Sweat It Out: Boutique fitness franchises
Delvin Burton and Charlotte Jones-Burton own a CycleBar franchise in New Jersey and are taking over a second in North Carolina.
Finalists: 9Round, Title Boxing Club, The Camp Transformation Center
While on a Mediterranean cruise in 2015 to celebrate their 20th wedding anniversary, the Jones-Burton duo sampled the workout that would change their lives. “We took a spinning class, because if you’re going to eat a lot you have to work out,” said Charlotte Jones-Burton, M.D., M.S., who is a nephrologist and internist working as an executive for a pharmaceutical firm. “When we got off, we said we’ve got to own one of these.”
Their research turned up CycleBar, which had begun offering franchises in March of that year. Charlotte liked the cause-marketing component called Cycle Gives that was built in to the model. “And we absolutely loved the cycle theater and the DJ,” she said, describing the dramatic, theater-style setting with the “cyclestars” or instructors acting as part educator, coach, DJ, motivator and friend. “We felt that it did tap into not only Delvin’s passion about music but also our values about community and service and philanthropy.”
Delvin Burton is her husband, an educator who kept his consulting gig until very recently, and he loves “the music piece, which I’m fanatical about, passionate about music. I said I would be a DJ in another life,” he said, adding with a laugh, “We have a lot of Beyonce fans among our instructors.”
Reached in January, Delvin is pivoting to full-time operations of their CycleBar in New Jersey and now trying to right a second studio they purchased in North Carolina. “It’s a turnaround situation, so we are challenging ourselves. We think it’s a great location,” in the booming Raleigh-Durham area. He will employ two tactics there that he believes are missing: marketing, and generating a sense of community.
CycleBar features “cyclestars” like this one who pump up the class with booming music and motivational exhortations.
“What I tell people is we don’t run a transactional business. We run a relationship-building business,” he said. “In our particular locations, people come, they know the other riders, they hang out, they get there early, because it’s a place where they can connect with other individuals.”
Delvin said he’s the hard-nosed half of the pair. “I tend to be more cynical. Charlotte gets excited, but I look at situations with a critical eye. We often say I’m the yin to her yang and vice versa so it works out.”
He believes in hands-on research. “To date I have been to 31 CycleBars, and I have ridden in 28 of those,” he said, including about 20 before he and Charlotte opened their studio.
He recommends the approach. “So if I’m going to be part of it, what does it look like elsewhere, and what can I put in place” to either duplicate others’ success or mitigate their shortcomings.
CycleBar is smaller than two of the Sweat It Out category’s finalists, with 122 units in 2018 compared to the largest, 9Round, with 700-plus. But average unit volumes at CycleBar are more than double 9Round’s, $380,000 versus $180,000. CycleBar also shows a sane pace of openings: 35 in 2018 and 63 the year before, compared with 9Round’s 119 and 117.
+ Average sales are double its biggest competitor in this category.
+ A theatrical setting and heart-pumping music set the franchise apart.
- Frequent ownership changes mean the model has been a moving target.
Franchising since 2015, CycleBar offers indoor cycling classes and its best operators aim to build a tight-knit community of diehard fans. Its owner since 2017, Xponential Fitness, has made changes such as shrinking the studio size, boding well for future profitability.
Closings during the 2016-2018 time period are zero for CycleBar, an impressive statistic that indicates careful franchisee selection and then robust support. And its Item 19 includes enough solid information so prospective franchisees can gain a full picture of their profit potential, our research team found. Item 19 for Title Boxing Club and 9Round, by contrast, was skimpy in each instance.
CycleBar is also in one of the hottest franchise categories, fitness, for attracting private equity and other investor interest, and it has the revolving-door ownership structure to show for it. “We’ve been with all the different owners of Cycle Bar. There’ve been three official ownership groups,” starting with the founders and now Xponential Fitness, a strategic owner out of L.A. that has eight brands under its umbrella, from Club Pilates to Row House to CycleBar to Stretch Lab.
Delvin believes Xponential has made improvements to the brand, especially shrinking its typical footprint to 2,200 square feet. Although he bought in before the change, and his own New Jersey studio is much larger at more than 3,200 square feet, he believes future profitability will improve.
Mostly he takes the changes in stride. “In this space, we recognize that change is inevitable, they’re snatched up by private equity firms,” he said. “We kind of operate in spite of. There are things a franchisor will do that will help you—great. There are also things they’ll do that will drive you crazy. You have to be solutions-oriented.”
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