Despite inflation, Americans aren’t giving up the gym. Crunch Fitness CEO Jim Rowley discusses strong growth, value-driven expansion and what the future holds.
00:00Despite pricing pressures and economic uncertainty, many Americans are still, of course, hitting the gym.
00:06And Crunch Fitness is seeing strong growth as people continue to prioritize health and community.
00:11The company now expanding nationwide with a value-driven model.
00:14And joining us now to talk all about it is Jim Rowley.
00:17He is CEO of Crunch Fitness.
00:18Jim, welcome.
00:19Nice to have you here today.
00:21I appreciate you having me.
00:22Jim, how do you define value in the gym space today?
00:26What does that mean to you?
00:27Well, I think it's really about affordability, right?
00:31So there's extremes in the fitness business.
00:33You can pay as high as $250 a month for a membership.
00:38The mid-range, we call kind of that $50 range.
00:41And we'd like to price point from an affordability standpoint anywhere from $999 to $29.99 to make it affordable for anyone who wants to join Crunch.
00:50What do you think ultimately makes a gym model like yours, a membership model, a bit more resilient than maybe luxury gym models that a lot of cities and communities have?
01:02Yeah, I've been in this industry for three decades.
01:05And everybody asked about this resiliency and so forth.
01:09And I think that it's really about kind of the consumer awareness around the benefits of health and fitness.
01:15You know, the mid-20th century was the information age.
01:18And I believe we're living in the health information age now.
01:21There's much more information shared around the benefits of nutrition, supplementation.
01:27You've got TRT, peptides.
01:30You've got GLP-1s.
01:32You've got hormone therapy and, of course, wearables.
01:35So all of this information around health now has, I think, illuminated it for people that if they want to have longevity in their life, if they want to increase not only their lifespan, but their health span, that exercise is the key component to all of those things I mentioned.
01:51And if you can do it from an affordable standpoint, it gives access to that many more people.
01:57Jim, I actually hadn't planned to ask you about GLP-1s, but I'm glad you mentioned it because here on Wall Street, there's a little bit of a split consensus.
02:03A lot of people seem to think with a proliferation of GLP-1 type offerings, that might encourage people to sort of indulge in snack foods in the future.
02:13It may encourage them to disavow snack foods and things like that in the future.
02:18How do you see GLP-1s impacting the broader health awareness space, but specifically your work with crunch?
02:24Look, I think if it gives somebody an appetite suppressant, right, so they can lower their calories.
02:32We believe in calories in, calorie out as a way to lower your BMI, to lower your weight, if that's your pursuit and so forth.
02:43We're seeing benefits with the heart, cardiovascular aspects and so forth.
02:47So for us, we believe it's something that might propel more people into the fitness industry because the one component that doctors will say, big pharma will say, you've got to exercise while you're on these GLP-1s.
03:01So it brings awareness to your nutrition, to your calorie consumption, but it should also bring awareness that you have to strength train so you avoid muscle wasting while you're on the GLP-1s.
03:13But look, if that becomes a component that gets people excited about going back to exercise, we're here for it.
03:21During times of economic uncertainty, a backdrop of a macro economy with shifting pricing pressures, inflation concerns, Americans more and more concerned about their ability to find a job if they need one.
03:33When we have cycles like this, how do you see membership behavior shifting?
03:38So we've seen membership moving, actually.
03:45Our sales have been fantastic for the last several years post-COVID.
03:49Now, we've opened nearly 500 gyms now.
03:52We've got nearly 3.5 million members.
03:55So we continue to see growth in terms of membership.
03:59But what we're also seeing is this change about what the expectation is that members are looking for something that's not just about the aesthetic of exercise, but about the longevity.
04:10And that includes mental health as well.
04:12So our group fitness classes, where they come together, 25, 30, 50 people, and they're taking classes, both high cardio classes, high intensity interval training classes, but also classes that focus more on stretching, mat Pilates, mindfulness.
04:29We've got sound bath classes, and things like that, so again, you go back to the age of information, now we have the health information age, all of this kind of circulates around this idea of exercise, but it's physical health, physical well-being, nutrition, supplementation, but also the mental health.
04:49So everybody sits in the parking lot and is like, oh, I have to go work out, right?
04:54It's this, it's almost a drag me to the gym for a lot of people.
04:58But when they leave, everybody is full of adrenaline and endorphins and dopamine and all the benefits, right?
05:05So we just encourage people to get in there one step at a time, just move on the treadmill, move on the equipment, take a class with your peers as well.
05:14The other thing that's great about crunch is our consumers come from about three-mile radius of the gym, whether it's their work or their home and so forth.
05:23So you're really working out with your community, the people you see at the bank, at the grocery store, at the movie theater, and I think that's why crunch is so popular.
05:31It's this micro environment of your community, and we get motivated by seeing people that are working hard in the gym as well.
05:39So there's so many benefits, not just physical, but mental.
05:43The fact that you did something, that you accomplished something good for yourself, I think is critically important.
05:49And with all the anxiety that's coming, look, we're all facing it.
05:53The divisiveness, the government shutdown, whatever you want to point to, right?
05:58It creates tension.
06:00It creates an energy.
06:01And we believe that exercise is a way to release that energy.
06:05Are you and the team approaching things like digital or streaming offerings for fitness goals versus more of a footprint model where people actually physically are walking into your locations?
06:17Yeah, so we've got a hybrid model, really.
06:19So we've got Crunch Plus where we've got a digital environment where people can participate for even lower than our membership costs.
06:27And they can take our group fitness classes, the wellness classes, the mind-body classes I talked about are afforded on our digital platform as well.
06:36Our equipment leans in with the ability to track the wearables.
06:40So many of the wearables that you see out there can be tracked on the cardio equipment and so forth.
06:45So we really kind of lean into this from an equipment purchasing standpoint, from a digital footprint standpoint, and just encourage people.
06:52Again, whatever the source of motivation is, if that Garmin watch or the Apple watch or Whoop, whatever it might be, if that motivates you to take more steps in a day, to burn more calories, just to move, we want to integrate that into the Crunch brick and mortar as well as our digital platform.
07:12Jim, there's no doubt that January, I'd have to imagine, is the busiest or at least one of the busiest times of the year for you.
07:18New Year's resolutions, people packing on maybe a few extra pounds for the holidays.
07:22But what does Q4 look like?
07:24What does it actually look like inside Crunch Fitness from now until the holidays?
07:28Are there things you're trying to actively do to get people to adopt this and make it so it's not so much just a New Year's resolution that's easily to drop, but that this is much more about a lifestyle that people in your communities can commit to for the long haul?
07:41I love that question.
07:42It's one of the best questions I've ever had.
07:44I think it's smart.
07:45So we're focusing on a campaign that's going to start in December that says results over resolutions, right?
07:52So not just this one time.
07:54And I don't want to bash resolutions because if that's the catalyst for you to get started, more power to you.
08:00But again, we want to focus on results over resolutions.
08:04And those results can come over a long period of time.
08:06So in December, you'll see a campaign around that.
08:09It'll lean into January and February and so forth.
08:11I'm really focused on our personal training, our Crunch One kickoff, which is free to our members to really help accelerate or jumpstart this January resolution idea.
08:22So it's really about that.
08:24But it's a really smart question because between Halloween, Thanksgiving, Christmas and Christmas holidays and the New Year's, the average American gains about 10 pounds, right?
08:37So we're, you know, the weather's changing, the time change, it's getting colder.
08:43We have a lot of comfort foods around us.
08:45Our calories go up.
08:47We tend to wake up in January and we're 10 pounds heavier than we were, you know, the quarter before.
08:53So our fourth quarter has started off really strong.
08:56November's off like a rocket ship already.
08:58So we're encouraged by the participation levels we're seeing.
09:02Jim Rowley is the CEO of Crunch Fitness.
09:04Congratulations on all of the growth, the expansions, the sales for the quarter.
09:08Thanks a lot for being here and all the best with those Q4 goals and beyond, Jim.
Be the first to comment