Paul Wright discusses how he chose Ann Arbor for his gym and how he hopes to leverage his management staff in another location.
In this podcast (Quicktime ipod compatible, 20MB; Google streaming flash video), Paul Wright and I (Bud) discuss how he chose Ann Arbor as the location for his Gold's Gym. Paul mentions that Ann Arbor has the right demographics within 5 miles of his location, about 55,000 people between 25 and 65 with a median income of $50,000.
Given these numbers, we know that Gold's was at 2% or less of its addressable market with 1,100 members at the end of October when the interview was taped. They intend to stop membership at a little more than double this number or less than 4% of the addressable market. Four percent of the market may not sound like much, but it's actually a good thing the business can be viable with such a small portion. This allows for people who don't work out and the fact that not everyone who wants to work out will choose Gold's.
We then move on to discussing other possible locations. He is looking to open a second facility in the state of Michigan, so that he can stretch some of his management personnel across more than one facility. It turns out that personnel is one of his greatest costs, and he would like to make them as productive as possible.
Additional Links
- This article, more than a decade old, discusses what it takes to create a successful gym franchise. It does not sound much different from what Paul describes today.
