(Editors' Note: This article is part of Club Industry's report, "Trends That Will Affect the Fitness Industry in 2019." You can download this report for free by going here.)
Nothing lasts forever. Why would we expect the fitness industry to be the exception to this rule?
Most businesses and trends work on S-Curve Theory, which shows a predictable life cycle for the business. With S-Curve, you have a long, steady growth period, a quick acceleration, a peak period, and then a slow, steady decline.
You see this theory at work in everything: in the demise of certain retail brands, in the popularity of trendy diets that appear out of nowhere and then return to the darkness, in mullet haircuts and fanny packs. They rise, they peak and then they slowly disappear.
This build, rise, peak and fall cycle used to take decades to complete, but now, with social media and other forms of immediate information sharing, what used to take decades now can cycle through in just a few years.
Most people working in an industry never see the cycle play out. We deny because change directly affects us, or we simply can’t believe that what we believe in most is going away. Although the world changes, we often cling to a past business or trend that is failing right in front of our eyes.
We are not the exception in the fitness world, and one of our hottest programming features, team training, is over the peak and starting its long, slow, but no-doubt decline.
Team training, where you have one coach working with a large group of people simultaneously, and usually for a fairly high fee per month, can be traced back to about 2005 when CrossFit and the other early boot camp players redefined how the client/gym interaction took place. Prior to this, all training done in most of the commercial gyms was done as a one-on-one relationship between a client and a coach.
Team has had a good run, and a professional coach can still create magic with a large group of people chasing sweat on a turf area, but the product itself has been diluted, copied and misunderstood to the point it is now a commodity fading to insignificance in the coming three years.
Badly Done Circuit Training
Single methodology programming always, and there is no exception, fails. CrossFit, back in the day, applied advanced coaching concepts to a group. As the product was accepted by other professional coaches, team grew into a controlled workout environment where a serious coach could manipulate a group without anyone getting hurt but could gain serious fitness benefits.
Team started to become diluted, however, when the serious coach was eliminated, and the gym owners started looking at it as just another programming offering done in the backroom and led by a newly hired trainer/old school aerobics instructor.
In the last few years, you have had the rise of the 1,800-square-foot team training circuit concept, represented by players such as Orangetheory and F45, and a vast herd of other imitators all trying to capture the magic that both of these companies have enjoyed in their expansions. One trainer, leading a group through an established circuit, and then repeat it the next hour.
The problem is the client always moves on and past the technology. If we look at a few of the national cycle businesses during the last decade, we can see the S-Curve at its best. Indoor studio cycling had a long growth phase, a hot rise to the peak and then a slow fade as cycling wasn’t the cool kid at school anymore. We witness this as we see these companies adding some form of team training in order to overcome the declining ability to keep filling the saddles.
The client always moves past single methodology and on to the next big thing. What is hot becomes not in a short period of time, and team training has reached that “been there, done that” state of mind for many potential clients.
The price is declining nationwide for team training, making it unsustainable in most team-only gyms. Since 2005, the industry has enjoyed a product, team training, that has allowed gyms to charge a $149 average to a large number of clients and then service them all in one pile. CrossFit created a high price standard that the rest of the industry could benefit from in their own gyms.
The average price for CrossFit gyms has been in the $149 per month per client range for a decade or longer, setting a new standard for other gyms formerly just dependent on one-on-one training, which while generating a high rate, only appealed to less than six percent of the clients in most gyms.
Orangetheory also brought in a solid price that the rest of the industry could emulate, averaging $179 or more around the country. For a decade or so, the combination of both of these players gave the industry something that had never existed before: training done at a high price for a whole new population. But in 2018, this average plummeted.
There are simply too many players trying to offer the same concept to not enough potential clients. There is often a saturation point for all of the big franchise companies or license groups where you expand beyond your ability to only attract the best operators and control the size of your group.
In this case, as competition increased, many operators, often those newer to the game or not experienced in business, resorted to lowering their price to attempt to stay competitive in a flooded market. In other words, I charge $149 now but have no competitors. Suddenly, however, I now have three new gyms all charging $139 or less for virtually the same product I am offering at a higher price.
Experienced owners might fight back and hold their price, but a sea of less experienced business owners drop their prices when sales slow down, always believing the lower price will take clients away from other gyms.
What use to be $149 is now in the sub $100 range and dropping quickly. Business plans based upon that higher rate fall apart quickly when your return-per-client drops in half. As the number of team-based gyms continues to open, the price will continue to fall.
Too Little Too Late
If you stay up late watching TV, you always find the stock guy screaming into the camera about the latest, greatest stock…and the rookies buy.
Real stock guys knew about that stock six months ago and bought while it was a deal. The investors who wait to see how others do always come in too little and way too late.
Team training has now been recognized by the big players, who are creating add-on rooms, new price offerings or who present the secret in a back room. These players are too late, doing too little, don’t understand team beyond just another programming offering, but most importantly, have lowered the price to the sub $50 range. You see this in the big chains and in the larger franchises that are even launching revised concepts of their old models hoping to capture the model of team success of the early 2000s.
There is always a halo effect in S-Curve Theory where a glow exists as the peak is hit, and then the decline begins, and that glow, or halo, can last for several years. The bigger players now chasing team hesitated too long, failed to embrace the change brought forward by the modern training gym, and now are chasing the halo that is already dimming.
What Is Next
The modern 6,000-square-foot training gym, generating $1.2 million or more annually with 350 clients is out there and growing rapidly as a business model. These models still use team as a tool but command more money per client because the owners discovered team is just a tool, and the training business for a more sophisticated client willing to pay a $149 to $400 monthly average is more about the experience and not about the tool of the day. Team will die as a low-priced commodity in the mainstream world but still be a vital, and financially viable, tool in the training-centric world.
Everything ends in business. Despite the current trendiness of team—and the franchises and license groups chasing it as the next magic bullet for a declining mainstream segment—team training too will fail and is right on track for a fade within three years.
Thomas Plummer has been working in the fitness business for more than 40 years. He founded the Thomas Plummer Company in 1990, which eventually became the National Fitness Business Alliance (NFBA) in 2003. The NFBA is a group of industry vendors and suppliers banded together to bring advanced business education to all fitness business owners operating anywhere in the world. Plummer does about 20 workshops per year around the world and is in front of more than 10,000 people per year through numerous speaking engagements as a keynote speaker, event host and private consultant. He has authored 10 books on the business of fitness.