Business has been good at Gold's Gym, Ann Arbor, although they have experienced some profit pressure on their beverages, and they are still a bit under where they would like membership to be. They will soon expand to a larger, fuller service facility.
In this podcast (Quicktime ipod compatible, 35MB; Google streaming flash video), Troy Garver describes to me (Bud) some of the challenges he and Paul Wright faced during Gold's Gym, Ann Arbor's first year.
In Troy's view it's been a fantastic year but one where they have faced some challenges. When I ask him to name one of those challenges, he mentions their shakes bar, which always seems to be busy. They are now using higher quality materials than when they started but still charging the same prices. They have also switched to frozen fruit, which is more readily available and easier to store. Given, the typical profit margin on beverages in the food industry, my guess is that they are probably still doing well. It's just not the profit center they want it to be.
Gold's Ann Arbor is now running at about 1750 members. A year ago, when I first spoke with Troy, he mentioned that they wanted somewhere around 2300 members while maintaining the customer experience. Now, he is putting more emphasis on the customer experience. When I ask whether the local economy is holding them down, Troy mentions that the economy's impact has been mixed and that they have picked up members from some failing gyms.
Next, Troy drops a big bombshell. He and Paul are looking to expand to a new location with 62,000 square feet (as confirmed by Paul a little later), close to four times the size of the current location. The new location will have a full size basketball court, a swimming pool, two handball courts, and three group exercise rooms. They should be signing a lease in the next two weeks.
I suspect we will do a series on design and construction of the facility.
- Cost of goods and labor typically account for 50 to 75% of non-alcoholic drink revenues. However, drinks with special ingredients, like the protein shakes at Gold's, can have much higher margins.