Palestra â€” fitness-club of premium class. In addition to the fitness component in the Palestra is a cafÃ© serving healthy dishes and a beauty salon
Eugene, tell us the background to the establishment of the gym?
I started getting into fitness a few years ago. Have checked how the sport changes a person inside and out. And it is not just the beauty of the body and relief. Changes the body and consciousness. One becomes more disciplined, confident and happy. Better cope with stress.
When I came to the idea to start their own businesses?
After a few months after I graduated and became an office worker, I realized that office work is not for me, and my business would give me much more prospects and freedom. But at that moment I lacked the courage to do this.
The courage I gained in 2014. Everything was bad: war, death on the streets of his native city, full of hopelessness, completely black. The hryvnia has fallen three times, that export products lost competitiveness. Many people lost their office work. For many it was the impetus for my own business. At some point I looked around and I suddenly found that a lot of people started to produce, sewing, baking, cooking. In short, to “take” anything: to make shoes, furniture, clothing, food, services. Then started the real boom of small and medium-sized businesses. Many who have gone down this path, complained that it is difficult, but back in the office no one wanted.
It gave me determination. I started writing a business plan for the future of the fitness club. By the time I was, you might say, a passionate consumer of fitness services, has been a member of many clubs, including abroad, have checked how it is and how it should be. I knew that this experience would allow me to collect the best.
Need any special permits to open a gym?
All employees must have a medical records book. They all undergo examination and pass a blood test. Different categories of employees undergo examinations at varying intervals. Special requirements to the room no standard â€” fire, security, proper purpose. We are located in a residential complex, so on their own initiative have thought through the soundproofing. Individual requirements to the cafÃ© as a catering facility.
How he chose the concept of the gym?
My project was very flexible, scale to different sizes of investment and different formats of the club: premium or economy, aquazone or not, only gym or a set of additional services. In the end we settled on a medium variant.
The format for the Palestra primarily determined the location of the second â€” developed in Kiev market of fitness services in the third â€” the size of the investment involved. We found a suitable property in a luxury residential area along the waterfront Obolonska. Naturally, the residents of this area had to offer services of premium class. In Kiev at the time and still consumer the fitness level above average used to get a very wide range of “hands”. Unlike Europe, in the CIS countries in the premium segment are more prevalent “megaclub”, which is a water Park, and tennis courts, all kinds of group classes, services for children, Spa and beauty services, as well as to eat. After all, eating for a healthy lifestyle is actually more important than exercise. The sophisticated consumer wants to be sure that doesn’t negate all his hard work in the gym, poor diet, and wants to have a high quality and useful and not to waste time searching for where to do it.
Before opening Palestra I tried to research world best practice in the fitness industry. Many of the clubs visited personally: in Kiev, perhaps, have been a customer of all the prominent fitness clubs at that time in Moscow â€” a few World Class”ov, Hard Candy and Dr.Loeder (in the past I stole the idea of the daily Breakfast, included in the club card) in the United States â€” Equinox, Soul Cycle, Barry”s Bootcamp. We focused largely on network Equinox as the best example in the industry.
At the time of planning Palestra in 2014, the fitness market in Kyiv was divided essentially into two extreme: life network, affordable, but low quality and expensive megaclub, which cost like five-star hotels.
That is, if the consumer is not satisfied with the quality of SportLife â€” alternatives was not particularly, high-quality fitness remained in Ukraine than the elite. I saw opportunities to open something in the middle, in the price segment above average. To occupy a niche quality, but more affordable fitness.
The fact that the Ukrainian market of fitness services is unsaturated and it has the potential, prompted statistics. Our country is engaged in fitness about 4-5% of the population, even in Russia the figure is closer to 10%, in Europe â€” 15-20% and the USA up to 40%. The emergence of budget networks like SportLife and Sportland essentially forms a mass market, teaching him that fitness is not something elitist, but an ordinary article in the family budget. When the consumer begins to annoy poor quality of services â€” he begins to seek something better and becomes conditional Palestra.
What were the difficulties?
The main difficulty is to find a room of sufficient size, which all would have been fine with the documents. The lack of data to predict the dynamics of financial indicators. In other words, how quickly pluck customer base when it can advance self-sufficiency.
How to choose a room?
With room another story. Based on our budget, we looked at the facility from 600 to 1 000 sq. m. To my surprise, to find an appropriate location proved to be much more complicated than money for the project.
First, we searched the premises without repair, but it wanted the building has already been commissioned, or at least fully constructed. Second, we needed high ceilings. Thirdly, free access to the building for our clients without any checkpoints and turnstiles. Fourth, was to be the order of the documents. It turned out that ready vacant space of this size in the whole Kiev is very little for developers too risky to design a large room with no guaranteed tenant. Under the prospective tenant is still in the stage basement, and the rest of the commercial space developers are usually crushed â€” so they are easier to sell or rent. The search of the premises lasted so long that I have almost ceased to believe that the project will take place: about 9 months. During this time we with a team of architects, engineers and lawyers checked out 4 or 5 objects. The longest-held legal review: the right of ownership, permits, and purpose.
Who did the design?
Not without the will of the case. Quite by accident I met a young man, the inhabitant of Odessa Dima Sivak. Now he and partner Artem Trigubchak co â€” founders have quite a large Studio, S&T architects. It’s two talented guys conquered not only their portfolio but also energy. They burned the embodiment of the project.
It was a mutually beneficial cooperation â€” Palestra became an important project for the portfolio of the Studio, and we got a cool design for a ridiculous price. Guys physically were in Odessa, but it never became an obstacle for the project.
As a result, for the first few months since we have received every possible award for interior design, logo, etc., and continue to receive awards so far. But more importantly, design became one of our main “chips”, which immediately puts potential customers on the spot and maintains the image of a premium club.
How much is the repair.
Repair our level can cost between $300-700 per square meter.
Let’s move on to the issue of equipment, how were they chosen?
We are on a tender basis, reviewed the proposals of the representatives of the three world leaders in the manufacture of premium fitness equipment, is presented in Ukraine: Technogym, Life Fitness and Precor. Met with the offers of all the suppliers of the equipment present in Kiev: Ukrainian interatlantico, Star Trac, Matrix, Impulse. There are still companies supplying rebuilt equipment, used. In the end we opted for Technogym: we were attracted by a combination of the best price offer, design, as well as subsequent support and maintenance. Equipment gym doing mostly our fitness Director Andrey Nesterov in cooperation with me and with the supplier.
Were there any difficulties finding staff?
Palestra is a very attractive employer, especially for professionals in the field of fitness, so here we are, as a rule, have the opportunity to choose. In addition to stable financial side, we attract people to the special atmosphere that prevails in our small but active and friendly team. We have good opportunities for growth, encouraged any initiative on learning and development, a lot of bonuses. Therefore, finding staff, I would say, specific problems there.
In February 2018, we will be two years.
What is the payback period of the investment?
It’s hard to tell with the war, exchange rate fluctuations and crisis. Initially it was assumed a period of about 7 years. Now, I think, to 10. This is a very conservative market: he slowly turns around â€” but also risks it is also low due to the annual format services.
Who is your target audience?
Wealthy family residents Obolonska embankment 30-50 years. Top managers and business owners, and officials. Typically our clients have two cars in the family and more than one child. A separate category of highly qualified young professionals 25-35 years old, unmarried, employed in the it or creative field.
The cost of the services your gym?
Annual standard â€” 19 250 UAH, “evening” version (no entry after 16:00) â€” 14 750 UAH. There are also maps at 6, 3 and 1 month.
Special attention is given to our premium card. It will cost 42 thousand UAH, out of which 35 thousand UAH fall on a customer’s Deposit and can be spent during the year on any club services: personal training, food and beverage, beauty salon and massage. That is, the cost of the card is only 7 thousand UAH. The map already included free daily Breakfast (i.e. Breakfast costs are not deducted from the Deposit). Thus we want to emphasize that nutrition is the most important component of a healthy lifestyle, Breakfast is the most important meal of the day.
What pass are you buying less?
“Short” card (6, 3 and 1 month) bought mainly to try as well as those who are in Kiev temporarily or living in “two countries”. For example, we have clients who spend the whole winter in warmer climes.
Annual card account for 50% of our client base. Card to the rest of the time sold about equally.
After almost two years from opening, the club remains nedosypaet, however, the customer base is growing every month is low, but stable pace. The club pays for itself with a 9-month job, so we especially don’t want to speed its content, for example, by aggressive advertising or price dumping, because such instruments are, in our opinion, is risky in the long term. It is also important to keep in the club the feeling of premium and individual approach â€” and in a crowded club it’s impossible. We have an understanding, what is the maximum number of customers in the club. When we will reach it â€” start to control the number of customers in the first place, probably by using price instruments.
What business margins?
From Palestra margin corresponds to the average market, is about 35%.
How is it going?
We experimented a lot. In the end, I came to the conclusion that the main source of new clients, organic growth and word of mouth. Any use of advertising is at most 15-20% increased interest in the club (flow of potential clients), and the sales impact is even less. To date, we have concentrated the cost of advertising on a small range of very localized activity. Also use promotion on barter via a number of partners.
Do you have statistics on how many people are engaged in fitness or sport in Ukraine, the EU and the US?
Ukraine has a very low percentage of people involved in sports. According to various estimates we have about 4-5 %, Russian Federation 8% to 10%, EU countries â€” 25%, USA â€” 40%, that is, the potential is huge.
I think the first reason of such situation in Ukraine fitness originated as an elite service only available to the elite circle of the rich. It is on this segment was directed first clubs: Favorite, KasperskyLab, 5 Element and the Aquarium. The middle class is simply no habit to spend on fitness. There is no such article in the family budget. The second reason â€” in Ukraine is historically strong school “iron”: powerlifting and bodybuilding. I think many, especially women, may deter related culture “protein muscle”. The third reason â€” a significant portion of the population truly understands the benefits of an active, healthy lifestyle are not aware of how this powerful positive effect on the body, and knows how to incorporate fitness into your life. It is not that it isn’t all suffering and does not take a lot of time. But rather a routine hygienic procedure, easy to compatible with office schedule and do not require super efforts and versatrak.
It is very difficult to predict some trends. After all, while I operate these only one small fitness club.
How competitive the market? Or amid rising demand from Kiev can still open a lot of clubs?
I have a feeling that the format Palestra good potential both in Kiev and in the regions. This is evidenced by the discovery of a number of clubs and studios, started in Kiev after the Palestra and designed for the same target audience.
As an elite client base “megaclubs” and large budget network of clubs consists of many thousands of people, whereas a relatively small “boutique” club like the Palestra to get the return you need only a few hundred. And luxury, and in budget clubs have a category of clients who are unhappy with the current situation: in the first case, these people are looking for something more affordable, but the quality, and the second something better and are ready to pay more. Here with these people.
What are your main competitors?
Fitness localized service, and further, the localization will increase. If earlier clubs were few and the consumer was ready to ride training through half the town, today the customer is more likely to choose a club, not a very suitable format or price, but located close to work or home. Therefore, we compete with other clubs in the first place on the location. We usually go from 5 Element (and the Aquarium, but the latter is closed this fall). Secondly, from a more budget-Podilskyi and Obolonskyi of Sportlife.
What’s the secret to the survival of a small club or all about the location?
The secret of survival is: do investors have the patience and money before you come-sufficiency. And Yes, of course, location plays a key role to develop the customer base of the required size.
As you can see the further development of the business?
In February, we will summarize another year of work. Then it will be possible to share some specific plans. Potentially want to open in other districts of Kiev, but while not specifically prepared to talk about it.