Episode #606: Building Planet Fitness-Joe Pepe Jr. on Family Legacy, Private Equity, and Scaling Fitness Clubs

1
00:00:01,440 --> 00:00:05,120
This is Pete Moore on Halo Talks nyc. I have the pleasure of

2
00:00:05,120 --> 00:00:08,480
bringing to our Halo Talks audience one of the

3
00:00:08,480 --> 00:00:12,200
largest Planet Fitness area developers and a good friend of

4
00:00:12,200 --> 00:00:15,640
mine from the legacy health club industry from the

5
00:00:15,640 --> 00:00:19,480
Northeast, the Joe Pepe senior and junior family. Joe

6
00:00:19,480 --> 00:00:23,280
Pepe Jr, welcome to your first Halo Talks. Thanks

7
00:00:23,280 --> 00:00:27,040
Pete. It's great to be here with you. Awesome. So, you know, I've known you

8
00:00:27,040 --> 00:00:30,780
guys since back in the day when you had your cluster of

9
00:00:30,780 --> 00:00:34,220
clubs and then did a deal with

10
00:00:34,300 --> 00:00:38,100
Omar who I went to business school with and you know, you and

11
00:00:38,100 --> 00:00:41,860
I met, I think your dad was dressed in a nice suit when I met

12
00:00:41,860 --> 00:00:45,620
him and you know, was always one of the thought leaders and action

13
00:00:45,620 --> 00:00:49,180
leaders in the industry. So for the people that don't know about the

14
00:00:49,180 --> 00:00:52,580
Pepe family and the health club industry, maybe give a little bit of a quick

15
00:00:52,580 --> 00:00:55,910
primer here to start. Yeah, so the family

16
00:00:56,150 --> 00:00:59,830
goes way back. I mean, my dad has been in the industry since I would

17
00:00:59,830 --> 00:01:03,510
say the late 70s. I mean he worked in, you know, European health spa and

18
00:01:03,990 --> 00:01:07,550
ultimately, you know, was the cosmic entrepreneur early

19
00:01:07,550 --> 00:01:10,390
80s, opened a women's only gym and then

20
00:01:11,030 --> 00:01:14,830
eventually owned a few World Gyms and Goals gyms, you know, kind of

21
00:01:14,830 --> 00:01:18,470
through the late 80s, early 90s. And so

22
00:01:19,110 --> 00:01:22,110
yeah, he's been in the industry for a very long time. You know, in

23
00:01:22,110 --> 00:01:25,690
2003 is when he kind of heard about the Planet Fitness

24
00:01:25,690 --> 00:01:29,410
brand. And I guess the story was he had a few

25
00:01:29,410 --> 00:01:33,170
clubs in Connecticut, non Planet Fitness, and a big box competitor was

26
00:01:33,170 --> 00:01:37,010
coming into his market in the club that he sort of worked out

27
00:01:37,010 --> 00:01:39,849
of, like literally had his office in that club and

28
00:01:40,970 --> 00:01:44,570
realized he, you know, they were, they were lower price and

29
00:01:45,370 --> 00:01:48,930
probably nicer facility. And so he, yeah, he set up a meeting

30
00:01:48,930 --> 00:01:52,730
with Planet Fitness, you know, founders at the time. Again,

31
00:01:52,730 --> 00:01:55,850
this goes back to 03 and made the decision to, to switch over to Planet

32
00:01:55,850 --> 00:01:58,970
Fitness, his three clubs then in Connecticut.

33
00:01:59,450 --> 00:02:02,770
It's kind of the big news of the times. He's very well known in, in

34
00:02:02,770 --> 00:02:06,490
the World Gym atmosphere and, and being a gold's licensee as

35
00:02:06,490 --> 00:02:10,170
well. And so I think he was really part of, you know, the real early

36
00:02:10,170 --> 00:02:13,930
days of Planet. I think he, we had, you know, location number eight

37
00:02:14,170 --> 00:02:17,850
out of, you know, close to 3,000. Now we were franchisee number something

38
00:02:17,850 --> 00:02:21,660
like three. And, and again, just through his connections with World Gym owners,

39
00:02:21,660 --> 00:02:25,220
et cetera, you started to see some more people get interested in the Planet

40
00:02:25,220 --> 00:02:29,060
Fitness brand and start to convert over. And so yeah, so we owe a lot

41
00:02:29,060 --> 00:02:32,860
to him as being, you know, our Founder here and, you know, setting a great

42
00:02:32,860 --> 00:02:35,820
culture. I mean, he's a person that cares about culture and

43
00:02:36,620 --> 00:02:40,340
the member experience and you know, we continue to preach that in our business every

44
00:02:40,340 --> 00:02:44,180
day. And a little known fact that probably most people don't

45
00:02:44,180 --> 00:02:47,570
know is that at one point Planet Fitness acquired World

46
00:02:47,570 --> 00:02:51,330
Gym. The franchisor tried their hardest to convert as

47
00:02:51,330 --> 00:02:55,050
many World Gym owners to the Planet business

48
00:02:55,130 --> 00:02:58,770
model and brand. And a lot of them didn't want to do it, which

49
00:02:58,770 --> 00:03:02,330
they probably regret. And then Planet ended up

50
00:03:02,570 --> 00:03:06,210
selling the World Gym franchisor to a group

51
00:03:06,210 --> 00:03:09,650
out of California. But an interesting, you know, kind of

52
00:03:09,650 --> 00:03:13,370
footnote on the Planet Fitness, you know, desire

53
00:03:13,370 --> 00:03:17,090
to rebrand legacy clubs into the

54
00:03:17,090 --> 00:03:20,850
Planet model. And that was pretty much you probably the

55
00:03:20,850 --> 00:03:24,610
only successful, you know, case study on that as far

56
00:03:24,610 --> 00:03:28,290
as I know, you know, so kudos to you and your dad

57
00:03:28,290 --> 00:03:32,010
for recognizing that the business model was a disruptor

58
00:03:32,490 --> 00:03:36,170
at the time and, you know, getting in on the ground floor of

59
00:03:36,170 --> 00:03:39,810
that. So when did you actually start working inside the club?

60
00:03:39,810 --> 00:03:43,330
You know, excluding, you know, child labor law, including issues?

61
00:03:43,810 --> 00:03:47,410
Yeah, I mean, go back to before I. Yeah,

62
00:03:47,410 --> 00:03:50,530
I should have been, but I've always, you know, spent time in the clubs for

63
00:03:50,530 --> 00:03:53,970
sure. I actually got involved in the business in 2007. So I went to college,

64
00:03:54,930 --> 00:03:58,730
graduated in 07, and, you know, it was an interesting

65
00:03:58,730 --> 00:04:02,450
time. Planet Fitness was growing rapidly at the time. I was an economics major. You

66
00:04:02,450 --> 00:04:06,210
know, I thought I'd go into consulting or banking or finance

67
00:04:06,210 --> 00:04:09,690
or something along those lines. And, you know, the person who actually recruited me to

68
00:04:09,690 --> 00:04:13,010
come to Planet Fitness was someone who's been on your show before, CJ Bouchard.

69
00:04:13,830 --> 00:04:16,870
CJ is the CEO of Excel, another large

70
00:04:17,190 --> 00:04:20,710
franchisee group. I'd known CJ since I was a kid. He used to live in

71
00:04:20,710 --> 00:04:24,030
Connecticut. And as I was trying to figure out what I wanted to do, I

72
00:04:24,030 --> 00:04:27,390
remember him calling me as a senior in college. I was like, look, this Planet

73
00:04:27,390 --> 00:04:30,990
thing is really interesting and I could use some help here in North

74
00:04:30,990 --> 00:04:34,710
Carolina. So I actually decided to move to Raleigh, North Carolina out of

75
00:04:34,710 --> 00:04:38,230
college, learn the business from the ground up, noticed that it was a

76
00:04:38,230 --> 00:04:40,870
disruptor and really didn't want to work in the family business, I guess is the

77
00:04:40,870 --> 00:04:43,970
way I would explain it. So I worked for CJ for a couple years

78
00:04:44,530 --> 00:04:48,330
and again, open clubs, was a GM in a

79
00:04:48,330 --> 00:04:52,130
store, kind of learned the business and was there for,

80
00:04:52,130 --> 00:04:55,690
for some time. Ended up coming back to Connecticut a little while

81
00:04:55,690 --> 00:04:59,410
later to work with my father's group

82
00:04:59,410 --> 00:05:03,050
who had some partners that were, you know, we Were

83
00:05:03,050 --> 00:05:06,290
scaling, we were trying to grow and need more help. And, and

84
00:05:06,690 --> 00:05:10,290
so I came up to Connecticut and you know, helped grow our business to about

85
00:05:10,290 --> 00:05:14,000
15 locations as of 2012 aside, sort of a director of

86
00:05:14,000 --> 00:05:17,640
operations role. And then in 2012 is when, you know,

87
00:05:17,640 --> 00:05:21,080
we had brought on our first private equity partner.

88
00:05:21,240 --> 00:05:25,080
You mentioned Omar Simmons earlier. He was runs

89
00:05:25,080 --> 00:05:28,680
Exalter Capital Partners. And, and at the time is interesting, I,

90
00:05:29,800 --> 00:05:32,440
I was like, I'm going to have to take my GMATs and go to business

91
00:05:32,440 --> 00:05:34,480
school and figure out what I want to do with my life because, you know,

92
00:05:34,480 --> 00:05:38,010
private equity is coming in, is going to, going to buy our business. Omar, great.

93
00:05:38,010 --> 00:05:41,730
Gave me an incredible opportunity to stay and actually get my

94
00:05:42,210 --> 00:05:45,610
MBA. So we went through the deal in

95
00:05:45,610 --> 00:05:49,450
2012 and yeah, so. And then from 2014 I did an

96
00:05:49,450 --> 00:05:52,930
executive MBA program at Columbia from 2014 to 2016,

97
00:05:53,329 --> 00:05:57,090
which is awesome. And then, you know, call it 2012 we had 15 stores

98
00:05:57,090 --> 00:06:00,930
that we sold. We grew to 108 over the next, call it nine years,

99
00:06:01,330 --> 00:06:04,450
about half through acquisitions of other planets, half through

100
00:06:04,610 --> 00:06:07,470
Greenfield stores. And then in

101
00:06:07,470 --> 00:06:11,070
2021, we sold to a new private

102
00:06:11,070 --> 00:06:14,710
equity firm that's owned us for the last four and a half years. And

103
00:06:14,710 --> 00:06:18,150
they've just been, you know, tremendous sponsors as well. So it's been, it's been interesting

104
00:06:18,150 --> 00:06:21,870
to see the evolution from again, this family business to a private equity, you

105
00:06:21,870 --> 00:06:25,390
know, scale business. And it's been a great ride. Yeah.

106
00:06:25,630 --> 00:06:29,310
Just as a, as a footnote, Omar and I went to Harvard Business School together.

107
00:06:29,790 --> 00:06:33,510
And at our 25 year reunion a couple years ago, we did

108
00:06:33,510 --> 00:06:37,150
a case study on his acquisition of Planet. And I

109
00:06:37,150 --> 00:06:40,630
had two rotary phones next to each other and we kind of

110
00:06:40,710 --> 00:06:44,390
redramatized the conversations. Hey, should I buy

111
00:06:44,390 --> 00:06:47,750
Planet? I'm like, yeah, you should definitely buy Planet. How do you feel about the

112
00:06:47,750 --> 00:06:51,550
franchisor? Wish they had private equity, maybe a little more predictable. And then

113
00:06:51,550 --> 00:06:54,270
they got private equity and then he's like, hey, I'm going to double down on

114
00:06:54,270 --> 00:06:58,030
this deal. Like, good idea, get more territory. Good idea. So we

115
00:06:58,030 --> 00:07:01,860
joke around that it was my pro bono banking relationship with

116
00:07:01,860 --> 00:07:05,700
a good friend from business school that turned out to be a big home run

117
00:07:05,700 --> 00:07:09,500
and success story for everybody involved. Yeah, so, so, you

118
00:07:09,500 --> 00:07:12,900
know, as you, you know, kind of started working in the business

119
00:07:13,140 --> 00:07:16,900
and understood the, the Planet business model, what

120
00:07:16,900 --> 00:07:20,500
kind of got you so excited about it to say, hey, I'm gonna do this

121
00:07:20,500 --> 00:07:23,940
as a career. And how early on did you know, like,

122
00:07:24,100 --> 00:07:27,520
hey, this is, this is something special here? Yeah,

123
00:07:27,760 --> 00:07:31,320
I can't say I knew that early on at the time, again, kind of

124
00:07:31,320 --> 00:07:35,040
mid-2000s, it was just such a disruptor. It was serving a market

125
00:07:35,920 --> 00:07:39,680
in a demographic that was underserved. Right. It sort of democratized

126
00:07:39,680 --> 00:07:43,440
fitness, it knocked down barriers in terms of intimidation,

127
00:07:44,240 --> 00:07:47,520
and then it was at a price point that was just affordable for everybody. And

128
00:07:47,520 --> 00:07:51,000
so really serious about clean, comfortable, non

129
00:07:51,000 --> 00:07:54,620
intimidating. And you know, you just saw that as you,

130
00:07:55,020 --> 00:07:57,740
you know, it was a business that you can, you can scale, it was a

131
00:07:57,740 --> 00:08:00,860
little bit less intensity in terms of the business model.

132
00:08:01,420 --> 00:08:04,020
And you know, I, I, I don't think there was ever a point where I

133
00:08:04,020 --> 00:08:06,740
was like, this is the thing. I think it's just, it just, you know, you

134
00:08:06,740 --> 00:08:10,580
surround yourself with good people. You learn along the way. I'm always impressed by the

135
00:08:10,580 --> 00:08:13,980
franchisee network and the franchisor as well. And it's just continued to

136
00:08:14,220 --> 00:08:17,940
compound incredibly well. It's, it's a, it's a resilient brand that,

137
00:08:17,940 --> 00:08:21,010
you know, I'm really proud to be a part of. And so I think it's

138
00:08:21,010 --> 00:08:24,650
just over time, you know, kind of morphed into this thing that's become, you

139
00:08:24,650 --> 00:08:28,370
know, a sizable business and we're impacting so many lives in the

140
00:08:28,370 --> 00:08:30,330
communities that we serve and that's what we're really proud of.

141
00:08:33,690 --> 00:08:37,250
This is Pete Moore. I want to let you in on a little secret. There's

142
00:08:37,250 --> 00:08:40,650
this company called Promotion Vault. And what they do is they give out rewards

143
00:08:40,970 --> 00:08:44,650
from retailers that allow you to incentivize your

144
00:08:44,650 --> 00:08:48,470
members without having to do 0 down and 1 month free

145
00:08:48,790 --> 00:08:52,550
or giving away shakes or giving away T shirts. What you want to

146
00:08:52,550 --> 00:08:56,390
do is build a rewards program that lasts, that people value

147
00:08:56,710 --> 00:09:00,350
and that doesn't discount your own products and services. So here's the

148
00:09:00,350 --> 00:09:04,150
deal. There's something called Rewards Vault. The Rewards Vault is going

149
00:09:04,150 --> 00:09:07,950
to allow a member to set up their own profile. They are going

150
00:09:07,950 --> 00:09:11,430
to answer questions, you are going to get those answers, you're going to be able

151
00:09:11,430 --> 00:09:15,240
to target those members and you're going to reward them and inside your club,

152
00:09:15,560 --> 00:09:19,080
inside your spa and outside of the club and outside of the

153
00:09:19,080 --> 00:09:22,800
spa to get them to become loyal, to get them to pay their

154
00:09:22,800 --> 00:09:26,640
monthly dues and to be rewarded properly for the

155
00:09:26,640 --> 00:09:30,200
actions. A lot of companies are cutting back on rewards. You shouldn't be

156
00:09:30,280 --> 00:09:33,240
Promotion Vault, your answer, trust me, this is real.

157
00:09:37,400 --> 00:09:41,240
You know, thinking back to, you know, when you were probably sitting at the

158
00:09:41,240 --> 00:09:44,720
kitchen table and I kind of remember this myself, when my dad was running a

159
00:09:44,720 --> 00:09:48,500
company and he was the CEO and you come back with inventory reports

160
00:09:48,500 --> 00:09:52,220
and talk about ownership and, you know, growth and new product lines.

161
00:09:52,220 --> 00:09:56,060
He was in the food service equipment business. But when you think about, you know,

162
00:09:56,060 --> 00:09:59,820
back to some of the dinner table conversations, probably with your

163
00:09:59,820 --> 00:10:03,660
dad, when you guys are running, you know, only a few clubs and you

164
00:10:03,660 --> 00:10:07,460
know, maybe taking out a loan with a, you know, personal guarantee

165
00:10:07,460 --> 00:10:11,300
or maybe a mortgage or, you know, leverage your home equity line and just

166
00:10:11,300 --> 00:10:14,930
kind of bet it all. Versus now looking at how private

167
00:10:14,930 --> 00:10:18,170
equity kind of looks at companies, looks at scale,

168
00:10:18,970 --> 00:10:22,250
knowing that you don't have to put down a sign of personal guarantee on the

169
00:10:22,250 --> 00:10:25,970
loan, on the lease, on the equipment, on anything, you can really just focus

170
00:10:25,970 --> 00:10:29,410
on growth. If it

171
00:10:29,410 --> 00:10:33,170
pencils out and you can execute on that plan. What are

172
00:10:33,170 --> 00:10:36,770
some of the takeaways that you've had on the ability to

173
00:10:36,770 --> 00:10:40,230
have rapid growth and know, thinking about that as, you know, an

174
00:10:40,230 --> 00:10:43,710
independent operator versus a, you know, private equity backed portfolio company

175
00:10:43,710 --> 00:10:46,350
CEO. Yeah. First of all, I say, you know,

176
00:10:47,230 --> 00:10:50,950
private equity typically invests in businesses that were, you know, founded by somebody

177
00:10:50,950 --> 00:10:53,870
who took a risk at some point. Right. And I do hear the old stories

178
00:10:53,870 --> 00:10:57,510
of, you know, my fathers would, would tell me, oh, this business I did on

179
00:10:57,510 --> 00:11:00,270
a credit card and then I had two credit cards and I maxed that one

180
00:11:00,270 --> 00:11:03,230
out. So I did. And. And it was really like that. Right. I've been there.

181
00:11:03,630 --> 00:11:07,170
Yeah. And so, you know, when I think private

182
00:11:07,170 --> 00:11:10,850
equity is, you know, it, you know, capital is an accelerant.

183
00:11:10,850 --> 00:11:13,970
Right. And it provides you the ability to grow faster.

184
00:11:14,930 --> 00:11:18,290
Our partners now have just made, you know, intentional

185
00:11:18,290 --> 00:11:21,970
investments to, you know, build a real scalable platform. So you think about,

186
00:11:21,970 --> 00:11:25,810
you know, the people you're able to hire. You know, marketing, real estate, construction

187
00:11:25,810 --> 00:11:28,850
operations, human capital, finance. You know,

188
00:11:29,490 --> 00:11:32,850
they've really allowed us to build out a great team.

189
00:11:33,090 --> 00:11:36,390
And, and at the end of the day though,

190
00:11:36,470 --> 00:11:39,670
Pete, you make decisions as an entrepreneur based on

191
00:11:40,070 --> 00:11:43,670
how do you allocate capital for the highest return. And so

192
00:11:44,230 --> 00:11:47,030
private equity is the same thing. Where are we going to get the best return

193
00:11:47,030 --> 00:11:50,870
on our capital? I think the timeline is obviously different and

194
00:11:50,870 --> 00:11:54,310
so you have a little bit more strict in terms of

195
00:11:54,630 --> 00:11:58,230
how quickly you're generating the returns that a private

196
00:11:58,230 --> 00:12:02,070
equity group is seeking. But I've enjoyed being in that environment. You have a

197
00:12:02,070 --> 00:12:05,850
board of directors, you have true governance, you have operational

198
00:12:05,850 --> 00:12:09,090
rigor, which is amazing. And you have

199
00:12:09,650 --> 00:12:13,370
the capital to be able to do things like acquisitions like put

200
00:12:13,370 --> 00:12:16,610
up new stores very quickly. And you probably,

201
00:12:17,570 --> 00:12:21,250
you take some risk too. We have very much

202
00:12:21,250 --> 00:12:24,730
a kind of test and learn philosophy Here we test different things and we learn

203
00:12:24,730 --> 00:12:27,250
from it, and the best idea wins. And so

204
00:12:28,370 --> 00:12:32,170
it's different, but in a lot of ways the same in terms of, at

205
00:12:32,170 --> 00:12:35,370
the end of the day in our business, it's. It's the member experience and are

206
00:12:35,370 --> 00:12:39,130
the customers getting a great experience at the club level. And we, we try

207
00:12:39,130 --> 00:12:42,890
and keep that, you know, very much alive today. Yeah. You know,

208
00:12:42,890 --> 00:12:46,730
as you take a look at how Planet has evolved and

209
00:12:46,730 --> 00:12:50,370
become a public company, you know, and you've got a lot of private equity

210
00:12:50,370 --> 00:12:54,130
in a lot of different territories. How do you, you know,

211
00:12:54,130 --> 00:12:57,250
share ideas or best practices with. With some of the other

212
00:12:58,400 --> 00:13:02,000
area developers? Obviously, cj, you know, is a friend of yours and a good

213
00:13:02,000 --> 00:13:05,680
friend. I've been, you know, Integrity Square has gotten involved with several

214
00:13:05,680 --> 00:13:09,440
planetary developers on growth, and I feel like there's a lot of.

215
00:13:10,640 --> 00:13:14,360
A lot of accelerated flow of like, hey, this is how you should do

216
00:13:14,360 --> 00:13:17,600
it. You know, rebranding. This is how I, you know, and I feel, you know,

217
00:13:17,600 --> 00:13:20,800
talk maybe a little bit about what the franchisee network

218
00:13:21,120 --> 00:13:24,930
provides you and how you've kind of leveraged that tremendous.

219
00:13:24,930 --> 00:13:28,410
I mean, some of my, you know, closest business colleagues,

220
00:13:28,570 --> 00:13:32,410
you know, are in the franchisee network from, you know, we have various committees

221
00:13:32,410 --> 00:13:35,970
that work very closely with our, with our headquarters, Planet Fitness

222
00:13:35,970 --> 00:13:39,450
headquarters, on all things around our business, marketing and operations

223
00:13:39,450 --> 00:13:42,810
and site selection and, you know, human capital.

224
00:13:42,970 --> 00:13:46,770
And so, you know, a lot of times the value of being

225
00:13:46,770 --> 00:13:50,580
in a franchise is being able to share those ideas. And, hey, I already went

226
00:13:50,580 --> 00:13:54,220
through this and here's how I handled it. You know, there's a

227
00:13:54,460 --> 00:13:58,100
Planet Fitness independent Franchisee council that, you know, meets regularly

228
00:13:58,100 --> 00:14:01,740
and really has just a, you know, a great

229
00:14:01,740 --> 00:14:05,500
relationship with the franchisor and amongst each other. We have conferences and

230
00:14:05,660 --> 00:14:09,420
meetings and workshops. And so you learn so much from that network.

231
00:14:09,500 --> 00:14:12,940
And I owe a lot to them. And I think being able to

232
00:14:13,340 --> 00:14:16,980
share those best practices debate on certain things is great. It

233
00:14:16,980 --> 00:14:20,800
brings out the best ideas and that's where we get a lot of our, you

234
00:14:20,800 --> 00:14:24,480
know, kind of evolution from. Yeah. And then from a standpoint of

235
00:14:24,480 --> 00:14:28,280
marketing, the, you know, I run this Halo Academy, so we, we

236
00:14:28,280 --> 00:14:31,680
go through case studies and we go through the franchise disclosure documents

237
00:14:32,320 --> 00:14:35,680
and the amount of money that Planet spends on a club by club

238
00:14:35,680 --> 00:14:39,160
basis for marketing, you know, not just a

239
00:14:39,160 --> 00:14:42,880
2% ad fund that, you know, get you some pretty nice exposure

240
00:14:42,880 --> 00:14:46,640
during, you know, when the ball drops in Times Square and everyone's

241
00:14:46,640 --> 00:14:50,360
wearing Planet Fitness gear. I'm sure it doesn't, doesn't hurt. Sales for the first

242
00:14:50,360 --> 00:14:53,980
couple weeks of the year. But the local marketing's never been something that

243
00:14:53,980 --> 00:14:57,500
has been diminished or under,

244
00:14:57,900 --> 00:15:01,660
you know, under invested in. So talk about for a

245
00:15:01,660 --> 00:15:05,380
minute, if you can, how Planet really goes in and saturates a

246
00:15:05,380 --> 00:15:09,180
market. And that is a relentless and continuous part

247
00:15:09,180 --> 00:15:12,580
of the business model. Where I see a lot of clubs will do like, you

248
00:15:12,580 --> 00:15:15,620
know, grand opening and they'll spend some money and then they'll kind of ratchet it

249
00:15:15,620 --> 00:15:19,260
back. But Planet's really like, hey, I'm going to continuously get anybody

250
00:15:19,730 --> 00:15:23,490
here that wants to enter the industry as a, as a member, like

251
00:15:23,490 --> 00:15:27,050
we want them. Yeah, we continue to believe in

252
00:15:27,050 --> 00:15:30,490
marketing in so many ways. I think it's just getting, you know, us, you know,

253
00:15:30,490 --> 00:15:33,570
at ignite, continuing to get smarter with, you know,

254
00:15:33,970 --> 00:15:37,810
performance marketing and where those local dollars are going and how they're allocated.

255
00:15:37,810 --> 00:15:41,090
And you know, we've invested in a marketing mix model to

256
00:15:41,570 --> 00:15:45,370
look at that allocation and be smarter with where we're spending. But

257
00:15:45,370 --> 00:15:48,530
we're not trying to pull back spending. We are, you know, we continue to believe

258
00:15:49,420 --> 00:15:53,020
that we are the gym for first time gym goer

259
00:15:53,500 --> 00:15:57,220
and people that may not be a member of a gym. And

260
00:15:57,220 --> 00:16:01,020
so that's always been Planet's bread and butter and that's been sort

261
00:16:01,020 --> 00:16:04,860
of our, you know, brand promise. And there continues to be,

262
00:16:04,939 --> 00:16:08,460
you know, a large percentage of the population that is not,

263
00:16:08,940 --> 00:16:12,420
you know, a member of a gym. And so we, we think we should be

264
00:16:12,420 --> 00:16:16,270
continuing to market throughout the year because there's

265
00:16:16,270 --> 00:16:19,470
some seasonality in our business for sure. But I think now more than ever with

266
00:16:19,470 --> 00:16:22,670
just the tailwinds you see in the industry,

267
00:16:22,750 --> 00:16:26,350
GLP1s and health and

268
00:16:26,350 --> 00:16:28,910
wellness recovery technology,

269
00:16:30,030 --> 00:16:33,790
personalized technology for fitness, there's much more

270
00:16:33,790 --> 00:16:35,950
awareness for it. But at the end of the day, you got to do the

271
00:16:35,950 --> 00:16:39,590
work, you still got to work out. And so we believe in continuing to market.

272
00:16:39,590 --> 00:16:42,770
It helps build up our competitive advantage and

273
00:16:42,930 --> 00:16:46,610
emote, you know, if you are. Yeah, yeah, you know, how, how has,

274
00:16:47,810 --> 00:16:51,410
how have you been able to benefit from the growth

275
00:16:51,570 --> 00:16:55,130
where, you know, there are guys that are, you know, either assistant general

276
00:16:55,130 --> 00:16:58,970
manager or general manager becomes a district manager. How have you kind

277
00:16:58,970 --> 00:17:02,770
of been able to use that bench and how have you been able to,

278
00:17:02,930 --> 00:17:06,050
you know, not have to bring people in like at the top level, but you

279
00:17:06,050 --> 00:17:09,800
actually like growing a team. You know, the people in

280
00:17:10,120 --> 00:17:13,840
front of our members are the most important. Right. And so building that

281
00:17:13,840 --> 00:17:17,400
management layer is critical. You know, we've continued to invest more

282
00:17:17,400 --> 00:17:21,120
dollars in the people that are closer to Our members so the people out

283
00:17:21,120 --> 00:17:24,840
in the field. So thinking of things like, you know, having a GM in every

284
00:17:24,840 --> 00:17:28,600
club, an assistant manager, you know, up to district managers

285
00:17:28,600 --> 00:17:31,800
and regional directors, that is so critical in our markets.

286
00:17:32,360 --> 00:17:35,940
And you know, building that bench is something

287
00:17:35,940 --> 00:17:39,780
we're super focused on from our ops team and our human capital team. And how

288
00:17:39,780 --> 00:17:43,420
do we onboard, how do we develop, how do we keep people growing?

289
00:17:43,420 --> 00:17:47,060
And you know, we can go across our business here at Ignite and

290
00:17:47,060 --> 00:17:50,900
there are so many stories of people that came in as probably minimum wage, you

291
00:17:50,900 --> 00:17:54,660
know, front desk worker and now have progressed, you know, three, four, five

292
00:17:54,660 --> 00:17:58,180
layers on. It's great to see, brings you a lot of,

293
00:17:58,340 --> 00:18:02,120
a lot of joy to see people develop that are truly bought in and, and

294
00:18:02,280 --> 00:18:05,560
you know, and enjoy being part of something bigger. You know, you're working in a

295
00:18:05,560 --> 00:18:08,960
club, you're in that one store, you know, but when you have 140 across our

296
00:18:08,960 --> 00:18:12,720
portfolio, we try and bring teams together for things like town halls

297
00:18:12,720 --> 00:18:16,560
and sharing best practices workshops. And so I think that

298
00:18:16,560 --> 00:18:19,280
goes a long way. And, and at the end of the day we always say

299
00:18:19,280 --> 00:18:22,680
that the people in our store are most important. They're, they treat our people well

300
00:18:22,680 --> 00:18:25,640
in the store, they'll treat our members well. Keep them coming back.

301
00:18:26,450 --> 00:18:29,810
We talk about our non negotiables all the time in our stores. It's a hello

302
00:18:29,810 --> 00:18:33,490
and goodbye. It's your cleanliness of your store and it's your,

303
00:18:33,730 --> 00:18:36,850
you know, we call it machine kind of, kind of downtime. You know,

304
00:18:37,410 --> 00:18:41,130
your machines work. Is the store clean and are you giving a real great

305
00:18:41,130 --> 00:18:44,930
hello and goodbye Learning members names. Ask them how they feel after a workout.

306
00:18:45,170 --> 00:18:48,490
That's the most important thing and that's how we're touching, you know, so many customers

307
00:18:48,490 --> 00:18:52,180
every day. This is

308
00:18:52,180 --> 00:18:55,580
Pete Moore. Here's the last tip for you of the podcast.

309
00:18:55,820 --> 00:18:58,780
We are partnered up with a company called higher dose

310
00:18:58,940 --> 00:19:02,380
higherdose.com they are the leader in

311
00:19:02,620 --> 00:19:05,500
workout recovery products. Infrared technology,

312
00:19:06,220 --> 00:19:09,740
LED light masks, neck enhancers and

313
00:19:09,980 --> 00:19:13,660
other products such as PEMF mats and sauna

314
00:19:13,660 --> 00:19:16,940
blankets. If you have not gotten on the workout

315
00:19:16,940 --> 00:19:20,320
recovery train yet, your time and your stop

316
00:19:20,480 --> 00:19:24,040
is now. You got to get these products in there before these workout

317
00:19:24,040 --> 00:19:27,280
recovery and spas end up saturating your market.

318
00:19:27,600 --> 00:19:31,200
Having your members walk out of the club and going into one of their locations

319
00:19:31,200 --> 00:19:34,839
for 200 bucks per month where they're paying 39 to

320
00:19:34,839 --> 00:19:38,680
you. Let's become an expert in workout recovery. If we

321
00:19:38,680 --> 00:19:42,000
are already an authority in workouts, Higher dose,

322
00:19:42,480 --> 00:19:46,100
check it out. There's a Wholesale code. And we look

323
00:19:46,100 --> 00:19:49,380
forward to helping you augment your products and services

324
00:19:49,780 --> 00:19:53,580
to meet the demands of your members. And hey, let's get people

325
00:19:53,580 --> 00:19:57,420
happy, healthy and sweating. And the recovery should be

326
00:19:57,420 --> 00:19:58,660
just as good as the workout.

327
00:20:03,620 --> 00:20:07,300
So I'd say for, I don't know, before a couple

328
00:20:07,300 --> 00:20:11,140
years ago, there weren't that many acquisitions that were being made

329
00:20:11,140 --> 00:20:14,800
by Planet Area developers of independent operators.

330
00:20:14,800 --> 00:20:18,200
It was mostly greenfield growth. I think maybe given

331
00:20:18,760 --> 00:20:22,440
the cost of construction, the time it takes to construct, and also the

332
00:20:22,440 --> 00:20:26,120
dynamics of independent operators such as Golden

333
00:20:26,120 --> 00:20:29,560
Gyms or World Gym operators that maybe don't have

334
00:20:29,640 --> 00:20:33,360
any, anyone in the business from a succession standpoint. The kids don't work

335
00:20:33,360 --> 00:20:37,000
in the business. Their general manager doesn't want to buy or cannot get the

336
00:20:37,000 --> 00:20:39,640
financial resources to buy it. So we've done.

337
00:20:40,950 --> 00:20:44,790
We did a deal down in Houston last year with Scott Sanders, picking

338
00:20:44,790 --> 00:20:48,470
up five fitness projects, which used to be Gold's Gyms. I heard that was,

339
00:20:48,550 --> 00:20:52,390
you know, very successful transaction and integration.

340
00:20:52,950 --> 00:20:56,669
CJ with Excel acquired Texas Family Fitness down in

341
00:20:56,669 --> 00:21:00,310
Dallas. So how do you kind of see this next evolution of growth

342
00:21:00,390 --> 00:21:04,110
where, you know, I'm sure you got plenty of greenfield opportunities, you know, you know,

343
00:21:04,110 --> 00:21:07,710
that, that what, you know, when I sign on a dotted line, you know, that

344
00:21:07,710 --> 00:21:11,470
thing's not opening for, you know, 6 to 12 to 18 months, depending on the

345
00:21:11,470 --> 00:21:15,110
development schedule, versus kind of, you

346
00:21:15,110 --> 00:21:18,670
know, honing in on, hey, if I could do acquisitions here, I could

347
00:21:18,670 --> 00:21:22,390
rebrand it Planet Corporate. Obviously, you know, is, is, is okay with

348
00:21:22,390 --> 00:21:26,110
that and encouraging that now, where I think they weren't really that excited about

349
00:21:26,110 --> 00:21:29,270
it before a couple years ago. So how do you see that as kind of

350
00:21:29,270 --> 00:21:33,030
another, you know, channel of growth? And how

351
00:21:33,030 --> 00:21:36,300
do you kind of view going into that M and A game

352
00:21:36,540 --> 00:21:40,300
versus the Greenfield game? Yeah, very different muscles, I would say,

353
00:21:40,300 --> 00:21:43,740
you know, the, the M and A game is, you know, kind of speed

354
00:21:43,740 --> 00:21:47,460
integration, you know, culture reset maybe, you know,

355
00:21:47,460 --> 00:21:51,300
but really it's sort of the, the integration and, and obviously working

356
00:21:51,300 --> 00:21:54,940
with the seller and, and making it, you know, something that's

357
00:21:54,940 --> 00:21:57,420
appealing to them. You know, I think, you know, we've done some of these in

358
00:21:57,420 --> 00:22:01,260
the past, and usually it is somebody who wants to, you know,

359
00:22:01,260 --> 00:22:04,700
get some liquidity or monetize their business in some way and maybe doesn't have a

360
00:22:04,700 --> 00:22:08,020
successor or, you know, or it could be something as simple as, hey, I have

361
00:22:08,020 --> 00:22:11,660
multiple locations and this one is, you know, the, the, the lease is

362
00:22:11,660 --> 00:22:14,060
up and, you know, what do I, what do I want to do here? Do

363
00:22:14,060 --> 00:22:17,460
I want to re up or reinvest or, you know, is there an opportunity or,

364
00:22:17,460 --> 00:22:21,300
you know, am I in a competitive market where it might make sense to.

365
00:22:22,260 --> 00:22:25,860
To sell in some way? And so we, you know, I think we, we don't

366
00:22:25,860 --> 00:22:28,900
go in there high pressure. We're, you know, we're out there. We're talking to a

367
00:22:28,900 --> 00:22:32,500
lot of our competitors through different, you know, industry panels and things. And

368
00:22:32,500 --> 00:22:35,860
so we know a lot of them. I think it's a matter of just, you

369
00:22:35,860 --> 00:22:39,340
know, going in the right way and making it a situation where, you know, they

370
00:22:39,340 --> 00:22:43,180
can have an opportunity to continue on. And it provides, you know,

371
00:22:43,180 --> 00:22:46,980
an exit that they may not have gotten otherwise. So I think that's.

372
00:22:47,620 --> 00:22:51,260
It's a real avenue of growth for us from a membership perspective. It may be

373
00:22:51,260 --> 00:22:55,020
from even just site selection, you know, and a competitor that has

374
00:22:55,020 --> 00:22:58,840
a great site in one of your markets versus greenfields is

375
00:22:58,840 --> 00:23:02,120
a little bit longer term. As you said, you got to negotiate a deal, find

376
00:23:02,120 --> 00:23:05,600
the right site. We try to be very thoughtful in terms of our

377
00:23:06,000 --> 00:23:09,680
real estate analytic model and putting together our investment memos, et cetera, but it

378
00:23:09,680 --> 00:23:13,520
takes time. It's a way to accelerate our growth in certain markets,

379
00:23:13,520 --> 00:23:17,080
especially markets that we're going to be in. We're going to be looking for a

380
00:23:17,080 --> 00:23:20,720
site in, and it might make sense to have one gym instead of

381
00:23:20,720 --> 00:23:24,570
two or three or four. And so, you know, is there a consolidation opportunity

382
00:23:24,570 --> 00:23:28,010
there that works for a seller is kind of how we position it.

383
00:23:28,570 --> 00:23:32,210
Yeah. So just two comments. One is just so the audience

384
00:23:32,210 --> 00:23:35,530
knows here if there's independent operators that may have

385
00:23:35,770 --> 00:23:39,610
clubs in the ignite territories, and we'll talk about that in

386
00:23:39,610 --> 00:23:43,370
a minute. Which states you have, you know, you're obligated to build

387
00:23:43,370 --> 00:23:46,890
in those locations because sometimes I'll get a call from someone said, hey, a

388
00:23:46,890 --> 00:23:50,530
Planet area developer contacted me, should I take this call? And I'm like, you must

389
00:23:50,530 --> 00:23:53,810
take this call because they have to build in this city. They have a contractual

390
00:23:53,810 --> 00:23:57,350
obligation to put a certain amount of clubs in a city

391
00:23:57,750 --> 00:24:00,870
that they've secured exclusive, you know, area development rights

392
00:24:01,590 --> 00:24:05,350
for. So you probably have one chance to take that call,

393
00:24:05,990 --> 00:24:09,590
roughly going to build out the greenfield strategy. And then your

394
00:24:09,670 --> 00:24:13,270
club's clearly less desirable, you know, as a flagship or a

395
00:24:13,270 --> 00:24:17,110
beachhead or a, you know, market share, you know, play.

396
00:24:17,670 --> 00:24:21,110
So from a standpoint of the territories that you guys are

397
00:24:21,110 --> 00:24:24,820
focused on or have, you know, milestones to

398
00:24:24,820 --> 00:24:28,460
hit in certain areas, can you, can you go through those? A couple of

399
00:24:28,460 --> 00:24:32,180
states or territories? Yeah, predominantly in the Northeast.

400
00:24:32,180 --> 00:24:35,700
So we're in, you know, Connecticut, upstate New York, from, you know, Buffalo,

401
00:24:35,700 --> 00:24:39,500
Rochester, syracuse, albany. About 80 of our stores are

402
00:24:39,500 --> 00:24:43,140
in the Northeast. We have the area in

403
00:24:43,140 --> 00:24:46,740
Tennessee, Chattanooga and Knoxville specifically, as well as

404
00:24:46,740 --> 00:24:50,550
clubs in Albuquerque, New Mexico, mainly in other parts of southern

405
00:24:50,550 --> 00:24:54,270
New Mexico, and then the three western Canadian provinces,

406
00:24:54,510 --> 00:24:57,670
so British Columbia, Alberta and Saskatchewan. About

407
00:24:57,670 --> 00:25:01,150
25 locations in Canada and then the

408
00:25:01,230 --> 00:25:04,830
remaining in the U.S. but those are the main areas where we operate

409
00:25:04,990 --> 00:25:08,110
and where our development obligations are. And given that,

410
00:25:08,750 --> 00:25:12,350
you know, your family's been in the business, your

411
00:25:12,350 --> 00:25:15,950
dad and your family to some extent, and you

412
00:25:16,690 --> 00:25:19,210
have been on the other side of some of these deals where you have been

413
00:25:19,210 --> 00:25:22,610
a seller, how do you think that benefits you

414
00:25:23,170 --> 00:25:26,970
from negotiating a deal or saying, hey, look, I know how it

415
00:25:26,970 --> 00:25:30,570
feels. I know that this is potentially your

416
00:25:30,570 --> 00:25:34,170
baby. This isn't a box to you. This isn't a

417
00:25:34,170 --> 00:25:37,930
20,000 square foot box. But this is something that might have built

418
00:25:37,930 --> 00:25:40,610
with your hands. You might have changed

419
00:25:41,810 --> 00:25:45,610
the H vac system on your own. You might have painted these walls, and I'm

420
00:25:45,610 --> 00:25:48,610
going to help you kind of take it from there. How do you think that

421
00:25:48,850 --> 00:25:52,530
kind of benefits that you've been in that mix before and know what

422
00:25:52,530 --> 00:25:56,170
it's like to kind of sell something that you built for? Sure, yeah. I

423
00:25:56,170 --> 00:25:59,930
mean, you said it well, I mean, these are people that may

424
00:25:59,930 --> 00:26:03,618
have been operating their business and it's been their livelihood for 20, 30,

425
00:26:03,682 --> 00:26:07,410
40 years. And so I think anybody has to feel like they're

426
00:26:07,410 --> 00:26:10,930
selling to somebody that they can trust that has high integrity.

427
00:26:11,490 --> 00:26:15,090
And I think that's part of what you have to portray as a

428
00:26:15,090 --> 00:26:18,820
buyer. We've done acquisitions before, quite a few of them. We've

429
00:26:18,820 --> 00:26:22,660
integrated people. We have people from those acquisitions that are still, you know, part of

430
00:26:22,660 --> 00:26:25,740
the ignite team, you know, many years later. And so

431
00:26:26,460 --> 00:26:30,060
like anybody, it's, it's not just the, the price, it's who are you

432
00:26:30,060 --> 00:26:33,859
selling to, Especially when you have likely employees that have worked for you a

433
00:26:33,859 --> 00:26:37,500
long time and have, you know, uncertainty around what a sale

434
00:26:37,900 --> 00:26:41,100
is like. And so I think getting in there early and, you know, calling some

435
00:26:41,100 --> 00:26:44,810
of those concerns is, is super important. And, but we can understand

436
00:26:44,810 --> 00:26:47,690
why, you know, why, why you'd have them. You want to sell to somebody who's

437
00:26:47,690 --> 00:26:51,170
going to take your baby, you know, and do good things with it, you know,

438
00:26:51,170 --> 00:26:54,010
kind of going forward. So very important. Yep. Great.

439
00:26:54,810 --> 00:26:58,490
And then in closing here, you know, as you built out your team,

440
00:26:59,050 --> 00:27:02,890
you know, what, what are some of the, you know, highlights, if you will, or

441
00:27:02,890 --> 00:27:06,250
things that you've Been like pleasantly surprised by maybe, you know, somebody

442
00:27:06,570 --> 00:27:10,330
moving from one, you know, area of focus to another and

443
00:27:10,330 --> 00:27:14,170
excelling or, you know, people that you built up over time that are now running,

444
00:27:14,170 --> 00:27:17,950
you know, big parts organization. Yeah, look, I, I, first off,

445
00:27:17,950 --> 00:27:21,470
I can't take credit for it. I mean, it's, it's the person talent is so

446
00:27:21,470 --> 00:27:24,710
important in, in terms of what you do. I mean, the person who oversees our,

447
00:27:24,790 --> 00:27:28,510
you know, field operations. I remember interviewing him, you know,

448
00:27:28,510 --> 00:27:32,070
over a decade ago for, you know, a job at one of our clubs and,

449
00:27:32,230 --> 00:27:35,870
and has just developed into a tremendous leader. You know, people

450
00:27:35,870 --> 00:27:39,590
overseeing, they were in the finance team now overseeing, you know, kind of real estate

451
00:27:39,590 --> 00:27:43,100
strategy. And so, you know, people in our clubs that are now on our

452
00:27:43,100 --> 00:27:46,860
marketing team or field marketing team and corporate sales. So

453
00:27:46,860 --> 00:27:50,500
it's, it's really, it's tremendous to see that growth and development

454
00:27:50,580 --> 00:27:53,820
and, and, you know, but, but they get the credits. People that are bought in

455
00:27:53,820 --> 00:27:57,380
that, you know, wake up every day with a sense of responsibility,

456
00:27:57,539 --> 00:28:01,300
try to get better every single day, you know, remain optimistic, you know,

457
00:28:01,300 --> 00:28:05,140
as I said, surround yourself with good people and good things happen. And it's

458
00:28:05,140 --> 00:28:08,260
really testament to just, you know, the people I'm around every day and, you know,

459
00:28:08,260 --> 00:28:11,510
what they've been willing to give to, to grow. Awesome.

460
00:28:11,910 --> 00:28:15,590
All right, well, you heard it here first. Joe, good to see you. Glad

461
00:28:15,590 --> 00:28:19,270
to get the story down here and for everyone to know how

462
00:28:19,270 --> 00:28:23,110
Ignite has evolved from just

463
00:28:23,110 --> 00:28:26,910
a couple clubs in Connecticut to taking on the planet brand to

464
00:28:26,910 --> 00:28:30,670
now being owned by and growing an

465
00:28:30,670 --> 00:28:34,350
all star team and backed by a big private equity

466
00:28:34,350 --> 00:28:37,750
fund. So as I tell people, if you're working or you're backed by a big

467
00:28:37,750 --> 00:28:41,340
private equity fund, over a billion, you know, you're basically playing in professional

468
00:28:41,340 --> 00:28:44,220
leagues of business. So you are, and you are the

469
00:28:45,100 --> 00:28:48,940
team manager or the captain. So glad to have

470
00:28:48,940 --> 00:28:52,660
you waving the Halo flag around on our industry's

471
00:28:52,660 --> 00:28:56,420
behalf. So congrats on what you built. Look forward to updates along the

472
00:28:56,420 --> 00:28:59,900
way. Thanks for having me, Pete, and thanks for everything you're doing

473
00:28:59,980 --> 00:29:03,820
within the industry. Appreciate it. All right, man. Awesome. Good to see you.

474
00:29:05,030 --> 00:29:05,270
Foreign.

475
00:29:10,390 --> 00:29:14,110
This is Pete Moore on Halo Talks. Your captain speaking. I am

476
00:29:14,110 --> 00:29:17,750
the founder and managing partner at Integrity Square. We've been around

477
00:29:17,750 --> 00:29:21,590
now for 15 and 1/2 years. We have been helping

478
00:29:21,590 --> 00:29:24,990
people like yourselves get capital, do mergers and

479
00:29:24,990 --> 00:29:28,630
acquisitions, consulting, strategic advice in the health,

480
00:29:28,630 --> 00:29:32,360
active lifestyle and outdoor halo sector, trying to

481
00:29:32,360 --> 00:29:35,680
help as many entrepreneurs as possible get to the next level.

482
00:29:36,240 --> 00:29:39,680
Take that inflection point to be the force behind your growth.

483
00:29:40,240 --> 00:29:43,880
We are helping companies that have at least $3 million of

484
00:29:43,880 --> 00:29:47,360
EBITDA, around $10 million of revenue, and

485
00:29:47,440 --> 00:29:50,800
we are positioned to help you get institutional growth capital

486
00:29:51,520 --> 00:29:55,320
or to negotiate deals with strategic partners. If

487
00:29:55,320 --> 00:29:59,070
you go to Integrity Forward slash isq,

488
00:29:59,070 --> 00:30:02,670
you can see our capabilities. Deck Happy to set up a consultation at any

489
00:30:02,670 --> 00:30:06,190
time that is free of charge and we look forward to

490
00:30:06,190 --> 00:30:09,910
helping solve obesity, loneliness and diabetes.

491
00:30:10,070 --> 00:30:10,950
Go Halo.