Giving Fitness the O2 Punch
Working out the details of a successful exercise club
Story by Donna Reges Hall
CEO and Raleigh native, Michael Olander opened the first location in 2002 and though he says the company faced obstacles at first, it has enjoyed steady recent growth, acquiring seven other gyms since late 2009 at a rate of one about every two and a half months.
“We’ve had our speed-bumps for sure,” Olander says. “When things first started going bad, we got hit really bad with our personal training right off the bat, but we’ve bounced back and we’re back at our pre-recession levels for personal training on an existing club basis just by focusing on having the best trainers, the best systems, and really providing the best product. People recognize that it’s something they need to do for themselves and for their bodies. We try to make it easy. We’re consumer friendly and we’re really upfront. We’ve got a lot of really neat programs that we think help people just enjoy their experience. As part of our perk, our existing growth has come from the added ability to penetrate the market even deeper due to the acquisitions we’ve had.”
Today there are 10 O2 FITNESS locations, including two new Express Clubs acquired in the last month. The Express Clubs are intended to expand the company’s footprint into markets that aren’t ready for a full-size club yet. While they don’t offer child care and group exercise like the regular clubs, the Express Clubs feature full lines of cardio and strength, as well as showers and 24-hour access.
Olander is thrilled with his company’s rapid momentum.
“It’s exciting. There’s always a lot of anxiety when you’re growing this quickly and you’re trying to build the base for which you hope the future growth will come from. It can be trying at times, but it’s fun,” he says.
Olander says his fitness clubs appeal to all demographics, from teenagers to senior citizens and everywhere in-between. Whatever the age, he says providing the client with an enjoyable experience is his goal.
“We’re member focused and retention-based,” he explains. “Really, we’re all about providing different experiences. Rather than just going into a club and just being a giant box full of a bunch of equipment, we want you to have a positive and different experience every day. Of course we want you to have a positive experience from a member and staff interaction, but also each club is set up with different areas and different experiences. We’ve got over 50 group exercise classes a week, integrative TVs in the majority of our cardio, Wi-Fi throughout, iPod and iPad compatibility almost throughout all of our cardio. So you can plug it in and it shows actually on the screen and it charges your iPod at the same time. We want people to have a positive experience and a different approach.”
Another aspect that sets O2 Fitness apart from other clubs is their “Oxygen Express” offering, which Olander describes as a full-body workout that focuses on toning and fat loss.
“It’s a 30-minute workout set to music, aerobic and anaerobic, so you go to a separate room and it’s got music playing for 30 seconds and it’s got 15 seconds before it tells you to switch to the next machine,” he explains. “You do 30 seconds on a piece of strength equipment and then have 15 seconds to go to a bike and then back to a piece of equipment and then bike and then back and forth. So your heart rate stays up all the time, you’re burning fat, you’re doing the aerobic exercise, but also with the strength training you’re doing the anaerobic. You go twice through the circuit in 30 minutes.”
Olander got his start in the business based on his own personal experiences with health and weight loss.
“I was really into fitness in high school and into college,” he says. “I was an overweight adolescent and then I got into fitness and lost a lot of weight and felt really good about myself. Traveling, I’d seen a lot of sub-par clubs and I thought it could be done better. And so that’s the goal I set out with. The first one was small, it was almost more a personal training studio, but it was kind of like a boutique. And I think this is where a lot of our ideas and approaches to fitness come from, that boutique kind of thing where members are not just a number. They come in and they’re part of a social group in the clubs. From opening that first one just wanting to do something with it to where we are now, it’s been a journey. “
Today, Olander says he tries to visit at least one of his clubs each day. He works out at the Brennan Station and Seaboard Station locations which are close to his office and home respectively. This kind of convenience is an important perk of O2 FITNESS.
“That’s one of the things for us, as we’re continuing to build and acquire all these other locations, is that we want it to be convenient for everyone,” Olander explains. “We have 10 locations, so anywhere you are in the Triangle there’s one that’s close to home and one that’s close to work.”
O2 FITNESS also works with local companies to arrange gym options for their employees, a trend that is catching on.
“We do some unique things with different companies,” he says. “We’ll host, we’ll do lunch-and-learns, we’ll do anything for companies that want to partner up with us. We’ll give their employees discounted memberships if a certain number sign up. It’s a tiered scale depending on how many sign up. Some companies actually buy memberships for all of their employees. A few companies actually have us host private group exercise classes either on-site or in our clubs.
Every Friday at Cary, I know there’s an hour class for a specific company. Some companies actually buy personal training and give it to their employees as rewards. But for every dollar that a company invests in health and fitness the average return is $3.41. So we’ve been seeing more and more companies getting into what they should be doing with that.”
The company has been growing at such a fast rate that Olander says he has to force himself to put the brakes on at times.
“It’s something I struggle with, always wanting to expand he says. “One of the things that I’ve been wanting to take to heart right now is it’s a much better return on investment to improve the performance of an existing location than to build a new one. I’m going to try to take a couple of months off from billing and acquiring. It’s a good time of year to do that in the summer because things are so crazy in the clubs in the first quarter with New Years’ resolutions. So we’re focusing for this summer on improving our systems and existing locations’ profitability.”
One of the challenges Olander says he faces regarding his company’s speedy growth is getting access to capital.
“I think it’s the hardest thing. We’ve been acquiring these clubs out of existing cash flow. None of our acquisitions have taken on any additional debt, but it’s hard because you can’t build a new club—a $4 million dollar club with 30,000 square foot with a million dollars worth of equipment—you can’t do it without a loan and money is just really not out there.”
In addition to growing, Olander says it’s important to him to focus on the quality of O2 Fitness and its continued improvement.
“We want to get better in everything we do,” he says. “From how we service our members to how we perform financially, we want to be a high-performance company and continue to improve every single measurable aspect of what it is we do. Consumer satisfaction and the bottom line… we think that one leads to the other.”