Posted on Aug 16, 2012
Why More Men are Investing in Women’s Gyms
As with many industries, from technology to education to food and beyond, gone are the days of one-size-fits-all. Customization, segmentation, and specialization are the watchword for marketers, retailers, and service providers of all stripes today, and the gym & fitness industry is no exception. The Lucille Roberts Fitness for Women chain was one of the earliest pioneers of this trend, recognizing almost two generations ago that women can have very different needs and preferences from men when it comes to a gym & fitness experience.
Chalk that vision up to fitness club pioneer Lucille Roberts, whose entrepreneurial story begins with her first eponymous gym on 34th Street in New York City, founded some 40 years ago. Lucille came from very humble beginnings, the daughter of a Russian immigrant family that instilled in her a tremendous work ethic and value system that the Lucille Roberts Fitness for Women franchise is still built on today.
FranchiseHelp sat down with the next generation of that fitness legacy, Lucille Roberts President Kevin Roberts. Kevin discusses his mothers impact on the company and why the women's fitness niche continues to grow at a rapid pace. Kevin also gives insight on what it takes to be a good candidate to own a Lucille Roberts Women's Fitness gym franchise.
Matt Wilson: Hello everybody, I'm Matt Wilson. This is FranchiseHelp.com, and I'm here with Kevin Roberts, President of Franchising at Lucille Roberts, obviously the son. Very good looking man. We're here in New York City, the birthplace of Lucille Roberts gyms for women. Started off on 34th Street right next to Macy's, across the street. Is that right?
Kevin Roberts, Lucille Roberts: That's correct.
MW: You want to bring us through the story?
KR: Yeah, well, basically what happened was my mother was a buyer for Bloomingdale's at the time. My father was a real estate agent here in the city. My mother was actually holding aerobics classes before anybody even knew what aerobics was.
MW: This was 40 years ago.
KR: Forty years. In 1969, she was holding classes in her apartment. I guess the light bulb went off in their heads and they said, "You know, we should be doing this as a business." So they both quit their jobs, which was kind of risky, I guess, for people at that time, and opened up this club on 34th and 8th.
MW: The rest is history, as they say.
KR: The rest is history.
MW: But now, you're looking to go and expand all across, nationally.
KR: Not just national, we want to go international.
KR: But our thrust is national right now.
MW: This is with the Lucille Roberts franchise model. You want to tell us a little bit about the specific people that you look for when you come in and interview?
KR: Well, we're not looking too specific because we're going to teach them a lot about how to be a good Lucille Roberts owner.
KR: They have to be gregarious. They have to like women.
MW: Fair enough.
KR: Preferably be a woman but that's not a perquisite. A man can easily come in as an investor and get a turn-key operation.
KR: We'll teach them almost everything they need to know, and we're going to hold their hand every step of the way.
MW: So if you're, say you're a man and you're coming in and you look at this franchise as an investment, do you have to be sitting there at the front desk and greet the women? Be a cheerleader?
KR: I wouldn't want them at the front desk. No, I wouldn't want that. You look, as an investment, it's an incredible investment. You might get 30% of your money the first year. But what you have to do is hire a very gregarious manager.
KR: Which we would help you do.
MW: Now, when we were talking off camera a little bit about how you guys really . . . first of all, everything is very systemized like you would expect in a franchise.
KR: Yes. Well, we have 40 years of experience doing it. So everything is written down. Everything that the person has to do at the front desk or to sell to a member or to manage classes, do whatever they have to do is already basically written down somewhere. We're going to teach them how to do it. So it's just reiterated on paper.
MW: Okay. But you also provide not only the textbook kind on how to do it, but you'll actually put someone in place?
KR: Our franchisees, let me just tell you the truth about this. We only have two now.
KR: The first however many, 5, 10, 15, 20 have to be successful.
KR: So we're going to be holding your hand as a franchisee every step of the way. From training to grand opening to even after the grand opening, for weeks on end we're going to make sure you're successful, because we can't be a national franchise company unless the first few are successful. There's just no way.
MW: Okay. So, you'll help with the finding a manager and then . . .
KR: Oh, we're going to help from finding the location, to negotiating the lease, to helping you build out the club, to helping you how to sell, how to train, how to train your own people, how to hire employees, how to do your grand opening, how to keep the ongoing maintenance of the club, every single little thing you need to know, we're going to teach you and then show you. Not just teach you and say, "Here you go." We're going to be there, holding your hand, showing you how to do these things.
MW: Impressive, impressive. You talked about location, you mentioned location. If I'm a franchisee, can I just say, "Hey, I think the spot in the plaza down on the corner, that would be a great place for a Lucille Roberts." Do they just call you and sign the papers and you're good to go? What's your location selection like?
KR: You could do that. At this point, I would think that anyone who's making an investment into a business, making an investment into our business has got to trust that we have 40 years of experience finding locations. We have 49 clubs right now corporately owned. I think I told you before we've been in about 109 leases. We've only went out of three. That's how good we are at picking locations. So I would hope that the franchisee would trust us.
KR: I mean we have an incredibly scientific way of doing it. We've partnered with a company called Buxton, which developed a whole program for us which allows us to see demographics. We actually don't just see general demographics. If we find a spot for you or you think of a spot, we can look at it and tell you exactly who's in the households near you.
KR: We can go household by household, hundreds of thousands of households in your area and tell you that's your customer given the psychographic profile.
MW: Okay. So what's the core demographic that you're looking for to join the gym, so if someone at home is listening and they say maybe my neighborhood a good spot?
KR: No. I think almost every neighborhood is going to be a good spot. It depends upon where you go.
KR: Because we operate so widely over the three states, we operate in so many different types of neighborhoods. We operate in dense urban neighborhoods with heavy African American and heavy Hispanic populations. We operate in dense urban neighborhoods with heavy white populations. We operate in suburban neighborhoods from poor to rich. It really depends upon the location. Some locations that are very, very wealthy may not work for us, and some locations that are very, very, you know, not so wealthy might not work.
KR: But there's a lot in between that does work. You know what I'm saying.
MW: No, absolutely. What are some of your most successful locations right now?
KR: Right now, I mean, we have . . .
MW: Who's your all star?
KR: Anyone outside of New York City may not know these locations, but all of the city clubs inside of Manhattan work great.
KR: All of the clubs in the five boroughs are great. All of the clubs on Long Island do good. We don't have many clubs that don't make any money.
KR: When you go into New Jersey, we have great clubs in Jersey as well. Philadelphia, which many people consider a depressed town, is really not so depressed for us, because of the way we charge. We're very inexpensive. We offer a lot of value to the customer. So we can go into poor, maybe, any neighborhood outside of New York you might think of as a poor neighborhood. We don't look at it that way. We look at places like Philadelphia, Baltimore as people want value.
MW: Sure. You talked about Virginia and expanding well beyond the northeast.
KR: For $10 a month, I don't think you can even take someone, you can't even take yourself to movie for $10. You know what I'm saying. We really thrive in almost every type of environment.
MW: I like it. I like it, Kevin. I wanted to end off on a particular question. You mentioned your margins are 30%, which you guys actually have earnings displayed which a lot of franchises don't.
[Kevin Roberts, Lucille Roberts]: Definitely. Anyone who contacts us about franchises, we're going to open the books to them and show them exactly.
MW: For people who don't know at home, not all franchisors will open their books in this way. But going over yours, your margins are, you know you mentioned that 30%.
KR: That's on the low end. That's the low end. Some of our clubs do much better than that.
MW: So what kind of breakeven point are you looking for? Someone comes in, how much does it cost?
KR: The whole, you're going to give us about $25,000 franchise fee. You're looking to with the club build out and everything, it's about $300,000, which we will finance $100,000 of it. You can go to the SBA and get another $100,000. You can come in with $100,000 and open up a club. That's the high end. If you live in a neighborhood that doesn't have 100,000 people or a town that doesn't have 100,000 people, we'll open up a smaller type club. You know, 4,000 square feet, 4,500 square feet and you're looking at $200,000 and you only need to put in $50,000.
MW: Okay. Then how many members are we looking to start joining the club?
KR: It's very interesting. This is one of the things that I think makes it so attractive is that you need about seven to eight hundred members to start breaking even. In your first week, we're going to help you do a grand opening. We're going to help you do a mailing. We're going to help you promote within your own neighborhood. You'll get four or five hundred of those right off the bat.
MW: And you've got some national television campaigns. Is that correct?
KR: Right now we spend about $3 million in the tri-state area. As we bring on more and more franchisees, like we're bringing on these franchisees in Virginia, we'll do advertising there. It doesn't make sense to spend all the money in the areas that we're not yet.
MW: Kevin, I appreciate you taking the time today.
KR: Oh, my pleasure.
MW: Kevin Roberts. I'm Matt Wilson and thank you very much for stopping by.
KR: Thanks a lot.
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