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Business Observer Wednesday, Jul. 15, 2020 2 weeks ago

Fitness entrepreneur seeks certainty amid chaos

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What's it like to open two niche gym locations in a pandemic? Stressful. 'If we have to close again it’s going to get really serious,' says the owner.
by: Mark Gordon Managing Editor

Peter Kilcullen was killing it in the Pilates business. He and his business partner had gone from operating one Club Pilates location to three in the region in less than three years, growing revenue at least 30% annually. Their south Sarasota location was one of the top 25 performers in the Club Pilates chain, nearly 600 locations nationwide.

‘The hard part about closing is the re-opening. It becomes a really expensive process.’ Peter Kilcullen, Club Pilates

Now coronavirus has left Kilcullen, an HSN on-screen product pitchman-turned-fitness entrepreneur, with what he calls a “pit in his stomach” regarding the future of the business. Running a fitness/gym in the pandemic, it turns out, is much like a restaurant, retail store or other business with high foot traffic: complicated, confusing and full of consternation.   

But Kilcullen, while admitting the “unknown is gigantic” is taking a counterintuitive stand against the pandemic. For one, he and his partner, real estate developer Gary Keith, took the unusual step of opening not one, but two Club Pilates locations in June. The locations, planned BC – before coronavirus — are in downtown Sarasota and Largo.

“We thought we just had to do it,” says Kilcullen, 53, who still does on-screen work for HSN, a home shopping channel owned by retail giant QVC. “At some point it just cost too much to not open.”

Those costs are significant: total investment for a Club Pilates location, including fees and real estate, range from $275,000 to $300,000, says Kilcullen. Adding to the costs? The closing of existing locations in March and April due to government mandates and then getting back in gear, including hiring back staff and reengaging with members. “The hard part about closing is the re-opening,” says Kilcullen. “It becomes a really expensive process.”

Invented Joseph Pilates in the 1920s, Pilates is a mix of low-impact flexibility and muscular strength and endurance movements. Designed for core strength, the exercise regimen has gone from a celebrity-driven niche to a more mainstream option in the last decade, joining a crowded market of class-based workout businesses. Irvine, Calif.-based Club Pilates, competing with the likes of Orangetheory Fitness, F45 and more for members, promotes a community-based class atmosphere for its 50-minute long Pilates classes.

Courtesy. Peter Kilcullen and a business partner operate five Club Pilates locations in the region, including two in Sarasota and one each in Bradenton, Largo and Clearwater.

An ultra-marathon runner and triathlete — in 2010 he completed the Atacama Crossing, a 250K desert crossing in Chile that's about 155 miles long — Kilcullen was introduced to Pilates a few years ago. “I knew Jennifer Aniston and Madonna did Pilates,” he quips. “That was the extent of my knowledge.”

And after 30 years with HSN, pitching mostly a variety of lawn and garden products, Kilcullen says he “wanted to have something I could call my own business.”

Now Kilcullen is in frantic survival mode, with three core challenges: recruit new members; retain current members; and keep up with the myriad pandemic-forced changes to running a business where lots of people sweat and touch equipment.

On the last point, Kilcullen wanted to be ahead of the curve in offering members a clean and safe environment. That includes an enhanced cleaning protocol, where they close the gyms for 25 minutes after every class and do “a super-power” cleaning of every surface and machine. Members are required to wear masks in the facility, and in between stints on the machines, but they don’t have to wear masks while actually on the machines.    

In addition taking care of guests, Kilcullen says the amped-up cleaning protocols are a protective marketing move. “As a business owner,” he says, “I didn’t want things to go wrong and then become a target and have people say why are you doing this, why are you doing that?”

The membership conundrum is an entirely different challenge. One reason Kilcullen was attracted to Club Pilates in the first place was its small class sizes, where the business can be profitable with 300 to 400 members a year. “It’s a much different model than big gyms,” he says, “where you have to have hundreds and hundreds of people” to be profitable.

But getting people to sign up now is a tough sell, with the lingering uncertainty. Opening in the summer is hard even in a non-coronavirus world — camps, vacations, etc. — and the two new locations couldn’t do any street-level, member-to-member marketing. In conference calls with the corporate office, Kilcullen’s leaned on Club Pilates officials to extend a 20% monthly discount for new members through at least all of July, if not longer. “We really need it,” he says.

What Kilcullen also needs is some clarity in how to operate all five Club Pilates locations, and a way to handle the curves that keep coming his way. “I’m (constantly) thinking about how we will stay safe and how we will not go out of business,” he says. “If we have to close again it’s going to get really serious.”

 

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