Welcome to HALO Talks! In today’s episode, host Pete Moore sits down with Rick Dennis, Co-Founder of Bakersfield’s Body Xchange and a definite "OG" in the HALO sector. With over 30 years of experience—including a storied career at Family Fitness, 24 Hour Fitness, and launching successful clubs with longtime partner John Ovanessian—Rick shares insights on evolving gym models, member experience, and responding to changing trends.
Rick and Pete chat about how Body Xchange became a place “where everybody trains,” adapting to the post-COVID demand for more strength training, flexible facilities, and self-guided workouts. Rick opens up about the importance of listening to your local community, running a tight operation with zero leverage, and the unique advantages of local ownership in a burgeoning market like Bakersfield, CA.
Pete and Rick also chat about future growth—both for Body Xchange and the Bakersfield area itself—as well as reflections on how today’s athletes are changing the game in high school sports and beyond. Listen now for a conversation packed with industry wisdom and practical takeaways for fitness professionals (and enthusiasts!)
On the "power" of staying debt-free Dennis states, "We're definitely not a leveraged company. I think that's something that's really important to understand because as you mentioned, with 24 Hour Fitness, once you get leveraged then there's restrictions to that. We've never had those kinds of restrictions because of the foundation and how we built it."
Key themes discussed
- Evolution of Body Xchange and their club model.
- Shift toward strength training post-COVID.
- Local market dynamics and growth in Bakersfield.
- Importance of a debt-free, reinvestment-focused business.
- Personal touch of local ownership versus national chains.
- Future expansion opportunities in nearby cities.
A Few Key Takeaways:
1. Evolution of Member Experience & Strength Focus: Rick highlighted how their business model has shifted post-COVID, with a significant pivot towards strength training and member-driven use of space. Recognizing the growing interest in free weights and Olympic lifting, they repurposed areas like group fitness rooms to fit more strength equipment, reflecting the changing fitness trends among younger demographics.
2. Deep Local Roots & Smart Growth: The Bakersfield market is robust and expanding, with affordable housing attracting a young population. Rick emphasized how their deep local knowledge allows them to strategically backfill old locations and position themselves in growth corridors, staying ahead of national chains and big box gyms.
3. Debt-Free, Locally-Owned, and Well-Maintained Clubs: Rick and John built Body Xchange with a focus on being debt-free and maintaining strong local ownership. This approach means they can swiftly reinvest in facilities, ensure equipment is always up to par, and maintain a high-touch presence—reasons why members prefer their facilities over less locally involved national chains.
4. Adaptable Operational Strategy: Body Xchange made a post-COVID decision to pause personal training, acknowledging a shift toward self-guided, technology-driven workouts. Rick notes they still onboard members and provide guidance, and could easily reboot personal training if the right talent emerges.
5. Expansion Opportunities & Local Demographics: Looking ahead, Rick sees potential for 2–3 more locations within Bakersfield and more expansion into comparable communities like Palmdale and Lancaster, as well as midsized cities between Bakersfield and Fresno or west along the Central Coast. He stressed their ability to replicate the Body Xchange DNA by maintaining control over real estate and ensuring each new club matches the model’s culture and values.
Resources:
- Rick Dennis: https://www.linkedin.com/in/rick-dennis-795252175/
- Body Xchange: https://www.bxfitness.com
- Integrity Square: https://www.integritysq.com
- Prospect Wizard: https://www.theprospectwizard.com
- Promotion Vault: http://www.promotionvault.com
- HigherDose: http://www.higherdose.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
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This is Pete Moore on Halo Talks nyc. I have the pleasure of
(01:07):
bringing to our audience Rick Dennis, straight from
Bakersfield Body Exchange, good friend of Integrity
Square and a leader in the industry for probably about as long as
I've been in the industry. So Rick, give your background and then we're going to
talk about Body Exchange Bakersfield. Sure.
Thanks Pete for having me on. I appreciate being here.
(01:29):
Yeah, I was doing a little digging when we
started talking and yeah, it's been over three decades. Started
and got my first personal training certification back in
the early 1990s, 1992
to be exact, shortly after that. Started into the industry
with Family Fitness center way back in
(01:52):
1993, in the mid-90s. Worked my
way up through the organization. Went through the
24 Hour Fitness acquisition in the late 90s,
early 2000s. Learned a lot through that
experience. At the time I was still on the fitness side of the
business. I was part of the, I was a
(02:15):
VP of the Fitness Department in our region
and then left 24
Hour Fitness for a short time, went to Knoxville,
Tennessee and worked for a startup brand there
and helped them start from the ground up. Spent a few
years there and then we had the idea of
(02:38):
Body Exchange. Didn't start out right at, you
know, what it is today, but we, we came
to an idea of what we wanted to try to do in the
industry and then that brought us back to Bakersfield
and here we are. So you and John Ovanesian,
you guys been working together since the 24 hour days?
(03:02):
Yeah, I was in Las Vegas running the fitness side of
things. They brought John to Las
Vegas from Bakersfield at the time. So there's,
you know, I could see the connection why we're in Bakersfield today.
And John came up to Bakersfield and he and I
partnered together there to run all of the 24
(03:24):
hour fitness clubs. I believe at the time
John came up, we had four or five locations there. We grew it
to 1224 Hour
Fitness locations. It was an area of rapid growth for them. And, and
we did a lot of the expansion with them there. And yeah,
we worked together for, for a long time. I'd say, you know,
(03:48):
many of those 30 years I've been, you know, alongside John.
And then when you went to, to Knoxville and I used to tour those clubs
at the Rush back in the day, that was also another 24 hour,
you know, diaspora of, of executives that went and started up a lot
of these new concepts. You know, the thing I loved about the Rush
is that they really leaned into entertainment and they leaned
(04:10):
into other modalities. Remember, you had a rock climbing wall and you had some other
interesting things inside of those clubs. You know, so as you kind of like
moved from the fitness side of the industry to the operations side
to the experience side, you know, what are some of the things that, that
you, you'd say like Body Exchange now understands about,
you know, what you're delivering and you really being on the pulse
(04:33):
of, you know, members wanting more strength. Maybe not as much Group X after
Covid, what have you kind of morphed the model because you're running, you
know, five clubs that are fully entrenched in the market?
Yeah. You know, we've tried to learn
all along the way, you know, from the early days of us
learning from pioneers like Ray Wilson. You know, I mean,
(04:56):
there's, there's dialogue in our meetings today with
our staff that we, we still, we talk about, you know, things
that Ray taught us way, way back in the early 90s. And then
when we went to Knoxville, yeah, it was,
it was completely different. You know, it was, it was
entertaining. You know, there's a wind tunnel and you know,
(05:19):
being on the fitness side, you know, you walk into that at first and it's
like, why do we have a wind tunnel and a batting cage in our gym?
You know, but it worked. And you know, what we,
what we pulled away from that is
that's, I think the time where the industry moved towards it was
really about the member experience, you know, what kind of
(05:41):
experience. And really fitness is about, you
know, endorphins too. Right? So what's the endorphin
change that Happens when somebody walks in the door to the
time they finish their workout, and how do they feel different? And I
think that's what the rush was really pioneering is,
hey, it's get them in the building and change their mindset,
(06:04):
change their endorphin levels, get them excited, and they'll keep
coming back. And so as we've
transitioned to what we are today, I think we've pulled pieces of
all of those things and try to make it work for
our market and our members and create that kind of
experience for them from the time they come in to the time they leave.
(06:27):
The interesting part, I think, about the industry now is that
there's more strength equipment on the floor. There's less. These
kids really don't resonate into Jones. And
to get into a group exercise class, they really want, I want Olympic squat
machines. I want pec fly machines. I want dumbbells. I want
kettle bells. And it seems like what you guys did
(06:50):
from COVID onward is basically said, hey, look, I'm, I'm, I'm
going to, you know, pot commit to just saying, like, what do people want here?
How can I repurpose my square footage? You know, you took out your kids club,
right? You took out your group exercise. You said, look, I'm going to provide you
as much strength area, equipment and enough, you know, requisite
cardio to, to, to, you know, placate the members
(07:12):
that still want to just run on a treadmill or what have you. So, like
to talk about how that pivot happened, how,
like, much easier it is to operate the business right now and,
you know, how you feel about where you guys are positioned. That's a loaded question,
Rick. Sure.
Yeah, great question. And, you know,
(07:35):
we learned a lot about ourselves,
as I think many people did during, you know, the pandemic and
Covid. We, we came out of that
and as many companies did, we had to look
inward and look at our identity and, you know, who are we?
You know, what. What can we be? What does
(07:57):
the community tell us they want? And,
you know, the. The average age demographic,
you know, of our members is between the ages of 16 and
36. And predominantly
their major focus is strength training,
free weights. Of course,
(08:19):
there wasn't Internet and, you know,
infomercials and podcasts to the levels that they are today,
back when I started in the early 90s. Right. So they're
influenced by, hey, I'm gonna do this quick workout.
I'm gonna show it to you. And most of that's coming into play
because that's that's meeting where people. Meeting those
(08:42):
people where they're at, you know. And so what we learned
was, hey, we are
the place where everybody trains. And right there
in 2021, we picked that tagline
up and we said, hey, we are where everybody
trains. And we're going to put in more squat racks than
(09:05):
any other competitor in town. We're going to serve the people
in the ways that they want to be served. We're going to
repurpose the square footage of our
facility, and we'll use, you know, just one group
exercise room as an example. You know, you might have,
you know, we were doing really well with group fitness, and in the early
(09:26):
parts of it, you know, we might have four or five classes a day in
that room. And in the rest of the time, you got around
3,000 square foot just sitting there when people go in and stretch
or whatever they do. But now you can walk into
any one of our gyms today, and that same square
footage, that same space, it's got members
(09:47):
using every square inch of that area to do
their strength training, their Olympic lifts.
You know, they're, they're deadlifting their
everything. You know, anything that they want to do, they're able to.
And, and that's, that's really who we are where, where
everybody trains.
(10:10):
This is Pete Moore. I want to let you in on a little secret. There's
this company called Promotion Vault. And what they do is they give out rewards
from retailers that allow you to incentivize your members
without having to do zero down and one month free or
giving away shakes or giving away T shirts. What you want to do is
build a rewards program that lasts, that people value,
(10:33):
and that doesn't discount your own products and services. So here's the
deal. There's something called Rewards Vault. The Rewards Vault is going
to allow a member to set up their own profile. They are going
to answer questions, you are going to get those answers, you're going to be able
to target those members, and you're going to reward them inside your club,
inside your spa, and outside of the club and outside of the
(10:55):
spa to get them to become loyal, to get them to pay their
monthly dues and to be rewarded properly for the
actions. A lot of companies are cutting back on rewards. You shouldn't be
Promotion Vault, your answer, trust me, this is real
foreign. So from.
From a standpoint of, of the competition that's been in and out of the market,
(11:17):
you know, I know you guys backfilled some of the old 24 hour because you
knew the market. Really? Well, you kind of have the. The market,
you know, I'd say, quote, unquote, like, you know, surrounded with body
exchange into. In main areas. Where do you see the growth
happening in. In Bakersfield? What's going on in Bakersfield? I know you got a.
A pretty good AAA hockey team that's affiliated with the Oilers, which is
(11:40):
the Condors. When I traveled through that area that's
like on the southwest corridor down by Allen.
Looks like there was a lot of rooftops, which obviously everybody loves from a
residential health club scenario. And then you've
got Planet and you've got in shape. But
I'd say the market isn't really over clubbed to the point of
(12:02):
some of the other markets that we've seen. How do you feel about
competition and how do you feel about the growth of Bakersfield?
Well, we feel good. You know, we love the market. We've been
here for over 20 years.
There's a lot of growth here. And, you know, one thing about
Bakersfield that's stood the test of time is it's
(12:26):
desirable for the fact that it's a very
affordable place for people to live. In California,
you know, there's over 420,000 people here.
The home prices remain, you know, affordable,
and it's. It's seeing an increase in
(12:47):
people moving here. It's. It's second in the Central
Valley, only second to Fresno, which is a major
city, I think the third largest city in the state.
So there's a lot of growth opportunities here. And it's evident
because in some of those areas that you described,
you know, there's national and regional, you know, brands coming in
(13:10):
to support the market. National change, you
know, big, big target. You know, shopping
centers are coming in, more Costcos and different things
like that. And, you know, as the
residential grows, then the retail side of it grows. And so when you can
see that retail growth, you know, that the residential
(13:32):
is. Is supporting it. So, yeah, there, there's definitely, you
know, some opportunity here in the market.
You know, in the northeast part of town, there's some major development
planned out there from a retail perspective. In the central
area, there's a major retail development, you
know, scheduled for Rosedale highway and Coffee Road, which
(13:55):
is right in the heart of town. You just
already mentioned in the Southwest, there's a lot going on
there that's probably the most vibrant, you know, area. You know,
there's the major. One of the new major east,
west, you know, corridors is on Panama Lane. And
there's a lot of opportunity And a lot of growth going on out there and,
(14:18):
and those major retailers that we talked about earlier,
they're slated to be on that road in a few different
areas that we're aware of. So, yeah, there's a great opportunity
and we don't see it slowing down again because it is an
affordable place for people to come to and live.
And it also, the demographics support that because
(14:41):
the average age is between the ages of, you know,
28 and 32. And there's a lot of the
population at the, under the age of 18.
And that's, you know, tells us that, you know, there's a lot
of about 30% of the population 18 and under.
There's going to be a lot of people here for a long time. Yeah, it
(15:04):
seems like you guys are well positioned to, you know, strength, obviously,
is where most of these kids are going to. They're on their,
their phones and they're doing their own directed workouts. And I think there's like
a, a new wave of, you know, what people
like, whether it's like bodybuilding or whether it's elite, you know, being an elite
athlete. I think high school sports. When I was There, you know,
(15:27):
25, 30 years ago, we knew nothing about nutrition. We knew very
little about, you know, periodization schedules and, and reps. I wish I'd
go back right now and like, train as a, as a high school athlete. I
think you'd have a lot better result. Even though I thought I was pretty good
at the time, but not, not as good as I could have been. You know,
when you take a look at, you know, 24 hour kind of leaving the
(15:48):
market, obviously they had a number of reasons why,
you know, they, they didn't have the capital to reinvest
into their locations. And that was mostly because of their balance
sheet and deals that got done with private equity funds that put a lot of
debt on the business that then had to pay interest instead of putting capital back
into the business. I know you and John have run a very clean
(16:09):
operation. I walked around there, I didn't see any, that there was not like
one piece of equipment. I'm like, hey, Rick, I think you might want to put
some, like, new upholstery on this thing. Like, there was no,
you know, there was no equipment out of order, you know,
so as you kind of look at and say, hey, we've run this
business for over 20 years and we've reinvested
(16:30):
into the business where we needed to. What do
people say in the market, you know, about body exchange versus Some of
the, you know, clubs that maybe don't have as much TLC or
local ownership and the fact that you're in the clubs, you know,
every week and live there and you know, have, have that kind of like personal
touch point that other clubs in national change just
(16:53):
don't really have that, that, you know, capability or like
the desire to care as much.
Sure. I'm going to break that into
two answers. I think the first thing is
when we started out to do this, we had a
(17:14):
very clear vision of how we wanted to build the business.
We wanted to build our company without debt. And of course,
as new entrepreneurs and starting out,
we did take on some initial debt. But as
fast as we possibly could, we paid off and
paid down all of our debt. When we
(17:37):
started opening, you know, we opened up roughly 10
locations in a 10 year span, you know,
2003 to 2013.
And when we were doing this, we were funding all of
our own construction, we were paying cash for all of our equipment.
We were building our company. So
(17:58):
that way for the long haul, we were built to
succeed. And now when we need to
have a capital call to put some new equipment in or do something,
it's readily there and available for us to be able to do that.
And so we're definitely not a leveraged company. And I
think that's something that's really important to understand
(18:22):
because as you mentioned, with 24 hour, once you get
leverage, then you're, you know,
there's restrictions to that. We've never had those kinds
of restrictions because of the foundation and how we built it.
So with that said, you know, like, you know, back a few
years ago when we decided, hey, you know, we're going to kind of rebrand ourselves
(18:44):
a little bit, we're going to reinvest into the areas of the
club that the market and the, the demographic is telling
us that they want, which is the strength, the
ability to do, you know,
powerlifting and different things within a commercial gym.
We were able to easily do that, make those decisions and
(19:07):
we stand out for that. You know, we are local.
I'm in our gyms every week, every day.
At some point we see and
hear from our customers. And if it makes business
sense and it creates a win for the customer,
(19:28):
a win for the, you know, company, then, then we make
decisions to make those things happen.
This is Pete Moore. Here's the last tip for you of the podcast.
We are partnered up with a company called higher dose
higherdose.com they are the leader in
workout recovery products, infrared technology,
(19:51):
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(20:12):
Having your members walk out of the club and going into one of their locations
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(20:34):
to meet the demands of your members. And hey, let's get people
happy, healthy and sweating and the recovery should be
just as good as the workout.
There's a two, two points that, you know, came out to me
as, as I was touring with you guys on my last trip out to California.
(20:55):
One, you guys are on ABC Fitness, right? So a lot of the industry benefits
from other clubs being on the, on the same software.
One of the things that, that was interesting that you guys made as a strategic
move was to say, you know, we did personal training before, but we're not doing
it now. Obviously your clubs could potentially do personal training if you
wanted to. What's been the, what's been the
(21:17):
shift there and thinking and then, you know, if you decided to
greenlight that again, you know, what, what kind of success did you have in the
past from a number of sessions or you know, revenue per
club that, that you could look at if you wanted to kind
of plug that back in? Sure.
Well, you know, as you mentioned, you know, post Covid, there
(21:39):
was, you know, a bit of a shift, you know, and
we believe that that shift is a
lot of people learned how to use technology
to do self guided workouts, self guided
programming. I won't get too far into it
(21:59):
but you know, you talk about today's time and you talk about AI, you
know, getting involved in, you know, in workouts and
things like that. So
what we've decided is that if
we're, if we're in a market
that a lot of people are using our strength, they're
(22:22):
doing self guided workouts. It's not to say that they
don't need help with inside the gym and we
have our staff go through a
training of sorts to understand how to onboard a new
member, take them through proper workouts, get
them integrated into the facility and
(22:45):
always be there as a resource for our members
to be able to succeed
within Their program. So that's the current.
That's what we, you know, what we've adopted as of, as of now
post Covid prior,
we had the full gamut of, you know, personal training
(23:08):
going. We had fitness managers within each facility
running the department, doing a majority of the,
you know, personal training package sales.
We had a district fitness manager that was overseeing, you
know, the multitude of clubs that we had at whatever time that was.
(23:28):
So if we were to be able
to find the right mix of
talent in terms of, you know, a district fitness
manager type person, you know, fitness
managers that can hire, recruit and train
personal trainers on a regular basis, and we could
(23:51):
do it. Well, there's no doubt that I feel like we could
go back to, you know, the years before when we were
generating about $100,000 a month in personal training
revenue and we evaluated our
personal training revenue based on
actual cash. We didn't do contract value
(24:13):
or anything like that. So, you know, there are some companies out there
that say, hey, you know, we do X dollars in, in personal
training revenue, but they're doing contract value, which, you know,
sometimes skews the number just a little bit.
Yeah, yeah, you just writing, you should just writing packages for the future that
hopefully you collect. And hopefully they did the sessions. Actually.
(24:38):
It was always, yeah, yeah. And then John
owns for the five pieces of the real estate. So you, you got a lot
of flexibility in what you could do inside of the locations as well, which is,
you know, not common in this, in this space where
you're, you're kicking up against a landlord or demolition
clause or something. You know, if somebody's going in. I just had a situation
(24:59):
where a competitor came into a shopping center
and they like, notified the tenant after
construction started. Like, hold on a second. I got an exclusive on this
property. Like, what do you, what are you doing putting this other fitness guy in
there? Like, it's not allowed as part of lease. Oh, like, what will you
pay us to let us do that? So how having. Having the ability to
(25:21):
have this, like, affiliated real estate entity,
you know, I think has been highly beneficial. It looks like you got some room
to expand if you want to do some things in the outdoor area as
well. I saw some expansion and parking, obviously, is not an issue at all.
So just the last question for you, you know, if you were to say,
hey, Pete, I'm going to go build another five locations over the next five years,
(25:44):
you know, if that was a desire for you and your management team,
you know, we talked about probably filling in a couple locations in,
in Bakersfield where, you know, you can follow the work of a, of a
Target in Costco. I used to say that back in the day. I'm like, do
we really need to do a research report here and pay like a lot of
money to figure out where the real estate development is or can we just go
like across street or next door to the Target? Like they obviously did the work
(26:07):
and figured out like, hey, I could do $100 million, you know, merchandising
store here, maybe my health club might work if I can get a, you know,
if I get an out parcel next to them. And then when we met, you
talked to us about at some point you were in Ventura. But what are some
of the cities if you want to just like tag for us here as
you know, potentially where body exchange could and should go within
(26:30):
like a 90 mile radius of like maintaining the culture and maintaining the
DNA of the business.
Sure. So outside of our immediate area,
like you alluded to there, there are some, some key
positional pieces that you could look at here locally for,
(26:50):
you know, you know, maybe two or three, you know,
opportunities outside of
Bakersfield. There's, there's areas
south of here, you know, Palmdale, Lancaster area
is a very similar type
area, similar type demographic
(27:11):
landscape to Bakersfield in terms of
affordability, in demographics and things of that
nature. So there's definitely opportunity there.
If you look north of us,
there's a lot of little
areas, key, you know, mid sized cities,
(27:34):
opportunities between here and Fresno.
And then, you know, you could also look, you know, to the west as you
start going to what they call out here the central coast.
Again, there's, there's
cities that would support,
you know, a mid sized gym,
(27:57):
you know, the 15,000 to 25,000
square foot type, you know, facility.
And yeah, there's, there's definitely some opportunity as you go to
the central coast, some smaller areas as you go up towards
Fresno and within that 90 mile range,
for sure, Palmdale, Lancaster, which is south of us,
(28:20):
that's great. So I see all the baseballs behind you. So the people
on the, who are listening to the audio here and not on the video, there's
a, there's a nice baseball collage behind Rick and some
glass casing. I went to the Giant game last night against the
Eagles and Doc Gooden, Dwight Gooden sat in front of me
who is an all time Mets pitcher back in the day, Cy
(28:42):
Young award winner and I had the pleasure
of like high fiving him on every Giants touchdown
and score and big hit interception.
So it was a pretty wild, like, bucket list event. One to beat the
Eagles after five years, but also to have Doc good. And I felt like I
was like, I like, invited him to come, like, hang out and watch the game
(29:03):
together. So it seems like. I know you're a big baseball fan,
so this is probably a good time of year for you. Yeah,
it's exciting that, you know, playoffs are here and
it's a fun time to watch the game. And, you know, it's
funny, you alluded to, you know, the athletes that we thought we were
back when we were young and working out and all of that, and
(29:26):
then you look at the common day athlete and, you
know, they just have all these advantages because there's a lot more
research going into the type of training they
need to do, the periodization of the
training that they do, the nutritional side of what they do,
and, you know, all the methods that they have today
(29:49):
to. To access, you know, the
best of the best type of training. And then you watch and perform on the
field and it's. It's obvious that
they're. They're just. They're built different than. Than
in, you know, many, many years ago. So, yeah, I
mean, I think the. The athlete of today gets to be like an iPhone, like,
(30:11):
17 and yeah, we're playing with like a iPhone 3, you know,
skeletal structure right now that has its wounds from. From not
recovering properly so. Well, look, man, it was great to have you on the show.
Thanks again for all your contributions to the. To the HALO sector at large.
Look forward to seeing how you guys progress, and congrats to you and
John and Laurie and crew for what you guys have built. It's a. It's a
(30:33):
great story, and it's also bringing a lot of value to, you know,
thousands of people in Bakersfield that if you guys weren't there, you know, they might
not be. They might not be doing what they're doing, you know, get results. So
that starts at the city level and it kind of grows up from
there. So thanks for coming on and good to see you again and go
Halo. I appreciate it. Thank you, Pete.
(31:15):
Sam,
(31:40):
sa.
I am super excited to announce that we now have a formal
partnership with the Prospect Wizard. And when I say
wizard, I mean wizard. Obviously you have a website.
This allows you to convert your website traffic visitors
directly into leads. It's not just another chatbot and
it's not AI, but it allows a visitor to call, text or leave a
(00:22):
voicemail immediately. Goes to you, your sales team or anyone else in the
club instantly. MIT shows a study that if you contact
the lead within 10 minutes, chance of them converting goes up nine
times that of the average. We got the Atlanta clubs
on it. Vita Fitness, Gold's Gym, Mountainside
City Fitness, Philly College Park. Become one
(00:44):
of the next Halo companies to deploy the Wizard.
It's easy to use. Go to the prospectwizard.com
get a free 30 day trial. Talk to my boy Dave Gallon. He will get
you all set up and let the leads flow based on the
Wizard. Go get him.
This is Pete Moore on Halo Talks nyc. I have the pleasure of
(01:07):
bringing to our audience Rick Dennis, straight from
Bakersfield Body Exchange, good friend of Integrity
Square and a leader in the industry for probably about as long as
I've been in the industry. So Rick, give your background and then we're going to
talk about Body Exchange Bakersfield. Sure.
Thanks Pete for having me on. I appreciate being here.
(01:29):
Yeah, I was doing a little digging when we
started talking and yeah, it's been over three decades. Started
and got my first personal training certification back in
the early 1990s, 1992
to be exact, shortly after that. Started into the industry
with Family Fitness center way back in
(01:52):
1993, in the mid-90s. Worked my
way up through the organization. Went through the
24 Hour Fitness acquisition in the late 90s,
early 2000s. Learned a lot through that
experience. At the time I was still on the fitness side of the
business. I was part of the, I was a
(02:15):
VP of the Fitness Department in our region
and then left 24
Hour Fitness for a short time, went to Knoxville,
Tennessee and worked for a startup brand there
and helped them start from the ground up. Spent a few
years there and then we had the idea of
(02:38):
Body Exchange. Didn't start out right at, you
know, what it is today, but we, we came
to an idea of what we wanted to try to do in the
industry and then that brought us back to Bakersfield
and here we are. So you and John Ovanesian,
you guys been working together since the 24 hour days?
(03:02):
Yeah, I was in Las Vegas running the fitness side of
things. They brought John to Las
Vegas from Bakersfield at the time. So there's,
you know, I could see the connection why we're in Bakersfield today.
And John came up to Bakersfield and he and I
partnered together there to run all of the 24
(03:24):
hour fitness clubs. I believe at the time
John came up, we had four or five locations there. We grew it
to 1224 Hour
Fitness locations. It was an area of rapid growth for them. And, and
we did a lot of the expansion with them there. And yeah,
we worked together for, for a long time. I'd say, you know,
(03:48):
many of those 30 years I've been, you know, alongside John.
And then when you went to, to Knoxville and I used to tour those clubs
at the Rush back in the day, that was also another 24 hour,
you know, diaspora of, of executives that went and started up a lot
of these new concepts. You know, the thing I loved about the Rush
is that they really leaned into entertainment and they leaned
(04:10):
into other modalities. Remember, you had a rock climbing wall and you had some other
interesting things inside of those clubs. You know, so as you kind of like
moved from the fitness side of the industry to the operations side
to the experience side, you know, what are some of the things that, that
you, you'd say like Body Exchange now understands about,
you know, what you're delivering and you really being on the pulse
(04:33):
of, you know, members wanting more strength. Maybe not as much Group X after
Covid, what have you kind of morphed the model because you're running, you
know, five clubs that are fully entrenched in the market?
Yeah. You know, we've tried to learn
all along the way, you know, from the early days of us
learning from pioneers like Ray Wilson. You know, I mean,
(04:56):
there's, there's dialogue in our meetings today with
our staff that we, we still, we talk about, you know, things
that Ray taught us way, way back in the early 90s. And then
when we went to Knoxville, yeah, it was,
it was completely different. You know, it was, it was
entertaining. You know, there's a wind tunnel and you know,
(05:19):
being on the fitness side, you know, you walk into that at first and it's
like, why do we have a wind tunnel and a batting cage in our gym?
You know, but it worked. And you know, what we,
what we pulled away from that is
that's, I think the time where the industry moved towards it was
really about the member experience, you know, what kind of
(05:41):
experience. And really fitness is about, you
know, endorphins too. Right? So what's the endorphin
change that Happens when somebody walks in the door to the
time they finish their workout, and how do they feel different? And I
think that's what the rush was really pioneering is,
hey, it's get them in the building and change their mindset,
(06:04):
change their endorphin levels, get them excited, and they'll keep
coming back. And so as we've
transitioned to what we are today, I think we've pulled pieces of
all of those things and try to make it work for
our market and our members and create that kind of
experience for them from the time they come in to the time they leave.
(06:27):
The interesting part, I think, about the industry now is that
there's more strength equipment on the floor. There's less. These
kids really don't resonate into Jones. And
to get into a group exercise class, they really want, I want Olympic squat
machines. I want pec fly machines. I want dumbbells. I want
kettle bells. And it seems like what you guys did
(06:50):
from COVID onward is basically said, hey, look, I'm, I'm, I'm
going to, you know, pot commit to just saying, like, what do people want here?
How can I repurpose my square footage? You know, you took out your kids club,
right? You took out your group exercise. You said, look, I'm going to provide you
as much strength area, equipment and enough, you know, requisite
cardio to, to, to, you know, placate the members
(07:12):
that still want to just run on a treadmill or what have you. So, like
to talk about how that pivot happened, how,
like, much easier it is to operate the business right now and,
you know, how you feel about where you guys are positioned. That's a loaded question,
Rick. Sure.
Yeah, great question. And, you know,
(07:35):
we learned a lot about ourselves,
as I think many people did during, you know, the pandemic and
Covid. We, we came out of that
and as many companies did, we had to look
inward and look at our identity and, you know, who are we?
You know, what. What can we be? What does
(07:57):
the community tell us they want? And,
you know, the. The average age demographic,
you know, of our members is between the ages of 16 and
36. And predominantly
their major focus is strength training,
free weights. Of course,
(08:19):
there wasn't Internet and, you know,
infomercials and podcasts to the levels that they are today,
back when I started in the early 90s. Right. So they're
influenced by, hey, I'm gonna do this quick workout.
I'm gonna show it to you. And most of that's coming into play
because that's that's meeting where people. Meeting those
(08:42):
people where they're at, you know. And so what we learned
was, hey, we are
the place where everybody trains. And right there
in 2021, we picked that tagline
up and we said, hey, we are where everybody
trains. And we're going to put in more squat racks than
(09:05):
any other competitor in town. We're going to serve the people
in the ways that they want to be served. We're going to
repurpose the square footage of our
facility, and we'll use, you know, just one group
exercise room as an example. You know, you might have,
you know, we were doing really well with group fitness, and in the early
(09:26):
parts of it, you know, we might have four or five classes a day in
that room. And in the rest of the time, you got around
3,000 square foot just sitting there when people go in and stretch
or whatever they do. But now you can walk into
any one of our gyms today, and that same square
footage, that same space, it's got members
(09:47):
using every square inch of that area to do
their strength training, their Olympic lifts.
You know, they're, they're deadlifting their
everything. You know, anything that they want to do, they're able to.
And, and that's, that's really who we are where, where
everybody trains.
(10:10):
This is Pete Moore. I want to let you in on a little secret. There's
this company called Promotion Vault. And what they do is they give out rewards
from retailers that allow you to incentivize your members
without having to do zero down and one month free or
giving away shakes or giving away T shirts. What you want to do is
build a rewards program that lasts, that people value,
(10:33):
and that doesn't discount your own products and services. So here's the
deal. There's something called Rewards Vault. The Rewards Vault is going
to allow a member to set up their own profile. They are going
to answer questions, you are going to get those answers, you're going to be able
to target those members, and you're going to reward them inside your club,
inside your spa, and outside of the club and outside of the
(10:55):
spa to get them to become loyal, to get them to pay their
monthly dues and to be rewarded properly for the
actions. A lot of companies are cutting back on rewards. You shouldn't be
Promotion Vault, your answer, trust me, this is real
foreign. So from.
From a standpoint of, of the competition that's been in and out of the market,
(11:17):
you know, I know you guys backfilled some of the old 24 hour because you
knew the market. Really? Well, you kind of have the. The market,
you know, I'd say, quote, unquote, like, you know, surrounded with body
exchange into. In main areas. Where do you see the growth
happening in. In Bakersfield? What's going on in Bakersfield? I know you got a.
A pretty good AAA hockey team that's affiliated with the Oilers, which is
(11:40):
the Condors. When I traveled through that area that's
like on the southwest corridor down by Allen.
Looks like there was a lot of rooftops, which obviously everybody loves from a
residential health club scenario. And then you've
got Planet and you've got in shape. But
I'd say the market isn't really over clubbed to the point of
(12:02):
some of the other markets that we've seen. How do you feel about
competition and how do you feel about the growth of Bakersfield?
Well, we feel good. You know, we love the market. We've been
here for over 20 years.
There's a lot of growth here. And, you know, one thing about
Bakersfield that's stood the test of time is it's
(12:26):
desirable for the fact that it's a very
affordable place for people to live. In California,
you know, there's over 420,000 people here.
The home prices remain, you know, affordable,
and it's. It's seeing an increase in
(12:47):
people moving here. It's. It's second in the Central
Valley, only second to Fresno, which is a major
city, I think the third largest city in the state.
So there's a lot of growth opportunities here. And it's evident
because in some of those areas that you described,
you know, there's national and regional, you know, brands coming in
(13:10):
to support the market. National change, you
know, big, big target. You know, shopping
centers are coming in, more Costcos and different things
like that. And, you know, as the
residential grows, then the retail side of it grows. And so when you can
see that retail growth, you know, that the residential
(13:32):
is. Is supporting it. So, yeah, there, there's definitely, you
know, some opportunity here in the market.
You know, in the northeast part of town, there's some major development
planned out there from a retail perspective. In the central
area, there's a major retail development, you
know, scheduled for Rosedale highway and Coffee Road, which
(13:55):
is right in the heart of town. You just
already mentioned in the Southwest, there's a lot going on
there that's probably the most vibrant, you know, area. You know,
there's the major. One of the new major east,
west, you know, corridors is on Panama Lane. And
there's a lot of opportunity And a lot of growth going on out there and,
(14:18):
and those major retailers that we talked about earlier,
they're slated to be on that road in a few different
areas that we're aware of. So, yeah, there's a great opportunity
and we don't see it slowing down again because it is an
affordable place for people to come to and live.
And it also, the demographics support that because
(14:41):
the average age is between the ages of, you know,
28 and 32. And there's a lot of the
population at the, under the age of 18.
And that's, you know, tells us that, you know, there's a lot
of about 30% of the population 18 and under.
There's going to be a lot of people here for a long time. Yeah, it
(15:04):
seems like you guys are well positioned to, you know, strength, obviously,
is where most of these kids are going to. They're on their,
their phones and they're doing their own directed workouts. And I think there's like
a, a new wave of, you know, what people
like, whether it's like bodybuilding or whether it's elite, you know, being an elite
athlete. I think high school sports. When I was There, you know,
(15:27):
25, 30 years ago, we knew nothing about nutrition. We knew very
little about, you know, periodization schedules and, and reps. I wish I'd
go back right now and like, train as a, as a high school athlete. I
think you'd have a lot better result. Even though I thought I was pretty good
at the time, but not, not as good as I could have been. You know,
when you take a look at, you know, 24 hour kind of leaving the
(15:48):
market, obviously they had a number of reasons why,
you know, they, they didn't have the capital to reinvest
into their locations. And that was mostly because of their balance
sheet and deals that got done with private equity funds that put a lot of
debt on the business that then had to pay interest instead of putting capital back
into the business. I know you and John have run a very clean
(16:09):
operation. I walked around there, I didn't see any, that there was not like
one piece of equipment. I'm like, hey, Rick, I think you might want to put
some, like, new upholstery on this thing. Like, there was no,
you know, there was no equipment out of order, you know,
so as you kind of look at and say, hey, we've run this
business for over 20 years and we've reinvested
(16:30):
into the business where we needed to. What do
people say in the market, you know, about body exchange versus Some of
the, you know, clubs that maybe don't have as much TLC or
local ownership and the fact that you're in the clubs, you know,
every week and live there and you know, have, have that kind of like personal
touch point that other clubs in national change just
(16:53):
don't really have that, that, you know, capability or like
the desire to care as much.
Sure. I'm going to break that into
two answers. I think the first thing is
when we started out to do this, we had a
(17:14):
very clear vision of how we wanted to build the business.
We wanted to build our company without debt. And of course,
as new entrepreneurs and starting out,
we did take on some initial debt. But as
fast as we possibly could, we paid off and
paid down all of our debt. When we
(17:37):
started opening, you know, we opened up roughly 10
locations in a 10 year span, you know,
2003 to 2013.
And when we were doing this, we were funding all of
our own construction, we were paying cash for all of our equipment.
We were building our company. So
(17:58):
that way for the long haul, we were built to
succeed. And now when we need to
have a capital call to put some new equipment in or do something,
it's readily there and available for us to be able to do that.
And so we're definitely not a leveraged company. And I
think that's something that's really important to understand
(18:22):
because as you mentioned, with 24 hour, once you get
leverage, then you're, you know,
there's restrictions to that. We've never had those kinds
of restrictions because of the foundation and how we built it.
So with that said, you know, like, you know, back a few
years ago when we decided, hey, you know, we're going to kind of rebrand ourselves
(18:44):
a little bit, we're going to reinvest into the areas of the
club that the market and the, the demographic is telling
us that they want, which is the strength, the
ability to do, you know,
powerlifting and different things within a commercial gym.
We were able to easily do that, make those decisions and
(19:07):
we stand out for that. You know, we are local.
I'm in our gyms every week, every day.
At some point we see and
hear from our customers. And if it makes business
sense and it creates a win for the customer,
(19:28):
a win for the, you know, company, then, then we make
decisions to make those things happen.
This is Pete Moore. Here's the last tip for you of the podcast.
We are partnered up with a company called higher dose
higherdose.com they are the leader in
workout recovery products, infrared technology,
(19:51):
LED light masks, neck enhancers and
other products such as PEMF mats and sauna
blankets. If you have not gotten on the workout
recovery train yet, your time and your stop
is now. You got to get these products in there before these workout
recovery and spas end up saturating your market.
(20:12):
Having your members walk out of the club and going into one of their locations
for 200 bucks per month where they're paying 39 to
you. Let's become an expert in workout recovery. If we
are already an authority in workouts, higher dose,
Check it Out is a wholesale code and we look
forward to helping you augment your products and services
(20:34):
to meet the demands of your members. And hey, let's get people
happy, healthy and sweating and the recovery should be
just as good as the workout.
There's a two, two points that, you know, came out to me
as, as I was touring with you guys on my last trip out to California.
(20:55):
One, you guys are on ABC Fitness, right? So a lot of the industry benefits
from other clubs being on the, on the same software.
One of the things that, that was interesting that you guys made as a strategic
move was to say, you know, we did personal training before, but we're not doing
it now. Obviously your clubs could potentially do personal training if you
wanted to. What's been the, what's been the
(21:17):
shift there and thinking and then, you know, if you decided to
greenlight that again, you know, what, what kind of success did you have in the
past from a number of sessions or you know, revenue per
club that, that you could look at if you wanted to kind
of plug that back in? Sure.
Well, you know, as you mentioned, you know, post Covid, there
(21:39):
was, you know, a bit of a shift, you know, and
we believe that that shift is a
lot of people learned how to use technology
to do self guided workouts, self guided
programming. I won't get too far into it
(21:59):
but you know, you talk about today's time and you talk about AI, you
know, getting involved in, you know, in workouts and
things like that. So
what we've decided is that if
we're, if we're in a market
that a lot of people are using our strength, they're
(22:22):
doing self guided workouts. It's not to say that they
don't need help with inside the gym and we
have our staff go through a
training of sorts to understand how to onboard a new
member, take them through proper workouts, get
them integrated into the facility and
(22:45):
always be there as a resource for our members
to be able to succeed
within Their program. So that's the current.
That's what we, you know, what we've adopted as of, as of now
post Covid prior,
we had the full gamut of, you know, personal training
(23:08):
going. We had fitness managers within each facility
running the department, doing a majority of the,
you know, personal training package sales.
We had a district fitness manager that was overseeing, you
know, the multitude of clubs that we had at whatever time that was.
(23:28):
So if we were to be able
to find the right mix of
talent in terms of, you know, a district fitness
manager type person, you know, fitness
managers that can hire, recruit and train
personal trainers on a regular basis, and we could
(23:51):
do it. Well, there's no doubt that I feel like we could
go back to, you know, the years before when we were
generating about $100,000 a month in personal training
revenue and we evaluated our
personal training revenue based on
actual cash. We didn't do contract value
(24:13):
or anything like that. So, you know, there are some companies out there
that say, hey, you know, we do X dollars in, in personal
training revenue, but they're doing contract value, which, you know,
sometimes skews the number just a little bit.
Yeah, yeah, you just writing, you should just writing packages for the future that
hopefully you collect. And hopefully they did the sessions. Actually.
(24:38):
It was always, yeah, yeah. And then John
owns for the five pieces of the real estate. So you, you got a lot
of flexibility in what you could do inside of the locations as well, which is,
you know, not common in this, in this space where
you're, you're kicking up against a landlord or demolition
clause or something. You know, if somebody's going in. I just had a situation
(24:59):
where a competitor came into a shopping center
and they like, notified the tenant after
construction started. Like, hold on a second. I got an exclusive on this
property. Like, what do you, what are you doing putting this other fitness guy in
there? Like, it's not allowed as part of lease. Oh, like, what will you
pay us to let us do that? So how having. Having the ability to
(25:21):
have this, like, affiliated real estate entity,
you know, I think has been highly beneficial. It looks like you got some room
to expand if you want to do some things in the outdoor area as
well. I saw some expansion and parking, obviously, is not an issue at all.
So just the last question for you, you know, if you were to say,
hey, Pete, I'm going to go build another five locations over the next five years,
(25:44):
you know, if that was a desire for you and your management team,
you know, we talked about probably filling in a couple locations in,
in Bakersfield where, you know, you can follow the work of a, of a
Target in Costco. I used to say that back in the day. I'm like, do
we really need to do a research report here and pay like a lot of
money to figure out where the real estate development is or can we just go
like across street or next door to the Target? Like they obviously did the work
(26:07):
and figured out like, hey, I could do $100 million, you know, merchandising
store here, maybe my health club might work if I can get a, you know,
if I get an out parcel next to them. And then when we met, you
talked to us about at some point you were in Ventura. But what are some
of the cities if you want to just like tag for us here as
you know, potentially where body exchange could and should go within
(26:30):
like a 90 mile radius of like maintaining the culture and maintaining the
DNA of the business.
Sure. So outside of our immediate area,
like you alluded to there, there are some, some key
positional pieces that you could look at here locally for,
(26:50):
you know, you know, maybe two or three, you know,
opportunities outside of
Bakersfield. There's, there's areas
south of here, you know, Palmdale, Lancaster area
is a very similar type
area, similar type demographic
(27:11):
landscape to Bakersfield in terms of
affordability, in demographics and things of that
nature. So there's definitely opportunity there.
If you look north of us,
there's a lot of little
areas, key, you know, mid sized cities,
(27:34):
opportunities between here and Fresno.
And then, you know, you could also look, you know, to the west as you
start going to what they call out here the central coast.
Again, there's, there's
cities that would support,
you know, a mid sized gym,
(27:57):
you know, the 15,000 to 25,000
square foot type, you know, facility.
And yeah, there's, there's definitely some opportunity as you go to
the central coast, some smaller areas as you go up towards
Fresno and within that 90 mile range,
for sure, Palmdale, Lancaster, which is south of us,
(28:20):
that's great. So I see all the baseballs behind you. So the people
on the, who are listening to the audio here and not on the video, there's
a, there's a nice baseball collage behind Rick and some
glass casing. I went to the Giant game last night against the
Eagles and Doc Gooden, Dwight Gooden sat in front of me
who is an all time Mets pitcher back in the day, Cy
(28:42):
Young award winner and I had the pleasure
of like high fiving him on every Giants touchdown
and score and big hit interception.
So it was a pretty wild, like, bucket list event. One to beat the
Eagles after five years, but also to have Doc good. And I felt like I
was like, I like, invited him to come, like, hang out and watch the game
(29:03):
together. So it seems like. I know you're a big baseball fan,
so this is probably a good time of year for you. Yeah,
it's exciting that, you know, playoffs are here and
it's a fun time to watch the game. And, you know, it's
funny, you alluded to, you know, the athletes that we thought we were
back when we were young and working out and all of that, and
(29:26):
then you look at the common day athlete and, you
know, they just have all these advantages because there's a lot more
research going into the type of training they
need to do, the periodization of the
training that they do, the nutritional side of what they do,
and, you know, all the methods that they have today
(29:49):
to. To access, you know, the
best of the best type of training. And then you watch and perform on the
field and it's. It's obvious that
they're. They're just. They're built different than. Than
in, you know, many, many years ago. So, yeah, I
mean, I think the. The athlete of today gets to be like an iPhone, like,
(30:11):
17 and yeah, we're playing with like a iPhone 3, you know,
skeletal structure right now that has its wounds from. From not
recovering properly so. Well, look, man, it was great to have you on the show.
Thanks again for all your contributions to the. To the HALO sector at large.
Look forward to seeing how you guys progress, and congrats to you and
John and Laurie and crew for what you guys have built. It's a. It's a
(30:33):
great story, and it's also bringing a lot of value to, you know,
thousands of people in Bakersfield that if you guys weren't there, you know, they might
not be. They might not be doing what they're doing, you know, get results. So
that starts at the city level and it kind of grows up from
there. So thanks for coming on and good to see you again and go
Halo. I appreciate it. Thank you, Pete.
(31:15):
Sam,
(31:40):
sa.
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