When the federal government closed down gyms last month, Fitstop chief executive Pete Hull was tasked with delivering the bad news to his two dozen franchisees.
“You’re starting from zero – if you had 300 members, you’ve now got 300 leads,” Hull recalls telling his business partners.
Almost immediately after the shutdown order filtered through the airwaves, major banks and other financial institutions began freezing direct debit bills across the industry, preventing gyms, yoga studios and fitness centres from charging their clients for services they could no longer provide.
“It was right for them to do it … there’s a lot of businesses out there that probably would have let their memberships run a little bit,” Hull tells SmartCompany.
The payments freeze was an unprecedented move, but then again so was the shutdown and the COVID-19 pandemic that forced the government’s hand in the first place.
But none of that changes the business-crushing reality of losing virtually all your revenue and client books, which in some cases took years to build.
“Our franchisees went from having 300 members paying them $49 a week to $0 overnight,” Hull says.
Fitstop’s network of Queensland-based functional fitness centres could no longer open their doors, and with client payments frozen, Hull faced a tough set of decisions.
“We had to choose, either we just close up shop, put our hands out and try to claim as much as we can through government stimulus while pushing back on our contracts, or push through and put ourselves in a position where we can still make some revenue and provide some value in exchange,” Hull says.
The solution was two-fold: while helping franchisees negotiate with landlords and access government programs, Fitstop has jumped onboard to join a rapidly growing trend in the fitness industry globally — online training.
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Franchisees have been hitting the phone day and night selling online training plans to customers at a 50% discount, with Hull agreeing to cut franchisee fees in half to help share the pain.
“We developed our own app, so now instead of customers booking in their classes to a location, they can book through their phones and they’re still able to schedule times,” Hull says.
“Instead of checking yourself in at the gym, you launch a live session with your trainer, friends and other members … we’re running classes in the same structure and schedule as before COVID-19.”
Breaking new ground
You’ve probably seen the photos circulating online: gyms around the world have been finding creative ways to keep customers active, and revenue flowing, during the coronavirus crisis.
Some are encouraging customers to use household items like kettles and other appliances as makeshift weights, while others have altered their routines to prioritise body-weight exercises.
It’s a brave new world for an industry that’s more tied than most to bricks-and-mortar, with online training previously the domain of YouTube vloggers and Instagram influencers.
But there’s little choice: gyms either shut up shop or embrace online training with gusto, and amid the disruption there are plenty of operators forging new paths.
Ben Lucas, owner of Sydney’s Flow Athletic, has managed to strike new ground with his Facebook-based online training program, achieving something previously unheard of for local gyms: international clients.
“We’ve put on 50 new members over the last week all over Australia, and all over the world, including Hong Kong and London,” Lucas tells SmartCompany.
Lucas recalls the week of the shutdown, saying he was expecting Australia to shutdown gyms after seeing legislators in other countries like the UK and New Zealand take similar measures.
“We could see it coming, so we started playing around with Facebook streaming our classes,” he says.
“When the decision was made we were able to get a four-station streaming business up and running in 24 hours with 64 classes a week.”
Lucas has essentially created a commercial operation on the world’s largest social media platform, using Facebook Groups with approved access permissions to filter customers into different classes behind a paywall.
Flow Athletic has even managed to lend out 110 Spin bikes to customers, allowing them to use professional gym equipment from the comfort of their own homes.
Facebook has encouraged the idea, but did not provide any technical support or new features to enable the online classes. Lucas worked it out himself.
“There’s plenty of gyms out there that just shut their doors all together, but my biggest motivator was being able to keep my team employed,” Lucas says.
“They’ve got families, rent to pay and food to put on the table.”
Structural changes to come for fitness
The shutdown has still been financially difficult for Flow Athletic, but the Facebook classes are keeping Lucas’ head above water.
The results have been so encouraging Lucas predicts the industry won’t go back to the way it was after the coronavirus crisis passes.
“We’ve been talking about online for seven years … but we were successful and quite complacent,” Lucas says.
“We were stuck in our comfort zone and this has changed that, it’s opened up doors and our eyes to opportunities that were always right there in front of us.”
In other words, Lucas thinks online gyms are here to stay and will be altering his commercial strategy in relation to bricks-and-mortar.
“I would potentially not do another location because it’s so rent dense, especially if I can hit people all over the country and the world with a streaming model.”
Hull broadly agrees, saying there’s no going back to the way things were for the fitness industry. But he maintains bricks-and-mortar gyms aren’t going anywhere.
“Our priority is to keep as much normality as possible, but ultimately we’re not an online platform, we’re a bricks-and-mortar franchise business,” he says.
“We’re really gearing this around a successful re-opening of all our businesses.”
This invariably begs the question: when will gyms be allowed to re-open? The federal government is currently undertaking a four-week review of trading restrictions and says it will update the community by May 11.
The resulting announcement could see gyms re-open in some fashion, or remain closed for an indefinite period. There’s no way to know, and in the meantime, businesses are making the best of the situation.
“I’m expecting them to allow us to open under restricted trading, so we might be able to open at 70% capacity,” Hull says.
“I’d love to see that happen in May.”