Pretty early into quarantine, I saw this article on Medium about how restaurants in 2020 are screwed and said to myself “yep — sounds familiar”.
Because I own two boutique fitness studios in Calgary, Alberta, and like restaurants, my businesses were designed to prioritize community, connection, socialization, and closeness — which are now prohibited by our government.
And listen — I get it. I understand and respect our duty to flatten the curve and prevent overwhelm of our healthcare systems. I dutifully closed both of my studios on March 16th and pivoted to online classes and an online challenge that same day. Because I have made it my life’s mission to build communities around health and fitness, and I felt a responsibility to carry forth my vocation, despite the closure of my physical studios. And I was not alone — I couldn’t open my Instagram account without seeing a dozen free online workouts happening from instructors and studios around the world.
But here’s where the issue begins — would you do your job without getting paid, for months on end?
Ask almost any studio owner or fitness instructor why they do what they do and they will tell you that it is because they are supremely passionate about it. They feel motivated to inspire others, and they enjoy being surrounded by wellness, health, and positivity. They truly believe they are making a difference in the lives of their members. I share these sentiments 100% (I left a six-figure salary to start a business and not take a pay cheque for the first two years for the exact purpose of doing something I am passionate about). With that said, I also realize that I am running a business; not a charity. I have personal and family goals that require an income. I have team members who rely on me for their livelihood. And that requires a certain level of financial responsibility.
I recently read a book called “Building a badass boutique” by Emma Barry that stated that 40% of boutique fitness studios worldwide are not profitable. While this statistic struck me, it didn’t surprise me. Similar to the restaurant industry, the fitness industry is a highly-competitive and narrow-margin industry, where our customers have been groomed to believe they can (and should!) expect a five-star experience for less than $20 a pop (and are often ready to hit up the Intro Offer across the street if they don’t like what’s offered). This is the issue with consolidators like ClassPass — although for customers they are awesome (more variety at less price — yay!), they are forcing studios to compete on reduced price and increased service — which squeezes anything resembling a profit margin even further, if it exists at all.
Meanwhile, the costs of commercial space, property taxes, and labour costs are all increasing. So suddenly, that 40% statistic doesn’t seem so surprising.
And then a pandemic hits.
Businesses are forced to close, while rent payments continue to be auto-debited. The Commercial Rent program will be announced, but it is dependent on your landlord buying in, and you are still responsible for 25% of the rent, and relief takes months to arrive. If you can wait that long. If you are REALLY lucky your landlord may give you some relief, or if you are a franchise giant you may have the power to tell them that you aren’t paying. Most small businesses aren’t lucky. I continue to pay $21,000/month in rent across two leases.
You have to make the difficult choice to either lay off your entire team and leave your members homeless, or pivot to an online model and hope that someone sees value and will pay you for it (even though your iPhone Zoom class is competing against Hollywood studios in the online fitness world). I choose the latter, and manage to maintain about $6,000/month in revenue. Thanks to the Emergency Wage Subsidy program, I *almost* break even on my payroll costs, but I know I am investing in developing my team and community. It’s a long-term strategy. Although CEWS will eventually end — even the Canadian government doesn’t have bottomless pockets.
And then there are the regular costs — business loans, equipment leases, utilities, software subscriptions. Some payments are deferred for 3 months (but not forgiven). Because nobody planned for this, and it’s not the bank / leasing company / utilities company’s fault that you operate an “unsafe business”.
So you scrape by for 3 months, and are finally given the green light to re-open. And you are happy about the news, because you have to stop the bleeding. Something’s gotta give. Except that, with physical distancing guidelines, the studio that could once fit 30 members now fits 10. Let’s do the math.
Monthly revenue pre-COVID: $20/class x 30 clients x 5 classes per day = $90,000
Monthly revenue with social distancing: $20/class x 10 clients x 5 classes per day = $30,000
You’ve exhausted your savings, payment deferrals and government assistance are ending, and you already operate on a skeleton team working 60 hours per week. Costs are up (disinfecting the studio every hour takes a lot of product AND elbow grease), but revenue is less than a third of what it was, with no foreseeable end in sight.
You are left with two options:
- Say screw it and walk away from your lease and maybe even your business. Hopefully you have enough in the bank to cover your personal guarantees, or the legal costs of defaulting on your lease.
- Exhaust every possible option to reduce payroll costs, monetize online options, and increase revenue per head.
I, along with many of my fellow studio owners, chose the second option. My instructors took a pay reduction, and my members were informed that our price structure is changing, and we will still barely break even if we are lucky. I am in the business of helping people, of making fitness, wellness, and community accessible, and so this decision physically pained me. But at the end of the day, I cannot be in the business of helping people if I don’t have a business. My credit card cannot be paid in well wishes or sweat equity, as much as I wish this were true.
I know, in my heart of hearts, that far too many fitness studios will not see the end of this pandemic. The better capitalized studios, the larger chains and franchises backed by private equity or international ownership groups will be better off. But if you are a member of one of the thousands of locally-owned small fitness studios in Canada, and want your community to be open to you when you return, then I encourage you to help in one of these ways:
- Show up! (But be safe and follow the rules!) Fitness studios are very safe places to be and have taken cleaning protocols and physical distancing very seriously. In a grocery store you don’t know who has touched the head of lettuce or washroom door, but in fitness studios all surfaces are disinfected every time they are touched. The combination of verbal screening, scheduled arrival and departure times, strict member protocols, and increased immune system function should mean that you are able to feel very comfortable returning to your studio (assuming you are not, or do not live with a high-risk individual).
- Support with your dollars. On average, studios are now running with 30–40% capacity, so you should expect the same. If you were once attending 6 classes per week, expect to pay the same for 2 classes per week, and take advantage of the other days for outdoor workouts, online classes, running, biking, or rest days! (Your body will thank you for it)
- Stop bargain chasing. If you hop from Intro Offer to Free Class to heavily discounted membership or class pack, you are not supporting small businesses. You are milking small businesses. Pay full price.
- Attend class or the gym during off-peak times. The busiest times are 6am and 6pm. If you are working from home or have a flexible schedule, show up at 7am or 10am or 4pm, and bring your friends! This leaves space for someone with a less flexible schedule.
- Write to your MLA or regional representative and request additional support for small businesses, and reconsideration of physical distancing limitations.
- Be kind. If you don’t like a schedule change or a decision that was made, understand that there was likely a reason for it. Ask questions to understand, but remember that this is a difficult time for everyone — including the front desk staff and studio owners who are on the receiving end of your emails.
- Share! Feeling lit up or strong after a class or a hike? Share it on social, and tag us! We have always lived for your testimonials, #sweatyselfies and success stories (see: why we do what we do) and now our Instagram feeds need the positivity more than ever!
We are in this together, whether we like it or not, until physical distancing limitations are removed. Let’s make sure that we come out of this pandemic stronger than ever!