The health and fitness industry keeps evolving, and it’s more exciting – and in many ways scarier – than I’ve ever known it,” says Tony de Leede, by way of explaining his seemingly endless enthusiasm for working within the sector.
It would be very easy for the Australian fitness industry veteran to kick back and relax, enjoying the fruits of his decades of labour. But that just isn’t de Leede’s style. Now aged 63, he’s been at the forefront of the sector since the age of 27, when he launched Australian Body Works in Atlanta, US – a chain he built up to 23 clubs over 20 years, ultimately selling to LA Fitness in the US in 2000.
Also on his extensive CV: co-owner of both the high-end Gwinganna spa resort in Australia and Komune Resort in Bali, a surfing and wellness destination; founder of Australia’s 30-minute, low-cost workout chain Fit n Fast, which he launched in 2011 and has taken to the 18 sites it has today; former owner of CardioTheater; and investor in a number of other businesses including meditation pod Somadome, for which he has the exclusive rights for Australia and New Zealand.
He was also CEO of Fitness First Australia back in its heyday, between 2000 and 2008 – a role he only agreed to take on if he could buy a share of the business. In spite of it being a public company, a deal was agreed whereby he acquired a 15 per cent stake.
This is a theme that weaves throughout de Leede’s CV: a desire for either ownership of, or at least a share in, the businesses he’s involved in. That’s no doubt the entrepreneur in him, but it’s a philosophy he now implements for staff working across all his businesses.
“If you want people to have an ownership mentality when they’re working for you, then give them some of the ownership. In some cases, our staff have chosen to actually invest money, but in all of the businesses I run, a significant number of key team members have ‘sweat equity’ – a share of the business in return for their hard work.
“I’ve always done this, as far back as Australia Bodyworks, and it constitutes golden handcuffs. But people wear those handcuffs with a big smile: they’re working hard, but they’re sharing in the upside.”
Fitness fusion
Returning to de Leede’s comment that the health and fitness industry is more exciting than he’s ever known it, what’s catching his eye right now?
“One of the things I find really interesting is the way different styles of exercise are being blended together. I call it ‘fitness fusion’ and I liken it to food fusion, which came on strong in the last couple of decades and brought all kinds of flavours and cuisines together. The same is happening with exercise: we’re seeing pilates blended with boxing, yoga with BodyPump, and it works. Millennials in particular love the variety – it keeps them motivated and it gives them a great workout.”
And how about his ‘scarier’ comment – just how quickly and dramatically are things changing at the moment? When we last spoke, for an interview in early 2011, de Leede had just launched Fit n Fast on the basis that three things were needed to succeed in fitness: to be cheaper, better and faster than the competition. So has all that changed in the last five years?
“Faster is definitely still there – just look at all the HIIT and the 30-minute workouts. Cheaper is still relevant too: all around the world, people want their basic bread and butter membership, and many of them go to cheaper gyms to get it. Better is subjective, but yes, it still applies.
“But things are changing much faster than they ever have and there’s a twist. Our basic Fit n Fast clubs deliver well against all three points, but they aren’t doing the numbers I thought they would. There’s way too much competition, so really we’re just competing on convenience – there’s no incentive to go past three other places to get to mine, because as far as the consumers are concerned, the treadmills are essentially the same.
“In the meantime, although people want a cheap membership and a convenient location for their gym usage, increasingly they’re also willing to visit a separate studio where they pay a premium – and indeed potentially travel further – for the classes they want, led by the instructors they like.”
Wellness villages
“We’re therefore testing out a new model. In May, we rebranded one of our Fit n Fast clubs in Sydney as YogaBar – a boutique wellness village offering classes, healthy foods and retail. We sell fortnightly memberships – equating to A$39.95 a week – but we’re selling far more 10- and 20-visit passes that work out at between A$18 and A$26 a class. And we’ve already found that well over half the people who come and work out at YogaBar also have a base membership somewhere else.”
He continues: “YogaBar currently offers yoga and barre classes, plus we’ve kept around 250sq m of Fit n Fast gym space. As we roll this model out, I think we’ll always aim to have a gym area alongside two to four boutique studios – although that said, we’re looking at some new locations right now that are very small, with space for only one or two studios.
“We’ll have a clearer direction over the next six to 12 months, but there will certainly be a number of different ‘tribes’ within each village. We’re currently experimenting with a number of different blends and exercise concepts to work out what the different tribes might be. Cycling with functional, and fighting with HIIT, are two fusion concepts we’ll be developing to sit alongside YogaBar and Fit n Fast, so we’ll be creating brands for those too.
“We may end up even taking an existing brand and licensing it. I’m certainly not thinking I need to recreate too much if I can find a brand I can work with.”
And the offering is likely to be different in different locations: yoga may not always be part of the mix. YogaBar will therefore be just one brand that will sit under an umbrella brand, yet to be named.
In the long run, all 18 Fit n Fast sites may be converted to wellness villages. That’s still to be decided, however, because a new pricing structure at Fit n Fast is suggesting there’s still life in that model.
Having introduced new programming – short format classes like boxing and the Quickie Max (Q Max) – Fit n Fast is now offering an optional trade-up to premium membership which includes access to this programming. The price point: A$20.95 a week, compared to A$13.95 a week for basic membership. And it’s proving popular. “We thought we’d get about a 20–30 per cent take-up, but in fact more like 60–70 per cent of members have opted in to this higher level membership,” says de Leede.
What’s clear, though, is that de Leede wants to put his foot on the accelerator in terms of getting the estate delivering to its full potential, whether that’s converting to wellness villages or boosting revenue at any remaining Fit n Fast clubs: “We aim to move strongly into converting a lot of our clubs and developing some new ones next year,” he says, adding: “By the end of 2018, I’m hoping to be on a path to an exit – not that I want to get out of that side of the business, but I want to give the investors a return.”
An untapped market
But there is another motivating factor for selling the business, and that’s another new business idea that he’s itching to get properly started on.
“We’re going to explore the whole realm of virtual,” he says. “In fact we’ve already started. We’ve developed our virtual exercise content – Move 1, 2, 3 – which comes in 10-, 20- and 30-minute formats. That’s already available on Wexer, but the real reason we’ve created it is for our new concept, Club W.
“Club W is going to be an all-virtual facility targeting women, and especially older women. We’ll have four virtual exercise rooms and an active education room – bikes and treadmills with personal screens, so you can watch short information films while you’re exercising.
“For that, we’re also developing another brand – Mind 1, 2, 3 – which comprises five-, 10- and 15-minute bites of knowledge sharing. That might be nutrition, life coaching, skincare, juicing, how to get through the menopause – hundreds, even thousands, of topics people are interested in. Little bits of information to help people live a better life.
“Meanwhile, given this is an audience who may never have been to a gym before, they can start from the beginning with Move: there’ll be 10-minute sessions to learn basic moves for yoga, for example, or five stretches to alleviate lower back pain.
“Because that’s what it’s all about when you get to my age. It isn’t about being very fit any more. We just want to take care of ourselves, to live longer and live better, and we want to do that in an environment we’re comfortable with.”
Which begs the obvious question: will older women be comfortable with a virtual-only club?
“It might be virtual exercise and knowledge on screens, but the clubs will be staffed: they’ll be hi-tech but also high touch, with plenty of people to show new members around, hold their hands, be their companions and their coaches.
“We’re aiming for all instructors to be aged over 40 and even 50+. They’ll be referred to as ‘hosts’ – we aren’t going to use any words that are fitness-related – and we’ll also have karma staff, who will be volunteers who get free membership in return.
“We’ll also have two rooms where local businesses can offer 15-minute appointments with, say, a nutritionist, a naturopath, a hair stylist, a life coach or an energy healer – all those small local businesses out there which don’t have shop front presence, but which are good businesses.
“Many older women don’t have anywhere to go to socialise, so Club W facilities will be like community centres that focus on wellness and activity. There’ll be a wellness lounge where they can come and have a cup of tea, and some days that might be all they’ll do. But if they want to do some activity, there’ll be four different rooms offering Zumba dancing in 15- or 20-minute slots, or perhaps a 30-minute beginner Vinyasa yoga class. The club will also have a meditation zone with Somadome meditation pods.”
Meditation goes mainstream
Here de Leede confidently predicts another trend: “I think these pods will hit the mainstream as soon as they’re being mass produced. We’re already in conversation with a number of operators who see them as a perfect alternative to having sunbeds in their clubs. They take up about the same space, and they can bring in additional revenue in the same way that suntanning can, but meditation is an easy sell whereas sunbeds are controversial – and in fact have been banned in a number of markets, including Australia.
“We’ll also see the pods in offices, airport lounges, hair salons, Starbucks… they’ll be everywhere. We even have plans for what we’re calling the ‘Somahome’.
“But returning to Club W, really this is my end game. This is what it’s all about. I have huge, global aspirations for this brand and I’m really excited about it.
“So all in all we have a lot going on. This is my year of moving quickly. Hopefully I’ll be able to slow down just a tad next year – that’s what I keep trying to do – but it never quite happens. Boredom isn’t an issue in my world, that’s for sure!”
