The term location, location, location is used often to emphasize the importance of selecting the right location for any business.  In fact, finding the right fitness facility location is one well known predictor of success for a fitness business.  Rick Mayo and Jared Breen, Alloy’s head franchise business coach, describe how to choose the right location.

As many gym owners will be quick to point out, the fitness industry has taken a beating and has been unfairly targeted in the past year. However, there’s a great opportunity right now in the fitness industry because there is plenty of real estate locations available in some great markets.   Where do you look and how do you find these great locations?  

Factors to Select the Right Fitness Facility Location

  1. Demographics 

Before settling on one location over another, there are some metrics that we use at Alloy Personal Training Franchise to decide if we are giving the business the best chance for success. Some of these metrics include population density, average household income, drive time, and many more.

For example, Alloy uses demographics for our target clientele. Our first step is to identify our target is a mature clientele with metrics around 40 – 69 age range and household income over 100,000. Looking at a facility size of a 2500 square foot range, we’re looking to have 250 clients.  With those numbers we know we want a population size of around 30,000 and we look at a certain radius size.  Radius size has to do with average drive time, as most clients are more likely to join within a certain distance.  What we found at Alloy in 30 years of business experience is most people don’t drive more than like a mile and a half to two miles to get to a fitness facility.  For that reason we look at other demographics including traffic counts, traffic patterns, population densities   We work with real estate partners many times to help with Alloy franchise locations. 

One thing we found with independent fitness owners  that decided to go into low rent or B level retail space, like way out in an industrial area, you’re going to have to spend a ton more on marketing to get people to your gym because you have zero exposure and no one sees you. Your more sophisticated competition that is in a nicer more viable location may not have to market so hard to get clients.  It sounds great to have rent of $8 a square foot, but you are going to need to spend a lot more money in marketing to attract clients to find you and come in.  Now if you were in that $30 a square foot space right next to a Starbucks, you aren’t going to have to spend that money in marketing to have those clients find you. You are either going to spend money in marketing or you’re gonna spend it in rent.

2. Facility Build-Out Costs and Return on Investment

With Alloy Franchise we have estimated budgets we recommend and facility designs, but when you get to the point of working with the real estate company on what it will take to build-out the space it get’s very important to know those costs and how long before you achieve a return on investment.  So when you get to the point of signing a letter of intent with the real estate owner you need to consider costs all the construction costs involved to deliver the final personal training studio.  You may have a great location, you may have great access, you may have all the things that check the boxes, but if you are looking at extreme build-out costs of $120 per square foot, then the whole business model is shot and your return on investment is going to drastically change. Speed of return on investment is important if you’re an investor.  If you are a fitness person who’s opening a first gym, it’s something that you should be looking is that length of time before return on this investment. If you have to spend obscene amounts of money for build out, it’s not going to work. There is a sweet spot is where build-out costs make sense to stay within a budget and achieve a reasonable time for a return on investment.

We have a construction management company that we work with on our Alloy Franchises that helps us list out everything from start to finish. And what we found is that about a $70 per square foot range is where we’re looking at for build-out and leasehold improvements. That’s kind of the sweet spot. Now there’s a lot of things that go into that, of course, size of the location that you’re looking at can play a factor.  With our smaller sized Alloy Franchise model  of a 1500 square foot, you might be paying a little bit more, but get free rent.  You could also get significant tenant improvement costs as part of the lease. 

Where you put your gym and who you put in charge are the two most important determinants of success. Finding the best location for your fitness business is just one step in the process. There are numerous other details you should be on the lookout for before you sign that lease. Tune in to this episode to learn more about this process and how to do it right!

Key Takeaways

  • The demographics for a personal training studio (03:14)
  • How drive-time and traffic patterns influence the location of a fitness business (05:59)
  • How easy is it to get in and out of your shopping center (08:01)
  • Low-level retail space vs. high-end malls (09:11)
  • How to estimate buildout costs before signing the lease (10:58)
  • The sweet spot between a nice buildout and getting a return on investment (12:41)

 

 

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Jared Breen

Rick Mayo 

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