Over the past couple of months, we have been laser-focused on the more trendy and affluent neighborhoods of Santa Monica and West Hollywood, as this is where we have the most connections. We've only toured properties and spoken to trainers in these areas, and we've neglected the other communities in Los Angeles that have great potential for our business model. We are looking for one location to prove our concept, and Santa Monica and West Hollywood have proven to be very expensive, competitive, and challenging (ex: lack of parking, wealthy landlords that aren't motivated to rent space, etc.).
We've decided to expand our search to include other neighborhoods because we believe our model can be successful anywhere there are existing gyms and wellness centers. The more fitness businesses in a community, the better it is for us as there is a current supply of trainers and clients to cherry-pick.
We are breaking down locations into three buckets:
- These are the neighborhoods in cities with the highest home prices and the most expensive stores and restaurants.
- We have seen concepts such as Soul Cycle, Barry's, and Equinox exclusively target these areas. These concepts need an affluent population as only the highest earners can afford $30+/class and/or $250/month memberships.
- Ex: Santa Monica, West Hollywood
- These are the areas outside the city that are more spread out and geared more towards families and older people. Property in these locations is affordable and typically features more parking and closer proximity to similar tenants (ex: more outdoor malls and shopping centers). It is worth noting that baby boomers hold 50%+ of US wealth and mostly live in the suburbs.
- We have seen franchise concepts such as F45 and OrangeTheory grow to thousands of locations around the country (and the world), targeting middle-class suburbia. Concepts such as Self-Made Training Facility have also enjoyed recent success expanding into these communities.
- Ex: Woodland Hills, Glendale, Pasadena
(3) Up & Coming
- These areas typically contain people of color who have lived there for decades mixed with younger generations moving in when they can't afford to or don't want to live in the hot city neighborhoods but don't see themselves in the suburbs. Property in these communities is more affordable, but there is typically a lot of build-out to be move-in ready. We see these as great communities to buy property in and start running our non-profit operation, Maverick Forward, out of. We want to work with these communities to create more entrepreneurs and give ownership to the people who have been mainstays in the neighborhoods. Our goal is to allow these individuals and families to thrive as their community grows.
- The fitness centers and gyms in these communities are primarily mom-and-pop one-off businesses, recently mainly focused on CrossFit as it is a very affordable business to set up. We have not seen many fitness brands come into these areas, which has created gym deserts, similar to food deserts.
- Ex: Highland Park, Boyle Heights
We believe Maverick Community can achieve success in any neighborhood because we are just a container for the wellness professionals who work out of our space. Wellness professionals working out of our West Hollywood location will charge $20-$30/class to cover our rental fees, and their clientele will be willing to pay. However, wellness professionals in Woodland Hills will charge $15-$20 because their rent will be lower, and their clientele will demand it.
We are also fitness trend risk proof as our diverse range of wellness professionals will have the flexibility to change their classes based on their client's desires.
These aspects give us a massive advantage over the existing fitness and wellness brands (ex: Soul Cycle, Equinox only work in affluent areas).
Additionally, we have a huge advantage over other fitness retail operations as our physical locations do not need to be on the hottest corner of main street because it is the instructors that will be marketing themselves online and driving people to our sites. This is very similar to the strategy of DVNBs (Digitally Native Vertical Brands), ex: e-commerce first companies like Bonobos, who are not leasing property in the highest traffic, most expensive areas because it is their online traffic and social media marketing that drives customers wherever they open up shop. With this in mind, we can gain leverage over landlords by taking their most undesirable spaces and avoid signing long-term leases by working under less risky, capital light management agreements (read more about this idea here).
Final thoughts... it is sometimes easy to get close-minded and zero in on one thing (ex: the areas of West Hollywood and Santa Monica), and that is why it is so important to share your struggles and journey with friends and partners. Very grateful for Christian and Steve, who are constantly challenging me and expanding my mind.