Philly’s Gyms Don’t Have a Lifeline
When the first shutdown took effect in the United States in mid-March, we all hoped it would be temporary. But now, eight months and counting later, matters are only getting worse. The coronavirus continues to spread throughout the nation, creating a need for new restrictions as cold weather sets in.
Prior to the pandemic, the U.S. fitness industry was on the rise — worth $37 billion-plus in 2019. According to CNBC, before the coronavirus hit, Planet Fitness had reported 53 consecutive quarters of sales growth. Without a vaccine, it could be the end of 2021 before the chain reaches those levels of profitability again. A number of previously thriving fitness empires, including Flywheel Sports, Gold’s Gym, 24 Hour Fitness, and Town Sports International — the parent company of the five Philadelphia Sports Club locations in Philly — have filed for bankruptcy.
Before COVID-19, Philly’s boutique movement scene was flourishing, too — there were spin, barre, dance, martial arts, yoga, HIIT and Pilates classes aplenty; members paying monthly dues to use weight-lifting equipment and machines at gyms of varying sizes and price ranges; and inclusive, forward-thinking studios like EveryBody Movement and Wellness and Unity Yoga gaining recognition.
Now, Philly’s small businesses face increasing losses as they operate at reduced capacity while still trying to manage employees, rent, and operational costs. Gym employees and trainers have felt the pain as chains like Corepower and SoulCycle furlough thousands of workers, and smaller studios have gone out of business. Though some local businesses have been able to access the Paycheck Protection Program (PPP), Economic Injury Disaster (EIDL) loans, PA CARES grants, or other forms of support, they say it hasn’t not been enough to sustain them as revenues continue to drop.
The first wave of shutdowns already caused some of Philly’s small, local studios to shutter — including Freehouse Fitness, Wake Up Yoga and Teranga Yoga (which hopes to reopen in the future). Others have been forced to scramble to pivot their classes and services to new COVID-friendly offerings.
But on Monday, the City of Philadelphia announced a new set of restrictions in response to the increased spread of coronavirus in our communities. These new rules ban gyms and indoor exercise classes, though exercise groups and classes — socially distanced and masked — may continue outdoors. The new “Safer at Home” restrictions will be effective from November 20, 2020, through January 1, 2021. While previous shutdowns and restrictions forced many gyms to close, this second set could be the final nail in the coffin for more.
Local Gyms Getting Creative in the Pandemic
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With the new changes in Philly, revenues will drop further as members freeze or cancel their accounts, and gyms without online classes have no way to make money going into the holidays. Many owners feel they’ve been given no real option for economic survival.
It’s not for lack of hustle and creativity. Some gyms have rented massive new spaces (Unite Fitness took on the entire 23rd Street Armory), installed air filtration systems, and made other major changes to accommodate CDC and city regulations. Juliet Sabella, owner of The Wall Cycling in Manayunk, built a new outdoor, socially distanced open-air spin studio that can handle 25 percent of her venue’s former capacity; Revel Ride on South Street built new outdoor facilities, too.
“We went from having a thriving business, with our highest level of membership since we opened our doors five years ago, to barely hanging on to a third of our original membership base,” Jen Wendowski, owner of Yoga Habit in Fairmount, says. “Our expenses — payroll, rent, utilities, software subscriptions — outweigh our revenue. It’s impossible to run a business like this.”
Yoga Habit, along with nearby studio Lumos Yoga & Barre, switched to a hybrid model of outdoor classes, socially distanced indoor classes and online classes after the first shutdown. It received a PPP grant in May, which helped pay the studio manager’s salary for 2.5 months but didn’t cover any instructors’ pay, since those instructors are independent contractors. “We received the EIDL loan. But by using the loan, I’m directly putting my family into debt to save our business. It doesn’t feel great,” says Wendowski. “We’ll run out of money next month and will need to use the EIDL loan for our monthly operational money.”
Gyms like Warhorse Barbell created customizable online team training via an app, and other studios across the city, ranging from Mama’s Wellness Joint to F45, are offering virtual classes. Some are going the extra mile and providing equipment as well: Barre3 Philadelphia shut down in-person classes to instead offer livestream classes, and in the wake of Monday’s announcement, it’s selling workout equipment for home use: resistance bands for $18, weights for $25. Other fitness studios, including Revel and Unite, have also tried this tactic, renting out bikes and weights to try to make up for lost revenue.
But making all these necessary changes to their operating models hasn’t come without cost to these businesses— and it’s put a strain on the already-fragile industry.
“We’ve invested a huge amount of money in COVID-related changes, such as increased air ventilation, full-time cleaners, capacity reduction, nightly disinfection cleanings, social distancing signage,” says Bob Polizzano, owner of Retro Fitness in Spring Garden. “I still have many members with frozen accounts; therefore, I’m not receiving a substantial amount of membership dues. I’ve had to furlough over 30 employees. In all, we’ve lost hundreds of thousands of dollars this year.”
Retro’s typical revenue comes from monthly membership dues, with other major income from personal training, small group training, and team conditioning. But Retro had to cut out team conditioning completely after the first shutdown, and personal training payments stand at 60 percent of their pre-COVID take. “We have no revenue stream whatsoever with our doors closed,” Polizzano adds.
“The first few months, our business income was down 70 percent, and with some ability to reopen, it was up to just about 50 percent,” says Shoshana Katz, founder and owner of BPM Fitness. “We’ve had to cut expenses in every way possible in order to keep our coaches employed. We haven’t gone through a pay period without paying them, but the only way that’s been possible is because of rent relief from our landlords.”
Even the city’s bigger chains can’t weather an economic storm indefinitely. City Fitness — one of Philly’s small-business-grown-large success stories — will close all locations as of November 21st through the duration of the shutdown and has furloughed the majority of its 300-plus staffers.
City Fitness had previously made big changes in order to adapt, opening an outdoor facility in Fishtown with classes and a strength training area, as well as installing air-cleaning technology in the HVAC systems of its clubs. “These upgrades represent not just a substantial investment of over $75,000 per club at a time of reduced revenue, but also incredible hard work by our staff and cooperation by our members,” a spokesperson for City Fitness says.
Meanwhile, corporate virtual-fitness monoliths — which have built-in infrastructure our local businesses struggle to compete with — are having a bonanza year. Peloton and at-home fitness app sales are skyrocketing. Forbes reported that in July 2020, Mindbody data showed a huge jump in consumers accessing virtual content since March. Seventy-three percent of consumers are using prerecorded video, vs. 17 percent in 2019; 85 percent are using livestream classes weekly vs. seven percent in 2019. In September, Apple joined in with a new subscription service that includes yoga and running training. And, prior to this year, Peloton, obé, and Nike had already been successful with at-home training programs before the boost they got during the pandemic — Peloton reported a 94 percent jump in subscriptions in May 2020, and its stationary bikes are back-ordered. Though the draw of workouts with these companies is clear — such crisp workout videos! The production quality! That nice big screen! — there’s no question they’ll play a role in the decimation of our once-thriving hyper-local fitness scene.
Small Businesses Still Looking for Answers
As of this week, there doesn’t appear to be any more federal aid headed to these businesses as they weather this next shutdown. There are attempts: the International Health, Racquet & Sportsclub Association (IHRSA), an alliance of health and fitness professionals, is working toward a bill, the Health and Fitness Recovery Act. (H.R.8485), to address the health and fitness industry’s needs with a $30 billion fund for grants. But for that to matter, the legislation needs to move forward to reality.
“I’m all for having standards that we need to be held to,” says Katz, whose studio BPM is planning to stay outdoors in the cold and hoping for a mild winter, as well as offering virtual classes through its On Demand Library. “But nothing has returned to normal for any of us in terms of operations, and rent is still due, paychecks still need to be paid, and we’re still trying to run our businesses. The problem now is that we — and when I say we, I mean all small businesses — still need help. We need more support. I am not against a shutdown if that’s what needs to happen, but at least give us a chance. None of us will be able to keep our doors open without additional support.”
Some local fitness industry members have mounted a Change.org petition requesting that the city allow gyms to be kept open as essential businesses. Others agree that shutdowns make sense for everyone’s health and safety but still feel abandoned, considering the lack of government-provided options to support their businesses. Many owners agree that without additional grants there isn’t much hope of seeing their enterprises through the winter.
“The health and safety of our community is our top priority,” says Adrienne Dolberry, co-owner of Studio 34 in West Philly, which has been entirely virtual since the pandemic began. “We’re not surprised the fitness centers have closed again. We hope we can continue to expand our virtual space and fund-raise to keep our physical space — welcoming back our community when it’s safe to do so. We need support for 1099 contractors — many yoga teachers and wellness practitioners are solely on 1099s. I find it unfair the hoops they have to navigate to get unemployment and health insurance. And, we need some type of continuous federal grants. The public should have regular monthly payments to cover rent and fixed costs to keep their businesses and housing. Then we can all stay home and stay safe without risking our livelihood or lives.”
Many studios are adopting this same route: weathering it out at home with virtual classes and taking every precaution possible — even if they’ve been suffering financially for it. Other fitness centers have continued to adapt and implement changes to stay safely open — while still losing money. Still other gyms are not abiding by the rules with the stringency and seriousness of others, leaving patrons open to potential exposure to the virus and then causing it to spread.
It follows, then, that as a deadly and contagious virus is on the rise — when there are more than 11.4 million cases and almost 250 thousand deaths — making every effort to take only calculated risks isn’t enough. Sometimes, shutting down or going entirely virtual is the safest thing. And if that’s where we are as a city — and it looks like it is — Philly’s gym owners think the government should make an effort to step up, too.
“I don’t disagree with the shutdown,” says Wendowski. “We breathe a lot in yoga classes, and I can understand why it’s possibly transmitting cases, even though we haven’t had any reported to us and our team has been healthy. We just need more funding — not loans, but grants that don’t need to be paid back.”
“We’ve had our cash reserves basically depleted at this point. We hope that the city, state, or federal government will create programs to financially support fitness businesses impacted by these shutdowns,” says a spokesperson for City Fitness. “We ultimately have been forced to shut down or run with reduced capacities for eight months now. It’s hard to see how many facilities will survive without more financial support.”
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Philadelphia magazine is one of more than 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and economic mobility in the city. Read all our reporting here.