Eric Casaburi might be young, but he knows how to create a plan and execute it. At 34 years old, he is the Founder and CEO of Retro Fitness, a 1980’s-themed health club chain that has seen tremendous growth since it began franchising just over two years ago. Today, the company has over 40 locations up and running and close to 80 more in development. With numbers like these, Casaburi must be on to something, and we sat down with him recently to get acquainted and discover what’s driving his success. Text: Kirsten E. Silven; Photography: Andrea Kane
To really understand Eric Casaburi’s growth, it helps to know his story. Growing up outside of New York city in a blue collar family, Casaburi played sports as a kid and developed an interest in fitness at a young age. By the age of 13 he was already working for a local health club – thanks to a work permit his mother obtained. Shortly thereafter, Casaburi even took advantage of a free program the gym was offering and became certified as a personal trainer – before he could drive a car! “I figured ‘Why not?’ I’ve always wanted knowledge and had a passion for fitness in my veins,” he shares.
From early on in his fitness industry career, Casaburi recognized a connection between fitness and nutrition, so he decided to major in Exercise Science in college. “It was still pretty new at the time, and my Dad wasn’t sure it was such a good idea,” he shares. By working in health clubs while attending college in Arizona, Casaburi continued learning the business “in the trenches” before leaving school early to come back to the east coast for personal reasons. By this time, he had learned about sales and the importance of service. “These early learning experiences made me good at what I do. I always truly believed in what I was selling and I used to get really excited every time I had the opportunity to sign up a new member and help them reach their fitness goals,” he says. Back at home, Casaburi took a personal training position at a gym in Staten Island, New York, but pretty soon he was also involved in sales. “I feel like I got into fitness on the right foot and was able to come home and hit the ground running,” he says.
MOVE TO INDEPENDENCE
By 1998, Casaburi was possessed by the entrepreneurial spirit he claims to have inherited from his parents, and started looking for locations to open his own fitness facility. Eventually, Casaburi settled on a location in South Jersey and became a licensee of a popular gym chain. “I always tell my franchisees today that they get to benefit from all the mistakes I made back then!” he says. Despite any early struggles, within five years Casaburi had successfully opened three locations of the gym chain in the area – a move that gave him additional time to learn and ultimately set the stage for what was to come.
Casaburi credits his success as a licensee to the fact that he was systematically studying, improving and teaching his staff everything he learned. “I had so much fun holding training sessions and getting my employees excited about what they were doing!” he says. “I was always spirited and into self-improvement.” Casaburi read books by visionaries like Louis Cheskin, Jim Collins, Michael Gerber, Anthony Robbins and Robert Kiyosaki, and also attended seminars given by experts like Blair Singer. He was always trying to learn new ways to better himself and his business acumen. “As part of my self-education, I also started to profile bigger companies that have been very successful, including Ray Kroc and McDonald’s, Sam Walton and Wal-Mart, and Steve Jobs and Apple, to learn how they made it,” he shares.
There’s no doubt that Casaburi was influenced by what he learned, and as time went on he became increasingly frustrated with being a licensee. He saw the fitness industry evolving and realized that gym owners were going to have to continue to become even more knowledgeable about business in order to stay ahead of the game. “One day I had an epiphany. I thought, ‘Why am I going to keep making someone else’s name popular when I could be doing it for my own company?’,” he says. This revelation came to Casaburi one night as he sat up reading as he so often does after his wife and kids are asleep. “The first question that came to mind once I seriously started considering the possibility of starting my own club was ‘Am I up to this?’,” he shares, adding, “Almost immediately I answered with a resounding ‘YES!’ and that was really the beginning of Retro Fitness.”
Casaburi says that his passion to succeed is what drives him to take action and seek out the tools to facilitate his dreams, and this was definitely true when it came to getting his Retro Fitness idea up and running. After a long night of brainstorming, he immediately contacted an attorney and began asking about trademarking the name and the idea. “This sort of action makes any idea all the more real. I can have amazing tunnel vision when I am passionate about something, which definitely helped me get the ball rolling on Retro Fitness,” he says.
DREAMS BECOME REALITY
When developing the Retro Fitness concept, Casaburi began by asking himself what he didn’t like about being a licensee. He also brainstormed to figure out who his target customer/demographic would be. His customers already tended to come from the mid-20’s to mid-40’s age range – basically Generation X – and Casaburi thought this was mainly because the edgy club atmosphere he had created appealed to them. Next, he asked himself what he liked – not just when it comes to health clubs, but in general. He thought about what marketing pieces had grabbed his attention over the years, and realized that he really loved everything 80’s. From Rubik’s cubes and ‘Where’s the beef?’ commercials to Duran Duran and Aquanet hairspray, Casaburi found that he had a very strong emotional tie to this time period in American history. “The more I thought about it, the more I realized that my generation had so much to offer in great branding lessons! I see it as the generation of innovation, and the branding was so powerful that it can still put a smile on my face 20 years later,” he says.
If his success is any indication, there’s no doubt that Casaburi is on to something. The truth is that many of us think back on those days with warm, fuzzy feelings. It was an emotionally and media-charged time in our country and in our lives, and sometimes it just takes hearing a certain song to bring those emotions flooding back. “I knew branding that powerful could be invaluable in my club, and my ideas came from the heart and have always been tied to the desire to develop a true brand. That’s what will create value ten years from now,” Casaburi says. To accomplish this, he set out to evoke an emotional response from everyone who steps through the door, which is what he told his architect when they sat down to design the first location. The overarching theme is ‘I remember when…’ which is also tied to the low price point of $19.99 per month. At first, Casaburi offered licenses to those interested in opening Retro Fitness locations, but eventually realized that this model would not allow for the level of brand protection that was so crucial to the entire concept, so he decided to adopt a franchise model instead. Upon making this decision, Casaburi hired some of the best franchising attorneys in the country – a firm by the name of Marks & Klein – which specializes in leading complex business transactions and has been instrumental to the success of Retro Fitness. At its most basic level, his company is successful because Casaburi took the time to develop a solid business plan that was tied to great marketing – a feat he says is possible for anyone who is willing to take the time to sift through the mountains of information out there to discover their own kernels of truth.
According to Casaburi, the design elements in a health club need to play into the entire intended member experience. That’s why Retro Fitness mixes 80’s music with the other pop music they play, and why everyone who sets foot into one of his clubs will find fun memorabilia throughout the facility. His unique theme also influenced the design of the Retro Blends juice bar, which was created to resemble a 50’s-era diner, and is even carried through to the 80’s-era movies members will often find playing in the Retro Cardio Theatre. “One club has a life-sized R2D2 and another has a cardboard cutout of Ronald Reagan. People love these extra touches – the little things are often what makes an impression and brings a smile,” he says. You will also find a see-through ‘time capsule’ built into the floor of every club that contains even more fun retro items, like KISS or Bon Jovi album covers, which Casaburi and his staff are constantly scouring the Internet to find. If you find yourself asking what all this has to do with fitness, the answer can be found in Casaburi’s next statement: “We get all kinds of emails and comments from members about our memorabilia. They love the theme of the club,” he says. And we all know that engaged members are members who keep coming back.
To create this type of engagement, Casaburi says club owners really need to become marketing and branding machines, and he acknowledges that, as a whole, the fitness industry has been behind the curve on this until recently. The upside of this reality is that so many opportunities still exist for market differentiation, which is why more and more equity partners are becoming involved. As with so many other aspects of life, hindsight for gym owners can be 20/20, and health clubs are starting to play catch up to other industries. “Franchising has definitely tightened my brand. If you look at other industries with successful franchises, you can see definite brand consistency from one location to the next, and we have followed this model,” he says. Casaburi wants members to feel the same level of familiarity in his clubs that they feel when they enter a Starbucks or other popular chain, because he views it as a testament to successful branding techniques. To this end, everything from one club to the next is virtually identical – from the menu at the juice bar to the equipment that is ordered – all in an effort to meet and exceed customer expectations.
When it comes to service, Casaburi says that too many fitness clubs think ‘service’ simply means saying “Hello” and “Goodbye” as members enter and exit the building. To him, it ultimately comes down to meeting the inherent expectations of the customer, which Casaburi says applies to everything in your club that members can see and experience. “Most people don’t just stare at the floor or at their biceps while they are working out. They look around the club,” he says. This is why he’s made it a high priority in Retro Fitness franchises to keep things clean and fresh, from the locker rooms during high traffic times to the dust bunnies that try to gather in corners. According to Casaburi, service creates loyalty and can make the customer feel as though they are getting a lot for their money.
And when it comes to making sure his members are getting a lot for their money, Casaburi has it down to a science. He wanted to provide members with more bang for their buck, and has done it by appealing to the right market, choosing the right equipment and opening smaller units. “A colleague once said something to me at a trade show that really struck a chord. He said ‘I’d rather have three 10,000 square foot clubs than one 30,000 square foot club.’ and I never forgot that,” he says. This advice can be seen in the Retro Fitness business model, which leaves no room for wasted space in their 10-14,000 square foot clubs – a feature that allows Casaburi to pass savings along to members and helps the company hit their ultra-low price point.
It’s important to note, however, that Retro Fitness prides itself on having high-quality custom finishes in spite of low membership rates. “I didn’t just want to buy the cheapest equipment at the cheapest price – quality is very important to me, so I focused on getting the best of the best as my vendors” says Casaburi, who spent years perfecting a formula that keeps membership rates low and club quality high. While much of the information surrounding how he’s managed to do this is off limits, he will say that it is imperative to view your relationships with vendors as partnerships. By this, he means keeping the lines of communication – and more importantly negotiation – open. Club owners should never think they are already getting the best deals they can get – especially if there is a large equipment order in the works. For Casaburi, the payoff for consistently negotiating better prices has been the ability to reach members who can no longer afford the membership prices at more expensive clubs – a fact that makes Casaburi beam with pride. According to Phyllis Dannin, Vice President of Sales for Life Fitness, the company that custom builds all of his equipment, Casaburi came to them with a real vision to develop his brand and was very committed to it. “He not only understands the fitness industry, but he is extremely well-read and has looked at other companies outside of the industry to learn what made them successful,” she says. Both Dannin and Casaburi talked about the importance of honesty and open communication between club owners and vendors, which has helped them work together to overcome challenges.
Retro Fitness is set up to help franchisees succeed and has developed a proven system to make that happen. From picking out real estate to managing debt service, every detail has been thought of and the business model incorporates the knowledge gained from both good and bad past experiences. In the Retro Fitness system, Casaburi and his team strive to offer everything someone would need to know to be successful – even if they know nothing about the fitness industry. Every new franchisee receives 16 hours of education from Retro University right out of the gate, along with opportunities for continuing education. Casaburi says that no phone call or email goes unanswered, adding that the attitude in the corporate office dictates that there are no bad questions and every question or problem that could arise presents a new learning opportunity.
“The profile of what makes a successful franchisee today is very broad, but I think it’s most important for franchisees to realize that they can’t come in and just do their own thing – they have to learn how to grow within the successful model that’s already there,” says Casaburi. The overarching reason behind this kind of thinking has to do with quality control; the sameness of each location is the foundation of the business model and is designed to be a win-win-win for the member, the franchisee and the company. Casaburi urges prospective franchisees for any company to take the time to do their due diligence before entering into an agreement, adding that it is just as important to understand the systematic approaches to running a business as it is to understand how to run a gym.
When it comes to sizing up his competition, Casaburi says he feels the most heat from other successful franchise models like Starbucks, Subway and FedEX, to name only a few. He sees them as ‘competition’ even though they are outside of the fitness industry because they have perfected what he likes to call “experience conditioning” which basically means that their customers get the same experience regardless of variables like location and demographic, which is exactly what Retro Fitness strives to do.
As strange as it may sound, the current state of the economy may actually be helping certain business models to succeed, and Retro Fitness seems to have found a place among them. By offering a high quality club experience at a lower price point, the company has been able to attract members who can’t afford the higher dues of many larger clubs as well as members who might be able to afford higher dues but don’t use the ancillary services many of the larger clubs offer. Casaburi still sees much opportunity for growth in the industry, citing the fact that under 20% of adults in the U.S. currently belong to a health club. Due to the state of the economy, he sees the largest opportunity for growth right now in low-cost and high-end providers, adding that if we were the auto industry and only 15% of the population decided to drive a car, most of us would probably still be forced to travel by horse and buggy!
Casaburi says he learned his core values from his mother, who was a “stay at home workaholic” and taught him to meet important tasks head on and gave him a sense of what was important. Ever since he lost his mother to cancer when he was only 16, Casaburi says he has felt as though there is an angel on his shoulder because he always seems to be in the right place at the right time. “Most of the obstacles we face every day are nothing compared to what some people are forced to go through – my workdays aren’t hard, they’re fun!” he says. He also urges other club owners to get a bird’s eye view of their club instead of a ground-level view. Too many club owners forget to think about where they want to be in five years because they are acting like an employee instead of an owner. It is easy to get caught up in the day-to-day operations, but it really makes sense to pay someone else to sit behind the front desk. Club owners should strive to create a situation that allows them to focus on studying and figuring out smarter ways to run the business. “Two sentences that you read somewhere could wind up saving you $50,000. Have lunch with your accountant and your attorney and discuss ways to save time and money to improve your business,” he says.
These days, Casaburi is busy with a whole new chapter for Retro Fitness. The company recently partnered with Lake Capital, a Chicago-based private equity firm that invests exclusively in service-based companies, and plans to use the capital and strategic resources provided by Lake Capital to continue nationwide expansion and growth initiatives. “We scheduled a meeting and interviewed each other, but at the end of the day it comes down to the people, and I felt good about the decision. We are focused on well-executed, well-studied growth, and we think through every decision we make,” he says. Which sounds to me like words of wisdom we can all live by.