Title: F45 Embraces “Shrinkage” Strategy to Revitalize Struggling Gym Chain
Once considered the fastest growing fitness empire, F45 is now implementing a new strategy to revive its struggling Australian-born gym chain. F45’s newly appointed global CEO, Tom Dowd, believes that the closure of fitness studios and the recent share price downfall will ultimately strengthen the company’s system. This article delves into F45’s decision to embrace the concept of “shrinkage” and the efforts made to reposition the brand for future growth.
F45’s Changing Fortunes
Founded in 2012 with a single gym in Sydney, F45 rapidly expanded and had reached an impressive milestone of 1,555 studios and 2,801 franchises across 63 countries by mid-2021. The company aimed to have 23,000 studios worldwide. However, a series of setbacks, including a catastrophic share price decline, resulted in the resignation of co-founder Adam Gilchrist as chief executive.
The introduction of a new CEO, Tom Dowd, in March this year offered a glimmer of hope for F45. Dowd, a business partner and golfing buddy of actor Mark Wahlberg, emphasized the need for the company to shrink in order to grow. While acknowledging the closure of several gyms in Sydney, Dowd argued that this would add value to existing studios and revitalize the brand.
The New Strategy: “Shrink to Grow”
Dowd explained that one of F45’s key strategies was to avoid over-saturation in the market. By closing unproductive locations and focusing on strengthening existing studios, he believes the entire system will become stronger. The company’s real estate strategy now centers around preventing oversupply and maintaining operational success across the franchise network.
Brand Reinforcement and Partnerships
To spark renewed interest and attract potential customers, F45 has implemented innovative strategies under Wahlberg’s brand management. One notable initiative is the introduction of “Mark Wahlberg weeks,” during which special training sessions are offered to non-F45 members free of charge. This collaborative effort aims to showcase the unique experience that F45 offers and entice individuals to become regular gym-goers.
New F45 CEO Tom Dowd
Tom Dowd, a successful entrepreneur from Pittsburgh, Pennsylvania, has an established partnership with Mark Wahlberg, collaborating on various ventures such as MW/TD Inspired, Performance Inspired Nutrition, and the Wahlburgers restaurant group. Dowd’s appointment as CEO of F45 came after securing a $134 million debt facility to reorganize the company’s finances. Dowd aims to refine F45’s go-forward business strategy and create sustainable growth for franchisees, employees, and shareholders.
Opulent Group Closure
F45’s largest franchisee, The Opulent Group, recently announced the closure of several gyms in Sydney. Former landlords and employees claim they are owed money, and some studios have resorted to selling equipment on platforms like Facebook Marketplace to recoup their investments. Despite these setbacks, F45 remains committed to supporting its franchise network and ensuring long-term success for the entire system.
F45’s decision to embrace shrinkage and refocus on strengthening existing studios reflects the company’s dedication to reinvigorating its brand. With Tom Dowd at the helm and the continued support of actor Mark Wahlberg, F45 is determined to restore its former glory as a world-leading fitness chain. While challenges persist, the company’s commitment to sustainable growth and value creation remains unwavering.