ANALYSIS & COMMENT
Certainly in the US, Xponential Fitness’s positive same- store sales compared to pre-COVID – a good news story for the whole sector – are currently being driven by its Club Pilates brand.” Franchising pros & cons Turning to the topic of franchising, Canarick explains: “For successful premium operators such as Barry’s, the corporate store model is better within the US. Barry’s does franchise in some of its overseas markets, but within the US, its premium price tag means it’s not going to roll out the 750-1,000+ stores that would justify putting a franchise system in place. “It’s in medium and small markets that the franchise model really comes into its own. Here, the return of capital lends itself more to franchises, which can grow faster than corporate store businesses.
“In many ways, the nature of boutiques as owner-operator passion businesses also plays into the hands of franchising, because each franchised store is operated by its owner. It’s a great way to bring boutique fitness experiences to a broader population. “However, my headline observation when it comes to franchising is that not everything can work everywhere. Certainly in the US, there are lower income areas where we’re seeing multiple franchised boutiques open, but where corporately-owned boutiques – where the companies are spending their own money – don’t open. “These locations may just about be able to support one boutique, but I’ve long wondered whether it’s really viable to cram in multiple boutique brands. The price points might be lower than at Barry’s and SoulCycle, but they’re still premium compared to standard gym membership. I just question whether there’s enough discretionary income and revenue opportunity to justify the high levels of franchise sales. I really don’t know.”
My headline observation when it comes to franchising is that not everything can work everywhere.
Barry’s recovery is very strong compared to the rest of the industry, says Canarick
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LONDON BOUTIQUE STUDIO REPORT 2023
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