(While still an undergraduate at Brown University, Sadie Kurzban started offering dance-cardio classes in earnest. In 2012 she moved to New York City to continue preaching her fitness gospel in pop-up classes, and two years later she opened 305 Fitness in Greenwich Village.
At the start of this year, Kurzban sat atop a fitness empire. 305 Fitness had opened four additional locations in New York and expanded its neon presence with studios in Boston and Washington, D.C., as well as pop-ups in Chicago, Los Angeles, and San Francisco, with more on the way. Employing 300 instructors and DJs, she drew 100,000 members, including celebrities such as Miley Cyrus, to her $34-a-session classes. Investment came from the likes of Kevin Durant. A flurry of coverage in glossy magazines and social media buzz had made 305 Fitness a darling.
And then came the coronavirus pandemic.
Kurzban was forced to close 305’s doors, furlough 98% of her staff, and forgo her own paycheck. “Obviously things are changing quickly every day,” she says. “It was up to me as a small-business owner to make these ethical decisions in a small vacuum.”
Kurzban’s fast decision-making is far from an isolated case. Personal fitness, a roughly $100 billion industry globally, was in high demand. But the very thing studios were offering, in-person group fitness, has become problematic. It’s an industry like many others that must completely reinvent itself—and fast. Right now, staying healthy and finding connection couldn’t matter more, but millions are being told to stay inside and away from each other.
“This is going to take a long time,” says Liz Van Voorhis, a fitness instructor and founder of FIT Collective, a marketing agency that works with brands. “No matter how long we’re going to be quarantined, people will have a fear of going back to spaces in groups for a long, long time.”
In the meantime, a patchwork ingenuity has taken hold as instructors, and customers, search for a temporary fix. “My entire business has imploded,” Van Voorhis says. “How can I pivot and repurpose my expertise?” As a diabetic, she was especially reluctant to hold her high-intensity interval training classes indoors at a bootcamp studio in Midtown Manhattan, so she temporarily moved them outside to a park, a plan she could resume once restrictions on gathering in groups have been lifted. From her studio apartment in Soho on her Instagram live feed, she’s now teaching classes using jars of peanut butter in lieu of free weights. “Maybe Trader Joe’s can sponsor me,” she says.
Some seeking workouts at home are using milk jugs as free weights or towels as sliders while videostreaming classes. The support for furloughed instructors has been grassroots, with people sending payments via Venmo to their favorites. Staff support funds akin to those in the restaurant and bar industry have sprouted up as well. “I have not asked for a dime,” Van Voorhis says. “But people have just been sending money.”
Most of the country’s 357,000 fitness trainers and instructors work as contractors, often in positions without health insurance or other employer-backed benefits. As a result, many have been ineligible for unemployment benefits when their gyms shutter, as have the thousands of support and cleaning staff. But industry trade groups are lobbying lawmakers for relief.
Like restaurants and retail establishments, fitness companies have to continue paying their leases in pricey real estate markets while also trying to hold on to customers. In the case of Crunch Fitness, a chain with more than 300 franchise locations, that meant suspending monthly membership fees. In lieu of physically checking people into its 100-plus clubs, Equinox Holdings Inc., is leaning on a check-in feature on its app and daily email reminders to keep in contact with its members. The company froze memberships the day its clubs closed.
Olivia Young, founder of New York City-based fitness studio Box + Flow, is among those who’s hoping for rent relief. She’s considering closing one or both of her two Lower Manhattan locations and laid off almost all of her 30 staff members. Sales had already been dwindling amid Covid-19 fears in the week leading up to New York’s gym closure, and she’s unsure how she can keep up with expenses.
“It was night and day,” Young says. “My emotions as a human, same as a business owner. I gotta protect myself, I gotta protect my people, and I also gotta be smart about my business.” She’s teaching some classes online and says she’s looking to her landlords for flexibility. With payroll painfully on pause and some sort of reprieve on the rent unknown, she has hope she can ride out the storm. But she’s unsure what will happen next month.
“If there’s one comfort, it’s knowing that I’ve spoken to numerous people who own studios,” Young says. They’re all afraid about letting employees go and paying rents while closed, she says. “It’s seeking a little bit of understanding from landlords. I don’t know what that looks like yet.”
In-home fitness brands, however, are clearly benefiting from a shutdown that’s keeping so many people at home. Peloton Interactive Inc., a maker of indoor bikes that start at $2,245, is responding to a clear spike in interest. It’s made its app free for 90 days in the interim “in an effort to make it easier to access fitness and wellness content in these uncertain times,” a spokeswoman says.
While many studios can’t afford pricier options such as Peloton, some of them—particularly those with Spin bikes or Pilates reformer machines—may rent out their equipment, which is largely sitting dormant. Yet even those logistics are difficult, says Leigh Barton with Monster Cycle LLC. “We’re a really small business,” she says. “We’ve already doubled down on everything. Would we have the time or budget to do that?”
If and when fitness facilities reopen, it’s unlikely they’ll accommodate as many people in a single class, either because of potential restrictions or to create a sense of customer safety. The days of people eagerly renting towels, yoga mats, or Spin shoes (additional revenue streams), aren’t likely to come back quickly.
While indoor exercise mainstays such as resistance bands and free weights remain on back-order at many online retailers, long-standing fitness video companies such as Beachbody LLC are reporting a surge in activity, perhaps heralding a contemporary at-home video craze akin to that of the Richard Simmons or Jane Fonda era. In mid-March, subscriber signups for Beachbody jumped 329% and the volume of workouts rose 23% in one week, according to chief executive officer and co-founder Carl Daikeler. Much of that has been for its cardio fitness workouts, but kids programming also skyrocketed—to 13 times its normal traffic—from Monday, March 16, through Thursday, March 19, he says. (The company has opened a free Vimeo channel for kids videos, too.)
Beachbody, with $1 billion in annual revenue and 650 employees, is online only, so it has no overhang of empty gyms to worry about. “One of the things we had to do is make sure we weren’t contributing to the fear,” Daikeler says. “We could have said, ‘Don’t go to the gym! Germs!’ But we didn’t want to do that. Gyms are great, but they’re not the right place to be now. But we didn’t want to contribute to the anxiety.”
For others, the mass move to video happened overnight. Pedro Wunderlich spent no money marketing Wakeout, his home workout app launched in September 2018. He’s generally seen steady growth of about 1,000 downloads a day. But in the week of March 23, Wakeout was downloaded 37,000 times. “We never envisioned the end of gyms,” he says—or, the sudden boom in people working from home.
Wunderlich, who lives in Guatemala and has only one other full-time employee, says one key to maintaining user happiness is having some sort of progress path in the app to maintain engagement, a structure he sees many newbies in the space cribbing from the game industry. Social functions like chat he’d thought were secondary now feel essential. “There’s a social element with the gym,” he says. “So now people are far more likely to leave a comment after a class online, so there’s still this sense of community.”
Meanwhile, Kurzban is healthy and practicing social distancing in Miami, where she’s waiting out the pandemic with her husband and parents. She’s livestreaming 305 Fitness classes on YouTube from the pink back porch of her parents’ home twice a day while mulling over what’s next for her company. That includes attempting to monetize the studio’s video presence, opening online instructor training, and trying to guide furloughed staff to whatever benefits they may qualify for.
“We’re just doing our best when people are needing hope,” Kurzban says. “This is not the time people are looking for their beach body and get into sick shape and lose weight. I think the message that needs to resonate is that we’re in this together. Let’s try to make the most of this time and not to close our eyes. This is the reality we’re living in, so let’s embrace it, let’s embrace the weirdness.”
©2020 Bloomberg L.P.
