Like many in the fitness world, CycleBar saw their business flipped upside down when COVID hit. However, thanks to their unique community and the efforts of the franchisees, the company has been to help their studios re-open. I sat down with Trevor Lucas, the president of CycleBar to talk about the future of the exercise industry and what he's learned during the days of COVID.
Dave Knox: What was the situation at CycleBar when Xponential took it over and how did that prepare you for 2020?
Trevor Lucas: When we took over CycleBar, the businesses were struggling. 70% of our franchisees were losing money and we had to pivot very quickly to get them into a good spot. We spent the last three years with our heads down and really grinding. We worked with our franchisees to change out their CRM and POS systems. We switched out their website and their app. We threw a bunch of new tools at them and operating procedures and requirements.
Knox: Did you change anything with the business model during this time and how did that help as COVID hit?
Lucas: A big focus was on moving the business from being more transactional in terms of selling one package that would be 10 rides for a certain dollar amount that didn't renew to go into a recurring model. We pivoted them to selling memberships. Some were doing that when we bought CycleBar, but it wasn't the focus for them. About 30% of the revenue was memberships and by the time COVID hit in March, we were at 70% of our revenue was coming from recurring memberships. So as we fast forward all the way to COVID starting, they're in a much better revenue standpoint.
Knox: You mention the virtual side of the business with GO but CycleBar has really focused on also getting people back into the studio. Why did you focus on that so much if virtual was working well?
GO has become an augmentation to what we are already doing. We have folks that they can only make it in a couple of days a week because our lives have changed a lot with work from home and virtual schooling. So the dynamic of how people interact with us has shifted a bit. We can do class times at times we normally wouldn't do them. But it's also giving the flexibility that, "Hey, if you can't make it in with us, but you have a bike at home, you can ride with us." But I think for us Xpo goes even bigger because there's different pieces of Xponential GO that allow folks, "Hey, if you can't make it into a class, you can still get a workout." That is the power of our eight modalities. I think that just augments their experience if they get bored with cycling. They can try something virtually and see if they like it. It is unlocking access to these other brands that people may not know about yet. We have some new and emerging brands in the rowing and stretching, in yoga, in dance. It's all these different pieces. So it's really exposing those folks to all these different pieces, and I think that helps as well and it makes them a little bit more sticky for us to.
Knox: Whether it is in the studio or virtual, the heart of CycleBar is the instructors. How have you kept that part of the business going?
Lucas: It's a ton of effort. We have an amazing VP of experience, Tevia Celli, who's really been in this business since the beginning. She's created the CycleBar method and the various rides that we do and really her goal is that accessibility. She always says it's for everybody. And our number one goal is just to make people feel good. Through that, she's been able to build this community of instructors. And not only instructors at the studio level, but instructors that we call master instructors, which are ones that help us. They work for the franchisee during the day, and then on the side, they work for us and help build this environment. There is a career path where they can become a master instructor, but in between that, we created a lead instructor role where the lead instructor manages the other instructors within each individual studio. You come in as an instructor, then you move to a role as a lead instructor. And then if you do well and you continue to sustain with the brand and you stand out, then there's a path to a master instructor as well. So folks can make a career out of this, and that's really more than anything is what keeps them engaged with us.
We also have a world-class training program. We use to fly our master instructors all over the country for in-person training. We would fly them out and we would do what we call bootcamps to train folks and we would help recruit and do those kinds of things. But once COVID hit, all of that stopped. It's always a blessing sometimes when different things happen, because from a training standpoint, we had to go virtual and the virtual program that Tevia and her team unlocked is something we'll actually never go back from now because it's so much more successful in the platform that we built on. We went from studios having to recruit and train instructors themselves to a whole virtual training program where there is a set curriculum. We are seeing an 80 to 90% pass success rate through that process. Not only has virtual driven out costs, but we're seeing a better instructor coming through.
Once someone passes through the training, we plug them in with our community. This includes both weekly and monthly calls. But there is also a Facebook community that only our instructors have access to. I don't even have access to it. I've never even seen it. It's a safe environment for them, but it's really where they exchange ideas. The information sharing and the community that they've built online has just been phenomenal. They're all friends. It's amazing. When we did in-person trainings, folks would fly out and they would all find Airbnb's together. It would be one instructor from Florida, one from Idaho and one from Texas, and one from New York. But they all knew each other from this online environment and they all became close. So they would all room together. It was amazing to see that community that was also built. More than anything, that is what keeps our instructors engaged and makes it such a special place.