Budget gyms offer no-sweat pitch: 10 bucks, contract-free

By Ina Paiva Cordle The Miami Herald

8:05 a.m. EST, January 22, 2014

Step into a Youfit Health Club, and enter a world of bright purple and green, filled with dozens of fitness machines, all geared to motivate you to work out for just pennies a day.

The Deerfield Beach, Fla.-based company, owned by Rick Berks, is expanding its group of health clubs, which cost just $10 a month to join. Memberships are month-to-month without contracts requiring a six-month or annual commitment."Historically, health clubs notoriously have been locking people into long-term membership agreements," Berks said. "We've never done that. We don't need to. We give such great value for the money."

Youfit is helping lead a trend of low-cost, $10-a-month membership gyms, which are squeezing out the middle market, with high-end clubs and boutiques at the other end of the spectrum, said Paul Bosley, owner of Fort Lauderdale, Fla.-based HealthClubExperts.com, which finances health clubs nationwide.

 To be sure, the health club industry is a competitive playground, filled with chains like LA Fitness, 24 Hour Fitness, Gold's Gym, Planet Fitness, Equinox and Crunch, as well as a wide assortment of other niche fitness centers.

"Plenty of people can't afford to go to a $40-a-month club, but can afford to go to the $10 club, so that expands the audience," said Stephen Tharrett, co-owner of ClubIntel, a Dallas-based brand insights firm focused on the fitness, golf and country club industry.

Amid an obesity epidemic the Centers for Disease Control estimates that 35.7 percent of adults are obese the fitness industry has grown over the years, as have clubs' member rosters. According to the International Health, Racquet, & Sportsclub Association, the industry's trade group, there were 30,500 health clubs in the United States in 2012, up 14 percent from 26,830 in 2005. Membership grew 22 percent from 41.3 million to 50.2 million members during that time frame, IHRSA figures show.

"Overall, nearly 1 out of 5 Americans ages 6 and older is a health club consumer," the organization wrote in its "IHRSA Health Club Consumer Report: 2013 Health Club Activity, Usage, Trends & Analysis." Average dues nationwide have reached an all-time high of $49 per month, according to the report, written by ClubIntel.

The original founder of Planet Fitness, Berks opened his first Youfit Health Club in St. Petersburg in April 2008, and has expanded the company. Youfit recently opened its 60th health club, in Pembroke Pines, Fla.

Beyond Florida, Youfit has facilities in Georgia, Arizona and California. Fitness centers also are under construction in Tennessee, Texas and Colorado; more are in pre-construction stages in Kentucky, Oklahoma, Alabama and Mississippi, Berks said. He hopes to have more than 100 clubs open by the end of this year.

The fitness centers look more like children's play centers than traditional workout rooms, with purple and green walls and dark rubber floors made from recycled tires and Nike Grind, or ground Nike sneakers. The room is filled with more than 100 workout machines, mostly Cybex cardio and strength-training equipment that includes treadmills; ellipticals, which simulate stair-climbing, walking or running; recumbent bikes; upright bikes; stair-steppers; and free weights. Cardio machines are each fitted with a TV. The strength machines are custom-made, with green frames defining machines for lower body and purple frames marking those for the upper body.

"When you come in, we want to energize you," Berks said of the color scheme.

At each health club, a 30-minute circuit training area occupies one corner of the room, where class members sprint from machine to machine in one-minute intervals while green and red street lights mark starts and stops. Meanwhile, current hits like Katy Perry's "Roar" from an approved list of satellite radio stations waft from the speakers.

Berks said he takes pride in the fact that he strives to have nearly exclusively American-made products, from the flooring to the lighting. He also has made an effort to be environmentally conscious. The health clubs use high-efficiency lighting and air-conditioning systems, waterless urinals, and tank-less, on-demand water heaters. Combined, that has reduced the company's energy footprint by a third, he said.

Youfit clubs, which vary in size from 10,000 square feet to 28,000 square feet, typically are located in high-density neighborhoods or on major thoroughfares where access is easy and potential customers are numerous.

"People want to be where it is busy, but they don't want to wait (for a machine)" he said. "That's what we factor into how to design a club."

The centers generally operate from 5 a.m. to midnight, with some open 24 hours. And the goal is to spotless, Berks said. "When you go to a health club, you want it to be clean."

At the new Pembroke Pines facility, a refurbished former Bally Total Fitness space of nearly 25,000 square feet, members signed up before the gym was even open. Salespeople earn no commissions, which helps set the health clubs apart from others and keeps costs down, Berks said.

The least expensive $10 memberships allow unlimited use at one health club for one month. A $19.99 monthly fee includes unlimited use of any Youfit Health Club for one person and a guest. It also covers an unlimited number of instructor-led classes, like Zumba, yoga or cardio kickboxing, offered at certain locations.

Berks said all staffers are trained in basic fitness. A one-hour session with a "Youcoach" personal trainer costs $15 to $45 lower than at many other gyms.

Elvis Pardal has been a Youfit member for two years, working out four or five days a week at one of two gyms near his Westchester, Fla., home.

"The membership fee is a lot cheaper than at other places, like 24 Hour Fitness and LA Fitness, and the best thing about it is you can bring a guest," said Pardal, 22, who has the $19.95 membership. "A lot of people don't like working out alone, so that is what I really like."

In Florida alone, Youfit has almost 250,000 members, Berks said. Membership is equally divided between men and women, and all fitness levels are represented with an age range that can be as wide as from 18 to 80, he said.

In other words, it's not a hotbed for body-builders and does not cater to those who are already extremely fit. In fact, half of the clubs' members are first-time fitness club members. The biggest source of new members, or more than 60 percent, is from referrals, he said.

"We try to make it as unintimidating as possible," Berks said. "The color scheme makes it look fun, and we don't gear toward body builders. We're geared to exercisers."

Some classes, like Silver Sneakers, are aimed at seniors. Healthways, a health care company, organizes that program nationwide, with certified instructors and formatted classes that focus on flexibility, mobility and strength.

"We have thousands of Silver Sneakers members who use our clubs," Berks said. "They tend to come for morning and midday classes that are typically slower for health clubs."

Youfit spends more than $1 million to open each new club, and its opening pace is quickening. In 2012 the company opened 14 new clubs, 17 in 2013, and will open as many as 50 this year, he said. In 2013, the company generated $60 million in revenue.

Budget clubs occupy a highly competitive growth sector within the club industry, Tharrett said. And the sector is growing at top speed. Other companies in the sector include Planet Fitness, Crunch Fitness and Blink.

"They are going to weed themselves out because the market can't support them all," Tharrett said.

The sector represents an unusual economic movement toward lower pricing, said Bosley, who recalls that in 1974 he sold 24-month memberships for $24 a month at a small chain of clubs called American Health, in Rochester, N.Y.

"Think of an industry, I don't care what industry, where the price 40 years later is half," he said.

Berks, who looks highly fit himself (he uses cardio equipment at his Boca Raton home and strength equipment at one of his clubs), has built his career around fitness.

A former Broward County, Fla., sheriff's office detective, he first opened a Gold's Gym in Pompano Beach, Fla., in 1992. He started Planet Fitness in Sunrise, Fla., in 1993, and grew it to three clubs before selling the brand in 2002 to a group in New Hampshire, which began franchising the concept.

Berks retained the South Florida territory, but after legal disputes, he separated from Planet Fitness and started Youfit, converting his seven fitness centers in southern Florida to the Youfit brand.

Keeping costs down and membership volume high has allowed the company to grow and maintain its $10 fees, Berks said.

"We overwhelm people with value," he said. "They expect a $10 club, and they realize we offer top-of-the-line everything."



YOUFIT HEALTH CLUBS

Owned by: Rick Berks

Headquarters: In Deerfield Beach, Fla.

Started: 2008 in St. Petersburg, Fla.

Number of health centers today: 60

Revenue in 2013: $60 million

Plan for total at end of 2014: at least 100

States with locations today: Florida, Georgia, Arizona and California.

States where locations are planned: Tennessee, Texas, Colorado, Kentucky, Oklahoma, Alabama and Mississippi.



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