- 6 months ago
NYC, Entrepreneurship, & Healthy Living
Howdy, I'm Taylor. I'm a 20 something former management consultant and ivy-league grad from California turned solopreneur in New York City, and I love making videos that follow all of the above. Stick around 😊
Howdy, I'm Taylor. I'm a 20 something former management consultant and ivy-league grad from California turned solopreneur in New York City, and I love making videos that follow all of the above. Stick around 😊
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LearningTranscript
00:00This is Barry's Bootcamp, one of the many luxury fitness studios where people willingly pay $40
00:06to be yelled at in a dark room for an hour. And yet, I am here multiple times a week along with
00:10millions of other people who have made these boutique fitness classes a non-negotiable part
00:15of their routines. But these studios are so much more than overpriced exercise. They are carefully
00:21crafted experiences that have completely transformed the fitness industry. While a basic gym membership
00:26might cost you as little as $10 a month to $30 to $50 a month, fitness studios like SoulCycle,
00:33Barry's, and SolidCore might charge you that much or more for a single class. The question is why?
00:40What is the business strategy that transformed basic exercise into a luxurious experience that
00:45so many urban yuppies can't seem to live without? I have spent years both observing and heavily
00:50participating in this industry. And today, we're investigating how luxury fitness studios
00:55created a business model that is part high-intensity exercise, part status symbol, and part psychological
01:01masterstroke that keeps people coming back. And just why, for many people, it is absolutely worth it.
01:11I'll stop doing the pointing thing. All right, as always, before we dive into the business model
01:16and the psychology behind premium fitness, do I look like I'm here to mess around? No! Let me give you an
01:22idea of what it's actually like to take one of these luxury fitness classes. And we'll focus mainly
01:28on Barry's for this because it's my favorite. You walk in and check in with one of the usually chipper
01:33and smiling folks at the front desk, and then they'll tell you what spot you have inside the class.
01:37From there, you go back to the locker room where you put your stuff away, change into workout clothes,
01:41and I'll show you some of the amenities in those locker rooms after the workout. And then it's showtime.
01:46Barry's classes are famous for their dark rooms and red lighting. They're actually called the red room.
01:51Blasting music. And of course, high-end equipment. That's right. Each and every one of the treadmills
01:56inside of Barry's class are $15,000 a pop. They're the nice woodway treadmills, which are indeed top
02:02of the line. I checked. Each class is 50 minutes in four rounds, alternating between the treadmill
02:07and the floor for strength training. And what's the workout actually like? It's freaking hard. It's
02:12widely regarded as the hardest workout of all. It is high intensity interval training at its best. But of
02:18course you can go as a beginner and just run a little bit slower than what the instructors suggest,
02:22or lift slightly lighter weights, and then you just work up to it. That's what I did. But yeah,
02:25I personally come out of each and every Barry's class drenched in sweat. Now, while I focus on
02:30Barry's, each studio has its own unique atmosphere. SoulCycle creates this almost spiritual experience with
02:37candlelit rooms and instructors who double as motivational speakers. SolidCore, on the other hand,
02:42is all about that slow burn muscle failure in a cool, lit blue environment. What they all share,
02:48though, is attention to every sensory detail. And I personally come out of each and every one drenched
02:53in sweat. Maybe I'm just a sweater. I don't know. And the instructors, they're all really, really great.
02:59Extremely fit, as you might imagine. Like, one of the instructors that I go to in LA
03:03literally looks like a human GI Joe. And their motivational coaching approach hits just the right
03:08spot for me at Barry's. Where they're not mean to you, like, run faster, you piece of s**t. But they're
03:12also not shouting, like, cringey, fluffy affirmations. It's somewhere right in between, where I feel
03:18properly hyped up. Then once it's time to shower off all that sweat, you go back into the locker rooms,
03:22where you have cotton towels, high-end products like Weigh hair and body products.
03:29It used to be Oribe, which is even fancier, but that's okay. Dyson hair dryers, which are $500 a pop,
03:35and then, you know, some other basic personal products and toiletries. The amenities do differ
03:39a bit between studio. Like, SolidCore doesn't even have showers. I'm like, girl, that's half the reason
03:44I go to Barry's. Just kidding. Kind of. And then finally, there is the fuel bar. So after the sweaty
03:50workout, you can have one of these smoothies waiting for you, which is packed with high-end
03:53supplements and protein powders. They use ProMix products for their smoothies, which, as with all
03:58these other things, are coming in at a high price. Smoothies are not included in the class price,
04:02but it's a nice option to have right there after you finish working out.
04:05And there's also some retail in every studio. So while that might have sounded like an ad for
04:09Barry's, it wasn't. I wish. It's just an inside look into how you're not just paying for a hard-ass
04:14workout. You're also paying for this overall high-quality luxury experience where everything in there
04:21is the highest quality version of that thing. And you walk out of there feeling like a million bucks.
04:26Tired? Yes. But satisfied. And nicely lotioned up.
04:29Okay, so that's what the experience is like. But even still, it's not quite as simple as,
04:35oh, it's a high-end experience. That makes sense. There's still the question of,
04:39why do people who attend these boutique fitness classes multiple times a week,
04:43not just pay for a gym membership? An expensive gym membership even, like Equinox,
04:47which also offers classes and luxury amenities. To better answer this question, let's look at the
04:52evolution of the fitness industry and where boutique fitness group workout classes fit into all of
04:58this. So beginning with the traditional gym of pre-2000s, they used to be a lot more bare bones
05:04with a much larger focus on weightlifting and cardio machines and pretty much no focus on group fitness
05:09classes. And the business model of traditional gyms surprised me a bit when I was doing my research for
05:14this video. You see, traditional gyms that are low cost and high volume of members actually count on
05:20most paying members not showing up to turn a profit. Planet Fitness at $10 a month with all that overhead
05:25costs? Are you kidding me? It only works because most paying members do not regularly attend. In fact,
05:30Planet Fitness has openly acknowledged their dependence on low attendance rates. In the early 2000s,
05:35some gyms started to add group fitness classes to experiment and try to differentiate themselves.
05:40This marked a major transition point as members who went to the gym started to enjoy the social
05:46and community aspects and not just the solo workouts. And gyms quickly noticed that members
05:51who attended group workout classes were much more likely to renew their memberships. But when did $40
05:57classes as we know them today come into play? Well, noticing this trend of group fitness, boutique
06:03fitness classes started to pop up here and there in the 2010s. And Barry's was actually ahead of the
06:07curve. So the founder Barry J was a front desk employee at a gym. He created his own group class
06:13format that became so popular the gym eventually let him start his own studio. Fast forward and Barry's
06:18Bootcamp as it was originally called is founded in 1998 in West Hollywood, Los Angeles, California. I
06:24say with pride as an LA native. The boom didn't really start until the 2010s during which the boutique
06:30fitness firms experienced a 450% increase in industry growth compared to 5% for traditional gyms and that same
06:37amount of time. Those numbers kind of speak for themselves. Venture capital and private equity
06:41firms start pouring in investment. The average class price climbs from $15, $20 to $30 to $40. And the
06:49industry has not looked back since. So that's how boutique fitness classes came onto the scene. We're
06:54starting to get the picture. Traditional gyms saw that people liked the group workout classes and social
06:59aspects. But boutique fitness studios took it to a whole nother level with this very high quality
07:04experience. But now let's dig in a little deeper to the fun part. The psychology behind premium
07:09fitness. How it transformed my personal fitness journey. And just how these studios have a choke
07:14hold on millions of people. Okay so remember the model for traditional gyms who bet on people not
07:20showing up? The luxury fitness model flips this completely on its head. At a typical gym the psychology
07:25works against you. I only pay $30 a month so skipping today is just losing a dollar. There's minimal
07:30accountability endless options that create decision fatigue. Should I do cardio or weights? Switch
07:35machines? And you're basically paying for access to equipment not an experience. Boutique studios
07:41operate on the exact opposite psychology. They are expensive and it doesn't take a genius to understand
07:48the mindset shift from oh I might go to the gym today to I paid $42 for a 5 30 class this Thursday
07:54I'm going. And you're not just paying for access you're paying for a reserved specific time slot and a whole
08:00experience. It's basically the difference between having a gym membership card in your wallet that's
08:04collecting dust versus having a non-refundable concert ticket. And this total psychological
08:09reversal is completely intentional. These studios know exactly what they're doing by creating this
08:14high stakes commitment device. As far as brand positioning goes different studios leverage different
08:20psychological hooks as well. Berries uses the intensity and boot camp vibe to make you feel accomplished.
08:25SoulCycle taps into the emotional catharsis with their therapy on a bike approach. And SolidCore
08:31emphasizes the science and precision of their method. They're all selling a transformation just
08:36through different psychological doorways. Then there are other factors at play too. The community aspect
08:42creates some social accountability. Seeing the same faces at your Thursday 5 pm class, following your
08:48instructors on Instagram who have effectively become micro influencers within the fitness space with thousands of
08:54followers. But you know what I think is the number one thing that makes these classes so attractive at
08:59least for me? It's the structure. And this is where my personal journey I think really illustrates why
09:05these studios are so effective. For those who don't know, athletics was pretty much the biggest part of
09:10my life besides academics I guess, but for the first 18 years of my life. I was mainly a track athlete,
09:14a sprinter and a high jumper, and then I introduced volleyball later on in high school. But at some point in my
09:19life, I pretty much tried every single sport. And anyone who's ever taken sports somewhat seriously, like you were
09:25on a team in high school or you played a club sport, knows how structured it is. I would go to school and then I
09:30would go to track practice after school, track meets on the weekends, and then additional workouts with my coach
09:35who was telling me exactly what to do. It was completely structured and I loved it. Then came college where suddenly I
09:43wasn't on a team anymore. For the first time in my life, I lacked that organized structure of high
09:48school sports. Yeah, I still cared about being healthy, so I went to Penn's gym occasionally. But
09:52it was college, I was having fun, I didn't have my coach to tell me exactly what to do in my workouts,
09:57and so I completely fell out of a consistent routine. This pattern lasted for about five years,
10:02pretty much all throughout college and into the early pandemic. I'd start a workout kick for a week,
10:07and then stop, and then start again. But the problem wasn't just the lack of structure and
10:11accountability. It was that I didn't truly enjoy what I was doing. Random weight circuits and
10:16occasional runs didn't capture what I loved about athletics. And this isn't just my story. I actually
10:22think this mirrors what millions of former athletes and young professionals experience. We go from
10:27structured environments to being told to just go to the gym. It's basically the same thing as if
10:32someone always had a personal chef and then you told them to just cook something. It sounds spoiled,
10:37and maybe it is, but it's true. Guess what solves those things to a T? Workout classes. After my five
10:44year hiatus from consistent exercise, it was Barry's that got me back into a routine. It recreates what
10:50worked for me as an athlete. A structured, coached environment where each 50-minute session was planned
10:56down to the second by a professional who knows what they're doing. And most of all, I enjoy it. The music
11:01is blasting, the energy is high, and I genuinely look forward to it. And that's the real psychology
11:07of premium fitness. Yes, the investment factor of, I paid for it, so I'm going to show up,
11:12matters. And yes, the community aspect and the instructor relationships help. But what I'm really
11:16paying for is the structure. Having something very well defined for me, having a specific time that I
11:22show up to and lock in for 50 minutes, no more, no less. And then, yeah, I have a fancy shower afterwards.
11:28And this explains why these studios thrive in urban areas crawling with highly paid young
11:34professionals. They're paying for efficiency, a perfectly designed 50-minute workout that fits
11:39into their busy lives without requiring them to plan, design, and actually follow through
11:44with a solo workout. When you look at it this way, $40 starts to make a little bit more sense,
11:49though it's still a lot to pay for exercise. So who exactly is paying for these classes and why are
11:54they priced at $40? Before we explore the target market and the pricing strategy,
11:58I'm curious how much revenue these studios are actually generating. As we always do on the
12:03Taylor Bell channel, let's take a quick look at the unit economics of luxury fitness studios.
12:07Okay, luckily, this is pretty easy to calculate. Here's a map of the last Berries class that I was
12:11at. You can see I was on treadmill number two there. There are 59 possible spots in the class,
12:1511 classes per day. I'd say, on average, each class is about 80% full based off of personal
12:20observations. And I would guess that the average person pays about $38 per class because, yes,
12:25you can get some slight discounts, which I'll tell you more about in a minute. That is $19,730 per day
12:32per studio. Sounds like a lot because it is. To put this into perspective, Berries revenue per square
12:38foot is more than 400 times that of traditional gyms and is on par with higher-end fitness retailers
12:44like Lululemon. I mean, what other business can pack 59 people into a tight space and charge them
12:49$38 to $42 for 50 minutes of their time. Not that many. So the Dyson hair dryers and the $15,000
12:55treadmills are starting to make a little bit more sense. Now, that's just revenue. Berries doesn't
13:00publicly disclose their profit or EBITDA figures because they're privately held. But cost-wise,
13:05I would assume extremely pricey real estate rents given the ultra-premium locations like we're in the
13:11middle of Manhattan, New York City right now. Same with the solid core and soul cycle. Obviously,
13:15instructor costs, fancy amenities, and equipment costs. Even still, industry experts estimate that
13:21Berries operates with a 25 to 30 percent EBITDA margin. That's earnings before certain expenses
13:26are taken out. Compared to traditional gyms, which operate at about a 15 to 20 percent EBITDA margin. So,
13:32very profitable indeed. Speaking of profitable business models based on organization, I've recently
13:37been using something that is changing the game on how I manage my crazy inbox. Notion, the tool that I
13:42already use for all my scripting, organizing, pretty much everything has launched Notion Mail. So,
13:48besides Notion Mail automatically categorizing and labeling all of my emails for me using AI,
13:53let me show you my two favorite features. First, the built-in scheduling tool. Here I am asking myself
13:58for a call to discuss channel strategy. Nice. And instead of switching between a bunch of apps like
14:03my calendar and my email, I can just hit the schedule command and boom. I can send over my calendar
14:08availability as is or I can go through and actually select certain ranges of my availability. Then,
14:13on the other end, they just click one of those times that work for them and boom, the meeting is
14:16scheduled. Second feature I love, the snippets. For emails that I get all the time, Notion Mail
14:21learns my typical responses or I can manually save them just like this and send them in one click.
14:26And since it's built by Notion, it has that clean, familiar interface with all the keyboard shortcuts
14:31that I already know and love. So, you can try Notion Mail for free by clicking the link in my description,
14:36connect your Gmail account. It's currently only available for Gmail, but they are expanding soon.
14:40And thanks so much to Notion Mail for partnering with me on this video. Now, back to our boutique
14:44fitness analysis. We've seen how profitable these studios can be, but who exactly is filling these
14:50$40 classes besides me? Let's take a closer look at the target market that is fueling this luxury
14:56fitness boom. All right, we've already kind of built out an archetype of the type of person attending
15:01these luxury fitness classes. 25 to 45 year old urban professional, above average income,
15:07health conscious, but time limited. Then, as with Erewhon, there are the celebrities. Some of the celebs
15:12spotted at Berry's include Jake Gyllenhaal, Kim Kardashian, Julia Roberts, Jennifer Lopez, David and
15:19Victoria Beckham, Harry Styles, to name a few. But I actually personally don't associate these luxury
15:24fitness classes with celebrities the same way that I do with Erewhon. You're in a dark room, it's not really a
15:30high visibility, see and be seen type of thing. That's just my experience. So how do these boutique
15:35fitness studios target this specific demographic? Largely through its location strategy. They're all
15:41located in densely populated, young, urban, wealthy areas. Even within New York City, they're still pretty
15:48strategically placed. We have berries in Tribeca, Chelsea, NoHo, Madison Square Park, and then a couple
15:54in Upper East and Upper West Side, Downtown Brooklyn, and Williamsburg. And for those who know New York,
15:59those areas are certainly serving the target demographic. On the marketing front, most of them
16:04actually don't do a ton of paid advertising. Berry's is known to take a community first approach
16:09by driving good relationships with its existing clients to drive positive brand identity and a lot
16:15of word of mouth. Their social media strategy though is solid. Again, the instructors at these classes,
16:21most of them or a lot of them are micro influencers within the fitness space, creating fitness content and
16:26helping to foster that community feel. So after a decent amount of the classes, the instructor will
16:31yell out, follow me on Instagram at so-and-so and tag me in your red room selfie. Then there's the iconic
16:36red light post-workout selfie. So the social media strategy is there, but it's all pretty much organic,
16:42smart. As for the brand positioning, it definitely varies by studio. I have to say they've done an
16:47incredible job carving out distinct identities while still essentially targeting the same demographic.
16:53SoulCycle kind of positions itself as a lifestyle brand with the find your soul messaging. SolidCore
16:59appeals to the data and results driven crowd with their focus on efficiency and muscle stimulation.
17:04Berry's kind of split the difference with their best workout in the world confidence. And the diverse
17:09positioning is really smart business. Same price point, different psychological appeal. So now to look
17:14at the pricing strategy and perceived value. $40 for 50 minutes of your time sounds absurd on paper,
17:21but if we closely look at what you're paying for, the calculation kind of starts to shift.
17:25When you break it down, what premium fitness classes like SolidCore, Berry's and SoulCycle are
17:31selling is not just access to gym time. It's a complete experience engineered to actually drive
17:36results. The high quality instructors who know your name, the premium equipment, the built-in community,
17:41and of course the structure. These aren't just random perks. They are carefully crafted elements of that
17:47pricing strategy designed to justify that $40 price tag. You're essentially paying 80 cents per minute
17:53for a professionally designed workout that is pretty guaranteed to make you sweat. Now I should
17:58mention that there are ways to get slight discounts for these classes. I am not paying $40 per Berry's class.
18:03I personally use ClassPass, not sponsored, I wish, which lets you book classes at some of these
18:08studios by using credits instead of paying full price. So through ClassPass, I actually pay $30 for each of my
18:13Berry's classes, which, not cheap, but better than $40. And if you want to try it out, I do have a link
18:18in my description. Again, not sponsored, but you get some bonus credits and we both get a little kickback.
18:23But the $40 price point is also a marketing tool in itself, where they're automatically filtering for
18:28their target demographic, who is more likely to view this $40 price point as a health investment. While not
18:34everyone is in the position to make this investment, obviously, classes like Berry's cater exceptionally well to
18:40those who do. Now, I hope it's clear that you absolutely do not need to go to $40 workout
18:46classes to be fit. You don't even need to spend $10 for Planet Fitness. All you need is yourself,
18:51maybe a pair of running shoes, the ground, and the drive to consistently move. Even I am confident
18:56that if I hadn't started Berry's, I would have eventually found my way back to a consistent workout
19:01routine because around the time I turned 25, I was like, how am I still not consistently working out?
19:07But for those who are down to pay the $40, whether they go multiple times a week and it's their only
19:12form of workout, or they go once or twice a month as a little treat to themselves, or they occasionally
19:16go with their friends as a social thing, it is worth it. For me, Berry's didn't just get me back into a
19:22consistent workout routine. It pretty fundamentally changed my adulthood relationship with exercise.
19:28And the irony is that after spending thousands of dollars on these workout classes,
19:33I have now gained the discipline to work out anywhere. I no longer need Berry's for the structure.
19:38I supplement it with outdoor runs and self-fledged strength training all the time. But I still choose
19:43to go to workout classes weekly because the experience is worth every dollar to me. Okay,
19:47something that I always find interesting when analyzing businesses like this is what's their
19:52future outlook. And as with any business, boutique fitness classes, of course, face their challenges as
19:57well. Similar to Erewhon, which is a luxury grocer, classes like this would also be considered to have
20:02elastic demand, meaning that during an economic downturn, people will become more price sensitive
20:07to services like this. This is the case for luxury things most of the time, because even high income
20:12folks, if they're looking to save a little bit of cash, they can also turn to cheaper alternatives.
20:16Then there's this other offering that in theory could really disrupt boutique fitness
20:20classes, but I actually don't think it's that much of a threat. It's digital offerings like Peloton or
20:25Mirror, which you can do from home. These offerings, of course, took off during the pandemic when people
20:29are at home. And they haven't fully disappeared, but their growth has normalized. And most successful
20:34boutique fitness classes offer both in-person and digital components. So digital offerings will not
20:40replace in-person classes, in my opinion, but just complement them. The thing that I think will
20:44actually pose the biggest threat to boutique fitness classes is market saturation in urban areas.
20:50Parts of Manhattan now have five to seven boutique fitness studios within a five block radius,
20:55like the Berries that we've been filming at is right over there. So with more alternatives entering
21:00the market, there is an increased pressure for these studios to differentiate themselves. This
21:04could lead to higher marketing costs and more aggressive customer loyalty programs to reduce
21:09churn in these competitive markets. But to respond to the market saturation in major metro areas like
21:15LA and New York, I've noticed studios like Berries expand to secondary markets like Nashville,
21:20Austin, Denver, which I think is a really smart move because these cities still have that target
21:25of young professionals with some disposable income. And the real estate costs are lower,
21:30customer acquisition is a bit more reasonable because these markets aren't quite as saturated,
21:34and they can still charge their premium price. So while urban saturation presents its challenges,
21:39it's also pushing these studios to expand strategically. My prediction? I think that these
21:44studios will only continue to grow. A macro trend that I think we've all probably noticed in the last few
21:48years is a huge increased focus on health and wellness. Whether it's health podcasts like Andrew
21:54Huberman's becoming mainstream, more discussion in the cultural zeitgeist around longevity,
21:59the benefits of weightlifting becoming more talked about for both men and women, which makes me so
22:03happy. I do think that these boutique fitness studios really complement this cultural shift that's
22:08happening. Especially for people who don't really know where to start and they have the disposable income,
22:12these classes give you that structure. So while it of course is not necessary to pay for $40 workout
22:18classes, I think that we have thoroughly investigated today why it is worth it for so many people. For me,
22:25boutique fitness classes didn't just get me back into shape. They reconnected me with what I most
22:29loved about athletics in the first place. Structure, community, and the pure joy of intense movement.
22:35And that experience is something that I don't really put a price tag on, even if these studios
22:40certainly do. Have you tried luxury fitness? If so, what do you think? Total ripoff or amazing experience?
22:45Let me know in the comments and like and subscribe for more business case study videos. Until next time,
22:50turtle out.
22:56Is it raining too much now? Do we go under that tree? Done. Yay!
23:03You know how many people were staring at me that whole time?
23:05Oh, over there. Yeah, in the La Colombe, which is a Philly-based coffee roaster and guess what?
23:12I don't really like it. I don't like how it tastes. That's how I feel. Oh my god.
23:18Were there any calves that walked by while we were filming? No.
23:27Cut. It's raining. It's raining.
23:32I hate the gusts. I hate them. I hate them.
23:43Great day to film. Look.
23:50He has little booties. Oh, howdy. If you liked this video, I'd bet my bottom dollar
23:57you'll also like this one. Check it out. Okay. Bye.
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