Taking fitness upscale

Steele Smiley had a ticket to Wall Street a decade ago, but he took a detour to Minnesota where he decided to take a run at the personal fitness craze.

Ten years later he's still in the fitness business, soon to have five Steele Fitness centers, including a just-opened one in downtown Minneapolis and a growing corporate practice.

In a competitive market that features 24-hour fitness centers, big-box fitness factories and everything in between, Smiley is betting his success on a program that caters to high-end users and provides service beyond a one-hour workout.

He likes to use the term "Ritz-Carlton" to describe the kind of workout facility and experience he wants to provide.

At the new Minneapolis facility, above a Lunds liquor store on Harmon Place, rather than row upon row of elliptical trainers and treadmills, there is ample open space on the newly finished hardwood floors for individual training sessions and group settings. The lockers in the locker room are cedar-lined, and a corner of the center's space is dedicated to athletic wear and accessories.

"People have low expectations for their fitness facilities," Smiley said. "I want to make our clients go 'wow' when they walk in the door."

Smiley, 34, an All-American swimmer at the University of Virginia, maintains the same zeal about business as he did when competing for his college in the 200-yard freestyle.

"I'm a recovering investment banker. I decided not to spend life in New York. I told myself I'd try fitness for a year and I stuck with it," Smiley said from the floor of his newest studio.

Smiley started providing fitness services to clients in their homes in 2002, formed Steele Fitness in 2005 and opened his first fitness center in downtown Wayzata in 2006. He now also has studios on Grand Avenue in St. Paul and 50th and France in Edina with a downtown Excelsior studio set to open in November.

Smiley is circumspect about the financial condition of his business operation for competitive reasons but says that revenue has doubled in each of the past four years. Indeed, he said, each new fitness center costs in the "seven figures" just to build out.

But the competition is stiff in the Twin Cities. Chanhassen-based Life Time Fitness has 105 centers in North America, including 25 in this market. Hastings-based Anytime Fitness has nearly 1,800 franchised clubs worldwide and 120 in Minnesota.

"There are more fitness clubs per capita in Minnesota than any other state in the nation," said Anytime's Mark Daly.

Smiley, who grew up in Denver and Washington, D.C., and now calls Medina home, has 75 employees on staff with openings for 30 more.

Hourly rates for clients range from $60 to $90 an hour for personal fitness training to as low as $20 an hour for group sessions. But Smiley also offers packages that include nutrition, apparel, equipment and events, allowing clients to pick and choose based on individual need.

"We vastly underestimated the number that want something special," he said. "We give a Ritz-Carlton-based experience and include the lifestyle beyond the workout."

Anytime Fitness, by comparison, has rates that vary from club to club but typically are in the $40 per month range. Life Time Fitness does not disclose its rates for competitive reasons.

Jocelyn Anderson has been a Steele Fitness client for three years. After losing 50 pounds on her own, Anderson turned to Steele Fitness trainers to help her lose another 35 and add tone to her new body. At its height, her program included three visits a week for fitness training and a daily food journal to track nutritional intake.

"I was a challenging client. But going to Steele Fitness is about choices, not deprivation. They helped me evaluate the choices I was making," said the Target executive from Wayzata. "It was expensive, but I got what I paid for."

Smiley says his biggest potential for growth is in the corporate, where health and wellness programs have become the new norm. Smiley said he has 15,000 clients through corporate centers in addition to his 7,000 regular clients.

"People thought I was crazy because the market is so saturated," Smiley recalled. "I learned, to be successful, you had to be different."

David Phelps • 612-673-7269