Anytime Fitness owner retools as it comes out of pandemic

One of the biggest lessons from the coronavirus pandemic should be a need to focus more on health at all levels, said Anytime Fitness co-founder Chuck Runyon.

Runyon — who is chief executive of Self Esteem Brands, whose fitness clubs include Anytime Fitness, Basecamp Fitness and the Bar Method — said the world needs to look at health more holistically and he hopes his company will help people be more proactive and comprehensive about how they stay healthy.

The Woodbury-based company's purchase of digital nutrition coaching business Stronger U is the latest move to expand its business, both in scope and platform.

"COVID shined a spotlight on the core health of developed countries around the world. Most people during COVID, unfortunately, were less active and they did not eat correctly," Runyon said. "We are left still [with] the epidemic of poor nutrition, low body intelligence, and unhealthiness, so there's never been more of a need for nutrition and fitness."

Runyon started the 24-hour gym chain Anytime Fitness with co-founders Dave Mortensen and Jeff Klinger in 2002. Self Esteem Brands has grown to about 5,000 locations worldwide, including Anytime Fitness, which makes up the lion's share of the clubs.

Self Esteem Brands' annual revenue before the pandemic was $2.2 billion, with the company seeing an average year-over-year revenue growth of about 18% each year.

In 2012, Runyon and Mortensen brought hair removal salon chain Waxing The City into their company fold as part of a strategy to expand "into recession-resilient industries," according to a news release. Since then Self Esteem Brands in 2018 picked up Basecamp Fitness, which focuses on scheduled class workouts, and the barre exercise chain the Bar Method the next year.

Other fitness companies also are expanding their scope. Chanhassen-based Life Time dropped "fitness" from its name four years ago because, as CEO Bahram Akradi explained, "the company is so much more than fitness" as it broadens services into co-working spaces and living complexes. Many of the larger fitness chains such as LA Fitness and Planet Fitness produce a plethora of digital content on how to maintain a healthy lifestyle or offer fitness training online.

Self Esteem Brands had been in discussions with Stronger U for several years before the acquisition was solidified.

"We've always wanted to add nutrition to our portfolio," Runyon said. "We all understand how important nutrition is as food as energy, how it controls mood and of course for weight loss. Now that we can add this we get more holistic in our full support of our members."

Stronger U offers personalized nutrition coaching with weekly nutrition and lifestyle recommendations. Runyon said Stronger U makes Self Esteem's fitness portfolio unique by connecting existing gym members with an additional service that he compared to "having our own Weight Watchers within our portfolio."

Founded in 2015, Stronger U has reached more than 50,000 members mostly through word-of-mouth. With Self Esteem Brands' network of facilities, Stronger U can continue to grow and attract new members, Runyon said. Self Esteem Brands already has certified personal trainers within their fitness centers who could also be trained to be nutritional coaches for Stronger U. The company hopes to double Stronger U's membership base year-over-year in the next three years and expand access to the platform globally so that it is available in multiple languages.

As more people have added to their personal fitness equipment at home during the pandemic or plan to use exercise equipment at their offices as they return to work, fitness centers have to stay competitive, said Alex Wang, a retail research analyst for CBRE who has studied the fitness boom in the Washington, D.C., area.

"If gyms were to survive and were to add value, it would have to be in the service component not in the equipment," Wang said.

With the adoption of telemedicine, Wang said he could see how digital nutrition coaching can be appealing especially coupled with workouts so health goals could be integrated and tracked. Despite the expanded digital fluency of the average consumer, Wang said he believed physical gyms were here to stay.

"The reason why you go to the gym in the first place is for the community and the motivation for your to reach your fitness goals," he said.

Self Esteem Brands first learned of COVID-19 through its dozen locations in China that had to shut down during the initial outbreak and then later its clubs in Italy and Spain. Company leaders hadn't foreseen how the pandemic would spread across the world but "within a matter of weeks, unbelievably, we shut down an entire network, 5,000 stores around the world in a very patchwork, rapid fashion," Runyon said.

While fitness club locations have reopened in the United States, there are still clubs in other parts of the world that haven't reopened, such as in Canada and Europe, Runyon said.

During the pandemic, Self Esteem Brands concentrated on how it could help members stay healthy at home and produced more digital content and remote coaching on topics such as nutritional guidance.

The company also worked with a developer to create a reservation capacity system so members could reserve their time in the gym based on capacity restrictions, a system they plan to keep after the pandemic. Anytime Fitness' model of being open 24-7 allowed members to spread out when they were at clubs and provided "a massive advantage" to the business, Runyon said.

While Self Esteem Brands did learn to adapt, the last year has been challenging as the company and individual franchisees have had to deal with capacity restrictions, mask mandates, changing cleaning guidelines, and consumers that needed their memberships frozen or canceled as they could no longer visit the gym.

Self Esteem Brands had to help franchisees with lease negotiations with landlords and access to local emergency funding while at the same time lobbying government policymakers so gyms could be reopen. The company estimates it was able to obtain about $400 million in domestic accommodations for its franchisees through rent relief and state and national relief funding.

Still, more money is needed to help those in the fitness industry who were the first to close down during the pandemic, Runyon said. Self Esteem Brands continues to push for the passage of the Gyms Act, which would create a $30 billion fund to provide grants to affected businesses in the health and fitness industry.

In the last two months, Self Esteem is starting to go back to pre-pandemic numbers with usage rates around 80% systemwide, Runyon said. Personal training has seen a surge and is near pre-pandemic levels.

Waxing The City has reached all-time highs in monthly revenue and retail sales likely because people are traveling and outside for the summer, he said. Studio traffic for group fitness classes has started to come back as well, though more slowly. By the fall, Runyon estimated business overall will be back to the pre-pandemic levels or possibly above.

As Self Esteem continues to build out its capabilities, company leaders say it's possible that Self Esteem Brands could expand services to help people in a variety of health areas such as in sleep and healthy meal delivery.

"I firmly believe that care for self-esteem is an outcome of the pandemic, something people will take more seriously and seek services to help them manage," said Mortensen, who serves as Self Esteem Brands' president. "We're evolving next into a space where fitness, nutrition and wellness services are viewed and sought more holistically, and the directions that we can potentially go next for our growth are exciting. ... We will seek new brands to join us, new franchise owners to invest with us, and a wider range of communities — especially communities of color — for our brands to operate and thrive."