Open/Close: Title Boxing Owners Grapple With Second Shutdown
Many Title Boxing clubs moved classes outdoors, including this one in Owing Mills, Maryland.
"We're kind of in one of the hotspots right now," said Reggie Orchid, co-owner of two Title Boxing clubs in the Houston area in an interview last week, after spiking COVID cases there prompted Texas Gov. George Abbott to close bars again June 26.
"Our last month we were right at 25 percent down" in revenue, he said, which is a break-even proposition. As of July 14, "we're 37 percent down. It will become negative cash flow if it continues this month."
After a "tremendous" amount of leads for new members when gyms were allowed to open May 18, the second increase in cases caused leads to "I don't want to say dry up but slow down." The ability to close on the leads has dropped from 75 percent to 40 percent.
Lurching from closures to openings to closures is tough. "With the reopening, we're Americans. We want to see finish lines for things. So we're reopened, we're done," is how he explains the country's collective attitude. However, "Houston has a very conservative judge that really wants to lock down. I think people are a little shy to buy, knowing that's quite possibly the next step."
Orchid and his business partner took quick action in March, the first lockdown. "We were really first responders in switching to a virtual platform. Within the first week we had 24 classes online," he said.
"We made the conscious decision, we'd retain all of the people. You never can guarantee outcomes, but our feeling was, our best bet was to work through to a positive outcome."
Twenty-five percent of the clubs' memberships went on hold; cancellations, usually about 5 percent each month, increased to 10-12 percent.
Orchid's stance is to go beyond government protocols. For example, gyms are allowed to have 25 percent capacity; his clubs are at about 12 percent, and they simply add classes to meet demand. Unlike some competitors, he's requiring customers to wear masks while working out.
"Although we're certainly following 100 percent the ordinances, we've decided to kind of make it our own world. The guidance is just that, guidance. We want to do everything we can" to make customers comfortable.
"We decided to default to ultra-conservative in the clubs, because we want to keep everyone as safe as possible. What I can't do is justify to my member that I'm not doing something to keep them safe," he said. "If you do nothing, you're guaranteeing a poor outcome."
What will he do if the clubs turn into the red? "What you do is you have a good franchisor that has given us relief on royalties and POS," he said. "What you don't do is cut your staff down to start the death spiral, and cut people and services."
Orchid, formerly COO of Jason's Deli, said this is the second time he's been through a financial crisis. "I cannot stress enough that when you stop investing in your people, all you're doing is kicking the can down the road of hurting your business."
Read other stories in Open/Close, a new franchisetimes.com series reporting how franchisees are navigating as business starts and stops amid the COVID-19 pandemic.