Competition heats up for luxury gym in Barrie
Barrie Athletic Club
Jeff Deverill and Mike McPhee
565 Bryne Drive, Barrie, Ontario, L4N 9Y3
www.barrieathleticclub.com, email@example.com, 705-722-4792
Nine full-time, seven part-time and 11 sub-contractors
Male and female young professionals and boomers
When Mike McPhee and Jeff Deverill purchased the Barrie Athletic Club in late 2012, the fitness industry veterans knew they’d found the perfect investment.
The squash and fitness club boasted a solid reputation as the region’s top squash venue and had a loyal squash membership. And Barrie, located 45 minutes north of Toronto, is touted as one of Canada’s fastest growing communities. The pair quickly realized that by upgrading the club’s tired décor and by building the neglected fitness side of the business, they could create the city’s first higher-end commercial sports and fitness club.
The business partners personally invested $650,000 to purchase and transform the 12-year-old facility into a finely-appointed club complete with a licensed food and beverage service, and luxurious locker rooms with whirlpools, steam-rooms, saunas, new fixtures and a free towel service. A culture of exceptional customer service and high maintenance and cleanliness standards was implemented. Monthly fees were set at $49-$89.
Membership numbers were tracking closely with expectations – the local newspaper named it Barrie’s Best Fitness Club in 2013 – until 12 months post-purchase when an imposing big-box, lower-cost American chain, LA Fitness, charging $35 a month, opened just two kilometres away. With an aggressive sales posture and deep discounting, it siphoned away 50 Barrie Athletic Club members and started competing for prospects.
As a result, the Barrie Athletic Club’s short term success has been disappointing. Although membership has grown by 50 per cent since opening, the club is currently 100 members short of its 900-member target.
McPhee and Deverill believe they have all the pieces in place to succeed – but it’s now a race to aggressively exploit their club’s value proposition and to sign-on prospects in a suddenly highly competitive market.
The partners were fully aware of the breadth of competition before committing to the purchase. Their analysis of the local fitness club landscape, at that time, showed a glut of lower-cost, lower-service clubs: a multi-club chain charging $45 a month, two no-frills clubs charging $15-$20, and three small franchises charging $40, along with several yoga and Pilates studios, three community centres and two YMCAs. They saw a gap in the market for a higher-end, full-service club believing that Barrie exercisers were ready for a more sophisticated exercise environment.
The business partners are no newcomers to the fitness club industry.
For his first 20 years in the business, McPhee managed or owned four large sports and fitness clubs in the GTA. For the last 12 years prior to purchasing the club, he worked as a consultant to over 100 North American clubs, providing design, marketing and management expertise.
Deverill is a former squash pro who developed the squash program at Mississauga, Ontario’s Club Meadowvale into one of the most successful program at the time in Canada. He later founded Planet Kids Ltd. and has spent 16 years growing it into one of the largest private summer day camp in Canada.
The pair is working diligently to eventually grow to 1,200 members (where they say they will generate “a respectable profit margin”) and to differentiate their club and justify its higher monthly fees.
“Nobody asks why it costs $50 more a night to stay at a Sheridan Hotel than a Holiday Inn,” says McPhee. “But when it comes to fitness clubs, consumers don’t always recognize that there can be huge differences in the quality of operations, staff and customer service.”
The Barrie demographic is proving to be particularly demanding and price conscious, he adds.
David Hardy is president of Fitness Industry Council of Canada, a non-profit organization representing over 5,000 fitness facilities and four-million members.
“The Canadian fitness club business is more competitive than ever due to industry consolidation and competition from a recent increase in U.S. fitness chains and franchises,” he says. “Success flows to those who are well capitalized and who have a depth of knowledge in areas like programming, marketing, HR, branding, information technology and sourcing equipment.”
To help boost the bottom line, the partners purchased a well-established karate school and moved it into an underutilized space in the club. There are now 150 members paying $95 a month.
They have recently joined three local networking groups and the chamber of commerce, launched a Facebook page and will soon be active on Twitter. They have begun sending email blasts to members, alumni and prospects. Upcoming plans include upgrading its website, generating cross-promotions with local retailers, launching a corporate membership program and joining the Rotary Club.
McPhee and Deverill admit that a premium sports and fitness club might be slightly ahead of its time for a small city like Barrie, but they’re determined to make it work.
“We know that to be successful our big-box competitors need about 6,000 members each while we need only 1,200,” says McPhee. “As owners, we’re determined to get there. If we have to do sales and work the front desk, then that’s what we’ll do.”