When Megan Tucker opened Dragonfly Hot Yoga in Fitchburg in 2011, she’d heard the fitness industry described as recession proof. Even when the bottom fell out of the economy during the 2008 financial crisis, revenue and membership at fitness clubs grew. Just one year later, she opened a second location on the west side.
Then, in 2015, hoping to bring the fun of the spinning classes she’d enjoyed while living in Los Angeles to her hometown, she made plans for another business: Flyght Cycle. The airline-themed operation would replace aggressive instructors with friendly “Flyght attendants” who advise their pedaling pupils to prepare for takeoff before a workout. To house the fleet of stationary bikes, she rented a space on Junction Road on Madison’s west side, and later a second space downstairs from the downtown Dragonfly studio.
And, like many small business owners, she signed a guarantee promising she’d be personally responsible for the rent if the business was unable to pay.
Though such agreements can allow landlords to sue for a tenant’s savings, cars and real estate, Tucker wasn’t worried. Even if Flyght didn’t prove profitable, she figured the revenue from Dragonfly could cover the costs.
What she didn’t plan for was a contagious disease that would bring about a recession like no other. She jokes now that it’d be hard to imagine a business less suited to the pandemic than a hot yoga studio.
“It has to do with heavy breathing, volume — because you make a profit from people filling your studio — oh and on top of that, let's turn it to 105 degrees, and you have to wear a mask.”
It’s a predicament facing fitness businesses nationwide. Some facilities find their programming constrained by public health rules limiting capacity to 50% and requiring physical distance. Others have voluntarily cut back their in-person activities more than rules require in an effort to protect clients and staff. And customers have increasingly moved toward online workouts during lockdown: A national survey by gym software company MindBody found more than 80% of respondents had live-streamed a workout in 2020, up from just 7% in 2019.
It’s been a radical change for everybody. While some have managed to keep their fitness businesses afloat by teaching online or devising lower-risk ways to offer in-person training, others have found themselves unable to pay their bills. According to the Community Gyms Coalition and the International Health, Racquet & Sportsclub Association, which together claim to represent an industry made up of 40,000 gyms and fitness studios, more than 20% of fitness facilities closed permanently in 2020, and 1.4 million jobs were lost.
Meanwhile, many say that the largest federal relief for businesses, the Paycheck Protection Program, is a poor fit for an industry where fixed costs for things like rent and technology may dwarf payroll costs. In February, Rep. Mike Quigley, D-IL, and Rep. Brian Fitzpatrick,R-PA, introduced the Gym Mitigation and Survival (GYMS) Act, which would provide $30 billion for grants to eligible fitness businesses. The bill, which lawmakers brought back this year after it failed to gain traction last fall, was not included in the $1.9 trillion federal stimulus package signed into law earlier this month.
The pandemic pressures come as some were already predicting a bursting of the boutique fitness bubble. In an August 2019 article, fitness media site aSweatLife cited the fact that its own readers had spent less on fitness in 2018 than 2016 as a sign that the $30 billion industry could be facing a decline.
Flyght’s ‘final descent’
Tucker received a forgivable loan through the Paycheck Protection Program. But to get such a loan forgiven, she had to spend 60% of it on payroll, leaving little to cover her businesses’ major fixed costs. The software Dragonfly clients use to book classes costs $2,400 per month, Tucker said, as the cost goes up with the number of studios and classes. It’s the industry standard, she said, and switching companies would be “a total nightmare.” There’s also insurance, merchant processing fees, payroll taxes, electricity and internet.
And then there’s the cost of rent for boutique studio spaces in high traffic areas. “We're not like a boot camp that goes on the outskirts (of town) and rents cheap warehouse space,” Tucker said. “We are right off State Street. We are right on Junction Road, so the rent is ridiculous, but the business model works if we're open.”
For two months, public health orders kept the doors shut at all of Tucker’s six locations. “You put in all this money on protections for your staff, whether it's cleaning supplies or plexiglass dividers,” Tucker said. “We had it all set up and then we just weren't allowed to be open.”
In the months since, Dragonfly has stayed afloat through a combination of online classes and smaller in-person classes at its downtown and west side locations. But when Tucker tried reopening Flyght’s west side studio in June 2020, she found that its business model, which depends on having enough butts on its 30-some bikes, didn’t work with strict capacity limits and social distancing requirements.
“It was like, OK, we can remain open, but basically we're paying money to be open,” Tucker said. The studio shut its doors after just two weeks.
With Flyght shut down and business down at Dragonfly, Tucker struggled to keep up with costs. She stopped paying rent on the west side studio last August. “We just didn’t have it,” Tucker said.
On Feb. 25, Tucker announced in an email to customers that Flyght was closing for good. The downtown location had already been slated to close in May 2020, having never drawn as many clients as needed.
“We worked tirelessly with our banks and accountants to see if we could somehow continue, but it is clear that we cannot,” Tucker wrote. “We could never have imagined Flyght and other small local businesses ending this way, with no real goodbye.”
“In true Flyght fashion, we have been cleared for permanent landing … We hope you enjoyed the ride.”
Flyght wasn’t the only local spinning business to shut down during the pandemic. Cyc Fitness at the on-campus University Square complex closed permanently in February after Cyc Holdings LLC, which operates a chain of studios across the country, filed for bankruptcy. And it’s in good company: Flywheel, which sold home bikes and operated more than 40 studios around the country, filed for bankruptcy last September.
Tucker thinks business owners that can show they were breaking even or turning a profit before the pandemic should be protected from evictions, perhaps by offering mortgage assistance to landlords. “Why can't we just push a pause button?” Tucker said.
“I don't understand how we're supposed to have $2 or $3 million for a rainy day. Who has that as a small business?”
FORWRD no more
2020 was supposed to be FORWRD’s big year. The small, far east side gym had grown to around 40 members, and they were preparing for new sign-ups in spring.
Raquel Sanchez and their brother-in-law Joe Krebs had opened the gym in 2018 as an answer to everything they hated about other gyms. They swapped the aggressive, “no pain, no gain” mentality and gendered workout assignments for a focus on healing, wellness and strength, aiming to provide a safe place for people of all ages, gender identities and sexual orientations.
“We came together to create a safe space and we were doing so well,” Sanchez said. “Then everything hit the fan.”
By March 14, 2020, the day Krebs’ son was born in a hospital that didn’t allow visitors, the pair could tell things wouldn’t go as planned. Sanchez first reduced class sizes and then decided to move all instruction online, weeks before Gov. Tony Evers’ statewide stay-at-home order.
“To me it doesn't make sense if you're in an environment where you're like huffing and puffing. Your vapor is going places,” Sanchez said. “It's not safe to be in a gym. I still don't think it is, even with masks and all the space and all that stuff.
“I just don't want to feel responsible for even one person getting infected. Even if they don't die, just having a dramatic experience, getting really sick, I don't want that.”
When local public health authorities allowed fitness facilities to open with restrictions last June, Sanchez chose not to reopen the gym. It didn’t seem safe, they said, with so many of their clients being in their 40s to 60s. “I don't have a demographic of a lot of younger people.”
The two turned FORWRD into a fully online gym, buying new cameras and computers to improve their classes and renting kettle bell weights to members. Sanchez, who describes themself as handling change well, discovered a love for online training and embraced the opportunity to lead clients through a challenging time.
But the gym had never gotten the attention that Krebs hoped for before the pandemic. Now, with membership down by half, the pair struggled to pay the gym’s bills plus new expenses associated with online classes. They received around $5,000 in local and state relief grants, but as a simple partnership, they couldn’t figure out whether they were eligible for the federal Paycheck Protection Program, which seemed to refer only to businesses with employees and sole proprietors.
In early fall, Sanchez and Krebs weighed their options. “At some point it got to like, ‘You know, we're not using this facility at all. Why do we have it?’” Sanchez said. They announced in December that they’d close for good, though Sanchez has independently continued to do personal training with former FORWRD clients.
The Fit finds pandemic groove
Not all fitness businesses are teetering on the edge. Among those finding viable pandemic business models are Jeff and Rebecca Liggon, owners of The Fit. The husband-wife team voluntarily shut down in-person activities at their 13-year-old Monroe Street gym on March 14, 2020.
“I was teaching a class that morning, and it was kind of lightly attended. And we just kind of looked at each other and we were like, ‘This just doesn't seem right … We're standing here sharing equipment. We're sweating together. What are we doing?” Rebecca Liggon recalled.
“The new language at the time was ‘flattening the curve,’” she said. “And it was just clear that everyone coming together to work out wasn't going to be part of flattening the curve.”
The two loaned exercise equipment to clients, moved their group classes to Zoom, and replaced in-person personal training with individual online workout plans, allowing clients to log in to view the series of exercises prescribed for them. Accompanying each exercise is a demonstration video; they estimate they made more than 1,000 such videos. And the team adapted each workout to what the client had on hand. (Got an exercise ball? Let’s use it! No weight-lifting bench? Try a coffee table!)
The idea, they said, is for clients to still feel like they’re working out with the trainers they know. “We really gave our clients a high level of service here prior to the pandemic, and it's really allowed us to at least feel like we're still able to personalize and customize things for them.”
It wasn’t just the workouts that went virtual. Realizing that people would miss the social part of their gym visits, the two also planned virtual happy hours, trivia nights and even passed by clients’ porches on their walks around the neighborhood.
In June, they began offering in-person training sessions for up to three clients at a time. In addition to wearing masks, each client stays in a separate “lane” outfitted with the equipment they’ll need for their workout. To reduce risk, clients train in the same group each time, enter through the front and leave through the back, and there’s a 15-minute break for cleaning before the next group comes in.
Though some gym owners have complained about the public health rules, Jeff Liggon said he doesn’t think the rules should have been any different. In fact, he wonders if lax enforcement may have lengthened the pandemic and slowed the return to normal.
“I think some gyms may have taken advantage of that and gone too far and caused us other gyms to have to deal with the consequences,” he said. “I think gyms were definitely a spot where people were passing it back and forth.”
Current rules limit gyms to 50% of their capacity, but Rebecca Liggon said that rule doesn’t change things at The Fit’s 3,500-square-foot gym. Even in normal times, the gym’s classes never exceed 10 people, well below 50% of its capacity.
“We are watching the COVID numbers rise around the world,” Jeff Liggon said in a late March follow-up email. “We are now thinking, how can we continue to keep our clients safe and fit?”
But adapting the business to the pandemic hasn’t been easy. It’s come with new costs, like webcams and app fees, while old costs like rent, utilities and snow removal remain constant. Before the Liggons were preparing to hire one of their trainers full time, but now they can’t even bring him in for part-time work. Membership is down about 20%, they say, and they estimate that their revenue is down about 30%. To make ends meet, Rebecca Liggon, a pharmacist who had previously shifted to working more at the gym, started putting in extra hours at her pharmacy job.
Government help has been key: They’ve gotten Paycheck Protection Program funds twice, along with grants from the state and city.
“We wouldn't be telling the same story, honestly, if we didn't get those grants,” Rebecca Liggon said.
The two also attribute their endurance to a loyal following and a higher-end business model. Many of their clients have been with them for 10 years or more, and their gym makes profit from personal attention rather than large groups.
“I would say how we ran our business before (the pandemic) is really a direct indication of why we're still around,” Jeff Liggon said. “The fact that it wasn't just a place to come in and throw around some weights and walk out the door ... It's really a community. That's a large part of it.”
From Zumba to Zoom-ba
Meanwhile, some fitness professionals have grown their businesses during the pandemic. Emma Rose, who runs a fitness and health coaching business, used to teach Zumba classes as a sort of paid hobby, renting space at Kennedy Elementary two days a week for two or three months at a stretch.
In March 2020, she put out the call. “I just pulled out my entire database from the last 20 years and just sent out an email: ‘I'm gonna try a Zoom Zumba class, if anybody wants to join,’” Rose said.
About 30 people from around the country attended the first session, paying by donation only. Like so many, she didn’t yet know the ins and outs of Zoom, like how to make her music play for everyone, and her camera didn’t work well.
“It was definitely trial by fire and trial and error,” Rose said, but she stuck with it, announcing she’d offer the class weekly.
Soon the recreation department was publicizing it too, later asking her to add stretching and strength-training classes to her schedule. In March and April, she was teaching 15 classes each week, though she later reduced her offerings. All classes were by donation, with some paying $20 and others paying nothing. She wanted people to be able to attend whether they could pay or not, and her own job as a physician’s assistant for a counseling and wellness agency meant she wasn’t stressed about paying her bills.
She estimates that she taught between 400 and 500 online classes to around 200 people. She taught her last online class in early March.
“It's funny how doors open that you don't expect will open,” Rose said, noting that where Zumba had once been just a small part of her life, it soon became the mainstay of her wellness business. “I am really seeing how … you just have to have a flexible approach and make it accessible to a lot of different people and just have faith that things are going to work out.”
Now, she’s moved her donation-based Zumba classes outdoors, plugging in her speaker twice a week outside Frank Allis Elementary.
“It's just absolutely the best. Teaching outside in the sun is way better than teaching in a gym with artificial air,” Rose said. “It's just been such an incredible silver lining to bring people together and share energy. You really took it for granted before, and now it's just the highlight of my week, and I think for a lot of people it's one of the highlights of their week.”
Fitness of the future
Meanwhile, the at-home fitness business is booming. The Washington Post reported that revenue from sales of health and fitness equipment more than doubled from March to October of last year, with Americans buying three times as many stationary bikes, and treadmill sales up 135%. Peloton, maker of internet-connected bikes, saw a 232% increase in sales over the same period in 2019, drawing $758 million in revenue.
Back at Dragonfly, Megan Tucker is hoping to capitalize on that growing market for living room workouts. She and husband Carlos Tucker commissioned Dfly on Demand, an online platform for Vimeo that allows people to access recorded and livestreamed classes through apps like Roku and AppleTV.
“We put our life savings into it because the idea was, well, we either put it into this or it goes to landlords and in two months we're closed anyway because we can't pay anymore,” Tucker said.
They hoped the platform might appeal to people across the country pining for instructors who don’t look like models or top athletes.
“We thought we could fill that niche. Maybe not getting the millions of subscribers that Peloton does, but maybe 10,000,” Tucker said. “Honestly, we thought enough people would sign up that we could pay our rent and not be in the position that we're in.”
But many Dragonfly instructors have been reluctant to be recorded, and the roughly 1,400 current subscribers fall well short of the target she thinks could stabilize the business until they can return to regular operations.
“If this works, then everyone gets their money and more people have jobs. We get to continue our community, virtually. We're still working on that,” Tucker said. In the meantime, she’s holding out hope as she waits to hear whether she gets the $50,000 county pandemic relief grant she applied for.
It’s still too soon to say whether the pandemic will change the way people exercise for good. But some fitness professionals say the crisis has forced them to discover how strong and flexible they can be.
At The Fit, the Liggons say the online models they were forced to create could enhance their offerings long-term, allowing clients who travel regularly for work to keep up their training while they’re away.
“We were thinking many of these solutions were temporary and/or alternative fitness options,” Jeff Liggon said. “We are now thinking this is the fitness of the future.”
Meanwhile, the owners of FORWRD aren't dwelling on their gym’s closing. “I don't think that we were in a position to have demanded anything more,” Sanchez said of the government assistance they received. “I didn't have employees ... I have a spouse that's still working. I'm not homeless. I can get a job. I'm just grateful for my health.
“Yeah, we could’ve gotten more aid, but then for what? To keep a business still not open?”
These days, Krebs, who personally paid off the roughly $15,000 the company owed, is a part-time stay-at-home dad working a couple days a week in consulting and engineering. He’s also developing a fitness tool called a “Strength Tank,” designed to stretch and strengthen the user’s back muscles.
Sanchez, who now works at the Willy Street Co-op, has kept up virtual personal training sessions with former FORWRD clients. The two are currently trying to recoup their financial losses by selling the instruction manual for a 32-class course, complete with video links, on a pay-what-you-can basis.
Sanchez, having discovered an unexpected love for virtual teaching, announced in March the launch of a new endeavor, Flipside Healing & Training. The forthcoming personal training business would continue offering online services long after gyms reopen. Sanchez, a self-described “no regrets type of person,” sees it as a small positive of the pandemic.
“It’s this horrible thing that's killed so many people,” Sanchez said. “It's caused so much trauma for all of us and taken away our dreams, but at the same time, for those of us that are still here, it's provided such a wonderful opportunity to reevaluate everything and make choices in the direction of what actually matters, what is fulfilling to me, and what can I do now to be happy living more in the present moment.
“And that's kind of where my mindset is at — not really wallowing in what I've lost.”
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