The London Boutique Studio Report 2023, compiled by market intelligence expert Leisure DB – the first time the report has been published since its inaugural edition in 2018.
London Boutique Studio Report 2023
WELCOME TO LEISURE DB’S LONDON BOUTIQUE STUDIO REPORT 2023 Leisure DB is a leading independent data specialist in the UK leisure sector, providing robust market intelligence and analysis that spans the full breadth of the ever diversifying, ever-evolving industry. For over 30 years, our reports have provided UK operators, suppliers, investors, consultants and government bodies with invaluable business insights and analysis of the trends within, and performance of, the sector. This empowers businesses with the insights and tools they need to make strategic decisions with confidence and precision, to in turn thrive in their market.
© Leisure DB. All rights reserved unless otherwise agreed in advance by Leisure DB. No part of this report may be sold, passed on, communicated, or disseminated in any form.
CONTENTS
LEISURE DB
LONDON BOUTIQUE STUDIO REPORT 2023
INTRODUCTION FOREWORDS
MULTI-SITE BRANDS STUDIO NUMBERS
4
63
6
INDUSTRY VIEWS
70
PRICING
17
DEFINITIONS
MARKET TRENDS MULTIPLES VS INDEPENDENTS
TOTAL MARKET LONDON SNAPSHOT
73
28
79
ONLINE PROVISION
30
OVERVIEW & KEY FINDINGS
80
MEMBER MANAGEMENT SYSTEMS
35
STUDIO LOCATIONS
LEISURE DB REPORT METHODOLOGY
38
STUDIO OPENINGS
87
43
STUDIO CLOSURES
90
OUR PARTNERS
44
STUDIOS PER LOCATION
94
OUR TEAM OF EXPERTS
49
CLASSES & TIMETABLES
95
WORK WITH US
55
PRICING
NEW TO THIS YEAR’S REPORT
New to this year’s report are expert and operator interviews and commentary, for insight into the story behind the statistics.
20
58
WINDS OF CHANGE – EMMA BARRY
BLOK LONDON – ED STANBURY
32
66
MARKET TRENDS – JON CANARICK
UFB – RICHARD SMITH & STEPH DAVIES
40
75
FRAME – JOAN MURPHY
PSYCLE – DAVID WATT
45
81
TEN HEALTH & FITNESS – JOANNE MATHEWS
BFT – CAMERON FALLOON
51
84
BARRY’S – SANDY MACASKILL
XPONENTIAL FITNESS – JOHN KERSH
Our thanks go to everyone for their time and willingness to share their expertise and experiences.
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FOUNDER FOREWORD
LEISURE DB
CONTINUED CREATIVITY
In 2018, when Leisure DB published its first London Boutique Studio Report, it was easy to be seduced by the boutique lifestyle. Founded by individuals with ideas, passion and energy, the studios’ premium experiences, environments and emotions inspired loyal communities. 2018 was the heyday for operators and consumers, with visitors coming from far and wide to try London’s latest concepts – 62 studios opened in London that year, more than in NYC – while globally F45, then the fastest-growing brand, opened 900+ sites. The momentum was still there in February 2020, when Emma Barry published Building a Badass Boutique. I was honoured to write the book’s foreword and, at its London launch, speak about how the whole industry was having a ‘fitainment’ moment like never before. One month later, pandemic and lockdowns. You’ll all have heard the joke: ‘How do you make a small fortune? Start with a large fortune and open a vineyard.’ While few boutiques started with a fortune of any kind, instead borrowing capital at initially low interest rates, the joke sadly still resonates for this sector. Yet in spite of some permanent closures and a few brands falling into administration or liquidation, most have emerged leaner, stronger, more nimble. As Frame’s Joan Murphy says on page 40, they have proved their business twice: before and after COVID. Other operators interviewed for this report show they also remain in the pioneering spirit, responding to changing consumer behaviours with creativity and passion. Moving more people more often is a common theme, with Psycle’s David Watt (page 75) talking about the transformative power of movement. Emma Barry talks about Generation Anxious (page 20). Ten’s Joanne Mathews highlights a growing interest in women’s health (page 45). Franchising is a key theme, with some of London’s trailblazers seeing this as the way forward for their phenomenal products. Meanwhile you have to sense that Xponential – listed on the NYSE as NPOF for those who’d like to follow its progress – is still just at the beginning of its international expansion journey. Several of our commentators warn that franchising won’t work for everyone, however. Look no further than current London market leader F45, whose delayed accounts for year ending 2022 have finally been published and show a loss of US$582m. A Google search also suggests a financial and legal workout courtesy of David Beckham’s celebrity endorsement. Finally, from our interviewees I hear a cry for more transparency, openness and sharing to grow the sector together, as well as a move away from constant discounting. We need to move these discussions forward – and potentially the definition of boutique, which for the purposes of data comparison remains the same for this 2023 report as for 2018’s. Leisure DB is therefore inviting boutique studio owner-operators to a roundtable, both to progress the debate and to continue to evolve and expand this report in collaboration with the sector. The creativity and innovation of boutiques is here to stay. We are here to support that.
Operators remain in the pioneering spirit, responding to changing consumer behaviours with creativity and passion.
DAVID MINTON Founder, Leisure DB
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LONDON BOUTIQUE STUDIO REPORT 2023
CHAIR FOREWORD
LEISURE DB
NEW OPPORTUNITIES
A surveyor by training, most people will know me as a big box health club founder: I opened my first club in 1979 and went on to co-found LA Fitness, later becoming chair of Esporta and a non-exec director of Holmes Place International. After the sale of LA Fitness in 2005, I co-founded Addleisure plc, where our portfolio included Movers & Shapers: a joint venture with BUPA that brought small boutique fitness to the high street. We later also invested in Mosaic, which curated a number of group exercise brands under one roof, and CIRQ, a screen-led HIIT
boutique in Fleet Street that performed well until COVID hit. Here is what I am seeing in the London boutique sector now.
The boutique phenomenon is based on an unbundling of the traditional health club, the assumption being that with the right expertise, each individual component – HIIT or group cycling, boxing, yoga or pilates, etc – can stand on its own as a branded specialist product and attract a premium. As a consequence – and in contrast to the big boxes that offer a bit of everything – the boutique sector is very vulnerable to fashion. Reformer pilates might currently be highly fashionable, for example, but a boutique specialising in only one discipline risks falling out of favour if the fashion changes. This has led to multi-discipline locations and/or groups of brands collaborating in one location, ironically beginning to reconstruct the multi-disciplinary big box clubs they had previously deconstructed, but now with a different pricing model. The pandemic has fundamentally changed the occupancy of the city. People are not in the office as much, and when they are, it is a place of work, with less time for social or life beyond the office. A few boutiques have rebuilt their businesses, especially those branded and fashionable products, but boutiques that rely on volume in the City are struggling. The shift of boutiques towards affluent residential areas where the population is more stable – for example, Kensington and Notting Hill, St John’s Wood, Putney and Wimbledon – will therefore continue. Funding is complicated at the moment, and for small and mid-sized businesses that borrowed to weather the pandemic storm, the increased lending on their balance sheets makes it hard to get additional funding. This is not a permanent factor, but it will take time for the canvas to change. Money will always be there for the right projects – ambitious, new, on-trend ideas – albeit not necessarily from traditional funders. Provided boutique brands can retain their passion and reputation for being the best at what they do, there will always be a market for them. In fact, for new brands coming in, the timing could not be better, as the high street is experiencing a seismic shift in occupant profile and occupancy and property is more readily available. Rents are also more favourable than in the unsustainably overheated pre-pandemic market, while planning is increasingly flexible around use of space. Property recessions have always been good for our industry and there are real opportunities for those brave enough to dive into the market.
Property recessions have always been good for our industry. There are real opportunities for those brave enough to dive in.
DAVID TURNER Chair, Leisure DB
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INDUSTRY VIEWS
LEISURE DB
A LANDLORD’S PERSPECTIVE EMBRACING BOUTIQUES AS PART OF AN AMENITY-LED APPROACH
When we’re working with landlords in central London, we plan for the buildings of tomorrow. Fitness and wellness is a big part of that. There’s a growing expectation that such services should be provided in any new building, making them integral to the amenity-led offerings landlords are introducing to encourage people back to the office – and to support people’s mental health and productivity while they’re there. But what should those fitness and wellness spaces look like? With hybrid working still the post-pandemic norm, and city-centre footfall slightly lower than it used to be, boutique fitness is a popular choice. Typically requiring just 1,000-4,000 sq ft, these studios can also share space with other businesses: boutique fitness in the basement where rent is cheaper, a third-party juice or coffee bar on the ground floor. Such collaborations make leases more complex, but they’re a good way for boutiques to spread costs and stick to what they do best. For any landlord looking to integrate boutique fitness, we’ll start by providing a shortlist of potential candidates. Landlords are often lent on to help with fit-out costs, so we really get under the bonnet of any business we’re thinking about putting forward. The top criterion is simply that you should be a really good operator. That’s easier to assess for established brands than for new business, as we can look at things like brand recognition, financial performance and potentially the availability of residential sites for home-working days. Another plus for us is when boutiques incorporate a retail element, especially in high street locations, as it provides diversity of income. You don’t always have to be established, though. Landlords are increasingly savvy about providing amenities with USPs, so if you have a strong business plan and a concept that sets you – and with it, the building – apart from the local competition, we’re interested. We’re always on the lookout for the next new thing; at the moment, it’s reformer pilates. The one thing that’s more difficult to work with on our projects is hot yoga, where operational costs are too high and practicalities such as condensation often too challenging. Instead, we’ll sometimes see landlords supplement boutique fitness with wellness services such as infrared saunas. Of course, the numbers also have to work. Studios will typically pay rents of £20-50/sq ft and sign leases of five to 15 years, but there are also business rates to pay, plus service charges of for example £4-7+/sq ft. All of this must be built in to the plans. We do act for landlords in residential areas such as Notting Hill Gate, Camden and Chelsea, and here boutiques can enjoy seven-day trading, but for City locations, the business case must establish whether a palatable fee structure can cover all costs based on people being in the office just three or four days a week.
Landlords are increasingly savvy about providing amenities with USPs. We’re always on the lookout for the next new thing.
STEVEN STEDMAN & WILL BROWN Central London Retail Division, CBRE
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INDUSTRY VIEWS
LEISURE DB
INVESTOR PERSPECTIVE KEY CRITERIA FOR BOUTIQUE FITNESS INVESTMENT
Through innovation and best-in-class entrepreneurship, boutiques have influenced the broader health and fitness market and changed the way we consume leisure. Today, Barclays has the privilege to support operators through our payments platform business and with our balance sheet. As boutiques navigate the current climate, we expect to see more opportunity to support the evolution of this space. Today’s economic outlook will require all consumer-facing industries to adapt. Many of the boutique market leaders have not previously operated in a low growth/ high interest rate environment, which will lead to assumptions being tested, changes in strategy and heightened competition. To support growth, whether through M&A or material capex, there are core fundamentals we always consider. These are even more pronounced today due to the current climate. Stakeholder alignment is important, whether we’re working with management or a founder, with transparency around the drivers for exit, what targets need to be met and who is incentivised to make it happen. Banks must also spend time with the equity holder to ensure all stakeholders are on the same page. Capital allocation policy will be scrutinised, whether in relation to a new site roll-out or a technology investment as part of the end-user experience. The rationale and return for all capital investment should be clear and well-justified. We expect technology to drive positive outcomes; from boosting customer retention to optimising business functions, we have seen excellent use cases. Whether it’s deployed to drive revenue or manage costs, technology should be used efficiently. It should never be about technology for the sake of technology. A robust financial plan is crucial – one that accounts for the downside while clearly articulating delivery of the underlying plan. Financial partners will focus on underlying cash assumptions, and while revenue growth remains key, margin expansion and cashflow will be opined on more than ever. A final observation is that boutiques are boutiques for a reason. Scale is not always the solution. Focusing on the core concept and providing best-in-class client experience will determine the expansion of the sector and who we, as financial partners, work with.
As boutiques navigate the current climate, we expect to see more opportunity to support the evolution of this space.
JOSHUA NEISH Head of Hospitality & Leisure, Barclays Corporate Banking
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The banking you expect. The industry data you don’t. Search Big Picture Banking Exercise bigger opportunities
Barclays Bank PLC is registered in England (Company No. 1026167) with its registered office at 1 Churchill Place, London E14 5HP. Barclays Bank PLC is authorised by the Prudential Regulation Authority, and regulated by the Financial Conduct Authority (Financial Services Register No. 122702) and the Prudential Regulation Authority. Barclays is a trading name and trademark of Barclays PLC and its subsidiaries. KX11444-97. 11/23.
INDUSTRY VIEWS
LEISURE DB
FOCUS ON WHAT YOU CAN CONTROL A VIEW FROM @THEWELLBEINGLAWYER
The boutique fitness sector has seen much volatility of late, the pandemic abruptly halting the boom and the cost-of-living crisis extending uncertainty. While fitness moves out of discretionary spend to become a non-negotiable – cemented by the concept of community that is so strong in boutiques – challenges remain in the shape of hybrid working patterns and many consumers’ desire for multi-faceted training. As such, we’ve seen pre-pack deals, acquisitions from liquidators, mass consolidation and a distinct lack of available funding, resulting in a continued sense of unease within the boutique industry. While it might not be the best time to fundraise in the fitness world, companies shouldn’t wait until things improve to get investment-ready. Getting the basics right from a legal perspective will put you ahead of the pack and leave a great first impression on any potential investor. The first easy win is to ensure you have a clear and up-to-date cap table (including class and number of shares and percentage holdings), details of any options granted and any loan notes in existence. Consider, too, using a brand management solution to protect your most valuable asset: your brand. Pinsent Masons’ Alteria product gives you control over the management of your intellectual property, such as your registered trademarks, and allows you to forecast renewal costs. There’s also optionality to monitor potential online infringements and comments about your company, leadership team and employees on social media. A review of existing employment and contractor agreements is advised to ensure any IP created during the course of engagement is owned by the employer. Consider scope and duration of any restrictive covenants to ensure they are enforceable. Coaches and instructors – particularly those with large followings on socials – can become pivotal, and so a balance must be struck between protecting the business if the individual leaves and unfairly restricting their ability to earn a living. Boutiques should recognise the unmistakable shift we’ve seen from investors being attracted to revenue-driven businesses to a desire for, at the least, breakeven businesses. Profit-making outfits are now considered to be gold dust. To differentiate themselves, boutiques should consider new ways of engaging with and retaining consumers. That might include an uptick in merchandise creation, blurring the lines between service provider and retailer while increasing sales and allowing customers to wear their loyalty on their sleeve for an even deeper connection. Investors will also be looking for boutiques to expand their offerings to better address holistic wellness, widening the ecosystem to capture more elements of consumers’ lives – think social and co-working spaces and events – while maintaining the delivery of measurable and inclusive training. The important takeaway: there is money out there and it needs to be deployed. The task now is to get ready to seize the opportunity when it comes.
There is money out there and it needs to be deployed. Get ready to seize
the opportunity when it comes.
SAMANTHA TRELEAVEN Associate, Pinsent Masons LLP
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INDUSTRY VIEWS
LEISURE DB
TALENT ATTRACTION A POST-PANDEMIC GUIDE FOR THE BOUTIQUE FITNESS INDUSTRY The post-pandemic world holds many challenges for fitness operators, with talent attraction and retention ranking highly on that list. An industry-wide issue, it’s felt most keenly among operators in London, where a high density of studios, gyms and leisure centres all fish in the same (shrinking) talent pool. For 2023, my team and I set ourselves a One Boutique a Week Challenge ; as I pen this in mid-October, we’ve so far visited over 40 boutique studios this year. Why? Because we wanted to learn about the latest trends and working patterns in the boutique space. And because we want to champion these brands. This is a sector we’re incredibly passionate about. So, what have we observed and experienced during our visits? First and foremost – and this isn’t just because we work in recruitment! – it’s clear that the boutique experience is reliant on people. You simply have to have the right team in place. Given the talent attraction and retention challenges of our post-pandemic world, we therefore thought we’d share three tips and takeaways to enhance your own recruitment processes. First, it’s hugely important that you get your employee value proposition (EVP) right and that you shout about it! A strong and meaningful EVP tells a candidate what they’ll get in return for choosing to work with you. People want to work for organisations that have similar values to them, so they feel at home; getting your EVP right will attract people who ‘fit’ your organisation. This doesn’t have to be a big marketing exercise – we see it more as a chance to define your culture, values and purpose – but once you’ve done it, shout about it as much as possible. In our 2022 Pulse Survey , candidates told us the first place they look when researching potential employers is company websites and LinkedIn pages. Your EVP should be front and centre here. Next, focus on your benefits. It isn’t just about salary any more: candidates also want to understand your annual leave allowance, free class access, flexible working and additional wellness benefits. We recommend communicating a well- defined benefits strategy throughout your recruitment process, from adverts to the interview process to your EVP. Increasing salary to attract talent isn’t always possible or sustainable – particularly in the fitness industry – so a well-considered benefits package can have a big impact. Finally, recognise that candidates want flexibility: almost 50 per cent of Pulse Survey respondents said lack of flexibility/a desire for more flexibility was a driving factor behind them looking for a new role. If they don’t find what they’re looking for in our sector, be ready for them to turn instead to sectors such as hospitality, retail and other aspects of leisure, which are competing for the same talent with flexible contracts, shifts and hours of work. Flexibility is something we must all now incorporate.
Increasing salary to attract talent isn’t always possible or sustainable, so a well-considered benefits package can have a big impact.
MADDIE CUMMINGS Account Director, Love Recruitment
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INDUSTRY VIEWS
LEISURE DB
REIMAGINING BOUTIQUE FITNESS HOW A SHIFT TOWARDS HEALTH-SEEKERS UNLOCKS ITS FULL POTENTIAL Across London’s many high streets, boutique studios are not just vying for the limelight – they’re challenging traditional notions of health and fitness. And while countless enthusiasts still clamour to sculpt their perfect physique, an equally significant segment is looking to boutiques for a more profound, preventative reason: their overall wellbeing. Amid the plethora of training methods available, Electrical Muscle Stimulation (EMS) emerges as a uniquely suitable solution for these individuals. Unlike traditional training methods that sometimes place undue stress on the joints and ligaments, EMS offers an impact-free, whole-body training approach that can be tailored to individual needs and training goals. Supervised by a professional, clients experience a comprehensive workout that taps into the deep muscle layers often underutilised in conventional exercise. EMS shines particularly bright in its capacity to alleviate and prevent chronic conditions like back pain, a common bane of today’s sedentary urban lifestyles. Age-related muscle loss, another quiet thief of vitality, is also kept at bay with regular EMS sessions. Considering the costs of these issues – both in terms of healthcare expenses and quality of life – it’s a no-brainer that prevention is not only better than cure, but often cheaper. Another compelling EMS narrative is its commitment to time-efficiency. In an era where time is at a premium, EMS delivers an incredibly potent punch. With just 20 minutes a week, clients can maintain a consistent, empowering exercise routine that enhances vitality and sustains wellbeing. For Londoners perpetually juggling between professional commitments and personal endeavours, such efficiency in achieving effective results is nothing short of a miracle. From its roots in Germany, we’re already seeing EMS make its mark on the UK fitness landscape. Feel Electric is thriving with 10 locations; global player Iron Body Fit, with its 200 studios, is now eyeing London; German titan Körperformen, with 300+ locations, is planting its flag in Nottingham; and home-grown champions Surge and Vive Fitness are charting their own expansion tales. But EMS doesn’t have to be a standalone concept: miha bodytec is the compact powerhouse that fits seamlessly into any fitness or health establishment. It is the perfect extension of a boutique studio offering, requiring just 1.5 sq m of floorspace per participant to deliver a premium, personalised experience that services customer needs and diversifies revenue streams. Our message to every boutique fitness provider pondering an upgrade to their offering is this: prevention is the heartbeat of holistic health, and EMS is the high- touch, customer-centric way to integrate it into your studio. Electrify your retention rates and ROI by harnessing the might of miha bodytec in your boutique space. As you pave the way for a fitness future where technology and personalised care coalesce, the investments you make in the holistic health of your clients will reverberate back, amplifying the profitability and sustainability of your business.
Prevention is the heartbeat of holistic health, and EMS is the high-touch, customer-centric way to integrate it into your studio.
PHIL HORTON Country Director UK, miha bodytec
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INDUSTRY VIEWS
LEISURE DB
BREATHE EASY THE VITAL IMPORTANCE OF AIR QUALITY IN A BOUTIQUE STUDIO
When it comes to building management, every aspect – however small or invisible it might seem – has the power to contribute to a healthier, more efficient environment, in turn positively influencing the customer experience. Many of my projects have been substantial in scale, but I want to emphasise that even modest changes can have a significant impact. In boutique group exercise studios, this holds particularly true when it comes to indoor air quality. When you step into a boutique studio, you expect to step into an environment that actively promotes your health and wellbeing. And where better to start than with breathing clean, fresh air? Invisible yet hugely important, the quality of the air you breathe while exercising is directly linked to how comfortable you are, how well you perform and how good you feel during your workout. Of course, since COVID, consumers are extra-attentive to air quality. Promoting your efforts in this area will resonate more strongly with people now than ever before. It shows you’re invested in customers’ comfort and wellbeing beyond the workout. It shows you’re focused on every detail of delivering a premium, health- enhancing experience. It shows you care. And with clients choosing boutique studios not just for the workouts, but for the experiences and the environments, it’s certainly worth exploring every opportunity to set yours apart. Beyond the health aspect, consider the energy efficiency angle. Maintaining good air quality can also make your studio more energy-efficient: when your heating and cooling systems don’t have to work so hard to compensate for poor ventilation or air quality, you not only help the environment, you also keep your budget in check. So, what can you do to enhance indoor air quality in your boutique studio(s) without undertaking a massive overhaul? Here are some straightforward steps. Use indoor air quality sensors: Keeping tabs on things like temperature, humidity and air contaminants, these are a practical way to monitor and maintain a healthy environment. Ensure proper ventilation: It’s an obvious one, but make sure your studio is well- ventilated. This can be as simple as keeping windows open where possible, or using an efficient ventilation system. Maintain cleanliness: Regularly clean and maintain your studio space to avoid the build-up of dust, pollen and other particles. Think long-term: Consider implementing technologies and systems that not only improve air quality but also reduce long-term energy costs. Even this needn’t be an upheaval: it can be as simple as adding timers or using apps to control your aircon. If you’d like to discuss the many possibilities, feel free to reach out to us. It’s heartening to see that some of my premium fitness clients are already leading the way, showing their commitment to clients’ health, comfort and satisfaction by prioritising indoor air quality. And the returns are there: when customers know they can breathe easy, they are more likely to come back, recommend your studio to others and give you top ratings.
When customers know they can breathe easy, they are more likely to return, recommend your studio and give you top ratings. MUKESH AGGARWAL Director, EWA Controls
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LONDON BOUTIQUE STUDIO REPORT 2023
boutique adjective [before noun] bu:’ti:k
COMMERCE
Used to describe a small fashionable business that sells a particular product or service.
Definition of boutique from the Cambridge Business English Dictionary. © Cambridge University Press.
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DEFINITIONS
LEISURE DB
WHAT IS A BOUTIQUE?
In return, customers should enjoy a premium quality experience across all touchpoints. There should be 20+ classes on offer each week, with each class able to accommodate a minimum of eight people, and no long-term commitment. Excluded from our definition are non-standalone studios (e.g. big box clubs’ own in-house boutique- style offerings), pop-up and non-permanent studios, outdoor fitness – however premium – and PT studios. To once again quote David from 2018: “We love and use small PT studios, and some even offer small engaging classes that are wonderful. However, with fewer than eight in a class and the economics working differently from a boutique, they remain PT studios in our eyes and not boutiques.” Please bear this in mind as you digest the data and interviews in this report. Our definition of boutique may differ slightly from your own, but we believe it captures the vital essence of boutique fitness, even as this sector moves into a new phase of its life. (See page 19 for the full definition used in this report.)
“Defining a boutique studio is probably the most difficult part of this report. It has taken many hours of debate and even more hours of challenging discussion around each brand to make sure it fitted the definition, and the definition fitted our boutique purpose. Some red lines had to be drawn.” These were the observations of Leisure DB founder David Minton in his foreword to the inaugural 2018 London Boutique Studio Report. Fast-forward to 2023 and what’s interesting, in spite of the many changes in the market over the past five years, is that defining a boutique studio is still challenging. If anything, it’s harder now than it was in 2018. On page 66 of this report, UFB’s Richard Smith and Steph Davies explain how “boutique has become a buzzword” and that this has “led to a lack of clarity around its definition”. Emma Barry – boutique fitness expert and author of 2020’s international bestseller, Building a Badass Boutique – elaborates on this topic on page 20: “In its heyday, ‘boutique’ meant uniqueness, expert focus within a single discipline, elevated touches and the one-off specialness of a small business that people were willing to travel across town for. “As boutique brands have scaled, big boxes have created high-quality in-club boutiques and some regions became oversaturated by genre, that uniqueness has dissipated. The perspectives that used to set boutiques apart have begun to be absorbed into other businesses such as big box gyms, corporate sites and residential communities. These businesses are taking the elements of boutique and placing them in their own spaces.” OUR DEFINITION Given this ongoing discussion and evolution, for the sake of constructive comparison with 2018 data, we’ve used the same broad criteria and definitions in this report as we used previously. That is, a boutique must be a permanent, standalone group exercise studio that charges a premium price tag – typically a monthly membership of over £100 and/or a 10-class package priced at over £120.
CLASSIFICATION & REMIT A few other important points to note on our
methodology (which you can read in full on page 87). First, although boutique studios are increasingly appearing in other cities and locations, this report focuses specifically on London as the continued hub of the boutique fitness scene in the UK. All references to ‘total market’ therefore relate to the total London boutique studio market. Second, as in 2018, we have classified each London boutique studio as Cardio, Mind & Body or CrossFit (in 2018, Cardio was referred to as ‘HIIT’, but for 2023 we wanted to acknowledge that not all feelgood, high-energy cardio classes are based on high- intensity interval training techniques). Of course, one of the big trends in the boutique fitness sector at the moment is a move towards diversification of the offering, either through collaboration between distinct brands or brands introducing their own additional formats. So why do we persist in pigeonholing every studio into one category?
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DEFINITIONS
LEISURE DB
THE INFLUENCE OF FRANCHISING Joan Murphy, co-founder of Frame, adds extra weight to our argument when, in her interview on page 40, she points to the growth in boutique franchising and says: “Although many of London’s big boutique brands are multi-discipline, the rise of the owner- operator, single-genre franchised boutique means there are still more single-discipline studios than you might imagine.” Speaking of franchising, although our report doesn’t analyse boutique brand/studio ownership, the expert interviews woven throughout shine a spotlight on the current momentum in the boutique franchise space, as well as nodding to the pros and cons of this model. Check out our interviews with Jon Canarick (page 32), BFT’s Cameron Falloon (page 81), Barry’s Sandy Macaskill (page 51), Emma Barry (page 20), Frame’s Joan Murphy (page 40), United Fitness Brands (page 66) and Xponential Fitness (page 84). Boutique fitness is certainly a rapidly changing market, and we warmly welcome debate on our methodology, definitions and areas of focus as the boutique fitness sector continues to evolve – and we seek to evolve future editions of this report with it.
First, London’s primary example of brand collaboration is currently United Fitness Brands (UFB) – see our full interview on page 66. UFB customers are able to pick and choose from the sister brands, which from a consumer-facing perspective remain distinct. We therefore continue to list them separately in our report, which fits well with our classifications. Meanwhile, the launch of additional formats under a single brand are most evident in the Cardio category, where some studios now also offer Mind & Body classes (e.g. yoga, pilates). However, our data shows that almost all studios still have a primary focus – both in their product and their brand heritage – and we have categorised them according to this. The numbers give us further confidence that ours remains a valid approach. For this 2023 report, of the 102 sites in the Mind & Body category, only two of them offer anything other than barre, yoga and pilates. Of the 159 Cardio sites, 51 also offer barre/ yoga/pilates alongside their primary cardio offering – but this is still only around a third of sites. CrossFit is a totally separate category; it has no overlap with our other studio classifications.
UFB is London’s primary example of brand collaboration
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DEFINITIONS
LEISURE DB
Following on from the deliberations and decisions we’ve already outlined, the definitions for our London Boutique Studio Report 2023 are as follows:
BOUTIQUE STUDIOS
All permanent, standalone group exercise studios that fit the below criteria, typically: › Premium price tag (usually monthly membership of £100+ and/or 10-class packages priced at £120+) › No long-term commitment › 20+ classes a week
› Minimum eight-person capacity in every class › Boutique quality experience, product and service
BOUTIQUE STUDIO TYPES
Cardio: Primary offering at the studio is cardio-based classes, e.g. group cycling, circuits, functional fitness, boxing. Mind & Body: Primary offering at the studio is mind-body classes, e.g. yoga, barre, mat pilates, reformer pilates. CrossFit: All CrossFit-affiliated studios.
TOP OPERATORS
Boutique studios belonging to the leading operators, as ranked by number of locations.
INDEPENDENTS
Single-site boutique studios – not part of a larger brand or group of studios.
MULTI-SITE OPERATORS
Branded groups of studios or an owner that operates more than one studio.
OPENINGS & CLOSURES
Openings: New boutique studios. Closures: Closed boutique studios. If a studio is taken over by another operator, this is not counted as a closure or a new opening.
UNLIMITED MONTHLY MEMBERSHIP
Monthly membership fee to take part in an unlimited number of classes each month (or 30 classes each month), on the non-contract option if this is available, or the rolling monthly membership fee in the absence of a non-contract option.
CLASS PACK
One-off upfront fee to purchase a block of classes – e.g. five-, 10-, 20- or 30-class packs.
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Similar to boutiques, premium big boxes such as Third Space incorporate luxury touchpoints throughout their GX experiences
WINDS OF CHANGE
Boutique fitness expert Emma Barry shines a spotlight on the trends and dynamics shaping the global boutique market today
#1 Evolution of the model Fitness boutiques can claim responsibility for driving a lot of emotional and financial value into group fitness experiences over the last 15 years. In the developed markets, however, we are perhaps past ‘peak boutique’– the early and mid-2010s, when multiple boutiques sat alongside each other on the same block, little more than a sandwich board promoting them, and had a steady line of punters happy to part with the best part of $40 a pop, no questions asked.
Boutique fitness now feels like a tough sector. It is not alone in this – equipment companies, connected fitness concepts and digital fitness subscriptions are also going through the washing machine of change – but my unbridled pre-pandemic optimism has been tempered to a more balanced view. In the recent Boutique Fitness Solutions (BFS) State of the Industry Report, only 9.4 per cent of surveyed studios had a profit margin of 20+ per cent. Very few are making enough money to sustain themselves, reinvest in their product and insure against whatever the future brings.
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This financial story isn’t just about the fall of the per- class price tag, which is a natural evolution in business as a product becomes more mainstream and prices drop over time. (In this case driven in part by aggregators such as ClassPass and GymPass, which offer affordable variety, and aggregated offerings such as house-of-brands Xponential, which is able to use its size for efficiencies across its 10 boutique brands.) It is also about the uncertainty of our world right now, which brings insecurity to all industries. And it’s about post-pandemic consumer behaviours that directly impact the boutique fitness model.
Boutique fitness now feels like a tough sector. My unbridled pre-pandemic optimism has been tempered to a more balanced view.
The economics of the model have changed. While some markets are in growth mode, others have become Tuesday–Thursday businesses in our hybrid working world, and boutiques’ original pay-as-you-go approach is evolving towards a more sustainable membership model. (Meanwhile big box clubs are becoming more flexible, with short-term memberships, punch packs, casual visits and day passes). As the HVLP (high value, low price) and some mid- and luxury-level segments flourish, fitness boutiques will also come down to unit economics – site-by-site profitability – and consolidation will continue as operational budgets remain tight. Boutiques will also continue to explore partnerships, ancillary income and creative ways to save money – sharing real estate across dayparts with other businesses such as food and retail, for example. #2 Staff shortages Another significant statistic from BFS indicates that the number one pain point for boutiques is finding great people, with 75 per cent of surveyed studios calling out hiring as one of their top three challenges.
Barry’s has evolved while staying true to its brand and its concept
Boutiques have always prioritised the quality of their talent, but the pain of finding and training new staff in high-churn roles is now very real, with a smaller, younger, less experienced labour pool. Potential recruits also now have different needs and desires. The solution is to adapt to shifting expectations to become the place where they want to work. That might mean salary rises, regular job title changes to acknowledge career progression, more and different perks (often generationally different), or employment models built around an expectation of six-month tenures in today’s gig economy.
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Recognising that we’re competing against other entry- level roles where deeper pockets support bigger salaries and benefits packages, it should certainly mean nurturing a magnetic and fulfilling culture – something that should sit at the top of the boutique list of priorities. It’s on today’s employer to work out how to do all this – yet only 5 per cent of studios surveyed by BFS named ‘building a high-performing team’ as their number one business objective. #3 Deconstructing ‘boutique’ In its heyday, ‘boutique’ meant uniqueness, expert focus within a single discipline, elevated touches and the one- off specialness of a small business that people were willing to travel across town for. As boutique brands have scaled, big boxes have created high-quality in-club boutiques (with the security of
a membership model and the advantage of variety and additional amenities) and some regions became oversaturated by genre, that uniqueness has dissipated. Everyone is now striving to stand out in a sea of sameness. We might all think we still have clear USPs, but these are far less obvious to a brand new consumer, who is therefore confused by the different price tags for what they perceive to be very similar products along the high street or at the club. The reams of high-quality digital content on the likes of YouTube, Apple Fitness+ and Nike Training Club only compound the issue. The perspectives that used to set boutiques apart – specialisation, personalisation, community, meaningful interaction, premium experiences and high-end fit-outs – have been analysed and understood, and have begun to be absorbed into other businesses such as big box gyms, corporate sites and residential communities.
Other fitness businesses are taking elements of boutique and placing them in their own spaces.
Reformer pilates is a hot trend globally, with Xponential’s Club Pilates a major player in the US
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There is positivity and strength when small studios genuinely sit at the heart of, and contribute to, a community.
These other fitness businesses now know how to boost the emotional element of fitness. They understand what high-touch looks like. They recognise the importance of building communities of like-minded people. They’ve seen the beautiful environments and experiences. They are taking these elements of boutique and placing them in their own spaces. #4 Authentic growth One area in which smaller boutiques still excel, which should mean some continue to thrive, is in community outreach and service. There is positivity and strength when small studios genuinely sit at the heart of, and contribute to, a community. Strength as a fundamental exercise is also having its moment across two distinct executions: reformer pilates, and strength training using tools such as weights, racks and kettlebells. What is interesting here is the intersection of social dynamics and the mind space that strength training commands. For Generation Anxious, a great way to feel psychologically strong is to make yourself physically strong. For ageing populations, it’s a chance to enjoy the same gains regardless of age. For those brought to their knees by the pandemic, mental strength can be found in strength training. For women, CrossFit and all the lookalike programmes have helped drive the female empowerment agenda. In contrast to the hypergrowth of connected fitness during lockdown – where the sheer speed of growth was ultimately the kiss of death – we’re reminded that sustainable growth does not come from seizing the latest trend. It comes from something deeper and more authentic. In boutique, as elsewhere, this will be what delivers growth in the long term. With this in mind, the rise of the recovery category is an interesting one to watch as the dust settles post-pandemic. Fashioned on strategies applied to elite athletes, it will be interesting to see the staying power given our number one challenge in society is that people are not moving enough and arguably have nothing to recover from.
Each UFB brand remains distinct, with its own authentic identity, says Barry
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#5 To franchise, or not Franchising sounds sexy and is a hot topic in the boutique market right now, but it’s far harder to do and make money than you might think. It also isn’t suitable for every product; selling fitness is more difficult and nuanced than selling sandwiches. You must be able to customise and adapt the model locally, and understand your product’s potential geographical and cultural (ir)relevance. You must also consider the key overriding trend of personalisation, which brings a natural intricacy to the offering. You must find the right franchisees and once again consider the staffing tensions that exist in this climate. Orangetheory, as an established example, looks for proven operators who have a track record in scaling businesses to take on whole regions rather than single sites.
You must be very careful how you scale, not spreading yourself so thin that the head office cannot support multiple (and often diverse) markets with single or only a few sites in each. A cluster strategy is often embraced to offset this risk. Proceed with caution. And you must work out how to condense your product to a set of lowest common denominator deliverables (The Playbook) – something franchisees can confidently commit to and that will still ensure a boutique experience. F45 and others went over their skis on sales projections driving valuation, but did elements of the lowest common denominator stuff well, streaming centralised pre- programmed digital content onto in-studio screens. If too much is left to the coach or studio manager, and they struggle to create enough profit to pay themselves and reinvest, you will find yourself in tenuous negotiations where there is push-back on the contract.
Franchising sounds sexy, but it’s far harder to do and make money than you might think. It also isn’t suitable for every product.
Xponential Fitness can use its size to drive efficiencies across its 10 brands
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I believe that, with only a few exceptions, the era of the one-genre boutique is gone – but variety must be done right.
Operators must adapt to shifting expectations among the workforce
#6 Variety, done right I believe that, with only a few exceptions, the era of the one-genre boutique is gone. There’s been a natural swing towards diversification, with consumers seeking variety and boutique business owners wanting to meet customer needs and capture more of the wallet-share. However, variety must be done right – and right will depend on your offering, your model, and likely location by location. Let’s take Barry’s as an example of best practice. Adored by its customers, the brand has taken its time to understand its market deeply and has not been side-tracked. It has introduced Lift and Ride, but these both uphold the Red Room vibe, are based on clear customer needs and were piloted extensively for proof of concept. Everything has been done uniquely in Barry’s way, with products introduced only in response to proven local needs.
Diversification hasn’t always worked this way at other boutique operations, where a set of programmes have sometimes come out under one brand, seemingly more in response to trends than to a long-term view of customer needs, brand authenticity and the ability to deliver a consistently fantastic experience. Diversification can work within one brand, but make sure it’s authentic, based on a deep analysis of customer needs – location by location – and tested to ensure people actually come and are therefore happy to pay. An alternative approach can be to bring separate boutique brands together behind the scenes, as UFB has done in London (see page 66), allowing each to retain a clear, authentic brand and product.
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h For all your gym, fitness and workout spaces h Work with you to make the best use of your space - we listen to what you want h Wide choice of strength and conditioning equipment h Options to meet your cardio and resistance needs h Flooring options available h Post workout recovery areas h Fitness wearables to help build community h Digital solutions from websites to CRM h Finance options available to help spread the cost h We have you covered from top to bottom h From concept to install
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