Crunch Fitness

Fitness has drastically evolved over the past 20 to 30 years, but nothing has helped that evolution more than the emergence of group fitness. Whether you want to trace its inception into the industry with aerobics or Jazzercise, one thing is for sure — Crunch Fitness jumped on the bandwagon very early.

Founded in the late 80s in New York City, Crunch Fitness was established on the principles of group exercise. Today Crunch Fitness maintains the same devotion to group fitness, but like the fitness industry, it has evolved to stay relevant to members worldwide.

A major portion of its relevancy came when Keith Worts, the CEO of Crunch Fitness, came aboard in 2006 after Angelo Gordon purchased the brand from Bally Total Fitness. Worts grew up in New York watching the Crunch Fitness brand develop into a fitness phenomenon, but when he came aboard he realized that for growth, it was going to take a lot of work.

In addition to the purchase by Angelo Gordon, New Evolution Ventures also purchased a stake in Crunch Fitness. The mission was to grow Crunch Fitness corporate in its previously existing markets (California, Miami, New York City), but also launch a franchise model that would allow for international growth.

Worts’ experience was perfect for opportunities at growing clubs. After college he received his master’s degree in Health and Fitness Management at the University of Connecticut. Following graduation, he accepted a job for the Fitness Company which had about a dozen locations in the metropolitan area and Washington D.C.

“I worked in fitness for about six months, then I was promoted to be a general manager at a club we were opening up at the northern end of Times Square,” said Worts. “This was back in the early 90s. I worked with the Fitness Company for about 10 years. We grew from 12 locations to about 80 and we were on the Eastern seaboard, from Boston down to Miami. My responsibilities grew from a general manager to an area position to a regional position that I held until 2002 … I oversaw 17 clubs between Philadelphia to Boston.”

Following Worts’ departure from the Fitness Company, he began working for a start-up company called SpaCapital, buying up day spas across the country.

“This was a company that was part of a private equity fund,” Worts explained. “I was the third employee and we had zero locations. A year later we had 1,200 employees, 24 locations in 14 different states. We got our revenues up to around $40 million and we sold the company three years later.”

After the selling of SpaCapital, Worts took some time off, but found himself setting up to enter Crunch after its purchase by Angelo Gordon.

“A friend of mine was interested in looking at Crunch,” Worts said. “Crunch at the time was owned by Bally’s, and Angelo Gordon was looking at purchasing Crunch at the end of 2005 from Bally’s. I was part of a group of people that were helping with the due diligence and looking at the brand. Angelo Gordon ended up purchasing Crunch from Bally’s in January 2006. That’s when I became an employee of Crunch. My first role was chief operating officer.”

Worts held the position of COO for about four years until 2010 when he was announced as president. In January 2013 he was promoted to CEO.

“Being in New York all my life, I was always impressed with Crunch and how they separated themselves from the competition,” Worts explained. “They were always known as a unique and fun brand. They were kind of out there. It was interesting to see this business that didn’t really act like a traditional fitness business. It acted like a fun place to build community, to work out, and they are really kind of different. That’s what really drew me to it, and I’ve been fortunate to be here seven and a half years.”

Having worked in the fitness industry in New York, Worts had friends over the years that would go work for Crunch for a multitude of reasons. Not only was it a unique and fun environment to work in, it also possessed an edge to its programming that hadn’t been seen in the industry.

IMG_1908“With employees that come on board with Crunch, we put an emphasis on having a fun and an innovative culture,” Worts said. “When you put that out there, what happens is you tend to attract an employee that’s passionate about health and fitness. If your employees are passionate about your brand, your members are going to become passionate about your brand, and that’s what we see here at Crunch.”

The Crunch Fitness brand has been evolving for almost 25 years. With its name and corporate growth opportunities, the Crunch team felt it could amp up growth even further with a franchise concept.

“We felt like we had something unique that would attract interest outside of not only New York, but the other markets we had served at the time, which were really San Francisco, Los Angeles and Miami,” Worts said. “We decided it made sense to take our brand across the globe as we were having the success here in these urban markets.”

Worts and his team felt that if the brand was having success in the urban markets, why couldn’t it exist outside those markets? They felt they had a compelling reason to try, and their inclinations proved positive in moving to a franchise model that would spur quick growth around the world.

“What we’re finding is, our brand is succeeding outside these major markets, and working in places that a lot of people didn’t think it was going to work,” Worts said. “It’s been a good decision and we’re happy we did it.”

The franchise model has allowed Crunch Fitness to experience multiple pricing models from $9.99 to $19.99 in the franchises, and $69 to $99 in the corporate models.

“We’ve worked on creating more separation between our higher-priced clubs and our lower-priced clubs,” Worts said. “As an example, at our higher-priced locations we offer towel service, Bliss products in the locker rooms and an assortment of 25 different classes that have 80-100 classes per week on our group fitness schedule. In a way, it’s forced us to separate a little bit and it’s made our higher-priced offering that much better.”

The $99-priced model gives Crunch Fitness’ members access to every location nationwide. In the next five years, that could be a lot of opportunities for fitness throughout the U.S.

“Ben Midgley has done a great job of getting our franchise business off the ground,” Worts explained. “Today (August 5, 2013) we’ve got very close to 250 franchise locations sold. That business has been up and running now for just about three years, so he’s done a great job of getting this thing off the ground. By the end of this year we should have 75 open, and by the end of [2014] there will be between 150-200 franchises open. Within five years we should be somewhere around 1,000 worldwide.”

The franchise model has already started to expand outside the U.S. with four locations in Australia. However, according to Worts, that’s just the tip of the iceberg.

“I expect to see that franchise business take off,” he said. “It’s a little bit easier to set up [franchises] rather than having ownership in foreign countries. I think for the corporate locations, in particular the higher-priced locations, I think we’ll continue to grow in the markets we are in today, and other markets here in the U.S.”

There are so many aspects of Crunch, according to Worts, that make it easy for people to grasp onto fitness, regardless of nationality.

“There is something about our ‘No Judgments’ tagline that attracts people,” he said. “There is something about our logo that draws an interest at first glance. From there, as people work their way into our gyms or our presale offices, our teams are doing a good job of describing the atmosphere, our clubs are doing a very good job of holding up our brand and being strong ambassadors of our brand — because, the larger you get, the biggest concern is, do you lose touch with what got you where you are today? I think our franchisees and our corporate-owned locations are doing a good job, along with our back office of supporting that ‘No Judgments’ philosophy.”

The four successful clubs in Australia, according to Worts, have been able to maintain that same level of consistency seen from Crunch in the U.S.

“With a country like Australia, I think it’s a fit country, people are genuinely interested in taking care of themselves and there’s a lot of growth in the health and fitness arena in Australia,” Worts said. “We are happy to be a part of that.”
Worts believes the member experience is what differentiates Crunch from other fitness facilities.

“There’s this feeling that they have that’s very positive and it goes beyond the benefits of exercise,” he explained. “They had a good time working out, which not a lot of people do when they walk into a more traditional gym. There [are] creative classes we have going on, so there’s this feeling that people have when they leave: ‘That was really fun. I had a great time.’ Whether it was with a trainer or a class, or just working out on a treadmill.”

The final piece to the puzzle for Crunch’s success, according to Worts, has been the logo.

“To me, when people look at it, it’s interesting,” he said. “It makes people take a second look and go, ‘I wonder what that is.’ We’ve got this cool sort of brand we’ve developed inside of our gyms, but I think we can take that and go in some other direction with this. As we refined it in 2007 we softened the edges a little bit, the logo was purple, it was yellow, it was a little harsh when you looked at it — so we felt like we needed to modernize it.”

IMG_1870After Crunch softened the edges it brought fourth a more modern color scheme that matched the new millennium, as opposed to the late 80s.

“We allow a little more colors that will flow better into our logo,” Worts said.

The transition of the logo wasn’t the only modern step that Crunch has made. It’s quickly looking into the future of fitness and how people could continue to benefit from a gym membership even outside of the club. A digital movement, removing the need for four walls, is the current mission of Crunch, alongside franchising. Although the company understands the need for the four walls, its purpose is to allow members to bring the Crunch experience with them wherever they may be.

“We’re working on some things now with licensing our name, and also the digital world, where we’ll be able to take some of our Crunch experiences and bring them throughout the world, not necessarily within the four walls of a gym,” Worts explained. “If you’re a traditional operator, where you don’t really have a strong brand, I don’t think you can really do those things. I think if you offer something that’s unique and different, people will find interest in it. That gives you the potential to do something more than just your traditional business that you see in this industry.”

Crunch Fitness is beginning its digital dynasty with iCrunch, a member portal that gives members the ability to receive benefits beyond the traditional membership.

“iCrunch allows you to track your visits and your usage, gain Wi-Fi access in all of our gyms once you’re logged onto iCrunch, giving you access to passwords that allow you to log on to free Wi-Fi,” Worts said. “It allows you access to our Crunch app that we launched four or five months ago. That app allows you to check into our locations using your iPhone or another PDA. It allows you to reserve fitness classes with your fingertip. So, if you wanted to reserve a class tomorrow, your favorite Spin® instructor is on, you can do that through iCrunch. You can reserve a specific bike in a cycling studio. Those are some of the benefits of our iCrunch portal.”

The digital infrastructure not only will help when adding more members throughout franchises, but it also stays in concert with the corporate facility demographic. Since its inception, Crunch has leaned heavily on a different type of fitness enthusiast — one that enjoys exercise, but also strives to challenge the status quo.

“We’ve grown in New York and we’ve grown in San Francisco in our corporate clubs,” Worts said. “Mostly because we want to create a cluster. Our regional teams can support our locations better if they are clustered together. As an example, I can get around to 10 or 12 locations in New York City if I wanted to. It’s interesting because a city like New York, or a city like San Francisco, as most people know, there’s a different feel to different parts of the city. The Upper West Side in Manhattan is a lot different than the Lower East Side. We have success in our locations in the Upper West Side where the demographics are 40 and 50 [years old], more family oriented. And we have success in the Lower East Side where it’s primarily built on younger students and graduate students that are in their 20s around NYU.

“We also have success in suburban California with high-priced gyms, [where] the market is similar to that of the Upper West Side — it’s a little more affluent, the age skews a little bit older, but getting back to the like-minded people and having a convenient, clean gym all plays into that,” continued Worts. “It’s been fun to see how the ‘No Judgments,’ and how the perception of what Crunch is, how that translates to different people in different markets — that’s been one of the more interesting things I’ve seen in the seven years that I’ve been here.”

That being said, Worts continued to explain the necessity of curbing the marketing to present a slightly softer tone for different markets. However, even where softness occurs, Crunch still strives to maintain a certain edginess to its marketing.
By truly having a marketing mission, but understanding how to bend its message to attract certain demographics, Crunch Fitness has been able to grow its corporate locations, and rapidly expand as a franchise. Additionally, it’s the branding and the slightly off-kilter exercise marketing that allows it to attract forward-thinking individuals around the world, regardless of demographic.

By Tyler Montgomery

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