HALO Talks Fast Break-Julian Barnes HALO Talks Fast Break-Julian Barnes and The BFS Network State of the Industry 2024 Report

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This is Pete Moore on Halo Talks NYC on location,

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Scottsdale, Arizona. I have a pleasure of bringing a close friend of the

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square. He has always been inside the square.

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Julian Barn. Go for it. This is

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Pete Moore on Halo Talks NYC. I have the pleasure of bringing

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back to our podcast channel the one, the

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only Julian Barnes. We're gonna talk about the BFS

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2025 report and everything that's going on in the boutique

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industry as a fast break. So, Julian, welcome back to the show.

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Hey. What's going on, Pete? Thanks for having me again. So I love the data

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that you guys are providing and not just, qualitatively,

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but quantitatively finally, where I could actually have a statistic and

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it can be backed up. So I love the fact that the referrals are coming

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in at 44%, and I want you to give us a quick overview of

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what the report has so we can make sure everyone's reading it after you overview

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it. Absolutely. But, again, thanks for the opportunity. We've spent

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the last nine months conducting a worldwide survey, mostly

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North America, but a little light representation from UK and Australia and

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a few other countries asking studios across

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the entire world, across every modality

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what their metrics look like so we could produce a

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profile of a profitable studio. And not only did we

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do that, we produced seven profiles. So I'll talk about one

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of them today. Let me show you the profile of

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a profitable studio, all modalities, any

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market size. And this is only profitable

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studios. They are overwhelmingly generating less than half

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a million in revenue with a profit margin of 10 to

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19%. They are single location businesses

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averaging two to 2.5 visits per week. They have between a

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249 clients, and their average revenue per

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member is between a hundred and $2.49. They pay

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their front desk people sixteen to twenty bucks an hour. They pay their

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instructors twenty six to fifty an hour. Their managers earn

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50,000 to 75,000 per year. Their churn is

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less than 5%. Referrals is their most

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effective lead generation tactic, and they're spending less than

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$2,500 a month on marketing and paid ads. That is

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the profile of a profitable studio, any modality,

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any market size.

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One thing that's interesting to me is some of the

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groups that I've seen in New York are starting to add more and

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more classes to the menu. You know? And I liken

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that to Southwest Airlines. You know? They fly that plane fourteen hours a

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day, and some airlines are at eight to ten hours a day. So the

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studios that are adding the the the classes are adding the volume.

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Absolutely. And so one of the results of what

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you just said is we saw an increase

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in the number of studios that are generating a profit margin of

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20% or more that increased from 9.2%

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to 17.4% from 2022 to

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2024. Now that's still less than one fifth

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of the entire market, but it is a almost a

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% increase from the last time we conducted the survey.

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So that is significant for, investors out there and owners

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that are thinking about about investing to know that

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that there's a segment of the boutique fitness community that

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is becoming more profitable. And you know better than anyone else how

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critically important it is for these businesses to run, when

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I say profit, at a 20% profit

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margin. That's what this number says. 20% of the

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studios we surveyed are generating I'm sorry.

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17% of the studios we surveyed are generating a

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profit margin of 20% or more. You know, Julie,

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when you look at at QSR and and fast food, restaurants,

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you know, their their barometer is kind of a 15% margin just given the

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the food and the labor cost typically be at around 60 percent. So if

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you are a small operator in the boutique space, if you're getting to 20%

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and higher, you know, you're doing the right things. And I would

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hope, as you were hoping as well, I'm sure that people are continuing to

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increase their price because the price to value that you're delivering to help

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someone lead a healthy lifestyle is worth way more than what their per class

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session is. And don't give up on price because you'll never get it

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back. That is absolutely correct. In fact, I was just at

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a dinner a couple nights ago with some industry

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industry colleagues, owners, and and other vendors, in New

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York City Two Nights ago. And one of the points I made

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is that our industry as a whole doesn't charge enough.

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And I'm not saying they're not charging enough for the commodity of

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fitness. It's my opinion that we're not charging

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enough, in the role of

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preventative health and and packaging what we

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do as helping people improve their health.

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If you told me that you could absolutely,

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transform my life, there's no amount of

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money I wouldn't pay. I would pay anything for that. And not only

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that, it would be the last bill I would cut. I would cut my

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Netflix. I would cut my Whole Foods. I would cut almost

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everything before I cut my my bill that I pay

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every month to whoever is helping me live a healthy life. So,

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yeah, you're absolutely right. We're not charging enough. Yeah, Julian. There was

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a, a client I spoke to the other day, and, I I my

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eyes popped open. He had a $385 per month,

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unlimited membership, but I had I said, how did you get to that? He's like,

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I'm not afraid. I'm not afraid to charge that because I know I

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deliver that. Exactly. I love that fact. He was just not afraid. Like, I'm not

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gonna lose business. Do people actually gonna perceive it as something

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that's different than some of the other places

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that are you know, if if something's priced low, it means it's it's it's less

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expensive because for a reason, because it's not as good. Correct. You know? So

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Right? So here's the other good news from the from

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the report. It's what you're looking at here on the screen. The

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profitable studios are executing the

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fundamentals of studio ops at a very high level. They

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are consistently and rigorously implementing

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basic boring fundamental principles of

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studio ops. What do I mean? They are finding

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so f is find. They're finding new leads at

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50 leads per month. E, they are enrolling

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these leads by converting them at a 30% conversion

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rate. And, r, they are retaining these new members,

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with a less than 5% churn rate in a two year LTV.

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So they're finding, enrolling, and retaining. And as I mentioned

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a few minutes ago, referrals is the number one or is

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the most effective lead gen tactic. So it's not it doesn't

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require you to have a a huge, digital marketing

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budget. You don't have to hire an agency. You just have to do

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the consistent things well each and every

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day, and that is proven from this report

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to be the path or one of the paths to profitability. So that I

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think that's a great message for everyone to hear. Yeah. And and some of the

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takeaways that we see, from some of the clients, you know, when we say, this

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is what you need to do in order to build a relationship with someone.

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And if they leave your studio, you know, they broke up with

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you. Okay? So let's, like, call it what it is. I have a relationship, you

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deliver. I pay you for that relationship that you deliver

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value, or you didn't give me what I expected. And I

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feel like a lot of studios are starting to understand that it's not just the

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word community. It's it's relationship, and it's gotta be real, and it's

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gotta provide results. Well and that's who drives the referrals as you can see here

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on the screen. Yep. Right? There are lots of different ways, to have referrals.

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It can be indirect, direct. You can you can reward members. It

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can happen organically. But the point is word-of-mouth marketing

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is the most powerful form of marketing. And I'm not gonna call it

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free, but it's not expensive. Right? It's not hiring an

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agency and trying to figure out the algorithms changed. It's really

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based in client experience because if you keep your clients happy, they're gonna tell

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their friends, hey. You should join me for class. So that's takeaway number

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three. Referrals are the most effective lead gen source. And then I wanna

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jump to takeaway number six, which is the one that surprised me the most.

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I wasn't expecting it, but it makes a lot of sense.

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There is a direct correlation between

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studios that have a manager and their top

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line revenue and their profit margin. So in other words, if

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you're if you're listening to this and you are, you're

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you're thinking you have a part time manager, but you can't afford to invest in

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a full time manager or you you wish you could afford a manager, but you're

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not willing to make that investment, This

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takeaway is unequivocal

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unequivocal in suggesting when you invest in a manager,

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your total revenue increase and your profit margin will increase.

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And if you think about what I said a few minutes ago about

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find, enroll, and retain, well, that's the manager's

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job to be finding new leads, to be running the

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plays, to convert those leads into members, and running the

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client experience plays to keep those members, for two

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years of plus. That's the manager's job. So when you have a manager focus on

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doing that, then you, the owner, can be out there growing the business,

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cultivating relationships. Hard to do both. I will

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say is two takeaways here, and and this is great stuff. You know, one

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is, a client of ours, used to use this phrase. He's

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like, I can't microwave a manager after crockpot.

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So invest not only in the right talent, but cultivate that

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talent, make them part of the ownership team, make sure everything's

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aligned, and make sure they get educated by going to events,

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by getting online, by doing continuing education. And then my other

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takeaway here with you is when you get this

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report, there's a link to get this report, don't just read the

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report. Okay? This is basically a playbook

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of someone else's scorecard on how they run their

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business, and these are attainable statistics. So if I

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say someone's getting 50 leads a month, don't tell me you can't get 50 leads

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a month Correct. Because it's getting done and it's across the world. So

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make this a benchmark, make this a bar that you need to cross,

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and successful studios make successful communities. Successful

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communities make successful health health health environments for all of us.

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Go halo. Go BFS. Julian, look forward to seeing you in person.

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+1, 23, halo. Halo. Halo, baby. Alright. Good stuff.

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Get the report real quick.

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BFSreport.com. BFS

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reports with an s Com. Either one. Fantastic.

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Thank you. We got all the doc