Perfecting Your Profits
Over the years, health clubs have transformed into full-service businesses. Many gyms have become a one-stop shop for all your health and fitness needs. While this is convenient for members, it is also beneficial for club owners and operators.
Gone are the days when gym revenue is solely dependent on membership dues. Now there is a plethora of ways to earn extra income for your club, such as offering personal training, tennis, physical therapy, a pro shop, aquatics programming and more.
For Greenwood Athletic and Tennis Club in Denver, Colorado generating ancillary revenue is a priority. According to Paula Neubert, the general manager at Greenwood, the club strives to earn 60 percent of its revenue based on membership, and the other 40 percent from non-dues revenue.
According to a 2011 study, the top method to generate ancillary revenue, besides membership dues, was personal training. This has proven to be true for Greenwood Athletic and Tennis Club. It earns 2.2 million each year through personal training services alone.
Greenwood Athletic and Tennis Club offers a variety of personal training programs — from private sessions, to partner training, to small group training. The club promotes personal training services by including a meeting with a trainer as part of the new member onboarding process.
“This helps create a relationship with the trainer and new member,” explained Neubert. “In addition, we have a dedicated sales and retention manager. Part of her role is to act as a member coach and meet with any member, new or existing, that needs some assistance in getting engaged in the club. Many times the meeting ends with the member involved in a small group training class.”
In 2014, Greenwood’s penetration rate for personal training was 22 percent for members 18 and older. According to Neubert the program’s success boils down to the trainers. “You need qualified, hard-working, dedicated, motivated and inspired trainers that are led by someone who possesses the same characteristics and advocates for them to continually be provided with the tools they need to succeed,” she said.
Neubert explained that offering various services, such as personal training, changes the entire dynamic of the membership. “The member feels more connected to the club, to their fellow members and helps keep them accountable,” added Neubert. “This accountability keeps them coming and therefore helps them see the results they desire. When a member gets results, we have a happy member.”
If you are looking to step outside of the box when it comes to your revenue sources, there are numerous other profit centers to invest in.
Chances are, most of your members are health conscious. They not only exercise but they also attempt to eat right. Appeal to their taste buds by opening a juice or smoothie bar inside your facility.
In 2010, Gainesville Health and Fitness opened Zwurly’s Smoothie Bar inside its facility. “We decided to open a smoothie bar because, for years, we leased space in our lobby to outside companies and smoothie franchises,” said Dan Ackerman, the café manager. “This worked OK, but it left us wanting. We knew that we could offer a higher level of service, as well as top-shelf products.”
However, when opening a smoothie bar, there are a few key elements to consider, such as what to sell and at what price. Upon opening Zwurly’s, the club started by modeling pricing after similar businesses with comparable products, but once they acquired enough of their own data, they refined the prices based on sales and traffic.
According to Ackerman, determining what to sell was a challenge. “Anyone can make and sell a strawberry-banana smoothie, and we do, but given the level of expectations of our members, we also had to be ready and willing to innovate,” he explained. “We had to create smoothies, like our ‘Pineapple Recovery Smoothie’ that no one else in the smoothie or health club world was selling. Those products have proven to be home runs.”
Zwurly’s and its unique smoothie creations have been a huge success for the club. Ackerman explained the member response has been overwhelmingly positive. “Several of our members have joked that Zwurly’s should be renamed Cheers because of how many regulars we see hanging around the counter and how many people are able to walk in and order ‘the usual.’”
Ackerman offers a few pieces of advice for those considering taking on the smoothie bar challenge. “Food costs can, and will, get out of control if they are not monitored regularly and should never exceed 30 percent of total smoothie bar revenue,” added Ackerman. “It is also imperative that an owner or manager review the sales numbers each month and not be afraid to raise or lower prices, kick unpopular items off the menu and introduce fresh, new products on a regular basis.”
Each UFC Gym franchise also features a juice bar, which it calls the Arm Bar, as well as other profit centers including the Gym Store, which sells apparel and workout gear. The company employs two buyers who help determine what to sell.
“The two of them are in touch with our members, team members and our vendors to deliver high-quality products that our members really want,” explained Derek Gallup, senior vice president of fitness and retail at UFC Gym. “Pricing is determined by being keenly aware of how products are priced in our markets and online so that you can be competitive, but still deliver on the need for the business.”
According to Gallup, both the Arm Bar and Gym Store have not only proven to be important sources of non-dues revenue, but also enhance the overall member experience.
“These services are what make the experience at UFC Gym unique and different,” explained Gallup. “The Arm Bar has become a really great place for members to properly refuel, hangout and share stories of their workouts. People also love to wear apparel that looks great and depicts something they are proud of. Our members love donning the UFC Gym logo to wear both in and out of the club.”