State of the Fitness Industry: 2022

State of the Fitness Industry: 2022

Chris Cooper: (00:01)
Hey, I’m Chris Cooper. I’m the founder of Two-Brain Business. Every year, we put together the State of the Industry guide. This is the data and the knowledge that I always wished that I had when I was a brand new gym owner way back in 2005. What are the best gyms in the world doing? How many clients do they have? How much money do they make? How many square feet do they take up? What kind of equipment do they have? How many staff? All the answers are right here. We do this every single year in collaboration with our partners, some of the biggest payment processors in the world, and others to bring you the knowledge that you need to grow your gym. Look, if you know Two-Brain, you know that we publish every single day. And so when I say that this is the most important thing that we publish all year, you know it’s gotta be pretty good. And we actually print it off and ship it to you.

Chris Cooper: (00:53)
But I’m gonna walk you through it right now because I want to talk about what’s in the State of the Industry, 2022. How are gyms doing? How should yours be doing? Let’s get into it. Before I really get into the guide, I’ve gotta tell you how you can get your own copy. If you participated in our industry survey or you’re a Two-Brain client, we’re already mailing you one, you’re gonna get a beautiful hard copy of this in your mailbox. But if you want one really quick or you haven’t participated in the past and you’re dying to know, you can still have it for free. Just click the link below this video. This is something that we put months and months of work into every year. We spend about a quarter of a million dollars getting all this stuff together and published and shipped, and I want you to have it for free because I want you to grow your gym.

Chris Cooper: (01:36)
That’s our mission here at Two-Brain. There are a million things that you can do to grow your gym, maybe a few thousand. All of those things fall into about six general categories, and that’s how we’ve arranged the data in the report this year. The top six, or the six things that you can do to grow your gyms are: you can get more clients, you can add more value to your current clients, you can keep your clients longer, you can get a better return on the money that you’re investing in things, like your rent. You can ascend your team and grow them, and you can pay yourself more. These are the six categories of things that you can do to grow your gym. We call these the Six Strategies at Two-Brain. Now, I wanna share with you what gyms are doing and where your biggest opportunities are to grow your own gym.

Chris Cooper: (02:23)
So first off, every year before I get into who’s in the data, what we do every single month is we track leaderboards within Two-Brain. We are the largest gym mentorship practice in the world. There are usually around 800 gyms in our practice, and we’ve worked with thousands worldwide with a team of over 50 mentors now. And what this tells us is which gyms are actually doing the best. So not the people who say that they’re doing the best in that public Facebook group that you’re in, the people who are actually doing the best. We publish a leaderboard for each of these six categories every single month, and then we interview them to say, what are you doing? So Two-Brain Business is not about what I do at my gym, it’s what the best gyms in the world do. And then we turn that into curriculum, which is what we teach our clients every single month, and then they grow. In the dataset

Chris Cooper: (03:15)
this year, CrossFit is represented more than anybody else, and it’s about 50%. If you add up all these other categories, CrossFit gyms are actually just over 50% of the people represented here. And so if you are a CrossFit gym, I’m gonna talk a little bit about CrossFit at the end of this video, but for right now, you should know that these are especially useful to you. However, if you’re not a CrossFit gym, if you’re martial arts or personal training or strength and conditioning or HIT or whatever, this data is tremendous for you because you’re going to get to see the biggest opportunities that nobody else in your niche is doing yet. Trust me, the stuff that we do in CrossFit gyms will work just as well in team training gyms, HIT gyms, and the stuff that we learn from martial arts, we can turn around and use that in CrossFit or any other type of gym too.

Chris Cooper: (04:06)
The opportunities are endless here. Let’s talk about exactly what they are. So let’s talk about clients, and how to get more clients. That’s where everybody wants to start, right? Out of the 11,000 gyms in our sample size here, the average gym has 154 members. Now, this actually tracks with anthropological data about the organization of tribes. The average tribe size is about 150 members, and if you look at military units, you’ll see that number of 150 pop up over and over and over again. In fact, it actually has a name, and this is Dunbar’s number. Dunbar’s number is the size of the normal human group of about 150. Now, this is amazing information to know, because if you start with the goal of having 150 members in your gym, that will tell you how much you need to charge every month, and it’ll tell you how many coaches you need and how much space you need.

Chris Cooper: (05:02)
The reality is, I’ll share more of this later, that there are gyms out there with 150 clients that are way more profitable than the gyms that have three or even 400 because they have a good sense of what they need from space and equipment size. They’re making good careers for a couple of coaches, instead of having 12 part-time employees. They’re not struggling to pay the rent because they don’t have ridiculous overhead, and they’re providing so much one-on-one value that their average revenue per member is really, really high. And so we give three sample business plans for gyms based on 150 members, and you can get that if you go to our free Facebook group, GymOwnersUnited.com. It’s not the only business plan we teach, but it is a great one. And if I were starting from scratch today, I would start from the number 150 and work backward from there and easily build a business that could set me up for life.

Chris Cooper: (05:57)
The reason 154 is so significant is number one, according to push press, it’s up 9% year over year. Hallelujah. But also, it’s significant because 150 clients is more than enough. You can have a one-on-one relationship with every person in their box without forgetting their kids’ names, and you’re not in this constant marketing churn of trying to replace the clients that you lose. All right, moving on. Are gyms gaining or losing clients right now? This is actually a super duper important question. And what we found by looking at this data, which comes from Wodify, is that while gyms are gaining clients pretty rapidly, at an average in the U.S., gyms are gaining between five and seven new clients a month. The problem is that they’re losing between seven and nine clients a month. And so if you look at churn compared to growth, what you’ll actually see is a bit of a drop off in the last six months.

Chris Cooper: (06:56)
You can see that at the end of this graph. Scrolling down for more information, here are all the metrics, and again, if you want your own copy of this guide to peruse at your own speed, just click the link below this video. So if we look at canceled users, what we see is that even though gym growth has kind of stabilized again, and it’s consistent, gym churn is up a little bit, and you can see that at the end of this chart. These three lines are all going up. And this is, it is super true in the U.S., It’s slightly less of a problem in the EU, and we actually saw that this year, is that the gyms in Western Europe are gaining more clients. CrossFit affiliates, there’s more affiliates- or affiliate growth in Western Europe is larger than any other place in the world.

Chris Cooper: (07:43)
And luckily, client acquisition in western Europe right now seems to be outpacing client churn. That’s not the truth in the States. In the States, churn is actually higher than acquisition, and so gyms are slowly losing members, okay? It’s not true in Two-Brain gyms, but across the board, if you look at this sample of 11,000 on average, most gyms are actually slightly losing clients. All right? Who are the clients? One of the best ways to get and keep clients is to know who your avatar actually is. So there’s not much difference between the genders here, which is great, but if you look at the ages now, you start to see something really, really interesting. Okay, so here’s your ages broken down by country, and if you look at Australia, New Zealand and Europe, you’re gonna see a larger proportion of clients between 20 and 30 years old.

Chris Cooper: (08:36)
But across the world, the biggest age gap for your clients is between 30 and 40. And so if you’re a gym owner and you’re under 30 years old, as I was when I started a gym, you might think that your best clients are people just like you, but they’re actually not. The clients that are gonna stick with you longest are the ones who are more settled. They’re stable, they’ve got a family, maybe they’ve got a job, maybe they’ve got some kids. They’re not moving around from place to place, where the 20 year olds largely are. Another interesting age group on here is the under 20 ones. This is a very transient group. A lot of these people are in college, maybe even in high school. And so their participation in the gym is really gonna depend on their academic year.

Chris Cooper: (09:20)
They might go home for the summer, right? They might get a summer job. So if you’re gonna bank on anything, bank on that 30 to 40 professional, for building the core of your gym. Now, 41 to 50. Yeah, I mean, if you look at places where these microgyms have been established longer, you do have a bigger following of people 40 to 50, like the US and Canada. You do see a growing segment happening in the UK and Western Europe. But mostly it’s the 20 to 40 year olds and specifically the 30 and up that really make up the core of the gym. What is interesting though here too, is that in places with more established microgyms, you see more people aged 50 and up. And so what that tells me is that the reputation of these gyms might be improving over time, where people over 50 are less worried about getting injured now.

Chris Cooper: (10:12)
And so you see higher numbers, 10% in the US, 8% in Canada, lower numbers like UK, Australia, New Zealand. How are these gyms getting those clients? Well, interestingly, about 81% of the 11,000 gyms in our dataset have run ads at some point, but only about half of those are still running ads now, and that’s probably because they didn’t have success with ads. And we actually interviewed a lot of people. Either they found that they got a better ROI from doing organic blogging and podcasting, or they just didn’t get a good ROI from ads at all. That’s a shame. I mean, ads are certainly a good part of a marketing strategy, but if you don’t have the organic and the media posting at the base, you’re not gonna get a good ROI. So the correlation there is that you should have a referral program, you should have an organic social media program, you should have a media publication calendar, and then if you run ads on top, you’re just pouring gas on the fire.

Chris Cooper: (11:16)
Okay? Interestingly here, 74% of the gyms that were running ads were profitable. 70% of the gyms that were not running ads are still profitable. So you can be profitable without running ads, but slightly more gyms are profitable if they are. Okay, here’s the key takeaways. If we had published this guide 10 years ago, people would’ve criticized it for talking about profit and marketing. If we’d published it five years ago, a lot of people would still have said, you don’t need marketing, you just need word of mouth. So what’s interesting now is that everybody is doing some kind of marketing, and I do think that’s a good improvement. That means you’re just taking action, right? You’re not just waiting for clients to come in and talk to you. But about half the owners are running paid ads, and the ones who were running paid ads and stopped, hopefully it means you’re doing better marketing.

Chris Cooper: (12:09)
Now, that’s more effective, but I’m also afraid that some people tried ads, didn’t get a good ROI because they didn’t know how to do them, and they bailed on a strategy that could actually help them, okay? The best gyms, the most profitable, have a plan for referrals, organic media and paid marketing funnels. Okay? So here’s a bigger breakdown. I don’t want to go crazy on this, but I do wanna look at lead gen. Now, what you’ll see from this is that martial arts has the highest lead gen, about 60 per month. Access-only gyms, so these are the gyms where you just swipe a card and you have access to it. Maybe it’s 24 hour, maybe not, but you’re not paying for coaching, you’re not paying for classes. Their lead volume is going to be very high, but it has to be. These gyms have to have hundreds of members paying a low price to survive, and that means they have to have a lot of people interested in their program and maybe interested in signing up.

Chris Cooper: (13:06)
What’s really, really interesting though here is, if you look at CrossFit, the average gym is only getting 22 leads per month. That’s really bad. Leads is not people walking in the door. Leads is people who click on an ad or go to your website. So these are people who don’t even book a free consultation or No-Sweat Intro, or they’re not even doing a free class. That’s a very low number of leads, considering that if these leads are coming from paid ads, you might sign up 10% of them. If they’re coming from organic social media, you might sign up 40%. If they’re coming from referral, you might sign up 70 or 80%. But in most cases, the number of people who actually come in your door and join your gym is gonna be less than 40% of these leads.

Chris Cooper: (13:55)
That means that the leads are very, very low for what gyms need. The average cost of a new lead. This is super helpful because if you balance out all of your marketing, you can calculate what does a new lead actually cost you. And across all gyms, that’s about 27 bucks. However, it’s highest for personal training. So it makes sense because you’re selling a higher ticket service with personal training, you might have to pay more to acquire a client, but every client is gonna be worth more too. So the return on that marketing dollar is actually highest for personal training because the client coming in is worth at least 10 times what the gym is paying to acquire them as a lead. If you look at CrossFit, and a gym is paying 29 bucks to acquire a lead, and even if every lead becomes a client, they’re probably charging about 145 to 150 a month, which means that they’re spending 20% of the first month’s revenue just on acquisition.

Chris Cooper: (15:00)
If you actually calculate cost to acquire a client, it’s much, much higher. This is just lead cost, okay? Here’s average signups per month. Access-only, again, it’s a high volume model. They have crazy high churn. They need crazy high volume because they have crazy low rates. All right, let’s talk about client value. Here’s the thing that is screwing up a lot of gyms. They think they need a lot of clients, and they do need a lot of clients because they don’t charge enough, they’re not providing enough value to the clients that they have, and so they can’t charge a rate that will make them sustainable. But the problem is that they also can’t keep 300 clients. And so they’re trying to fight both ends of the spectrum at the same time. They have low value because they think they’re gonna get lots of clients they can’t get and keep lots of clients.

Chris Cooper: (15:45)
And so the two ends pull on the middle and there’s nothing left over and the gym closes. You’re far better off establishing a high value service for 150 clients than trying to be an average price for 300. Okay? Now we call this average revenue per member, ARM. And here’s something that’s interesting. This one dramatically improves with mentorship. The average gym revenue per month, according to Push Press, is 15,900. From our own data set, it’s almost $6,000 per month higher. Here’s the thing you’re gonna see though, that doesn’t necessarily correlate to an increase in costs. And so a lot of that $6,000 is going to profit, it’s going to the owner, they’re taking it home to their family, or it’s paying other coaches. Okay? That’s super duper important. And if we look at revenue growth from initial, and you track that as a correlate against client growth, what you’ll find is that gyms with a high client value, even if they’re losing clients per month, their revenue isn’t affected nearly as much.

Chris Cooper: (16:48)
But if they’re gaining clients, if they’re having a net positive gain per month, then their revenue is dramatically affected. And that revenue is what creates opportunities for coaches, not client headcount. Okay? So here’s revenue growth, really interesting. Now we wanna get into group training. So if you’re running CrossFit, bootcamp, spin studio, any of those that focus mostly on group training, here is what you charge. The average person said that they were charging 160 bucks a month, okay? The average person also said that of their total revenue, 67% comes from group training. Now, this is really, really important because if we had done this survey five years ago, what you would’ve found, especially in CrossFit gyms, is that a hundred percent of their revenue is coming from group training. As I’ve already said, those prices are way too low, which means they’re not getting enough revenue.

Chris Cooper: (17:43)
And so what we’ve done over the years looking at data like this is say, Hey, if you offer a personal training option to clients who don’t want to do group training, they’ll still follow your method. They’ll still do your CrossFit, your Pilates, your spin, but they wanna do it one-on-one and that’ll drive your ARM up. But when gyms started to introduce this, they were getting maybe 10% of their revenue from personal training. What this shows now is that more gym owners understand the value of providing a private higher value or even a high ticket service, and that is significantly impacting their revenue. So if somebody’s telling you no, you just need bigger groups or more groups, that’s not true, and the data doesn’t bear out that that produces the strongest gyms. The other thing that this does that really gives me a lot of hope for the future of the industry is, it diversifies your revenue streams.

Chris Cooper: (18:39)
Because gyms who make money off things other than group training are not as fragile. So, you know, annually in the holiday season, people put group training memberships on hold, but they don’t cancel personal training appointments. They don’t cancel their nutrition plan if they have a one-on-one plan. The higher the value of the client, the less likely they are to be affected by short term costs in their own life like Christmas presents. How many group classes does the gym provide per week? So this is a good number to know. Push Press says it’s 31. Teamup, the European gyms say it’s 54. Here’s the thing though, the more classes that you provide, the more your costs go up. Every single class that you add increases your cost. However, it doesn’t in turn drive revenue while you do have to have a certain minimum number of classes.

Chris Cooper: (19:34)
What you can see here, or later when we get to the attendance, is that simply having more classes does not attract more clients. It just adds more costs. So if we go down to average attendance per class, if we look across the board, the mean average is like 6.6 people in your class. Here’s the problem. Retention in your gym is highest one-on-one. If you have a one-on-one client, you’ll keep them well over three years on average. If you have four people in a class, your retention is not as good. If you have seven people in a class, your retention starts to improve and it keeps improving until you have about 13 people in the class and then your retention drops off. Again. If you’ve only got six people or fewer in a class, that class is not helping your retention, you’d probably be better to put them in one-on-one training, okay?

Chris Cooper: (20:32)
But more than anything else, it’s really important to notice, when you’re hiring coaches, a lot of the times we hire coaches to service the classes that we have instead of cutting back the number of classes that we have, employing fewer coaches, but making those coaches more full-time. And so if you’ve got 6.6 people in your average class and you’re running six classes a day, well that’s only 42-ish people a day. You could do that in four classes, have a lower staffing cost, and fill the extra hours with personal training or nutrition coaching or whatever. So the gym gurus who are telling you you need to be running big group classes, I mean, once again, that theory just falls apart. Like nobody is doing that on a consistent basis and actually being successful. Even the gyms that are sometimes running classes of 20 are just as often running classes of three or four.

Chris Cooper: (21:23)
Those are just not profitable uses of your time. And if you calculate what the average client pays per visit in your gym, it’s probably maybe 10 bucks per visit, maybe it’s less, and then you multiply that by 6.6, okay, this hour was worth 66 bucks. To me, my personal training rate is 80. You know, did I do the best thing by actually running a class right now? These are the numbers that can empower you to make decisions for your gym. How many clients are in the average group class according to what? Here you go. Average class size, the percentage of gyms with an average class size of over 10 is less than 1%, by the way. So if you’re in that category and your average class size mean average is over 10, good for you. You know, a big group model might work for you.

Chris Cooper: (22:16)
We can mentor you either way. But in most gyms, you have to build your revenue streams to include group classes, but also other services, because you’re just never going to get more than 10 people in a class. And if you look at like the means and the medians here, the most popular class size is three, then four, following that, it’s two. I mean, come on. Here’s popular class times. I don’t think there’s gonna be any surprises here, but it is really nice to see that most people are actually running classes on time. One of the things that I learned early on in the service business was, you need to make your service available when your clients are available. It doesn’t make sense to run a lot of classes between nine and five if most of your people work from nine to five. You’d actually do better to open from six till nine, close down the gym until five, and then run from five to nine.

Chris Cooper: (23:08)
Again, that’s what the service industry means, is serving people when they’re available. And so it makes sense that class times on the weekend are really well attended. And if you look at the most popular class times, you’re going to see times that are fairly early in the day and fairly late at night. That’s just part of the industry we’re in. Okay, some interesting stats here though, too. Monday is the most well attended day. If you’re an owner/operator, you’re delivering everything yourself or with one coach, open on Monday, you don’t have to open on Sunday. If you have a big staff open on Sunday. Personal training is interesting. You saw that something like 58% of the people surveyed here were CrossFit gyms. 10 years ago, very few CrossFit gyms offered a personal training option, even though that’s what Greg Glassman did.

Chris Cooper: (23:59)
He started one-on-one and then he went to semi-private, not to big groups. Even so, 10 years ago, even five years ago, a lot of gyms were struggling with this concept. But now, at least 85% of all of these gyms across all categories offer personal training including martial arts, which you would not have seen even five years ago. The price hasn’t gone up much, but the revenue that these gyms are making from personal training is taking a bigger percentage. So as group numbers are trending downward, which you saw earlier, luckily personal training is trending up. So revenue is actually going up, but it’s not coming from group memberships. It’s because people are offering more one-on-one, or high value or high ticket offers. And so you can see here, 22% is the average percentage of revenue for people who offer one-on-one coaching.

Chris Cooper: (24:49)
Now, I wanna talk also about nutrition coaching. So if you look at what people are charging for personal training, it’s almost exactly half of what they’re charging for nutrition coaching, but- it’s mostly the same gyms offering both- only 5% of their revenue comes from nutrition, where 22% comes from personal training. We’ve been talking about nutrition coaching now since 2016, and the numbers quickly went up to about six, 7%, but they’re going down again now. And so now what we’re starting to think is that gyms are just making less revenue from selling nutrition coaching as its own service. However, what you’ll see later is that gyms offering a high ticket package with nutrition baked into that value stack are actually doing better. And so this nutrition coaching, while it’s super important, it should be tailored to the clients. It has to be present.

Chris Cooper: (25:44)
Just selling a nutrition coaching one-on-one is not as successful for many gyms as it used to be. There are outliers, definitely. There are some gyms who are absolutely crushing it. But what you’re seeing is that if a gym owner has to decide, I can only add one new service in the next six months, that should be personal training or maybe one of the next two options that I’m gonna talk about. Okay, online coaching. Interestingly, gyms who offer an online option are making more than gyms who offer a nutrition option. So while a lot of gyms took away their online option as soon as they reopened after COVID, clients still do want it at about the same rate that they want nutrition coaching, okay? However, far fewer gyms actually offer this option now. And the reality is if you have a lot of students in your gym or you have a lot of Armed Forces personnel or people who move, you have a very mobile audience, online training is a great option to add for them because they can still train with you when they move to Boulder ’cause they’re going to work for CrossFit HQ.

Chris Cooper: (26:53)
Martial arts gyms don’t offer online. It’s kind of a surprise, but I think a lot of people just got burned out after lockdown. Supplements, to me, represents probably the greatest opportunity in 2023, not because there’s anything really new in supplements, but because it’s the most underutilized resource. And if you combine a nutrition coaching program with a supplement program, the whole will likely be more than the sum of its parts. The two compliment each other, but you could also add supplements in as part of your value stack for a high ticket or hybrid offer. Okay? However, less than 50% of the gyms offered supplements. If you’re in Two-Brain, there’s an amazing offer for you in our marketplace through Thorne and Driven is also really popular out there. Either of them will set you up really well. Ascent protein seems to be the favorite among Two-Brain gyms.

Chris Cooper: (27:43)
Hands down, they’ve got a great program out there too. Now, if you’re a martial arts gym or a HIT gym or a personal training studio, you might actually have just an amazing opportunity to add supplementation in, but it seems to go best in a coaching environment. So we’ve got a supplements guide. If you go to GymOwnersUnited.com, just do a search for supplements if you don’t see it. There’s a great guide in there on how to sell supplements. I think with the quality that’s out there right now and just the knowledge that all of your clients are going to buy supplements anyway, you’d do better to actually make some recommendations on products that you know, like, and trust and that’ll help them out more. It’s a great opportunity and it’s a win for everybody. Now, 10 years ago I didn’t wanna sell supplements. Even when I published the first book, I was against selling supplements, but back then you didn’t know what you were getting.

Chris Cooper: (28:35)
It was the Wild West, there was no margin and you had to stock up on inventory. None of those things are true anymore. You can get really good quality stuff without a massive spend. You can do it all at no risk and you can make a decent margin now. So it’s a big opportunity. Kids classes. For people who are offering kids classes, what we see is a bump of about 9%. Now, compared to the other options to add revenue to your gym, kids classes is the highest. It beats out nutrition coaching, it beats out supplements, it beats out online training, everything except one-on-one training. The challenge here is you’ve gotta have the right person, obviously, okay? So martial arts and cheer gyms, other people in the afterschool industry that offer kids coaching, it makes up a massive proportion of their revenue.

Chris Cooper: (29:27)
They charge way more for it than like CrossFit gyms do. And they do an amazing job and that’s why their business is really built on kids. So I think there’s a massive opportunity here if you have the right instructor. So if you look at hybrids and I’m talking like, high ticket, basically anything that combines different services into a value stack. Now, there are gyms out there that are selling a $2,000 six week plan, right? And it’s great ’cause it helps the client, it gives them exactly what they need. We’ve always been calling it a hybrid opportunity. And so this hybrid is going to include two or more services. So this could be group and one-on-one, it could be group and nutrition, it could be nutrition and one-on-one, it could be access plus group, whatever. Okay? So in gyms that do this, it forms about 11% of their membership rates.

Chris Cooper: (30:15)
So if you look at gyms that offer personal training and a hybrid option, that forms 33% of their gross revenue, which is why the group training forms about 67% of their group revenue, and that’s their model. You know, it looks like they’re making about 60% of their revenue from group, maybe 65, about 20% of their revenue, maybe slightly higher from personal training. And another 10% from hybrid, which is personal training plus nutrition or PT plus group. That’s such an amazing business model with 150 clients and you’ve got an ARM of well over 200 there. You can make a hundred thousand dollars a year, you can provide full-time coaching for one other person halftime for one other. It’s such a great model. But again, a lot of gyms still chase that 300 member model with big group classes and it just doesn’t work.

Chris Cooper: (31:09)
We’ve said that over and over here. All right, uncoached access. So this is really interesting. It’s a lesson in price anchoring, gyms that only sell access. So, they have equipment, you come in, you use the equipment and you leave, their average price is about 40 bucks a month, okay? So that’s the Planet Fitness probably down the road from you. Whatever the big global gym is, it’s 40 bucks a month. However, if you’re a gym that primarily sells coaching and you offer 24/7 access on top of that coaching, you’ve got a really interesting price anchor there. And so even though you are only selling access when your classes aren’t in session, probably you can charge way more than the global gym can. And that’s because you’re attracting higher value clients who probably have a plan that they’re following, and that’s how you add value.

Chris Cooper: (32:03)
Now, if you’re watching this and you have an access-only gym, here’s a big hint. Sell coaching and you can probably charge more for the access that you’re selling. If you’re running a CrossFit or a martial arts or a personal training gym, just remember you’re not competing with that global gym on price. You’re actually selling a higher value service and so you should charge more for it. It was a real relief and kind of an epiphany to see this, because what it tells me is that people are valuing themselves when they’re selling access even though they’re undervaluing themselves when they’re selling coaching, right? So let’s look at what gyms are actually selling. For the average CrossFit gym, 76% of their revenue is coming from group, 14 from PT, 5% from kids, 7 from a higher ticket, and 5% from access.

Chris Cooper: (32:54)
There’s probably opportunities as you’re looking across that row. If you are running a high intensity interval training gym or a personal training gym or strength/conditioning sports-specific gym, you’re looking at far lower revenue coming from group and much higher coming from PT and nutrition. You probably wanna look at options for online or maybe kids-specific classes, but definitely a high ticket offer. Next, let’s talk retention. Retention is way more important to focus on than marketing because if you have poor retention, then you have to constantly be doing marketing to replace the clients that you’re losing. If you have good retention and decent marketing, you’ll just keep people longer. You won’t need as many new people per month. Every new member coming in will just add straight to your bottom line. Now, the industry average is 7.8 months, and this is consistent with last year and the year before.

Chris Cooper: (33:47)
Retention is not getting better in gyms. However, retention in Two-Brain gyms, measured as the amount of time the average client stays, is now 18.8 months. This is crazy important because if a client is around for 18 months, two thirds of those clients will stay to 24 months. At 24 months, you can say that you’ve made a meaningful change in their life. So if a client is only staying for eight months in your gym, that’s not enough to create a lifestyle change. So when they quit your gym, they quit exercise at 18.8 months, a year and a half, they’re far more likely to stay with exercise. So they might quit your gym, but they’re going to switch and do something else instead. That means you have made a meaningful change in their life. And so that’s what’s most important here. Of course, the longer you keep a client, the better for your business because every new client just compounds.

Chris Cooper: (34:39)
But you know, a client that leaves after eight months, you haven’t changed their life. I’m sorry. Another interesting thing to note here is that people generally start referring their friends at the 12 month mark. So if you’re not keeping clients for at least 12 months on average, you’re not getting them to the point where they start referring friends and you lose the exponential value of keeping clients longer too. Okay? At the 12 month mark, things start to get really good. At the 18 month mark, you start getting a compounding effect to the clients that you have. So if you’re building your business on referrals and you’re primarily running group classes, your retention is too poor to really capitalize on referrals. And so you start getting this compounding churn of people leaving and never bringing anybody else in. All right, let’s get into expenses. What are gyms spending?

Chris Cooper: (35:29)
So if you look at what does it cost to actually run a gym? This is an amazing number to have, whether you’re just about to start a gym or you’ve been running a gym gym for a long time. If you look at return on investment, that’s how much revenue do you generate compared to what you spend. What you’ll see here is that access-only gyms have massive expenses. Of course they do. They need big space, they need an equipment loan, et cetera. The gyms that have the lowest expenses are CrossFit. That’s pretty cool, right? As a 14 year CrossFit affiliate, I like seeing that I can make revenue in a low cost environment. So my risk to start up is lower. However, they also have lower revenue than any other segment too. So the ROI on that spend, it kind of washes out. Even though you’re saving money, you’re not making money.

Chris Cooper: (36:21)
So if you look at the lowest average spend compared to revenue and the highest ROI, you’re actually looking at personal training. Okay? So what are they getting? Access-only gyms have the most space. Martial arts gyms have the least. The average though, is really interesting. So that’s just around 5,000. Speaking for myself empirically, you know, this is a data set of 11,000. My n=1 data set. We settle in at 6,500 square feet and I love it. That’s private space for personal training. It’s private office space for nutrition and No-Sweat Intros. It’s private space for an entrepreneurial program, and it’s a big open gym space for groups. But if you’re looking at strictly the numbers, the the size you wanna be is around 41 to 4,200 square feet. If you look at the cost of gym space, the average gym is paying around 4,900 bucks per month.

Chris Cooper: (37:15)
The average CrossFit gym is slightly under that at 4,700. The gyms that are paying the least are personal training, and it’s probably because their square footage is just the smallest, okay? If you look at like business debt, this number is actually going up over the years. So 10 years ago, the gyms in this survey, fewer than 40% would have any business debt. They were just kinda like bootstrapping everything. But now 11% of the gyms have over a hundred thousand dollars in debt. It’s a little scary, especially if your revenues are under 20,000 a month and your profit margins are slim. The best way to pay off that debt if you’ve got debt is to increase your profit margins, not your head count. And while the two are correlated, it’s way more important that you’re servicing that debt than you are getting more clients.

Chris Cooper: (38:04)
So think more about ARM and retention than about attracting new clients. All right, let’s talk about staff. So the average gym has one to two average full-time team members. Now this probably includes the owner, but we tried to separate that out. So this, in most cases does not include the owner. On top of the owner, there’s like one to two full-time staff people, but there’s a broad distribution here. So there are some people that have over 25 staff people, but that’s 1%. There are some people that have 12 or 13, and that’s about 4% of all gyms, right? Most people seem to have between two and, I would say, six staff people not full time, okay? And what that can mean is staff churn, staff instability, but it could also mean staff variety.

Chris Cooper: (39:01)
There’s pros and cons to having your staff be full-time. There’s definitely pros to having some part-time staff working the morning hours instead of me because my clients see a happier, more energetic face, right? If you look at full-time, you’re going to see martial arts, personal training, strength conditioning, access. They usually have around two, but the type of staff and what they’re paid differ dramatically. Access-only. You’re gonna look at two full-time desk staff paid probably around minimum wage, okay? In the average gym though, staffing accounts for about 33% of expenses. You know, at Two-Brain we teach an entrepreneurial model, and so staff make more than that. But you also have to look at who’s in the survey. So these might be some staff that are, like, front desk staff making 10 to $15 per hour, might be cleaning staff, et cetera.

Chris Cooper: (39:53)
Okay? So those are all included in there. If you look at the cost for a coach to run a class, it’s on average about 22 bucks. Martial arts pays the best. CrossFit is slightly under the average at 21. But the interesting thing here is if you take the numbers of average attendees per class at 6.6 and you look at what are those people paying per class, and then you subtract out 22 bucks to pay the coach, what’s left? That is what’s gonna pay the rent. That’s what’s gonna pay the owner. That’s what’s gonna pay down your debt. And so if you’re running a class and the average person is paying 10 bucks per visit and there’s only four people in a class, you’ve only got $18 left over to pay the rent, the internet bill, the heat, the lights, service your debt, and then hopefully pay the owner, right?

Chris Cooper: (40:40)
That means you’ve gotta face some decisions here, all right? The highest earning staff member and the average earning staff member, if you look at full-time staff, you’re looking at an average of about 28,000. In CrossFit, that’s about 26. If you look at the highest earning full-time staff, those usually access only, but again, they’re only gonna have one or two staff at that level probably. Let’s talk about what owners are actually making. We wanted to use a median number here instead of mean because there are so many gyms making $0 for their owner that the mean is really scary. But if we segment out those gyms or we include them, but we just look at the median number that gym owners are making, it’s around $3,700 a month. That’s take-home, that’s what we call net owner benefit.

Chris Cooper: (41:32)
And fully half of all people in the survey were under 4,000 bucks a month. That means that net owner benefit hasn’t really gone down in the average gym, but it hasn’t gone up either, which means they’re not taking steps to become more profitable. Instead they’re chasing the wrong metrics, probably, I’m gonna get more members, so I have to get a bigger size, I have to buy more equipment, I have to hire more coaches, and it all nets out to making the same amount. Sure, the government makes more money. Sure, your landlord makes more money and Rogue makes more money. Who doesn’t like those guys, right? But you’re not, and that’s not why you became an entrepreneur. The average Two-Brain client net owner benefit is just over a thousand bucks per month more. So if you want to think, what is the value of mentorship, it’s what would an extra thousand dollars a month mean to your family?

Chris Cooper: (42:21)
So let’s look at the median monthly net owner benefit. Access-only is not great. Martial arts unfortunately is even lower. CrossFits around 3,500. Personal training, strength conditioning, those are slightly higher for an average median of $3787 per month. Now, let’s look at how hard people are working to earn that money. Because it’s one thing to earn 3,700 a month if you’re only working 20 hours a week, that’s a nice little side hustle, but if you’re working a lot, that’s not a great income. Okay? So if we look at the average EHR of a gym owner, ideally, this is your effective hourly rate. So this is, you take what you make and you divide that by the number of hours that you work, and that’s your effective hourly rate. That’s what your business pays you per hour to be the owner.

Chris Cooper: (43:11)
Ideally, you want this number to be higher than you would earn as a personal trainer. That means that you’re more successful as an owner than you would be as a trainer. If your EHR is lower than what you would make as a trainer, you’re a better trainer than you are an owner, and it’s time to learn how to be a better owner. So let’s look here. Access-only, your EHR is gonna be high, 60 bucks an hour because you’re not putting in a lot of time, right? CrossFit or martial arts is the other end of the spectrum. The owner is putting in a lot of time and not making enough money, okay? So the average Two-Brain gym owner is making about $19 per hour more than the average, which is nice. If you look at, like, what is the key difference here?

Chris Cooper: (43:57)
It’s having a mentor. A mentor’s gonna help you be more efficient with your time and also grow your business so that it’s paying you more and even while you’re working less. Okay? And this shows to me a massive value. So not only are gyms in the mentorship program making an extra thousand dollars a month, they’re doing it in less time. So you don’t have the burnout, you keep the passion for the work and the passion for the clients. How many hours do they work each week? You know, most are working 30 to 40, but there’s a great handful over 70, and I was certainly in that boat for years. The great news here is that over 72% of CrossFit gyms are profitable. Now, you have to take the word “profit” with a grain of salt here because a gym can be profitable without paying its own or anything.

Chris Cooper: (44:44)
All this means is that its revenues are higher than its expenses. And so I get a lot of people in Gym Owners United who say, yeah, I’ve got a profitable gym, but they’re not paying themselves anything, or they’re not paying themselves nearly enough. To me, I include my pay before profit. I pay myself a salary. So if I’m not getting paid, I don’t count profit, okay? But a lot of people do. The great news is that gym owners are profitable and many gyms are profitable even while the owners are being paid. If we look at profitability, you know, net revenue is higher than net expenses. The average gym owner is working about 39 hours a week. So hopefully at 40 hours a week, you’re getting paid a great wage too. But if you’re working 40 hours a week, you’re not getting paid very well and the only people making money off you are Rogue, the government and your landlord, then you need to increase profitability.

Chris Cooper: (45:43)
Alright, here’s profitability by expenses. Again, the biggest gyms aren’t always the most profitable. It’s not a guarantee that opening a bigger gym will make you more profitable. It’s great news for those of us who opened up in 2000 square feet or less, okay? And there’s more here on facility size too. Years in business. What this shows is that just staying open is not a predictor of success. And so while it’s great that you’ve been open for eight years, or you’re a 10 year affiliate, or a 12 year martial arts gym, the reality is that that doesn’t necessarily mean that you’re more profitable. There are gyms in business who have been open for one year and they’re way more profitable than you are. That’s just the reality of it. While there is a correlation, your gym should be becoming more profitable over time as you streamline. The reality is, it’s not causation. Just simply the act of remaining open will not guarantee you growth.

Chris Cooper: (46:41)
When I learned this, it was probably five years into gym ownership, and I’m like, Hey, I’m still working a 70 hour week. I’m still getting paid too little. Things are not just getting better on their own. What has to change? Now, let’s look at the industry as a whole. So first off, the median cost to open a gym is about 40,000. The mean average here is 88,000, but that’s really skewed by the access gyms that cost 3 or 400,000 to open, right? The 40,000 was pulled down because it’s not nearly that expensive to open up a CrossFit gym. The 88,000, again includes very high-volume, high-space, high-expenses gyms, okay? It’s still, the median cost to open is 40,000. If you take a mean average, it’s around 58,000. When I opened up my personal training studio, I had a loan of 16,000, and frankly, I wasted most of that and I was fine.

Chris Cooper: (47:41)
When I expanded to a CrossFit gym, I probably spent about another 30,000, and that was more than enough. We still use a lot of that same equipment. But now the cost is going up to open these facilities, largely because rent is going up and rent guarantees are higher now, but also because people are trying to open bigger facilities in the hopes that that will attract clients. That’s not necessarily true. So only 32% are actually working with a partner now. It makes sense that the more expensive gyms are more likely to be operating with a partner. This shares the debt burden and shares the risk. CrossFit, 31.8% of gyms open with a partner right now. That’s a little bit tougher to understand because this really is an owner-operator business. You don’t need a partner. But when I opened, I took two partners just because I was terrified, and I thought I could share the work or share the risk.

Chris Cooper: (48:36)
Interestingly, 8% of gyms were part of a merger or acquisition. So they either sold or they bought another gym or they merged, and that is higher than normal. But in challenging financial times, that does happen. And by the way, the highest rate there was in the CrossFit space. Let’s talk about business coaches. The percentage of respondents with a business coach is rising. I think more people are seeing the value of this. I mean, I’ve been talking about it for 17 years now, sorry, 15 years since I found a business coach and started to dramatically change my business and my life. Business coaching has been around in martial arts for years, and that’s why three quarters of the gyms in this survey are working with a business coach. The number working with a business coach in the CrossFit space is over 50% now, which is fantastic.

Chris Cooper: (49:28)
It’s the best way to grow and be sustainable. Those working with access-only, it’s a low percentage. Let’s face it, access-only is a pretty hands-off business. There are certainly levers that you can pull to make the business more profitable. But business coaching hasn’t really penetrated that segment very much, although we are getting more and more calls at Two-Brain for people who just own access-only businesses for that reason. The high expense, high risk, high loan, access gyms are the most likely to want to sell. While martial arts gyms are the least likely. In just personal experience talking with martial arts gym owners, a lot of them are just doing it for the passion and the sport and just teaching. And so they don’t wanna sell, even though they’re not making more money, they probably are working another job and doing this very part-time.

Chris Cooper: (50:20)
The number of CrossFit gyms who are willing to sell has gone down. It’s only at about 20%. However, that is fairly high. If you looked at restaurants and you took all the restaurants in your town and you surveyed all of them and said, how many are willing to sell? One in five is actually a pretty high number. So I think a lot of this has to do with the number of hours that gym owners are working for what they’re paid, and that’s why they would consider selling if they were approached. All right? Hopefully this is the last year we have to talk about pandemic lockdowns, but 84% have returned to pre-pandemic profitability. 77% have returned to pre-pandemic revenue. What this tells me is that the gyms got leaner and meaner, and even if they haven’t hit their top-line revenue, they are still more profitable because the pandemic forced them to cut expenses or investments, or just operate at a higher value.

Chris Cooper: (51:18)
What we like to do here is we like to talk with people who identify themselves as CrossFit gyms and are affiliated. So what’s interesting here is that 91% of the people who say “we do CrossFit” are actually affiliated. So that’s a high number. I think there’s a lot of fears that there are tons and tons of gyms out there doing CrossFit who aren’t affiliated, but the reality is that 90% or better of the people who say they’re doing CrossFit are actually paying affiliation fees. Of the affiliates who are in the survey, 77% approve of CrossFit Inc’s direction. Which is interesting. Personally, I’m optimistic about the direction, especially with Don Faul taking over as CEO. I think that number might rise. It’s certainly rising among affiliates that I talk to. And for the sake of the CrossFit brand, I hope that number does keep going up.

Chris Cooper: (52:16)
I definitely like tracking what’s going on with CrossFit. I’ve been a 14 year affiliate. I’ve been passionate about CrossFit since 2008. Still, you know, two thirds of the mentors at Two-Brain are CrossFit affiliates. Over half of the gyms in Two-Brain are CrossFit affiliates. We do like to present things with data, and so sometimes it looks like what we’re reporting on casts a negative view of the brand or the affiliation, but the reality is that we think that we can help CrossFit and its affiliates best by presenting reality instead of sugarcoating things. So hopefully things are on the up and up there too. What I do see, though, that’s making me super optimistic is growth of personal training gyms and growth of martial arts gyms. And both of those segments are growing pretty dramatically right now, both in revenue and in the number of gyms.

Chris Cooper: (53:09)
So look, I’m a skeptic. There are a lot of gurus out there more than ever who are promising big results and free leads and a million clients a month and all this stuff. It really does serve you to be a skeptic when you see stuff online. But that also makes it hard to know who to trust, right? It makes it easy to become cynical and don’t trust anybody. But the thing about the numbers is that they don’t lie. You can take these numbers and reach dramatically different conclusions than I have. You can take these numbers for free from me, you can disagree with me if you want to about what I think. But the reality is that if we’re talking from numbers, we’re all talking from a level playing field and we’re starting from absolute truth. You can take these numbers and think, I’m gonna do completely the opposite of what Chris is saying and that’s fine, but at least we can agree that the numbers don’t lie.

Chris Cooper: (54:01)
So, yeah, guys, I hope this helps. We spend so much time and energy putting this together because it’s the greatest contribution that I can think to make to the gym owners that surround me worldwide. To the 30,000 of you on our email list, to the millions who have downloaded our podcast, to the 6,000 of you in Gym Owners United, to the thousands that have been through our mentorship program, are beloved alumni, and the 800 gyms currently making up the Two-Brain family. Thank you. Thank you for pushing us to produce this data. We’re the only ones who can do it, and that’s because of you.

Mike Warkentin: (54:36)
Thanks for listening to Run a Profitable Gym. Please subscribe so we can help you do exactly that. If you want the State of the Industry guide, click the link in the show notes.

Thanks for listening!

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