Once crumpled, Crunch Fitness powers back
Ben Midgley was president of Planet Fitness and now is CEO of Crunch Franchise, where classes include "Chisel It," "The Ride" and even "Boing with Kangoo," which involves bouncy shoes.
Crunch Fitness has emerged from a checkered past that is equal parts sexy and sad.
Originally branded as a high-end fitness studio in the late 1980s, its formative years included shows on cable TV, energetic DVDs sold at big-box outlets and the first-ever stripper pole classes that shocked the eyeballs out of plenty of grandmothers in what now seems like sweeter, simpler times. That sweat-fueled party came to an end in 2009, eight years after Bally Total Fitness acquired the brand, when Crunch filed for Chapter 11 bankruptcy protection.
Eight years after emerging from bankruptcy, the Portsmouth, New Hampshire-based chain is finding success with a lower-cost, higher-volume model that originated from parent company CEO Ben Midgley, who came to the brand in 2010 after serving as president of Planet Fitness. While he may be using a similar playbook at Crunch, he asserts the “low-cost, high-value” space is both a perfect fit for multi-unit franchisees and the brand’s post-Bally’s investors.
Reflecting on its edgier days, Midgley said Crunch used to be “very boutique-y, edgy and more of a marketing-based company” compared with the numbers- and value-driven concept it’s toned itself into. The brand is now seeing rapid growth in a much more mature, increasingly competitive franchised fitness industry.
Big gym socks to fill
“It seems competitive, but not really as much as you’d think,” Midgley said of the U.S. fitness industry, which he estimated has grown to approximately 32,000 clubs and $26 billion in annual revenue. He pointed to the fast-casual restaurant world as evidence that white space remains in this country’s fitness market, even with so many competitors.
“There’s over 300,000 quick-service restaurants in the U.S. now, and it always amazes me when a new pizza or burger place opens,” he said. That logic, as he explains it, means there’s plenty of room for additional clubs, as long as the company strikes a value-focused chord that resonates.
These days, Crunch is known for the standard lineup of spin machines, treadmills, weight training and battle ropes, but it also offers add-on group classes that are attracting a disproportionately female customer base that is padding the bottom line of its franchisees.
So-called Peak members pay a higher monthly fee, and are eligible for tanning services, guest passes to bring a workout partner and access to its online fitness and nutritional programs including videos that are notably less amusing than what Midgley calls the brand’s “big socks” videos of yore.
Group classes include “Chisel It,” “The Ride,” “Mind Body Burn,” “Cardio & Dance,” and “Something Different” that ropes in pole-focused routines and “Boing with Kangoo” bouncy-shoe classes, which are bound to be fodder for internet laughs like '80s-era aerobic videos are today.
With a long career that began with cleaning machines at Gold’s Gym in Santa Barbara, Midgley has seen his fair share of changes sweep through the industry. As exercise fads continue to come and go, he directs his team to pay close attention to what’s hot and fading in fitness, and continually tweaks its offerings to match.
Beyond group programming, Midgley said the two biggest fundamentals in this low-cost fitness space are proximity, convenience and cleanliness. “That’s honestly 50 percent of your success,” he said. “Health club users tend to go to the place they feel the most comfortable.”
After breaking through the 200 club mark last year, Crunch now has more than 60 franchisees—and it’s moving into second-tier cities like Little Rock, Arkansas, and Charleston, South Carolina, and outside the country to Canada and Spain, where the brand partnered with soccer star Cristiano Ronaldo for its CR7-branded locations.
Here at home, Crunch grew its member base by 42 percent during 2017, with hopes of eclipsing the million-member mark later this year. That milestone is a far cry from the brand’s darkest days, when Crunch had fewer than 75,000 members.
All-in investment for a first Crunch Fitness ranges from $1.2 million to more than $2 million in higher-cost urban locations. Average unit volumes range from $1.4 million to $1.9 million, Midgley said, for larger locations open longer than 24 months.
Up against larger systems with hundreds of franchisees, Crunch has intentionally been cautious about adding franchisees even as it grows. Midgley said he’s looking to accelerate the brand’s unit growth, but do it with a relatively smaller number of franchisees—what he calls “staying small to grow large.”
“Without patting ourselves too much on the back, the way we’ve structured everything has put a good wind at our back in terms of getting into what most would consider a crowded industry,” he said.