When Eric Casaburi, the CEO of Retro Fitness, was 13 years old, he wanted to join a gym. The problem was, his family couldn’t afford it.
Not one to be deterred by financial circumstances, he took his mother’s advice: “[She] suggested I go work there and get the membership for free,” Casaburi recalled. “Hence my humble beginnings scrubbing toilet bowls, urinal cakes and wiping down sweaty equipment.”
Even at 13, Casaburi exhibited the characteristics of an entrepreneur. As a teen he was a go-getter and a problem solver. And, he was never satisfied, as a budding visionary.
“Eric is always three steps ahead of where we probably should be at this point in time,” said Matt Schultz, the vice president of franchise operations for Retro Fitness, who has worked with Casaburi since the company’s launch in 2005.
At the moment, one of Casaburi’s visions is becoming reality via Retro 2.0, an initiative that will bring a series of evolutions to the franchise. Changes will include the expansion of Retro Fitness into markets like California, Arizona, Texas and Florida; its physical facilities will transform to offer more functional space; and new, proprietary group training programs will be made available. The existing 144 locations will have the option to add Retro 2.0 elements to their current programming.
Retro 2.0 is a part of Casaburi’s drive to update, change and react to the market. Continually evolving is something he believes will help the company stay ahead of the curve.
As Retro 2.0 comes to fruition, Casaburi explained he will draw on lessons learned during his childhood, just as he did when he was a 13-year-old kid yearning for a gym membership. Before his mother passed away, she instilled several key life values that the now 42-year-old entrepreneur believes directly correlate to business success.
You just keep going. You can’t bury your head in the sand. You can’t turn your back on your priorities. These are just a few of the mantras that guide Casaburi as he continues to lead Retro Fitness into the future.
“You Just Keep Going”
When Casaburi trademarked Retro Fitness in 2004, it was a result of his dissatisfaction with the industry at the time. He thought every concept on the market was essentially the same. Each had the same price. Each had the same equipment. Their colors and logos may have differed, but that’s where the differences ended. “Everyone was biting off the same part of the apple,” he said.
So, Casaburi decided to take a different bite. He launched Retro Fitness at $19.99 per month, officially franchising in 2006, just a couple of years before the Great Recession.
When the recession started in 2007, “We became rock stars overnight,” recalled Casaburi. “Because people who were paying $49 per month, they couldn’t afford that anymore. The fact we made it affordable to have a really high-value, great fitness experience at a low cost, [at] that time people thought it was great. We became instant heroes.”
Today, Casaburi is again dissatisfied with the industry. And Retro 2.0 is the result. He explained today’s health clubs are repeating history, striving to take a bite out of the same apple, just as they did in 2004. He referenced the health club industry’s current market penetration of 18 percent, which is far below that of other industries.
“I look at the automobile industry,” explained Casaburi. “They have such a high impact on the consumer. Everyone drives a car that can drive. If you look at fitness, not everyone that can workout is exercising. This is promising for future business, because we have such a large gap to fill. But for me and growing Retro, I needed to shake it up a bit.”
To start, Casaburi referenced Retro Fitness’ expansion plans. Currently, most of its clubs are centrally located in New York and New Jersey, with a handful in 14 other states. He’d like to fill in the gaps nationwide, and plans to grow beyond 700 locations by 2020.
To help in this endeavour, Casaburi hired Rebecca Foth as vice president of real estate. With 14 years of experience at Payless ShoeSource and 13 years at McDonald’s, she will oversee company growth plans and work hand-in-hand with Retro Fitness’ franchisees to facilitate and execute new store openings.
“When I first met with Eric Casaburi and Matt Schultz, they just showed so much enthusiasm and optimism in growing the business,” said Foth. “They are always out there looking for new options that they can bring into the gym experience, so that really excited me.”
Although Retro Fitness plans to grow, it hopes to do so wisely. It internally and externally invests in geographic and demographic data analysis, looking for markets in which its target customers are centrally located. “We don’t look at the industry or look at other industries,” said Casaburi. “Another gym concept might see our [data] and might not be able to attract the same member. But they don’t have the same offerings that we have.”
Like its growth plans, Retro Fitness’ offerings have changed as part of Retro 2.0. Its base membership will still be priced at $19.99 per month, for those who want access to basic amenities. However, members who want more can pay a higher price point, in exchange for access to small group or one-on-one training.
Mike Urti, the vice president of personal training operations for Retro Fitness, explained the idea for the proprietary programs was sparked by its customers’ behavior. “Members of our clubs had dual memberships,” he said. “They would join our clubs for $19.99 a month, pay that, and then go to a boutique studio down the street for $150 a month. We thought to ourselves: Why can’t we keep them inside our facilities?”
The answer was that Retro Fitness’ members wanted quality training, versus just gym access at a low cost. “Now, we’re selling results-driven programs, where members are going to come to our facility for that reason, not just for the low price point,” said Urti.
“You Can’t Bury Your Head in the Sand”
Although Retro 2.0 will bring sweeping changes to the company, Retro Fitness was successful by any standards prior to Retro 2.0’s launch. The company earned $141 million in system revenue in 2015, and currently has 450,000 members. However, because Casaburi is a visionary, he knows the company couldn’t stay as it stood forever.
“I don’t see our success as one thing we have done or one approach we have taken,” said Casaburi. “I see it as a constant evolution that I keep updating and changing. It is this constant evolution that allows us to stay ahead in so many markets and thrive.”
To know where and how to evolve, Casaburi places a huge emphasis on his personal continuing education — but not necessarily in the traditional sense. He attended three colleges, but dropped out to found Retro Fitness.
That is because Casaburi places more weight on common sense, versus formal education. “Most business deals get done in a good conversation,” he said. “For me education started when I left college, when I dropped out. I started really studying what I wanted to learn. I started to learn my craft.”
When Retro Fitness began, Casaburi would spend his mornings at the club, and his lunches at Barnes & Noble. There, he would read books by Zig Ziglar and Anthony Robbins, activities he still does to this day.
Most recently, Casaburi attended the Disney Institute’s Leadership Excellence Program in Orlando, Florida. He sat with leaders and managers from all walks of life, discussing the importance of establishing values and vision within your organization.
Casaburi also takes advice from those that are more experienced than him. For example, at the beginning of his career he was introduced to Fred DeLuca, the co-founder of Subway, at a trade show. DeLuca advised Casaburi to pick his franchisees wisely.
“He was probably the oldest guy on the block and I was probably the newest guy on the block,” recalled Casaburi. “He said, ‘You really want to pick and choose who your franchisees are going to be, because they’re going to be the ones growing your system with you for the next 20 to 30 years.’ Sure enough, I was very fortunate and blessed — I do have a really good group of personalities in my franchisees and our network is really strong.”
For Casaburi, college couldn’t have taught him these important life lessons. “Everything we did [was due] to my being a student of the game,” he said.
“You Can’t Turn Your Back on Your Priorities”
As Retro Fitness evolves as a concept, it will also evolve as a business at the operations level.
According to Robbie Sprechman, the chief financial officer of Retro Fitness, the company has hired nine new members to its corporate team in order to better assist franchisees. “This allows us to get into the clubs on a consistent, monthly basis, keeping the energy and the fire in the employees and cultivating the member experience that Eric intended when he first started this,” he said.
In addition to new hires, Retro Fitness is opening a new employee training center in New Jersey, where 70 of its gyms are located, and plans to open offices in Orlando, Florida, as well.
And as the company evolves, it will continue to learn from its successes, and its failures.
As an example, Casaburi referenced his $50,000 mishap, which occurred when signing the lease to the very first Retro Fitness location. “We had hired a divorce attorney to do my real estate lease,” he recalled. “There was a clause in this lease that apparently nobody read, including the attorney, that said upon sale of the business or transfer of the lease, I had to pay $50,000 dollars to the landlord. It was in black and white.”
Now, Casaburi looks back on the experience and laughs, thinking of the mistake as an opportunity to impart a key lesson. And despite that failure, he said he’s never become risk-intolerant. “I wasn’t afraid to fail,” he said. “I just never was.”
Indeed, Casaburi is no longer the 13-year-old employee scrubbing toilet bowls at a small gym in New Jersey. But at his core, he’s still the same person. “I look at my tenacity [years ago], and it’s the same, but different,” he said. “Right now I’m a more experienced, mature, knowledgeable version of myself way back then. But the passion and the enthusiasm, that really hasn’t changed.”
At the end of the day, Casaburi doubts his passion will ever fade. He and Retro Fitness will continue to evolve and fight off the complacency that can come with success.
“Success is dangerous — it is a narcotic for failure,” said Casaburi. “Success can lull you to sleep, because you get comfortable, you get complacent. You think everything’s OK, and that’s when you get your face punched in.”