Aaron Harris for the Toronto Star
Case Studies

Members needed for Toronto’s C.O.R.E. indoor cycling studio and fitness center

Vital Stats
Name:
C.O.R.E. (Creating the Optimal Ride Experience) Studio
Owners:
Clair and Ursula Cafaro
Field:
Fitness
Employees:
Five contract instructors
Years active:
Less than one
Sales:
Approximately $35,000
Offering:
Holistic approach to small-class and individual fitness training and life coaching.
Members:
40
Notable:
Dr. Nigel D. Clements, head of orthopedic surgery at the Trillium Health Centre, leads indoor training rides at the studio during the summer off-season.

On the street level of a Victorian-style row house, tucked between a tattoo parlour and a small flower shop, there’s an indoor cycling studio with a speed limit sign on the door proudly displaying three bolded words: “EXCUSE LIMIT 0”

“No one else is doing what we do, it’s a place of solace for people,” says Clair Cafaro, who co-owns the studio with her sister Ursula, “not just body fitness, but mind and spirit too.”

Both sisters are self-proclaimed cycling nuts and certified fitness instructors, and they founded C.O.R.E. (which stands for Creating the Optimal Ride Experience) as a refuge from the commoditized mentality of the big-chain gyms where they used to work.

“Gym culture focuses on what’s wrong rather than on bringing out the best in you. It’s a one-size-fits-all, rather than a person centered approach,” says Clair. “I’m not exaggerating when I say I love every single person who walks through our doors. I see a real person, with real needs.”

Unfortunately, this passionate approach to fitness is not, at the moment, paying particularly well. With revenues only at $35,000 so far, neither sister is drawing a salary — Ursula still works as a fitness instructor at another gym and Clair, who has a fine arts degree from the Ontario College of Art and Design, teaches adults and seniors how to paint, and runs a second business certifying indoor cycling instructors.

All their cash is going to pay for the 1000 square foot studio’s lease, their ten rented bicycles, and various other expenses.

But, although both say the health of their clients comes before anything else, the sister’s didn’t start the gym purely out of altruism. The goal, says Ursula, is to eventually give up the day jobs and run their own spin-centric gym full time.

“That’s the trajectory,” she says. “It has to be.”

The studio, which currently has 40 members, is on track to reach $60,000 in revenue by the end of the year. Ideally, Cafaro says, they’d like to reach 100 members before their lease is up in December 2014 so they can afford to continue growing and move into a larger space.

The pair believe they’ll reach those numbers because, says Ursula, they do fitness differently.

“For us it’s turning (gym culture) on its head and being much smaller and hands-on because we want (members) to succeed,” she says. “When you’re in a smaller group, with a teacher right there, you feel like you have to show up and you have to deliver. People who come to our gym are going to stick to their goal and be more successful.”

The key to their success so far, she says, is a personal touch and a holistic approach to health. The gym specializes in no-frills cycling classes — they stick to the basics and avoid the awkward exercises practiced in many spin classes, such as doing situps, rapidly standing and sitting, or lifting weights while riding.

C.O.R.E. studio also offers strength training, yoga classes and injury rehabilitation. The walls of their brightly lit space are covered in paintings of nature scenes the sisters created themselves, and Ursula’s dog, a shih tzu maltese-mix named Miss chichi Rodriguez, is often onstage with her to help motivate clients during classes. There’s a lounge with comfortable chairs and free coffee for anyone who’d like to stay and chat after class, and members are also encouraged to do “mind agility” exercises while on their bikes.

“I say, ‘what letter comes after F?’ or you do tongue twisters while doing an all out, high intensity surge,” says Ursula. “You don’t just exert yourself, you also have to think.”

Scott Bowman, senior director, Ontario for the Canadian Youth Business Foundation, an organization that provides financing and mentorship to entrepreneurs, says this holistic approach to fitness could actually be part of C.O.R.E.’s problem.

“It’s one thing to have a full service gym, even a small one,” he says, “but they’re trying to cater to two different groups by offering mostly spin and a few (aspects of larger gyms).”

This, he says, will make it hard to lure potential members looking for a full body workout away from big-chain gyms. So, he recommends the sisters either concentrate on spin classes exclusively, or expand and become a full boutique gym with all the weights and machines members would expect.

He also recommends the sisters start marketing at fitness trade shows or bodybuilding competitions, and that they increase awareness about their studio by partnering with local gyms that don’t have stationary bikes to offer members free or discounted classes.

“You’ve got get out there and you’ve got to hustle,” he says. “There’s enough spin enthusiasts in Toronto that you can make a go of it, but you’ve got to build connections in that community.”

The sisters don’t have the cash for advertising, so they’ve already launched a partnership strategy and are currently getting referrals from physiotherapists, massage therapists, acupuncturists, personal trainers and naturopaths for referrals.

They also keep an active Facebook page, and are redesigning their website in the hopes of getting more members through the internet. Plus they’ve started offering fitness and artistic daycamps for girls, dryland hockey training, and, for the most hardcore cycling aficionados, advanced ride training.

They also offer a range of membership options priced according to market rates, and don’t bind members to contracts. First classes are free, single classes are $18, and drop-in packages range from 5 classes for $80 to 32 classes for $384.

Overall, the sisters say they’re excited about the future, and believe their passion and personal touch will eventually get them the membership numbers they need.

“We created C.O.R.E. to be something better,” says Ursula, but, she adds, “you can’t make someone buy your product by twisting their arm. They have to get there on their own.”

EXPERT VIEWS

As Interviewed by: Tom Henheffer

C.O.R.E.’s owners might need to refocus their energies toward considering the real consumer needs and brand differentiators that are relevant to the fitness market in Toronto, instead of concentrating on their passion for a cycling-based business. Entrepreneurs must start with these questions: what makes a business unique, desirable, and worth paying for? And what are consumers lacking that C.O.R.E. can provide? Cycling fitness and spin classes are popular in Toronto, but most gyms offer something along these lines. To offer cycling solely is a strategic choice, but probably not a strategic brand differentiator likely to drive significant membership. Differentiating C.O.R.E.’s offering along some other lines might be more effective. So I’d recommend messaging focus around their ‘mind and body’ approach to fitness, or their personalized, intimate membership offering. Finally, increasing volume (e.g. members) isn’t the only way to raise revenues. Increasing the margin they bring in per member (e.g. price of membership/classes) can also help to bolster top-line revenues.

by Brynn Winegad - Ryerson

Most businesses take three years to break even, so the owners of C.O.R.E. need to change their expectations, readjust budget and cashflow projections, and get ready to build more slowly. That said, this is a good concept. Spinning is in-demand, effective exercise, and people, especially those who are a bit older and looking for a more well-rounded program than what’s offered at big-box gyms, are looking for a provider who’s doing it differently. So I’d really emphasize the rehabilitation aspect of the business by partnering with more chiropractors and osteopaths, and also target seniors and retirees with these partnerships and in marketing materials. And there could be a real play toward the mommy subset if they can offer enough classes during the day — especially since word of mouth travels so quickly among this crowd. They really do seem to have something here — the pricing is great, there are ample partnership opportunities and a wide potential customer base. The owners just need to make sure to plot growth realistically, and build out their offering according to what their target market needs.

by Mark Simpson - GBC

There could be a market for this, but if someone is making me do tongue twisters when I’m working out, I’d just get annoyed. So the owners need to focus on cycling first and make the holistic health side of the business separate — something they can offer to clients as an additional service if they want it. C.O.R.E. also needs a stronger business plan. They’re only real differentiator is small size, and it’s hard to grow without losing this. The only solution is hiring instructors, but that will increase costs, so the owners need to do some additional planning. Once they figure this out, I’d concentrate on low-cost promotional options. They could have nights for groups of pregnant women, or dog walkers or businessmen. They have dogs there, maybe they could let people bring theirs in on certain nights, or have a networking event in their lounge following a class. Odds are only one or two people from these events would join long-term, but if the owners round out the service and hook a few new members each time, they could build a solid client base.

by Deirdre Fitzpatrick - GBC

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