welcome to a special edition of all things Fitness and Wellness in today's episode we're excited to present our second quarterly Fitness forecast brought to you by Abc Fitness with more than 31,000 clubs and Studios 542,000 coaches and trainers and 38 million members in over 100 countries Abc Fitness is the fittech provider to the best in Fitness visit them at AB BC fitness.com joining us today is a panel of Fitness industry heavyweights ready to dive into the latest developments and finance con
nected Fitness franchising Trends and the significant impact of weight loss drugs on the industry if you're eager for a snapshot of the fitness industry's current state you're in the right place I'm Chrissy van your host for today's quarterly Fitness forecast on all things Fitness and Wellness I am so thrilled at time of recording for this quarterly Fitness forecast presented by Abc Fitness we are at Ursa which of course no longer Ursa health and fitness Association I'm so pleased to have the th
ree of you I'm going to go around first and have everyone introduce themselves No Stranger here Chris tell people who you are yeah thanks Chrissy my name is Chris Smith I'm the president and CEO of Fitness World Canada up in beautiful British Columbia and I'm also one of the proud partners of this show which is again all things Fitness and Wellness and L we've had you on the podcast before but reintroduce yourself I'm L ker I'm the founder and CEO of Studio Grow we're a 51 Man team largest curre
ntly Boutique Fitness Consulting Group in the world working in 43 countries in counting incredible I'm Mark that's awesome I give you knuckles I love it um Mark Mastro kind of a fitness entrepreneur around health and wellness been in the space for a few years few decades way too long but all things around health and wellness that was one of the most modest intros I've ever heard I'm so pleased to have your expertise and the thing that I love about the panel today is the fact that we have someone
that of course in Big Box gyms hlp you're so connected to Boutique and you have this great Global Perspective and a lot of great info for investors so at time of recording it's the month of March 2024 is rolling on when it comes to the fitness Trends we know in January we start to see a lot of predictions so which are the ones that you are seeing actually gain steam as we roll through this year well I saw in some you know different magazines that it was year of the booty and you know that and e
specially men were going to be training their booties which at first glance I was like maybe and what I can tell you is you know I've invested in some very specific booty Builder equipment and that sort of thing and really kind of continue to tweak and evolve our footprint and our facilities and whatnot and uh they weren't wrong so as we've put these areas of equipment into our clubs they're being heavily used uh and specifically by by men and so it's definitely I think becoming an area of the o
f the body and you know even we think about core training everyone thinks oh that's my abs of my lower back but core training is so much more than that in terms of a strong foundation and whatnot so that's something that I kind of at first was a little bit curious about but we'd already made some of these Investments and they're paying dividends to the sense of back to like the financial side of it like it's bringing guests to our facilities people are showing up because they know we have that e
quipment as an example and they can train the way they want to train so it's interesting how about from the boutique perspective cuz I know Pilates has been the word of the year with a massive Resurgence I mean whoever owns reformer pilates equipment company should be very happy right now so I think anything equipment based is tending to work really well so reformer pilates Hot Yoga when you consider heat as a form of equipment um you know equipment-based uh hit Studios private training has cont
inue to rise and I think uh the exploration from moving from group and small group training to private training that only going to continue but for me some of the most important things that that we've seen has been the rise of the I'll call the implementation of longevity Labs within uh within Boutique Fitness Studios so looking at the body very much in a form of concierge Fitness much like we're thinking concierge medicine you know can we track uh if you're using one leg more than the other are
we looking at grip strength are we looking at how you're balanced on two feet you know we're really looking at longevity markers more and more and longevity we can call it a trend but I mean I think that that's just here to stay at this point we're in the preventative health industry and we're moving towards this and so um I foresee that those longevity uh the ability to capture this the ability to implement it in studio it's going to be some of the key tree Trends we're going to see not just t
his year but for the next five to seven years and Mark I'm going to kind of switch it up for you because I know Bloomberg came out with an article in the beginning of February that basically stated that things were quite flat into January for a lot of the gyms out there it had a bit of a negative blanket in regards to the health of the industry what were your thoughts or your takes on that article if you did have a chance to have a look I mean a lot of stuff I read I just kind of value as fake n
ews not really sure where the data comes from so I just have to go to see what we might have so we took a look at the companies we have and so we have our own traffic counts um most of our brands are up over 20% over prior year so it was like phenom compared to what was reported for exponential and Planet both being flat so we were like wow we're up 23% in a couple of Our Brands and then the other one is that there's um some outside groups I forwarded this to a lot of our teams that do phone cou
nts so they have people's cell phone data that they let them track off of and they published their study and their study showed that Our Brands were up over 20% and so you started thinking like well was the report that planet put out on their own stats and exponential accurate for whatever reason they were both flat so I'm not sure why but Our Brands were up dramatically in January and very strong in February so we were pretty happy about that but you know I kind of take a lot of news with the g
rain of salt fair enough and just more from a global perspective because I know I went to one of the talks during Ursa now health and fitness Association from Abc Fitness and they were saying in North America January starts were down by minus 3% but when you looked in I believe it was Latin America it was 20 some odd percent so would you say that's a little bit reflective when you take that zoom out that we're seeing some of the broader markets yeah so then you have to throw that curveball so wh
en it's winter in North America what is it in right Latin America it's summer and so then you go to the cultures so what's really interesting is that we operated in Scandinavia and the best months in Scandinavia like in British Columbia are not January and February they're September and October when people come back from their vacations it's like why is that because because they want to get ready for ski season they want to look good as they go into the winter it's not the opposite North America
ns want to look good for the summer right so when you get down to Latin America they want to look good in the summer and so they train very heavy in the summer months because we've had operations in Latin America we've been down there and so we saw bigger spikes in June July August sometimes um in some countries versus January February March in Latin America it's very strong in the early part of the year because it's summer and people want to be in great shape look good be on the beach and get r
eady for their vacation so it's just a cultural thing so it's hard to compare having said that in the people I've talked to most people are feeling pretty good about q1 so far to date but I think some of the bigger groups are a little flat but most are the ones that are hustling are doing pretty well well on to your point a headline generally gains traction when it has more of a negative connotation to it so it really is important to dig a little bit deeper and beyond that I'm curious from the t
wo of you when when it comes to Consumer Behavior because we're starting with an overview here as we're heading into 2024 we saw obviously that dreaded word pandemic where people were really in hybrid or switching to atomes so what would you say the consumer appetite is right now we'll start with you Lis I mean I think the the first thing to recognize is without a doubt we've had the largest consumer behavioral shift since World War II and we just need to accept that and recognize that um two ma
jor things when it comes to Consumer Behavior we're seeing an element Boutique Fitness of trade down Behavior spending is actually up growth is actually up it's been a phenomenal first quarter in most of Boutique Fitness but people are using facilities less now in Boutique Fitness the the gold standard has been an unlimited membership we would really recommend to most people to start reviewing whether that's still the case so trade down mentality they're buying they're buying less so they're may
be coming once or twice a week the unlimited membership no longer nearly as important class pass has done a good number of of getting people to want multiple different facilities and to have a bit of one community and a bit of this community a bit of that community so I think in that sense consumer Behavior looks a lot different but if we go beyond that and look at you know the shifts from genz Baby Boomers what we're seeing that that's bringing to the market I think that uh Boutique Fitness in
particular is going to look very different in the next couple of years and very different this year alone just in how we're marketing how we're going to reach out and how we're going to attract people to day yeah fair enough how about yourself Chris what are you seeing yeah I think for us you know we try to do a really good job at just understanding how the consumer is moving by even asking those that don't join our facilities um in terms of what are you looking for what would have maybe made t
his experience different for you um and really just trying to you know keep moving along with obviously all the Publications and all the research that you see others doing but you got to validate right in your own Marketplace and understand your consumer and but we're seeing you know again um in our space which we compete in kind of the hlp space we're finding that people are very excited to you know get started and want to take that journey and what we're able to do generally speaking is provid
e an experience where then we're also seeing a big uptick that are upgrading because they kind of they get in the door they want to get started we get them moving a little bit right and then that starts to make them looking better feeling better all the things go with it and then from there they're like well what about this recovery stuff because I've never really thought about that before Oh you have red light therapy I've never thought about that before and so those kind of creative add-ons ki
nd of keep coming and playing into it a little bit and so again we're leveraging data we're leveraging you know all of our kind of waterfall reports and member communication to kind of help influence good decision- making as it relates to what we know their goals are based again on what consumer Insight is telling us well and I think now more than ever people have that perspective and understanding that your health is your responsibility and out of all the industries this is the one that can Cha
mpion that and the thing that's so nice even being like an event like Ursa again health and fitness Association now you can sense that unified voice which is only going to hammer that home for your consumers ultimately that will be walking through the door that this is the avenue to do it that being said as we look at this overview the economic climate has changed for all of you especially as owner operator so I'm going to throw this over to you Mark when it comes to inflation interest rates wha
t's the temperature check in the environment now because you said a lot of these places are having a strong q1 but the climate has really not necessarily been that appetizing when it comes to interest rates and what things are costing these days yeah so the conversation on q1 is member usage right so members are coming in and they're using the facilities more than they were in the prior years now you're coming out of the pandemic so some of that's just people are re-engaging getting more comfort
able coming back to Boutique or to gyms and feeling comfortable in that envir environment when you get to the inflation side of the house yeah costs are rising in every component in the gym that's humanly possible in every business whether it's a restaurant you know whether it's somewhere else um I saw an ad the other day where one of the states is trying to pass a law where the minimum wage would be $50 an hour and so this guy did this um small bid on it walking into a restaurant saying I'd lik
e to buy a burger please in a fast food restaurant they saides what would you like I'd like fries and a shake here you go it'll be $128 and so inflation is really generated off of in my opinion um wages and there's been massive wage increases in all areas in Most states and federal levels in every country and so as the wages go out the trickle down effect is increased cost to produce deliver develop so we're facing that and then we have to do a better job in our businesses at retaining people in
ancillary areas to generate more income and revenue and then to ensure that you know we can be profitable in the face of inflationary period when it comes to interest rates you know hopefully you're not borrowing too much money right now you're living off of your past debt and it's at a lower level that you're at so you've got debt that you borrowed in 1920 21 22 even and that's at 2 3% interest and you're not floating off of the current interest rates um but having said that it's interesting t
imes you know there's no doubt people are trying to find ways to cut labor and improve their cost areas Cost Containment and management and at the same time you know Drive profitability in that environment which isn't always so easy yeah fair enough I mean I know one thing we've talked about before generative AI is obviously helping in a huge capacity when it comes to those labor shortages but it's not going to solve every problem L kind of on that note because at Studio Grow you have the opport
unity to work with so many Boutique owners on the ground how do these economic conditions impact pricing because not only as owner operators are these measures impacting your cost but your consumer may be feeling the impacts as well when comes to spend so I think let's start internationally for just a second so um Europe and particularly the UK we're dealing with massive utility hikes um given that many of our studios are heavily Reliant especially look at Hot Yoga on power we're now getting Stu
dios that might be 3,000 square feet who have 4,000 5,000 pound a month utility bills that's not uncommon but pretty much everyone's bills has tripled or quadrupled since then and that's trickled throughout Europe that we're dealing with us and as small business owners I think those types of costs have been more jarring than just about anything because they truly are out of their control um when it comes down to how we're pricing people differently yes I mean we've got to go up in prices um you
know I still remain shocked um I come from a big restaurant family when you when you start a restaurant they they pull in a pricing expert your prices are tweaked and adjusted every 6 9 12 months you're looking at at at putting out the best the ideal product with the highest profit margins and a lot of this is going to be having our industry also be willing to say hey there's an art and a science there's behavioral economics that go on behind this that we need to be considering and we need to be
looking really what we're putting in front of the consumer how we're pricing and packaging what the product stack is to encourage someone as you said to move from let's say this initial membership to purchase personal training to invest in ancillary Services how is this going to flow through and you know on a on a domestic level as lovely uh as lovely as those interest rates are and they're painful I just bought an office building it's terrible you're feeling I'm feeling the sting it was really
an ugly moment but you know in reality I have not seen it stop um many of our consumers I do think where it's it's halting is as you said in the growth we're seeing an enormous amount of growth we're unfortunately also seeing the highest commercial rental costs I've ever seen we just had one of our clients sign 100 $ s foot lease um which is the first I I've ever seen it works with their pnls it works with their projections it's feasible but those are the issues as we look like how this moves f
ive to seven Paces out that we're going to see some real issues how about yourself Chris in an hlp Market because obviously your consumers are looking for that lowcost high value but again to deliver on that there may have to be some changes yeah and and again I think that you know regardless of what category you you know position your business and wherever your passion is and whatever you know your belief system is Mission Vision and all the rest you know there is room for everyone so whether w
e're talking about boutiques whether we're talking about hlp if we're talking about luxury lifestyle you know I think for a lot of our consumers we're also trying to help them is on that Journey Back To Fitness and Wellness whatever and I think what we have seen and will continue to see to a large degree is there's like graduation steps along some people's journey and I would say you you know pre pandemic to now I think it was very common where people would have one two three four five membershi
ps sometimes maybe to one or two boutiques plus two commercial gyms plus plus whereas now you know that's much more reduced however I do think people are kind of moving through like a different ecosystem and so yeah it just comes down to what is your value proposition and where does that fit but again I still think that there's market share and wallet share the industry you know if you look at it from 2005 to now there's been consistent even through the recession even through the pandemic the av
erage through this whole period of time and when we even look ahead a few years it's still 6% growth for the entire industry right we'd all like that to be better we'd like to see more of course but the reality is whether you're on Wall Street or whether you're an operator all businesses are growing right so high tides are rising All Ships regardless of where you sit within the ecosystem so for us you know we're passionate about what we do we play in our sandbox if you will cuz we can only contr
ol what we control but like if I hear that boutiques are doing great I'm excited for them because that means that's reciprocal for the industry if I hear that the luxury lifestyle clubs are doing amazing I'm like well that's great for everybody as well because that means that more people in the ecosystem their kids are going to grow up around Fitness and Wellness and they're going to want to participate so that that's kind of my thinking around you know when it's not just my business it's kind o
f the whole ecosystem is kind of how I think about it well in hearing that growth Mark when it comes to attracting capital in the current climate is that something that you feel there's a strong appetite for and if you're a business owner entrepreneur is easier to seek in this climate or perhaps more challenges or difficulties there's a tremendous amount of capital on the sidelines you know people have a lot of cash to invest they've been hoarding cash and so you know really boils down to how st
rong your business is so in the boutique if you've got a good facility of five six seven eight locations that's performing really well and you want to grow you're going to probably have a very good opportunity to raise Capital um if you're a one or a two mom and pop not performing really well you're in a different situation you're probably looking to be re ired or you're trying to buckle down and grow your business better but capital is available on an equity basis on the debt side it's there bu
t you know raising capital for debt is much different than it was five or 10 years ago it's a lot more difficult the questions that they ask now in light of some of the bank failures in the last few years the the Hoops you have to go through to raise one two 510 million is probably three times as long as it once was and probably two to three times more difficult than it once was what would be some of those primary Hoops that you'd see people frequently encounter yeah great question do you have a
uditive financials or not a lot of small businesses don't so it's like gosh you how do I know your numbers are accurate you know and then are you going to give a personal guarantee you know do you want to guarantee this loan and you know I always advise people try not to do that because the world may end you know you never know yeah we learned that already yeah so you got to be very careful if you want to give a personal guarantee and then what are the conditions of the debt you know is it up ag
ainst Prime can continue to go up is it locked in for a certain number of years are there covenants that if you have a ratio between your equity and your debt that they could default you and take your business away from you so it's all the kind of numbers that kind of come with that debt and the facility that you acquire so you have to be very cognizant of how you're negotiating that paper not just taking whatever they give you because you could end up losing your business to somebody or you kno
w not being able to pay the debt service you know if the interest rates should go up you're 100,000 a month payment Cod end up be 125 150 and if your business is not performing next thing you know is you're upside down and again if you gave a personal guarantee you know what did you use to give that personal guarantee was your home cash in the bank so a lot of things come with it if it's a bigger piece of debt it's really just about the covenants that the bank requires what are you going to agre
e to or not agree to when it comes to that and you better have a good strong financial teamer advisor to ensure that you sign a good piece of paper before you uh take the debt in yeah that doesn't seem like a place to skimp on soliciting some expert advice before you venture down that route this quarterly Fitness forecast wouldn't be possible without our friends at Abc Fitness Discover ABC ignite gym management software and learn why it's the trusted solution for more than 8,000 clubs and 24 mil
lion members learn more at ABC fitness.com you know you spoke to Acquisitions there and we're going to switch over to Connected Fitness cuz obviously that is a market that we saw exponentially thriving through the pandemic and lately we have seen a lot of Acquisitions taking place and a little bit of instability in that market uh there was just water rower acquiring City row that happened just in the beginning of this year and there's been many examples so I'll see who wants to bite out of this
one but what do you feel is driving this consolidation in the connected Fitness Market there was a a big appetite for acquisition at a period of time so Beachbody car on team there was really acquiring most of it so they had a lot of capital public company multi-billion valuation they were merging people in stock Equity cash whatever it might be so they were doing a lot of work and then a lot of the smaller groups you know were starting to find a following plaes yoga bar did a phenomenal job get
ting people involved to do exercise at home but while the world of I call it pelaton said you know the world is ending gyms are no longer going to be valid it's all about connected Fitness and they shouted that out soon as everybody got back to the gyms they came roaring back and the kind of connected guys fell back a little bit and pelaton and others suffered greatly because they were not accurate in their predictions people love Community I like riding on my peleton bike once in a while I like
doing connective Fitness at home once in a while but I really want to be in a setting where I'm motivated there's noise I hear Chris Smith grunting and screaming and yelling when he's pressing 150 kilos and we're all sitting there like what the hell this is exciting I want to be in that environment so that's what Drew people back in um there's space for connected Fitness for the the leaders is there continued consolidation maybe every brand has to have it you know you kind of have to have somet
hing that you can support with your member base so that they feel like they have an option at home and abroad when they're traveling if they want it but there's so much fun stuff to do outside of connected that to me it's a luxury not a not a need for me other people love being at home and just exercising now and they feel more comfortable there which is great as long as you're getting your exercise in I've always said as long as I've been in this business it don't have to belong to a gym play t
ennis go out in the park run go play pickle ball go bowling do whatever just be active burn calories burn more than you ingest and you're going to be healthy happy in life so do good do good through Health wellness fitness find the boutique of of choice find the gym of choice you know find your your main place that you're enjoying life and then continue to exercise in any way that you can on a daily basis yeah I couldn't agree more and there's no time limit on changing that life I've told the st
ory many times but pickle ball my mom was very isolated moved to a new city wasn't very active knew she had to do something and joined a pickleball league and now if I try and visit her it's impossible to schedule between well I've got aquafit at this time and a coffee at this time and it all stemmed from that one decision and finding what resonated but getting back to the connected Fitness land just to your point I mean I know earlier this year we saw pelaton shares plummet by 24% uh that was e
arly February Boflex just chap filed for chapter 11 bankruptcy so it's definitely a market that's been hit I'm curious from on the ground in actual Boutique Fitness or in the gym how has that switch impacted you because I would venture to Guess that perhaps it's a positive that people are shifting gears back I think there's been a volatility in this for the last year and a half and and I can say that I question some of the decisions some of these companies have made you know just personally when
I look at them I'm finding going why this why that it doesn't seem it's driving them to the end goal but um I think that yes of course everybody coming back into facilities is great for us I think we were shocked in fact how many people roared back in I do think it's opened up though at least in Boutique Fitness a market that has you know very specific pieces of equipment an opportunity to um lease or bring in your own brand and sell this I'm I'm shocked more reformer pilates studios are not pu
rchasing 50 and 100 reformers leasing them out to different customers because we've now done this very successfully and saying hey you can enjoy our online platform we will do a lease on your reformer for X Y and Z uh you've got Brands like bout who are bringing the connected uh in studio um and that uh the Box bag with a brain Morrow is doing a great job of building up very unique I'll call them smart Studios a studio that really is less reliant on on on all of the people you would typically ne
ed and more reliant on the gamification that's built within so I'm also curious how we bring this into the studio and into the facility uh so that it's not just an atome product but it's something that's a crossover because that seems like that has legs to ultimately grow uh in many ways yeah even that gamification I think it's LOM in that just opened up yeah and the Innovation right I mean that's an AI an AI driven Studio I mean you know how you how you can push and go from there there's opport
unities to really layer this in and not have it just be something that's you know homebased or this and that and I'm curious how we start to interweave that technology within well and speaking to the people problem that we spoke about earlier when it comes to having staff you know initially a lot of the conversations where front desk obviously and your correspondence could be solved through AI but when we speak to how these interactive smart gamification of fitness instructor shortages have been
just as much problematic and as much as you want people to grow and Thrive and have a career path these are just realities that we're facing in the financial climate and it's going to happen so we might as well lead the way I think what I would add is you know what what I'm seeing or my perspective is so again Vancouver BC it's one of the most beautiful places if you've never been and yada to come uh at the same time it's one of the most expensive places that that you can be so when you just lo
ok at Cost of Living and you you know people often talk about wallet share but when you look at the average square footage or square meters that someone's living in there's not space for connected Fitness there's not there's not space for a bike uh it's like no it hangs on the wall there's no space that's where the bed is and it folds down into the living room and the I live with no walls 600 square feet yeah so she she can attest to it right and so it's real and it's palpable and so I think tha
t that in itself makes it uh a bit of a challenge and I do agree from the hybrid perspective in terms of you know where you know meeting your members where they're at and so obviously technology plays a huge role whether we're talking about cell phones or the the iPads or whatever connected device they may or may not use and so yeah if you've got content that you believe in that's branded to your business that aligns again with Mission Vision and all the things you're trying to accomplish I thin
k that's where you're meeting the members where they're at and so you know I know we do something um you know crunch has a great online ecosystem as an example uh you know planets launched a whole bunch of stuff in that space and I think made some strategic hiring decisions around you know how they think about that space just the same but yeah there there's a lot of opportunity there so I think that's where most businesses um are trying to figure out right and I still think it's it's not early d
ays as Mark would say that's a phrase i' I've stolen from him over the years but I think we're still learning right we're still learning like really where's The Sweet Spot and uh I don't know that anyone's fully um cracked the code there just yet well and even when you just speak to the demographics that use it I just had a thought there when we talk about the loneliness epidemic as well and gen Z obviously is growing so much in our gym spaces and it's so they're our biggest Champions like I wat
ched that demo they get it they understand that it's for mental health but I also think that the amount of exposure they've had to screen time through growing up they're the ones that have as much as we give them the most and it's our podcast I can say it we give them the most but at the same time they're the that actually want to engage and have that Human Experience they're having problems with dating they're having problems with friendships they're having problems meeting people and so I thin
k that's why they actually aren't really the adopters necessarily of that connected that are going to have the pelaton in the corner they want to be there and mingling and socializing in our gyms and I see it just on the ground yeah I mean I I think you could make an argument with the digital Revolution Millennials in some ways destroyed Main Street and jenz is here to to bring it back I think all of us have jenz children I think there are saving Grace um on where this goes I mean they're they'r
e leading how we Market but beyond that you look at jenz uh they've gone through two recessions many of them have dealt with the after effects of having parents or grandparents that are living with preventative disease and obesity and all of the ramifications have comes from not having a healthy lifestyle and then you add a pandemic onto that and it's not a shock I mean the data is very clear that the second largest investment that a jenzi uh individual will make is in health and fitness I mean
they're going to lead our industry forward and they have a real reason to because they've seen what happens when you don't we'll take a brief pause to thank our sponsor ABC ignite transforms Fitness management streamlining operations enhancing revenue and delivering profound insights built for Innovative Club operators ignite ensures efficiency and member Centric experiences learn more at ABC fitness.com oh 1,000 we're going to get to the whole glp1 and obesity conversation through this podcast
but before we venture there I want to talk franchise and it's one of those things you prepare for a podcast and inevitably big news comes down the pipeline and I understand there could be some sensitivities around this discussion so whoever would like to bite by all means but Orange Theory and self-esteem Brands they obviously made their announcement in recent days at time of recording so massive scale OB obviously 3.5 billion in systemwide sales 7,000 locations 6.5 million Global members with t
hem coming together so I know that in some reports people were saying this is surprising news so what's the temperature check here A bunch of different answers so RoR is the capital provider and partner behind self-esteem Brands and they're a franchise a conglomerate they focus on and specialize in franchising and they basically have a bunch ofan groups that Acquire amalgamate under one Banner so this is what they do they're really good at it so whether it's restaurants or Fitness you know you g
ot a really good team at any time that's developed the brand globally that's also facing heavy competition based on each market whether you're in Australia and Asia and they're facing it against Jets who has a similar number of locations the same footprint so it's an interesting kind of competitive landscape where I really like about the acquisition for them is Orange Theory has phenomenal technology and so they do a really good job at understanding who the consumer is and all the it and informa
tion behind it so the technolog is a really nice acquisition for for I call it anytime but self-esteem so that makes a lot of sense and then obviously Orange Theory is trying to figure out how do they grow their footprint and to grow internationally is not easy it's not easy it's very very difficult and I know they've entered some markets and had some success I know they've entered some markets and not had success because you underestimate like the Europeans the Europeans like to get on a bikee
and ride a bike on the streets and in the mountains they don't like going into the studios so you think you know Studios like Soul cycle and and you know cycling no longer can we say the word spinning but is going to be popular in Europe but it's not as popular because the people there like I'm not going into the gym I'm going onto the road it could be snowing and raining I'm still going onto the road you know so it's a different cultural experience so I think Orange Theory is trying to navigate
that and and the groups at any time those guys have phenomenal experience market after market and they already have franchisees in market so there's something there that makes them come together that's really exciting for them and they know best they have to go execute now and figure out how to basically roll it out but I I think it's a good marriage I think those two groups coming together is going to be a really good thing so I'm happy for them happy for the industry happy for more people to
experience those Brands as they kind of get out there and grow so I think it's a plus plus for both sides what are the economics what are they acir for what kind of stock do they get how are they going to exit have a thousand questions for them but I won't answer them here because if they're not going to be a public company you know you could be locked into that thing forever a lot of times you come to me and say Mark I want you to merge into my company I'm like well how long am I going to be yo
ur partner and I can show you situations I have now where I've been a partner for 15 years with no exit and no exit coming right I've got a company I'm involved in that is a monster multi-billion dollar company and I don't know if I'll ever see a DME because my stocks just going to sit there till I die it'll go to my kids when they finally do something so you have to be careful about sometimes coming together because sometimes there's no way to get out I mean they're so big I mean the IPO makes
sense to me if that's the the the place where they're going I think it's a brilliant move for Orange Theory Anytime Fitness knows International like no other I I mean they have and they've been laying the groundwork for probably 15 years at this point I mean they were really the first to understand and do it well I think interesting enough for Anytime Fitness you know they've dabbled in Boutique they own The Bar Method they base camp they've been just touching into this market and it's clear tha
t they're interested in in in building that and so bringing orange theories Orange Theory knows how to run Studios well and how to build profitable Studios that's not the norm across many franchises and boutique Fitness I mean it's profitable Studios is a problem we just don't talk about it and so the fact that they're going to offer these two things Orange Theory also is going to get a a mass opportunity with hug huge number of Anytime Fitness franchises who've already showed they like to diver
sify I mean when you look at who's buying base camp when you look at who's buying Bar Method who's buying waxing the city they tend to cross populate across Brands and so to have access to I don't know 3,000 franchises or so plus a remarkable network of uh of Master franchisors internationally they that's where the rub will hit the r is that whole kind of combination of the two groups and the others as they grow it out can they become a public company do they want to be a public company public c
ompany you have to look at exponential out there you know it's it's difficulties in it stock valuations I know Anthony's doing all he can to drive it forward and and the numbers look promising but they still aren't above the Mendoza Line and in lifetime you know a phenomenal company throwing off tremendous cash performing at the highest levels and their stock is still below IPO value so you look at that and say do I bring my company public and create liquidity but am I am I going to be able to g
row my my stock that's the that's hard part as a public company in our industry that's why I've never been a big fan of public offerings but you know you can create liquidity that way for sure which is nice but you know when you look at the comps out there right now um the multiples are not really high they're not not super exciting I I talked to Bach Rody and you know he's constantly like I'm killing it but I can't get my stock up and he will eventually he's an awesome operator and eventually l
ifetime will grow but that's the tough part about finding that exit and and when you get so big you know seven eight D 10 whatever you want to call it there's no buyer so that's why I was worry that you know I kind of tease orange St may be locked into that for life at some point work's going to want to exit and maybe the public offerings yeah the outcome but it'll be fun to watch from the outside looking in I'm always curious what those big buyers will also look like I mean are we eventually go
ing to have an apple health or someone like that that's looking at this that's from a much bigger level that we can't even imagine who wants the data and everything else as much as they want the people I think I think that's a good question and often wrestle with it but I think they want to be agnostic where they aren't in one group versus all and so I think you know the world of of apple and all the big guys it's like you know we're just going to appeal to everybody and continue to develop our
our watch and and all that comes with it so you could take Aura ring you know which is tremendous you know product out of Finland you know off of the Nokia platform and has boomed into this multi-billion dollar company so you would think Apple maybe will go chire and bundle it in but then you hear not Apple's going to build its own ring so it's kind of weird that you know that's the way they all operate but I think they want to be agnostic and and kind of do their their thing yeah but we'll see
but I think it's the big question I've always felt like eventually that'll be asked you know it always was Will Nike get involved in the fitness industry turns out yes Y and they open a couple Studio but that's because Brian was the head of Fitness for Nike and he spun off with Mike and they created that company and they got a couple Studios to see if it can work but you know will Nike get more involved they've always been around group X they've always been involved in that but that's the stuff
you have to figure out you know in time we'll see but what they're all missing is is that you know we are a community- based industry and we have our finger on the pulse of what's really happening in the world today with our member bases and our our teams and and Associates in the field so we really know what the hell is going on um so if they want to figure it out they're going to need to come to us at some point it's going to be a story that unfolds but when it comes to franchise obviously the
re's been a lot of positivity in the space as well we saw entrepreneur put out their list that crunch was number 29 out of 500 for franchises and there were many other Fitness facilities that ended up on that list so what do you feel has given crunch the Competitive Edge I mean I'm obviously familiar with a number of the people that are involved and I think Mark's probably the best person to answer it but yeah I think they weren't only numbered 29 that I think that's in like all franchise busine
sses globally but I think they were number one in Fitness so you know again using that phrase Crack the Code they figured some stuff out that I think you know others haven't I mean I spend a lot of time you know shopping everybody right to try to emulate best practices what are they doing does that make sense in my market for my consumers whatever and so you know when you look at the HP 2.0 that model what it does for consumers um again back to meeting members where they're at and the bundled Se
rvices it's just there's a wide varray of directions you can go when you enter into that space and into that model and then again I think they've done a tremendous job at really on on brand right and so I think they've built a really robust ecosystem something that people are excited about um you know I talk to people and say it's kind of like what's your Vibe right everyone says I'm a good vibes only I'm a good vibes only guy well I think the same is true in the in the fitness and the health an
d wellness space you want to go to places and spaces that give you good vibes so when you think about lighting uh in terms what is the lighting is there natural lighting what is the music what channel is on how loud is it right can I is it loud enough where it gets me excited and keeps me a little more motivated but not so loud that I can't talk to my workout partner and so I think they've been pretty thoughtful about what they've done and what they've built um and again they're a brand I've tri
ed to emulate truthfully right in terms of the work that I do in Canada um because I think that they've you know done a lot of things right for sure which again consumers and ultimately their franchisees and I'm not even completely clear how they go about those rankings but either way they're number one right and so I think they're kind of painting A New Path for people to chase after which is exciting because again that's Evolution right that's growth for the industry and that's what I'm most e
xcited about which I already kind of commented on right is anytime we're getting better as an industry then that that's good for everybody we're going to take a moment for a quick shout out to our sponsor whether an expansive multilocation Enterprise or a boutique Club ABC ignite optimizes every aspect of your gym enabling your team to deliver exceptional experiences to members visit them at ABC fitness.com to learn more well the industry we know is changing rapidly and especially when it comes
to glp1 so on exercise snacks bite-size science we have had doctors on to talk about what it is what some of the concerns are what the side effects are we know in your talk today mark it was something that came up in the keynote muscle loss is something that we've addressed very much on the podcast as well which creates opportunity in the fitness space we have seen mayora and Equinox already create in-house programs for this so first of all what are your thoughts on the model of people prescribi
ng it in gy and trying to go that route they're going to miss out on a massive opportunity if they don't do I know if I feel entirely comfortable about the blend of of that level of of medical practice and this is very much a medical practice in Fitness facilities it probably wouldn't be my first choice I'd rather see functional medicine and Physicians that are are focused on some other things for first but um look people are people want to be they want to be thin I mean that that is it um and I
think you know that's been certainly uh uh at least in parts of the the fitness industry that's been our marketing that's been our Focus that's been uh where people have been pushed and what they think we're there for I tend to think that um they're going to be very interesting tests it may work very well in certain sectors uh I'm more concerned with the response to what do we do one with the muscular loss I mean I do think that marketing to people and Partnerships with Physicians that are larg
ely prescribing this uh is going to be a key piece I mean I I getting that OIC what do they call the OIC slip or the the slack you can visibly see in people uh that's doing so I think the programming changes around it um are incredibly critical I also think we got to remind people that there's a lot more benefits to exercise than just being thin I mean the mental benefits like literally the neural pathways that you're building like physically wise if this is where we stop that's it but but it's
here to stay um It's relatively safe um if you're going to look at all of the studies and see this as far as we know it's been in use for a while um it's going to be a really interesting uh it's going to be a very interesting experiment over how far our industry is willing to go yeah everyone knows I have really mixed feelings over it I understand that obviously there's tremendous Financial opportunity and I equally can see that for those that have struggled with obesity and are exploring all th
e Avenues this is exactly because at the end of the day if they're able to resolve that and get a handle it's going to ultimately prevent more chronic diseases for them in the future which actually will save money in Health Care Systems as well as well as potentially save their lives but exactly to your point we know that that's not the only reason why people are utilizing these it is a lot of the I want to lose the 20 pounds before the event mentality and to a degree pop culture is marketing it
in that big way as well obviously Oprah's endorsement happened but then there were several celebrities down the pipeline one was um one of the osborns and she was basically quoted saying I don't have the direct quote but the essence of it was like I don't want to exercise forget that why wouldn't I just do that so there's a bit of a diluted and mixed up narrative I think that's happening for the public yeah I mean I mean that's their job right I mean that's how they make a living celebrities ma
ke a living by endorsements and you know whatever gets sound bites and that sort of thing um you know and again it is early days and you're talking about like so far side effects whatever but there are some legitimate side effects and there's legitimate lawsuits that have now already been filed in multiple States um based on people that have had negative experiences and so you know when you think about behavioral change or what does that look like or how do we really help people long term becaus
e again there there's no really there's no path to get out right um unless you save off the muscle loss and you do behavioral change work along the way some people might even need beyond the behavioral change of like building habitual patterns in a fitness facility they might need like why why did they become obese in the first place right or what led them down that path they might need like legitimate counseling or you know psychology like there's there's some real issues that people need to wo
rk through when we think about behavioral change and and and what's required so you know I'll give you another perspective that that I often think about which is I came really close to making it to the NFL like I was right there um try outs camps all sorts of things I'm 49 years old I've never had a drink of alcohol ever and I've never had a any Taste of tobacco I've never tried any illicit drug and so for me again I appreciate the folks that really it is an answer meaning I've been morbidly obe
se my whole life I've tried different things I have thyroid issues like there is a legitimate y there are legitimate people that need this and I get it but for the vast majority of people I just look at it like yes it's a it's a cheat code but it's a cheat code that it's just frankly unnecessary like go put in the hard work go put in The Sweat Equity like Fitness is earned and back to what you're earning it's not about what you look like right it's about how you feel and that feeling is not just
around the even the mental wellbeing you're going to feel stronger right we're talking about longevity it's going to increase your play span your Mobility when you go do all the activities whether we're talking about playing at the park with your kids or doing all these things that drug is not going to help you with any of that it's not going to help you with any of that and so I appreciate it and kind of what it's doing and yes I do think there's Financial upside for those that can participate
but again I also think it depends on the country I know for a fact in Canada there will never be a way for us to administer it even if we wanted to right it'll be medically protected they will not allow I you can't do cryotherapy in clubs in Canada unless you have a doctor on site so it's not even possible to partner with somebody you literally you have to have a doctor in the building with an office to do that which again in my category hlp that's not going to happen right and so again I I def
initely have a lot of thoughts and passion around the subject but it is here it's not going anywhere right so it's something we all got to learn from and see where it goes well and that's where there's a little bit of skepticism because when I think of the Equinox model and I know that they were really looking to design programming to take people along those behavioral change and build in all those foundations that you spoke to but in my mind and I hope the world proves me wrong but I'm like per
centage wise for people to make Behavior change it's it's not the majority and I think even if they go that route they're still might be that lack of Desire that being said I do think our spaces are the ones to at least give it a shot and hopefully even if it's a small percentage convert some people to actually instill those into their lives Mark for you I'm curious from the financial standpoint because obviously and especially from the American perspective getting insurance companies involved u
h I think of an article that I read that talked about big food and how they're having to completely rethink their financial strategies because they're already feeling a bit of a pinch from this because there is less appetite figuratively and literally for the types of offerings they have so how might this change the financial landscape in the fitness space because as we addressed this is here to stay it does work there are some downsides but it does pair hand inand with Fitness to Chris's commen
t earlier it its early days so when you look at the US there's less than last report 250,000 people on OIC it's nobody so even when the food article comes out oh my God people are losing weight and they're not going to eat and they're suppressing their diet they're not buying food I'm like it's 250,000 people out of 380 million it's nobody and maybe now it's half a million who knows but you know what we do know is that this is a drug that was built around diabetes and it was to reduce the sugar
content in your blood and your system and by doing so it suppressed your appetite and there was a weight loss by product from this and so they started recognizing that and they moved it into weight loss and so it first got adopted by Hollywood and celebrities and doctors that say Hey we've got something can help you lose weight there's some byproduct from it but you can lose weight and then it's moved into mainstream issue is it's expensive issue is Health companies don't want to pay for it issu
e is the self-insured compan which is most of America now self-insuring their employee base doesn't want to Fork out $1,500 to $2,000 a month to help you lose weight and becoming a more productive employee or more productive person um as Chris pointed out there's this whole thing about obesity right the UK just came out with this study it was unbelievable and I don't know if you read it but the study said that in the UK people between the ages of 35 and 59 60 % of them were obese and one out of
every six child under the age of 10 was obese that breaks my heart the most honestly you look at the numbers right but to me obesity isn't BMI it isn't body mass index or weight what's your engine inside your body because I know a lot of people that are are bigger thicker heavier but their engine's unbelievable their heart's functioning perfectly they just hit the Obesity number because the way that we measure weight isn't based on fat and muscle we lift weights these days and people are full of
muscle it's a different thing I'm in the theoretically the edge of obesity I I weigh 175 pounds I'm 5 foot 10 why am I obese I my body Fat's like 10% but I have a lot of muscle because I lift weights I've always lifted weights so we have to throw all this out in the end what we have to say is that this drug has benefits now as we said earlier it affects muscle and once you go on it you really can't come off of it because you come off of it yo-yo right back but it does eat muscle and you're goin
g to need to have resistance and weight training and if you're doing Pilates that's great but you're going to need to go do something in the gyms and someplace push-ups pull-ups something where you're going to do resistance training so it's really interesting as it goes forward I do think like I mentioned earlier there's a company out of London called I prescriber or xexi and it's led by a gal who was formerly the head of strategy for apple and so she's taking it into to the Healthcare Community
into our world and the application is we will help you navigate this by getting your employees or team members into gyms where they can measure their attendance and performance and send feedback to you to show they're actually working along with the drug to create as Chris pointed out you know a change in their their habits and a change in Direction they're putting effort in and by doing so you can reward them with the program versus just not wanting to give it to them so I think that a company
like that that'll emerge will really help Healthcare and our business kind combine it'll be awesome so I think it's really interesting but I also want to point out one story just just to point to the the world of equinox and Lifetime and all these folks that have gotten into the band waging and providing it thinking more people will join or maybe there's a buck to be made whatever Harvey and braah are looking at I think as a benefit to their employees so I have a a friend and she's a cancer sur
vivor and she went on OIC said I got to go try it and she went to a spa where they had a woman who was able to give the product to her and didn't go to a doctor or anything and she took injections two or three I think in her first month or so and she got violently ill like um had to be in the hospital for two weeks and it was really bad for her and they said you shouldn't be on this product having come through chemo and everything so there is a risk that we're in the early days and we need to be
very careful on who's prescribing it I like the Canadian system much better you know we as gym people shouldn't be messing around with this right now God bless those that are but it's not a space I'm going to enter into I don't feel comfortable in doing so and I think it needs to be left to the professionals and under their guidance and tutelage versus somebody we hire to kind of implement it inside our four walls fair enough and as I say I've interviewed a couple of the researchers that have t
alked about the complications and they are very real and again that's just my Clos in and people know I'm a little bit biased on the side of it but I'm just kind of like if it's not something if it is your last resort tool I get it but if that's not the case when you think about the fact that it usage was type 2 diabetes my dad was a type 1 diabetic that's not something that you can reverse it's autoimmune but the complications that they receive in the human body and you watch that play out why
you would risk some of those complications for yourself voluntarily is beyond me unless it's something that you genuinely really need but again I understand it's very lucrative I know a lot of investors obviously have a strong appetite and hopefully we can be the voice where people do it the right way and but I think it's going to take time to see how that unfolds there's a place for it Y and under the right system in time it will be awesome and for people who need it God bless them they should
definitely get on theog but it's early days and we you know the smart folks on the medical side need to figure out how to implement this and combin with companies like I prescribe and XE and and help navigate them towards the right outcome which is strength and resistance training inside some program whether it's a gym or YMCA or home whatever someplace they have to have that combination and then they have to decide is this a lifetime drug that you go on you know or not it's kind of like men tha
t take testosterone boosters and pellets and all that stuff once they get on that program after two or three years of being on it your body will no longer produce testosterone and so you're on that product for life right and so you have to make that decision with the knowledge of what the outcomes are going to be both medically physically morally Etc and that's the space you're in right now not that I'm on any holy Pulpit preaching here I'm trying to play it down the middle but it's interesting
I think it's going to be a GameChanger in many ways and this is just the beginning right the holy Grill has always been can I take a pill and look like Brad Pit that's the Holy Grail right so we've got cosmetic surgery to help you get closer to Brad Pit and now we've got a pill to get you nice and lean and Chris Smith has the gyms to get you fit like Brad but you can't do it without Chris you got to get your ass into a place and work that's at the end of the day where it is right I think it's in
teresting you know we we we talk a lot about OIC here in the US I travel around the world all the time and I was sitting in Dubai recently and and said something about OIC at a at a table of very well-educated people and they all went what's that um you know this is still something that's you know relatively new around the world we'll take a moment for a quick shout out to our exclusive sponsor of the quarterly Fitness forecast at Abc Fitness they turn the vision you have for your Fitness busine
ss into reality discover their Technology Solutions for personal trainers coaches Fitness Studios and traditional gyms and health clubs at ABC fitness.com on that note as we wrap up our conversation from each one of you I just want to hear biggest opportunity in 2024 biggest challenge biggest opportunity uh yeah looking at smart growth is you know the right way to go about it and again we're talking about a financial you know kind of podcast again sponsored by our friends at ABC is again we talk
ed about like the debt and the banking and the interest rates and all that stuff that's out there so you got to do it in a very very smart intelligent way but certainly I think like most businesses you know you want to grow and so that's the opportunity in front of us so we're looking at how we can best do that intelligently challenge well the challenge is the interest rates and the markets and the bank relationships and again to Mark point on finding that right piece of paper that makes sense t
hat you're agreeable to that you know yes helps you grow but you're still you know well invested well producted the covenants make sense etc etc right biggest growth biggest challenge L I think it's uh probably going to be the ability to really tap into the wearable data the connected Fitness that we have um and provide a far more personalized experience I think personal training is going to become a misnomer I think we're going to see far greater levels of what personal training really can mean
in these coming years um biggest challenge I mean from a marketing perspective we're still really feeling out post iOS 14 um so many different marketing channels that are emerging what is really the best way to drive drive new lead leads through the door every single day consistently and I think uh starting to figure out what that landscape looks like and optimizing and maximizing it across the fitness industry is going to be key along with the messaging that we need to provide for it and Mark
yeah I think that was a great answer so I'm on that page um I'm going to throw out something very different for biggest opportunity a pelvic floor yes I love that biggest opportunities pelvic floor and so many of my circle speaking of that they're all just that have their kids yeah massive there's this awesome company coming out of Switzerland called pelvic that has a product that's phenomenal so I think pelvic floor is really interesting um I don't want to give long answers but um down in Santi
ago in Chile I have a business down there we sold long time ago my partner down there got a hold of me and said that the Chilean government ran a um Health survey with its population and the number one issue that came back in the whole country was pelvic floor with women over six million women had pelvic floor issues so that's really interesting I think so pelvic floor um I think if you look at the opposite side the the biggest challenge uh United States let's take one country United States I th
ink it's the presidential election about to happen in November because starting in July we're going to have a tremendous amount of media money being spent that's going to block everybody from doing what they need to do and then we're going to see who the country wants to become because it's very bifurcated right now it's unfortunate but there's you know two sides to this country is it's trying to figure out its way as it moves forward from an industrial nation to a service Nation because that's
who we are right now so I think that's really interesting on a global basis that'll have ramifications because we're dealing with a lot of right now all over the world between Ukraine and Israel it's just a little bit nuts out there so um I'm hopeful that we'll have a nice transition navigation into the political land cape and that's to me the greatest challenge as we go forward well Mark L Chris thank you so much for sharing your expertise on our second quarterly Fitness forecast so many great
takeaways and I really appreciate you all taking the time thanks for having it's great to be here thanks CH great to be with people that know their yeah you've just listened to a special edition of all things Fitness and Wellness hosted by Chrissy van this episode was presented by Abc Fitness with more than 31,000 clubs and Studios 542,000 coaches and trainers and 38 million members in over 100 countries Abc Fitness is the fittech provider to the best in Fitness visit them at ABC fitness.com
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