Without group classes and without private coaching, how can this gym expand to hundreds of stores? | Jike Sports

Author: Wang Li

Editor: Wang Xiaokun

Since California Fitness introduced the "prepaid system" to China, the shadow of "running away after selling membership cards" has been lingering over the fitness industry and is hard to shake off.

It's easy to make money, but for a consumer-oriented industry with relatively weak supervision, a low level of development, and the need for intensive cultivation, this means walking a tightrope. When internal management problems occur or the market environment undergoes a drastic change, enterprises will inevitably encounter operational difficulties.

"Running away after selling membership cards" not only relates to the prepaid system itself but also reflects a long-standing problem in the industry - Without relying on discounts and sales skills, how can fitness, which is "against human nature", be turned into a business with a sound development.

Riding the east wind of the mobile Internet, things have changed. With the aid of technology, new types of gyms represented by LeKe and Super Monkey are making different explorations in terms of cost performance, courses, and experiences, attempting to bring changes to the industry and earn money from "users coming", and the "monthly payment/time card" has also emerged.

During this period, a chain gym called 24/7 FITNESS (hereinafter referred to as "24/7 Fitness") with a similar concept and payment model appeared in Hong Kong, which is separated from Shenzhen by a river. Unlike its mainland counterparts, 24/7 Fitness "emphasizes facilities rather than content" - there are no group classes, and even personal trainers who promote will be punished. They focus on building an operating system, configuring high-end equipment, maintaining the cleanliness of the venue, and even including the air smell.

"Letting guests exercise comfortably and freely, and then gradually obtaining rewards, rather than in the short term, is what we consider a healthier and more long-term model," said Huang Jingyi, the director and CEO of 24/7 Fitness.

Huang Jingyi stands at the entrance of 24/7 FITNESS store

In the six years from 2018 to 2024, 24/7 Fitness has opened more than 100 stores in Hong Kong. Even after experiencing the epidemic, no stores were closed due to financial pressure. According to Huang Jingyi, "Every store in Hong Kong is making a profit at present." After the strategy was verified, Huang Jingyi set her sights on markets outside Hong Kong - Macau, Taiwan, Singapore... The mainland is the most crucial one among them.

How can a fitness chain that doesn't rely on sales and prepaid fees continue to make profits? With this question, 36Kr chatted with Huang Jingyi in mid-September.

Gym, without "Hard Selling"

In addition to the love for sports formed since childhood, another reason why Huang Jingyi decided to start a business is the "hard sell" phenomenon that filled the Hong Kong fitness industry at that time - selling membership cards through various improper means.

The fitness industry in Hong Kong started in the 1980s and 1990s. After the fitness culture was introduced from Europe and the United States, large chain fitness centers called "big venues" emerged in business districts such as Tsim Sha Tsui and Central, with California Fitness and Physical being representative enterprises.

According to Hong Kong media reports, in the early days, gyms were a novelty, and the culture of "thin is beautiful" was prevalent at that time, so it wasn't difficult for gyms to attract customers. However, as the number of competitors increased, the competition gradually became fierce, and the industry fell into a price war. The survival rule of fitness trainers changed from deepening services to desperately forcing customers to make orders, and "hard sell" became the synonym of the industry.

On the eve of Huang Jingyi's entrepreneurship, users' complaints about gyms became rampant. According to the data of the Hong Kong Consumer Council, the number of complaints increased from 221 to 415 from 2017 to 2018; in the same year, the Bad Business Practices Investigation Division of the Hong Kong Customs received 599 reports from the fitness industry. The most exaggerated case is that in 2015, a mentally handicapped man was suspected of being deceived by a fitness center to sign a contract of HK$250,000 and was taken to a finance company to borrow money, with a cumulative debt interest of nearly HK$1 million.

Hong Kong legislator Tang Ka-piu helps the victim to advance the case of the mentally handicapped man being deceived, photographed by Lin Yuxiang

Although the Hong Kong government included "bait-and-switch sales", "misleading omissions" and "fatigue bombing" and other bad marketing methods in the "Trade Descriptions (Amendment) Ordinance" after 2012, and a fitness trainer was sentenced to 40 months in prison for inducing a customer to sign a card worth HK$1.4 million, this kind of consumer trap has still not been eliminated.

  "I know many fitness industry practitioners. They are very professional and don't want to operate their work in this way (hard selling)." Huang Jingyi added, "This is not a problem of people, but a system. So I was thinking, if we give the public a more comfortable payment method, can this industry be improved."

With this idea, Huang Jingyi, who comes from the IT industry, entered the game with her friends. Starting with the payment model, they formulated a whole set of strategies for the user experience.

The first is the deduction method of HK$520 per month after signing the agreement, and the business hours of 24 hours a day, which is convenient for consumers to come at any time. In the venue of 400 to 1,000 square meters, basically all the equipment of the American brand Life Fitness (Hammer strength series) at the level of elite athlete training is used, including aerobic and strength training, and the venue is also certified by Hammer Strength Training Center.

In addition, the cleanliness in the venue is also very crucial. The bathrooms and shower rooms are specially maintained; there is also a medical-grade disinfection system, and the bacterial content is regularly sampled to ensure the cleanliness of the equipment; the air is a fresh air system combined with a Swisher fragrance machine to increase the "breathability"; the thermal imaging system constantly monitors the physical condition of consumers to ensure safety.

The interior of 24/7 Fitness venue

This strategy, which sounds not difficult, has supported 24/7 Fitness to survive for 6 years. "I think the gym is about doing the details so that customers can feel the warmth." Huang Jingyi believes that the building of a gym brand is composed of countless small things.

On this basis, excluding the store manager, each store is equipped with 2 to 3 well-shaped trainers to provide on-site services. They either lead by example to activate the exercise atmosphere, or provide users with some movement guidance. There is no need to promote personal trainers unless the customer initiates the demand.

This practice is also inseparable from Huang Jingyi's concept. She thinks that "trainers are the most valuable to the operation of the gym." The way to retain the enthusiasm of trainers to the greatest extent is not to promise to make a lot of money, but to have no pressure of "meeting the sales target". Only in this way, will fitness trainers voluntarily pay more and infect more people.

Under the Lion Rock, 24/7 Fitness is writing a simple but uncommon story.

The Fitness Industry, Bitter Before Sweet

In the expensive Hong Kong, it is not easy to write the "fitness story", which requires a large investment behind it.

You can often see expressions such as "the gym belongs to heavy assets" in the media and industry reports. The subtext is that merchants have to pay a high cost in the early stage, including but not limited to rent, equipment, labor, etc., so the prepaid system is needed to alleviate the urgent need. This unwritten industry rule has also been transformed into a narrative - there are risks in operating a gym, and in order to operate, merchants need to find someone to share the burden rather than bear it independently.

In Huang Jingyi's opinion, this seems to be a problem. Instead of relying on others, it is necessary to "‘bitter before sweet’, pay first, and after getting through it, slowly receive the rewards."

It is reported that each branch of 24/7 Fitness requires an average investment of HK$4 to 5 million in the early stage. "It is a bit hard to invest these funds at the beginning, but it is a necessary payment."

The same can be reflected in the handling of members during the epidemic. During the three years, 24/7 Fitness has accumulated about 14 months of business suspension. Even though the Hong Kong government has provided subsidies, it is far from making up for the losses. In order to maintain the customer relationship, between letting the customers share the burden and bearing it alone, the Huang Jingyi team chose the latter. During the business suspension, 24/7 Fitness suspended the collection of membership fees and did not extend the contracts.

To Huang Jingyi's surprise, after learning about this situation, a group of customers once came to her and said, "You should collect the money first to support the business. We hope you don't fail."

The gym is related to human feelings, but more importantly, it is a business. It is known that the rent, labor cost and equipment expenses in Hong Kong are high, and the membership fee is not high. In the case of paying alone in the early stage, if you don't expect the non-existent cards, and only rely on the cards in your hand, how to break the situation?

"Occam's Razor" may be the concept closest to the methodology of 24/7 Fitness - Combining mathematical models, research, experience and feedback, and retaining only fixed expenses as much as possible to unify the operational quality.

The first store of 24/7 in Shanghai is being planned

"In order to make it easier for members to use the venue, we must first be profitable. In this process, our focus is more on how to control our own costs."

For example, during the store decoration period, only find customers through online marketing; partners tend to look for fitness trainers, most of whom are willing to stay in the store for a long time and can handle daily receptions and other work, and then there is a cleaner. At least two people can operate the store; during the epidemic, when the old-fashioned gyms hired people to measure body temperature, 24/7 Fitness used machines to automate this action.

Although Huang Jingyi wanted to build a chain fitness brand at the beginning of her entrepreneurship, she is very cautious about opening stores.

For example, initially preset different business difficulties and make a plan to balance all parties; or do not set quantitative indicators and adjust at any time according to the market situation. She described that after opening a store, every customer signed is like saving "points". When the "points" are accumulated to a certain value and the cost is offset, then consider opening the next branch store; when selecting a store location for research, evaluate the lease period with a scale of more than 3 years, and pay special attention to the local business environment.

At the team management level, 24/7 Fitness is "collecting information from the bottom up and formulating methods from the top down" - in addition to relying on local partners who are familiar with the regional situation, 24/7 Fitness also regularly collects customer feedback. Unless a large number of voices are heard, the store will not be opened unless necessary; every month or every six months, Huang Jingyi will also hold a review meeting specifically, where everyone puts forward the difficulties they encounter, discusses them together, and then implements improvements according to the majority opinion.

"We will do a good job in management training for our partners." Huang Jingyi continued, "Generally speaking, we have already determined the solutions to all problems, such as customer complaint handling, but there are always some small exceptions. At this time, we will listen to opinions and improve the rules together."

It is worth noting that the proportion of pure franchisees of 24/7 Fitness is not more than 20%, and more are investment shareholders and friends who have a good relationship with her.

According to Huang Jingyi, due to the different conditions of each store, 24/7 Fitness does not have a unified payback period, usually 9 to 12 months. Up to now, each branch of 24/7 Fitness in Hong Kong has 1,000 to 4,000 members, with a 12-month membership fee of HK$520 per month, and a single-month membership fee of HK$1,020. Assuming that each member consumes HK$520 per month and the number of members is 100,000, then at least HK$52 million in cash flow is generated per month.

24/7 Fitness, which breaks the old industry rules, not only makes fitness more comfortable and gives itself financial security, but also brings a new narrative. Compared with seizing the market share quickly, it may be better to take it slowly.

Focusing on Advanced Fitness People

In fact, the long-standing prepaid problem in the fitness industry is closely related to the attribute of the customer group - novice users.

The reason is not difficult to understand. When fitness becomes a popular culture, a class symbol, and even a national strategy, it is difficult for people not to be shaped. Sports or physical education also seems to be changing from an optional "elective course" to a "required course" for further studies. Taking the situation in regions with a mature industry level and applying it to the market in China where novice users are everywhere, what follows is an imaginative "profit prospect" and a group of eager industrial forces.

However, the imagined money is not easy to earn. Even though the volume is huge, novice users are not a stable customer group. Human nature, the consumption environment, other entertainment methods... Too many invisible factors affect fitness consumption.

Therefore, Huang Jingyi focuses on people who have a certain foundation and often exercise, while also being compatible with novice users, even if the market figures are not so attractive.