that pricing is important and that the two must be competitive without pricing themselves out.
“I do not think that when they dropped the [membership] price [at 24/7-Union Square] from $599 to $299, it was too much — maybe [even] $150 at the least,” says Toomer. “You don’t want to devalue the club and have people thinking it’s cheap. As far as competition, if you jump prices to match your competitors, make sure you can offer what they have and more. If they are established, it will be very hard to pull their customers if you don’t offer a significant amount more. Most people will not switch clubs just because it’s a couple of dollars cheaper,” he says. Adds Powell, “Hopefully they researched the market before dropping the price, especially if there’s a larger franchise nearby. In a price war, the larger franchise can always undercut them but probably won’t want to if it’s doing well at a higher price.”
EXPANDING THE BUSINESS
“[Washington and Wilson] must totally watch out for the different clientele in the new gyms. Often a business wants to appeal to the same core that made them successful. At [24/7-Gramercy Park], they cater to [people] who are loyal to body building. At the new gyms, they may be attracting fad followers who just want to have a body beautiful now and will move on to another fad later,” says Powell, who notes that the physical training/medical tie-ins are excellent. “Sometimes medical insurance pays for therapeutic or preventive activities. This helps stabilize part of their bottom line. In general, they must continue to survey and research their customers, find out who they are, what they like, and what will make them stay.”
Toomer also notes that the success rate for new businesses is greatest with franchises, “This expansion is huge and needs to be gauged. Let the number of paying members determine what your expansion will be. Feasibility studies are very helpful, but sometimes things that look good on paper don’t jibe. If your facility is busting at the seams with members and more are wishing to join, you have a problem but it is a good one. This is normally when you begin your expansion plans.”
After the events of Sept. 11, Powell suggests that the two re-examine their clientele at 24/7-Tribeca. “They need to look at the client base there and see if there are changes that have to be made. The character of that area will be different [now], especially since so many of their presigned clients worked at the world trade center. [This is something that may] conspire against their success.”
“Overall, with the things they can control, they seem to be doing fine,” says Toomer. “I think the one thing to keep in mind is that as clubs focus on sales, many lose sight of service. This is even more important as competition grows. People want to belong to a club with a well-trained staff. It is not only important that they are polite, they must