Why John Treharne, founder of The Gym, believes he can capitalise on the continuing popularity of health clubs with a low cost proposition.
It would be logical to assume gym memberships would take a bit of a battering during the recession, but according to industry stats, the number of people who belong to a health club has been rising steadily over the past few years. Helped by the government’s Change for Life campaign, encouraging the public to ‘eat well, move more, and live longer’, the figure currently stands at seven million, according to the Fitness Industry Association (FIA). However, that still leaves nearly 90% of the population to sign up, and John Treharne is eager to reach them with his low cost, no frills proposition.
Treharne, whose fitness industry career spans 25 years, has torn up the health club rule book with his new venture The Gym, which draws inspiration from a similar concept operating in the States. The biggest differentiator is undoubtedly price. At £15 a month, membership is at least three times cheaper than the cost of joining the average mid-market or premium UK club.
The Gym can afford to price itself well below competitors because it’s scrapped the traditional reception, admin and sales staff and replaced them with a sophisticated web platform which manages memberships and payments online. The facilities are also incredibly low cost in comparison to other clubs. Only one piece of equipment needs to be plugged in, there are no expensive energy consuming pools to run and the 24/7 operating hours actually save on security and maintenance fees as everything is monitored remotely.
“40% of our members have never been to a gym in their lives,” says Treharne. “What’s happening is we’re attracting right across the social spectrum. This concept isn’t about pinching members from our competitors. It’s about attracting a new market – those on low incomes, students, retired people, housewives. However, we do also still attract the top ABC’s that typical health clubs sign up.”
It was this classless remit, combined with the fact that The Gym’s low prices allow them to work with GPs and NHS practices for prescribed exercise, that sparked interest from social enterprise investor Bridges Ventures, who have invested £6m over the past two years. “One of the biggest difficulties I had was raising capital,” says Treharne. “I needed a significant amount to roll the concept out quickly, but VC’s don’t want to fund start-ups. I went to Bridges because they have a different remit due to their interest in social investment.”
The strong proposition and the proven Stateside model clearly impressed Bridges, but Treharne’s own background in the industry would have been equally confidence inspiring. The former accountant and England squash player started his first gym chain, Dragons Health Clubs, back in the late eighties. After floating the business in 1997, Treharne and his investors sold it three years later. A stint with premium club Esporta ensued before he began work on The Gym.
“We’re now moving very quickly towards profitability,” says Treharne, who is just about to open his seventh club since 2007 and already has a presence in several city centres including Liverpool and Manchester. “The concept is very much about volume. We see it developing predominantly in large city centres. As we expand, each club uses the same system and it becomes much more economical. We’ve already signed up all our 2010 sites and are now thinking about 2011.”
With a “conservative plan” to open ten gyms a year, and the current economic climate offering up excellent deals on property, The Gym’s prospects are in great shape.