pandemic, but lost nearly half during the shutdowns, Tucker said.

But the bigger challenge for the business has been finding “flexologists,” trained physical fitness or health professionals, to work. There used to be 10, now there are seven, which is not enough to handle client demand, he said.

PPP money saved his business, he said.

“Without that money, I would not be standing,” he said.

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