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Business Observer Friday, Apr. 26, 2019 2 months ago

Crunch time: Industry veteran returns to his passion with renewed vigor

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A fitness guru learned a valuable lesson about change after a major stumble, when his investors turned on him and sold the company he’d spent decades building.
by: Brian Hartz Tampa Bay Editor

Geoff Dyer’s success in the fitness industry goes far beyond profit. He might just owe his life to it.

Dyer, founder of Lifestyle Family Fitness — whose Florida operation was sold to L.A. Fitness in 2012 — and now a top franchisee for New York-based Crunch Fitness, ballooned to 250 pounds during his youth in Australia.

“I was an overeater and ended up joining a gym at age 18,” he says. “I lost the weight in three months. It changed my life.”

Four years later, Dyer ventured to the United States with his father, who had friends who owned health clubs. The young Dyer got a job as a fitness instructor. Soon he was promoted to manager.

'The whole category of insurance-paid access to gyms and wellness facilities in general is exploding.' Geoff Dyer, Crunch Fitness

Now 66, Dyer finds himself back as a fitness industry entrepreneur after decades of working his way to the top. But like any businessperson passionate about his or her field, he embraces change as the ultimate opportunity to prove one’s worth. His journey also highlights the importance of developing and maintaining good relationships, even with competitors, in order to remain nimble and adapt to industry shifts. 

“I don't know of any other industry where you can start as a front-desk employee making $10 an hour and a year later be managing a club and making $75,000, and five years later, own your own business and become a millionaire,” Dyer says of his humble beginnings.

At its peak, Lifestyle Family Fitness boasted 55 fitness centers nationwide and generated $135 million in annual revenue. With the help of investors, Dyer built it into a chain that operated in Florida, North Carolina, Indiana and Ohio. The recession of the late 2000s, however, dampened investors’ enthusiasm for the brand, and the board decided to sell the business. Dyer pushed back but was outvoted.

“When you build a company from scratch, that's your legacy and you'd like to see that company grow,” he says. “But after the market turned down in 2008, there was no appetite to continue, and the investors wanted to take that opportunity to get out. It was not unexpected. The investors had already been in for a 10-year period and they chose to exit.”

Mark Wemple. Geoff Dyer says joining a gym changed his life as a young man, when he was overweight.

Constrained by a non-compete agreement in Florida, Dyer bought two health clubs in Columbus, Ohio, and rebranded them Aussie Fit. (Citing terms of the agreement with L.A. Fitness, Dyer says he can’t disclose how much he made from the sale of his stake in Lifestyle Family Fitness.) Meanwhile, Vince Julien, who co-founded Shapes, a chain of fitness centers for women, had acquired the Crunch Fitness franchise rights in Tampa Bay. Julien invited Dyer to partner with him.

“He grew his operation to 14 locations while I was the CEO of Lifestyle,” Dyer says of Julien. “We formed a very strong relationship. Even though we were competitors, we met often, about every six weeks, and shared best practices. We kept each other informed.”

Dyer saw enormous potential in the Crunch Fitness brand, part of the popular “high value, low price” vertical in the fitness industry. Like YouFit and Planet Fitness, Crunch charges a lower monthly fee — around $10 — than L.A. Fitness, for example. To close the gap with higher-priced chains and boutique competitors like Orange Theory, Crunch offers premium membership plans for $21.95 and $24.95 per month, plus a $49 annual membership fee.

Partially based on that model, Crunch Fitness is booming, particularly in Florida. In 2018, Dyer and Julien, the majority owner in the partnership, opened seven new franchise locations, and six to eight more are on the way this year. The group also owns the rights to the Orlando territory and plans to open at least 100 Crunch locations throughout Florida in the coming years. Most franchises average between $2.5 million and $2.8 million in annual revenue. 

Dyer says a typical Crunch Fitness franchise costs about $2 million to open, but some costs, like equipment, can be financed. “Our cash out of pocket is not outrageous.”

Even with the successful model, membership churn can be a challenge, Dyer says. But Crunch has been successful at retention because it markets to active exercisers, particularly millennials, who view fitness as essential to their lifestyle. Crunch has also made crucial inroads with seniors, whose health insurers increasingly cover preventative wellness expenses.

“We have thousands of people who come to our clubs whose memberships are paid for by their insurance companies,” Dyer says. “The whole category of insurance-paid access to gyms and wellness facilities in general is exploding.”

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