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Transcription – Jon Brady Show 173

Chantal:               Jon, welcome along and thank you so much for joining us on the show.

Jon:                        Thanks very much, Chantal. Happy to be here. Very excited.

Chantal:               Now, before we actually dive into this week’s topic, do you want to start by just giving us a brief overview about Midtown Athletic Clubs and specifically, tell us about Midtown Athletics Chicago.

Jon:                        Oh, absolutely. Love to. So Midtown Athletic Clubs is a family-owned premium health club facility based out of Chicago in the United States. We opened our first club in 1970 as an indoor tennis club. In fact, we were first … Our first name was the Tennis Corporation of America, and we were built predominately or originally [inaudible 00:00:43] tennis. Obviously, we have developed over the past 45 years. We’ve added clubs, added facilities, made changes and adaptations to all of our clubs, the most recent being the … I think what would be called the world’s first and largest premium sports resort, which is Midtown Chicago.

Jon:                        And I’m hoping we can continue to share what we’ve learned and show what we’re still learning about what we’ve created. It’s a 600,000 square-foot premium sports resort, and there really isn’t any other way to describe it. It’s all about the member experience. It’s all about what you see, what you feel, what you hear, what you smell. All the senses are taken into consideration on the get go. And as such, it has a dynamic flow and a natural flow through it that people just seem to really enjoy.

Chantal:               Well Jon, you just said in there that one of the things that you like to do is share what you’ve learned, and obviously it’s been an amazing journey throughout this process and the evolution of bringing Midtown Athletic to where it is today. And one of the things that really stood out to me was the experience that I had walking through the club and seeing the boutique-style spaces, I don’t know if you call them, if you’ve got a word for them, studio spaces within the facility. I mean, it was quite unique that I could walk into the yoga section and feel completely immersed within that section, or walk into Everybody Fights and just feel like I was part of a smaller club within the club.

Chantal:               So, that’s what I would love to talk to you about today. The first thing I’m hoping to understand is, how did you go about choosing which brands to actually bring into the club?

Jon:                        So, we’d spent a long time, this club has been a long time in the making in the development of it, and we spend a lot of time researching and visiting and trying different classes in different boutique studios around the world. So, we literally spent probably the best out of two years in and out of every studio concept or boutique studio concept in the United States, across Europe, some in Australasia as well, just so we could find what were the best in class experiences.

Jon:                        And that’s what our boutique does very, very well. They look at the experience from the moment you walk in. It’s very specific. It’s very tailored to that modality. So if it’s a yoga studio and it’s a big yoga studio, there’s a certain essence, there might be a smell, there might be a feel, there might be a texture to your journey. But it’s all to do with the yoga modality that you’re about to undertake or you’re about to experience.

Jon:                        And so we spent a lot of time looking at all of those different experiences, and working out whether there were ones that we could utilize, or whether there were ones we could re-develop, or in fact design ourselves. Some of the boutique studios within the club, we’ve built the studio from the ground up, and we’ve built programming as well that goes within that. And both are equally as important, because it doesn’t matter if the facility is fabulous and the programming’s poor. Then you’re going to get a very, very inconsistent message across to your customers. And we wanted to make sure that the facility was great, and the programming was great.

Chantal:               Jon, for anyone that hasn’t been to Midtown Athletics Chicago, or they haven’t had a look on the website, just run us through each of those areas that we’re talking about now. ‘Cause I mentioned the yoga room, which I know you’ve got a specific name for it, and Everybody Fights. Can you just quickly list through those specific areas?

Jon:                        Absolutely. So the yoga studio you mentioned is called Samadhi. Samadhi is the ultimate state that you’re looking to achieve in yoga. So [inaudible 00:04:52]. We have a cycle studio called Ride, which we developed along with Precor and spinning, and we used their products in there. We have a group fitness studio which is called the Theater. It’s designed around, funnily enough, a theater. The instructor’s on stage. It’s lights, camera, action in there. We have Everybody Fights, which is a boxing and fight-style boutique studio. And we also have The Field, which is a huge turf zone, which we run multiple classes on, and we utilize that as a studio, a boutique studio in and of itself. We also have [inaudible 00:05:29], a studio which we use, obviously, for a lot of functional training classes and small group programming.

Chantal:               Excellent. I’m actually going to include some photos in the show notes, so everyone can jump on and have a look at each of those areas, because I think one of the things that I really felt, I mentioned it earlier, was just how immersed you feel going into each of those sections. And I think that … You said it, it’s not just the look but it’s also the smell and the feel and the atmosphere. And the trainers that you’ve got within each section.

Chantal:               So I’d like to talk about that, Jon. With so many variations under the one roof, whether they be external brands or brands that you’ve created, how do you actually go about having them stand alone, but still having the flavor of Midtown Athletic obviously run through the entire facility?

Jon:                        That’s a great question. We decided that we were going to have these … One of our premises was to out-boutique the boutiques. So we had to get very deep in what they did very very well. And the things they do very well, members align themselves with the branding, and the programming, the instructors. And the rise of the instructor has been a phenomenon that’s been happening over the last three or four years, through boutique studios as they promote rock star instructors. And so we had to get our instructors up to the same level, or better, with education training, with the programming and building the programming in.

Jon:                        And part of the upside was also to do with the branding of the studios themselves, and the merchandising. So each of the studios has its own name, obviously, its own brand, its own logo, its own merchandise. And each of those areas unique within the club. So we wanted to make sure that each studio could live on its own if it had to. If this was something that was on a little street, on a high street or a main street somewhere, it could live by itself and it could be profitable, and it could be successful. So we went into it with that mindset.

Chantal:               Jon, a couple questions in relation to that. You mentioned about the investment that you’ve made to really replicate those rock star instructors. Do your instructors cross over multiple brands or multiple departments, or does a ride instructor just do ride? They don’t do other programs? Or are they multidisciplined?

Jon:                        They are multidisciplined. We have a number of them that are … I think it’s one of the great opportunities within the industry. The hybrid instructor, or the hybrid teacher, has so much more to offer, than just somebody who’s only interested or capable or has a desire to do one thing. So we have crossover, because one of the reasons for that is we want our members to cross over. We don’t want members to just do … Just use ride. We don’t want them to just use Samadhi. We want them to use Everybody Fights. We want them to use The Field. And so encouraging members to make use of … And that’s one of the benefits we have, is we have all these boutique studios, but we also have another boutique studio, not down the road, around the corner. Around the … Down the … The staircase. Other options of other things to use, and we want people to have that opportunity to make the most of the studios.

Chantal:               Jon, you just mentioned merchandising. Now, you said that you had different merchandise for each of the different departments or areas or boutiques within Midtown Athletics. Is all that merchandise sold in one retail store?

Jon:                        Yes. We have a retail store and boutique, funnily enough, store, in the club. And it has each merchandise to each studio, each boutique, whether it be shirts or leggings or socks or the cycle gear, for example. We have casual clothes, some of them branded with messages on it, logos. And members love aligning themselves with those studios, and with those boutiques. So it brings everything alive for members of the Mid. There is a Midtown logo on all of the merchandise, but it’s very small and it’s very … It’s in a small, out of the way place, where the boutique brand lives and breathes by itself.

Chantal:               Now, one of the questions that I’m sure is on everyone’s mind as they’re listening is in relation to how you actually do your membership pricing, or how you charge. Because I’m interested to know, do the members have one set fee for utilizing everything? Are there any additional costs that they pay to go to each of the boutique areas within the club? Are you happy to dive into that a little bit for us?

Jon:                        Absolutely happy to. One of the benefits we see is that this is all inclusive. So you have the opportunity, with one fee, a monthly membership fee, to use all of the facilities. And we don’t want to limit our members. So I think with the boutiques, one of the things that the boutique fitness industry has done, for those of us in the bigger box or the bigger club space, is that it’s put a price on group fitness. And for years, that has not … It’s been difficult to sell to members.

Jon:                        So you get 120 classes a week, or whatever it is, and in the Midtown Chicago Club, it’s 215 classes, free, on it’s timetable. And we were never able to really quantify that or show members the value. Now, with the boutiques are charging 25 dollars or 30 dollars or 35 dollars a class, we were able to say, well, if you’re doing Soul Cycle or you’re going to Barry’s Bootcamp, or you’re going to Orangetheory, you’re paying 30 dollars a class for those classes. How many times do you go a week? And they’re like, twice a week. Okay. You could do the same thing here for less money than you do at the boutiques, and you get great locker rooms, you get great amenities, you’ve got the boutique store, we have a great restaurant, swimming pools, indoor and outdoor with pool decks, adult roof decks, party space, all sorts of other things thrown in, effectively for nothing.

Chantal:               It really is a one-stop shop, isn’t it?

Jon:                        It is, absolutely. One-stop shop.

Chantal:               Jon, with so many advancements and renovation you did last year for Midtown Athletics Chicago, one of the things I’m interested to understand is the technology within the club when it comes to membership retention. Do you partner up with any brands in relation to things like performance, heart rate monitoring, that type of thing?

Jon:                        Sure. We use a number of different providers for different things, but technology has been a key part of what we’ve built into this club. We use a RFID system called Gantner, out of Austria. We’ll track member usage for members to register, use classes, come in and out of the club itself, lock lockers, there’s electronic locks in the locker rooms. And also, to register on the cardio machines. So members who want to use the cardio machines, they have to use their RFID wristband to the one-time login, remembers your Spotify account and Netflix account, Google account, whatever it might be that you want to set up. And allows you to go back in and it’s customized for you, personalized for you.

Jon:                        So we use that. We also use Myzone as a heart rate monitoring program. We built our own program around Myzone called Voltage, which is a heart rate, high intensity interval training program using heart rate as a methodology, which is super successful. We also use some systems with Precor and their Preva system in our cycle studio, which is around watts and power tracking.

Jon:                        So there are multiple technology aspects of this club. But the most important, I think, is how it ties together. We have built our own CRM platform, called ME360, or Member Experience 360. And what it does is allow us to monitor every member’s usage, usage behavior and patterns, spend behavior. Because effectively, the club is a cashless society. You can pay for everything and charge it to your account.

Chantal:               That is just amazing, Jon. I’m so glad that we talked about that, because that really does … The technology that you just stepped us through really does enhance that member experience, and as you said, being in a cashless environment and having that technology to partner up really enhances that member experience. So thank you for diving into that. And of course, you said two of my favorite words in there without any prompting. One of those words were Precor and the other word was Myzone. So any prompting whatsoever.

Jon:                        Without any prompting.

Chantal:               But I can’t believe that I missed Voltage when I was in there, because high intensity and Myzone, it’s two of my favorite things. So I’m going to have to come back for a visit and take part in that, I think.

Jon:                        Absolutely. You’ll have to come back. You’ll be a guest.

Chantal:               I’ve got one last question that I’m hoping we can finish off today. And perhaps you can leave us with three tips that you would share with other club owners or managers that are looking to introduce either third party brands or specific boutique-style programs within their club. What recommendations would you give?

Jon:                        That’s a great question, Chantal. I think one of the keys to it is making sure that your programming, whether or not it’s a third party or whether you’re developing the programming by yourself or with your coaches and trainers, is a great qualities. It’s got to meet the needs of the members that you’re trying to target. So if that’s high intensity interval training, it’s got to be high intensity interval training. Don’t make it high intensity steady state. Or don’t make it low intensity interval training. Don’t be afraid of making sure you hit the demographics with that programming.

Jon:                        But the other thing I would say is, create an environment that is suitable for that program. So many times, I’ve seen people trying to do boxing programs in what is effectively an office with … There is no environment, there’s no experience, there’s no atmosphere, there’s no energy. And doesn’t take a lot of money to transform a room into something that’s more appropriate or a boxing class, or a fight club type class. It’s like cycling. We all look cycle studios and go, that’s a great cycle studio. It’s dark, it’s got some flashing lights, but you wouldn’t think about doing a cycle studio necessarily in what is a room that’s ineffective.

Jon:                        So take that same concept and apply it to each and every space. A good example is, Theater, the group fitness studio at Midtown Chicago, it’s got a stage, there’s no mirrors. Because when you go to the theater, there are no mirrors. And so we’ve had people comment to us, why are there no mirrors behind the instructor so I can see myself? We’re like, you know what, we don’t think you need to see yourself. We want you to enjoy the experience, have fun. The rock star’s on the stage. Your focus is on the rock star and the flashing lights and the nightclub-esque feel. That’s what you’re there for. We want you to feel it, we want your emotion taking over. We want you to be able to emote about your experience in the studio.

Jon:                        So creating that environment, again, it doesn’t take a lot of money. It just takes thought and a commitment to buying into what you’re trying to create. I think those would be the big things, I think. Get the programming right, spend time on that. Make sure that the environment is appropriate for what you’re trying to deliver. And then, get your members excited about it. Tell a story. Create a story around your brand, around the studio, around what you want people to feel. I want you to be emotional about your experience, because that’s what’s going to keep you coming back. And I think that story, that environment, and that programming linked together, that’s the magic. That’s the genius. If you can pull it off. It’s absolute magic.

Chantal:               I think it’s really special that you mentioned the story there, Jon, because one of the things that really stuck with me, and that wasn’t from being a member, that was literally from doing a tour of the club, was the passion that yourself and the team members all had about the story about the club. And that really, I think, it really stirs up emotion. And it’s something that we can’t underestimate when we’re speaking to our members. And especially in a transformation like you’ve just gone through. So I want to thank you for including that as one of those final takeaways, because I think that’s a really important part of it.

Chantal:               So Jon, look, this has been so great. Really taking a look, behind the scenes, of Midtown Athletics Chicago. So thank you so, so much for joining me on the show.

Jon:                        You’re so welcome. Thanks for having me.

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