Snap Fitness, headquartered in Minneapolis, is the world’s fastest growing health club chain with over 2,200 centres across the United States, Canada, Australia, Mexico, Singapore, New Zealand, UK and Egypt. In 2008, Dr. Vikram BM and Srilekha Reddy bought the master franchisee for Snap Fitness in India and launched a flagship centre in Bangalore. Today, it is one of the top three companies in the organised health and fitness segment in the country.
Snap Fitness is a “no frills” 24/7 concept providing fitness trainers and equipment at affordable prices. The members are entitled to use any Snap Fitness gym across the world. With centres in 40 locations across 8 cities, the company has membership strength of over 30,000. Snap’s retention rate of 55-60 percent is the highest when compared to the industry average of 40-45 percent. Nivedita Jayaram Pawar spoke to Srilekha Reddy, Co-Founder, Snap Fitness India, to understand the fitness market and Snap’s plans for a fit India.
What were the reasons that led you to take the master franchise of snap fitness for India in 2008?
Both me and Dr Vikram were earlier involved in the running of big-box fitness clubs and realised that the ROI for such a club was not lucrative. The high fixed overhead costs, unrealistic rentals and manpower make this format an expensive proposition. These expenses were being passed on to the members in the form of high membership fees. Also, big-box clubs were plagued with multiple customer service issues due to their steam/sauna/shower rooms which are used by only 2 percent of the gym members.
We were in search of a fitness brand that could be scalable with high revenue per square foot, affordable and convenient to members, international standards and Snap Fitness fit the bill perfectly.
Tell us something about your first outlet in Banglore. Why did you choose the location and what was the response?
We chose Indiranagar in Bangalore for our first outlet in November 2008 as it’s a popular, high-end residential catchment with a good mix of commercial spaces, shopping, eating joints, etc. The awareness of fitness is very high in this area and is the destination for most brands. We felt it would be the ideal location to open the flagship store of Snap Fitness.
The response was very good. We sold over 350 memberships within the first 2 months. However, we have recently moved our centre to a 4,000 sq.ft. outlet in Indiranagar due to space constraints in the earlier location.
What initial challengesyou faced while launching snap in India? How did you overcome those?
When we set up in India, nobody had heard of Snap Fitness. Therefore, selling franchises was a challenge. But with the runaway success of our first outlet, our members became our franchise owners. Once they saw the business potential of the model, expansion became easier.
Our first 10 franchises were taken by the members of our Indiranagar outlet and they went on to open multiple Snaps. For example, our Koramangala franchise owner has already opened six centres of Snap Fitness. Finding good real estate was another challenge. Most of our expansion is currently concentrated in the South since both of us founders are from this part of the country and we know this region really well.
What are the some of the day-to-day challenges in operating a chain of fitness centres?
Ours is primarily a franchise model. The challenges in this model are standardisation in the look and feel, service standards and pricing. Collection of royalty is a huge task.
In the recent times, there have been instances where people have died on the treadmill. In this scenario, it’s imperative to maintain health and safety standards at the club. Senior citizens need special attention. It’s the utmost priority of the health club owner to ensure the safety of its patrons at all times.
Real estate and human resources are other issues that need to be addressed. Ours is a no frills concept and we try to keep the overheads as low as possible. Staff training plays a pivotal role in this industry. The fitness trainers have to be trained in CPR and also equipped with deal with medical emergencies. In the larger picture, competition from local and international brands will always be tough.
How big is the health and wellness market in India and what is the growth rate? What are the factors propelling the industry’s growth?
The fitness industry in India is valued at USD 113 mn and is experiencing a healthy growth rate of 40 percent year on year. Out of the 1 billion population which is growing at the rate of 1.7 percent, the age group between 20 and 44 years is the prime segment for fitness clubs. The population in this particular age group is expected to go up from 39 percent in 2011 to 40 percent in 2016. This will add approximately another 4.2 crore in terms of population between 2011 and 2016.
What is your retail presence today?
Snap Fitness in India has 40 centres, out of which 37 are operational and 3 are in the fit out stage. Out of all the outlets, four are company owned while the rest are franchisees. We are now expanding to other parts of the country with our first centre in Gurgaon.
How has the brand in India evovled over the years? What’s the progress?
Snap Fitness has grown rapidly in India. Within a short span of 4.5 years, we have spread ourselves to more than 40 locations. We are the number one fitness brand in South India and number three nationally. We are a zero debt company and now looking at investors to expand the brand in the country.
What are your franchise requirements? What support do you offer to the franchisee in the initial stages?
To become a Snap Fitness franchisee, you need passion and a background in fitness. Individuals who can devote time and attention are apt for this business. We have realised from our experience that a centre where the franchise owner is physically present does much better business than the one where the owner has less involvement. A fitness club has a lot of cash transactions and there have been instances where trainers have pocketed the cash. We charge a onetime franchise fee of `10 lakh. Thereafter it’s a flat fee of `85,000 per month.
What was the major turning point in the growth story of Snap Fitness in India?
The fact that we launched Snap Fitness in India during the recession in 2008 proved to be a blessing in disguise. Seeing the business grow, our partners realised that this is probably one of the few business models which are profitable even during recession. This helped the business tremendously and there was no looking back for us. Today we have so many people approaching us for a Snap Fitness franchisee that we have run out of locations in Bangalore. There are people in waitlist for this city.
What are some of the trends you have been witnessing in the health and wellness segment in India over the past few years?
Awareness of fitness is growing by leaps and bounds. Bollywood stars are driving this trend with their fit bodies and six-pack abs. Preventive wellness has also gained importance. People have realised that with rising stress levels, being fit is the only way to avoid lifestyle diseases.
Corporates are also investing in fitness as they realise that keeping their employees healthy leads to improved productivity, less absenteeism and an overall healthier and happier work force.
What is the typical customer profile of snap fitness? Has it been changing in any way over the years?
Since Snap is a neighbourhood fitness club, we have a mixed profile of members. People staying in the close vicinity of the club visit us. They could be CEOs, housewives, students, models, etc. The age group is mainly between 20 and 44 years. Around 30 percent of the clientele is regular.
Until a few years ago, it was mainly men wanting to build their body or women only wanting to lose weight. But now we see people from all walks of life and their fitness mantra is to tone up, be healthy and be well.
What is the location strategy for snap?
Location selection is very crucial for us, and unless it meets all the parameters, we do not open a Snap centre there. The success of the outlet is highly dependent on the location. We open a Snap outlet on a high street or densely populated residential catchments. We are not particular about ground or first level. We could even take the third floor but it has to be a single-floor format. We do not open on multiple floors. Being on a single floor makes it easier to manage and oversee for the owner.
What are your customer loyalty programmes?
We reward our members for providing referrals. The rewards are generally in the form of branded Snap products such as bags, sippers and services like PT, nutrition counselling, and extension in memberships.
What is your marketing strategy and how does it impact your business?
Marketing plays a big role both for brand building and customer retention. We have a very strong marketing strategy in place – both pre and post launch. Prelaunch marketing places more emphasis on pushing new memberships through various BTL activities. Post-launch marketing is more about customer retention through events, referral programmes, etc.
What is your expansion strategy to open more outlets? What others regions of India are you looking at?
We believe in the Hub and spoke model of setting up company-owned centres in each market segment, which will work as a show centre and selling multiple franchisees. We will continue with both company owned centres and selling franchises. We are targeting Delhi, Kerala, Ahmedabad, Kolkata and all the major cities pan India. Delhi, Noida and Gurgaon are where we see a huge potential for Snap. We also have a focussed approach to open Snap Fitness in tier II virgin markets such as Manipal, Mangalore, Hassan, Vellure and others.
Are there any interesting concepts you have itroduced at snap?
We organise in-club events monthly and outdoor interclub competitions quarterly such as interclub cricket, football, and marathons to keep our patrons engaged. After a thorough scientific method of fitness assessments, we chalk out a personalised work out plans for each of our members. We also organise a monthly meeting for club managers to brainstorm and discuss challenges, training methods, etc.
Please share some key learning that you have gleaned over the years in this business?
The fitness industry is run by passion. It’s highly addictive and an industry where even high paying executive with MBAs are willing to leave their jobs to be part of the fitness industry because of their passion. It’s also very rewarding to work in an industry where you are contributing towards making people healthier and happier.
Did you carry any major course correction or make-over of your business in the past? What has been result of such re-formatting?
In the initial stage, we were providing too much support and handling the entire execution of all the clubs ourselves. This resulted in minimum involvement of the franchise owners. Also we didn’t have the bandwidth to handle everything. With time we realised that training is the key. We train our franchisees so that they can be involved in running the club. In the eventuality of attrition, they can train the new staff. We also conduct monthly training on operations, fitness and marketing so that everybody is on the same page, including the new staff. The result is much smoother operations and more profitable clubs.
What are your future plans? Are you looking for investors to expand?
We plan to open 300 Snap outlets over the next 5 years in both tier I and II cities. We are aiming to launch an online group class called “Fitness On Demand,” which will feature international trainers at your doorstep and offer a wide variety of classes such as Zumba, Pilates, aerobics, and kickboxing. Apart from fitness clubs, this programme could be used by corporates, households, schools, colleges and hotels. Yes, we are looking to partner with like-minded investors.