UFC Gym seeing more consumer demand amid fitness center rebound: CEO

UFC GYM CEO Adam Sedlack joins Yahoo Finance Live to discuss the fitness industry, consumer demand, and the outlook for growth amid COVID-19.

Video Transcript

[MUSIC PLAYING] BRIAN SOZZI: Welcome back. As part of our America Back in Business series sponsored by Straight Talk Wireless, we are zooming in on the fitness industry’s recovery from the COVID-19 pandemic. UFC Gym has more than 150 locations open throughout 37 countries, with over 800 locations in development globally. Joining us now is UFC Gym CEO Adam Sedlack. Adam, good to see you here this morning. So give us a state of play on your business compared to– let’s take today compared to the same day pre-pandemic. How is business? How are memberships? ADAM SEDLACK: Yeah, thanks for having me. Listen, the industry has been drastically impacted over the last couple of years. I think in 2020 the industry lost $2 billion. And when you look at as we navigated through COVID, 17% of all gyms closed permanently, and 40% of all members left the industry. And what was thought to happen was that virtual fitness and streaming services would take over. And as we’ve gotten on the other side of COVID, we’ve seen the opposite. We’ve seen more consumer demand than pre-COVID levels. And we’re seeing consumers not only want to transaction into fitness but also want other verticals such as nutrition and recovery services to better arm them for the future in case a pandemic happens again. JULIE HYMAN: And so it’s Julie here. Have you all been adding those kinds of services? I mean, I’m also curious what kinds of pivots you made during the pandemic that are now sticking now that we’re coming out of it. ADAM SEDLACK: Yeah, it’s a good question. First of all, I think there was a lane to enhance vertical. And what we’re seeing now is our members that love brick and mortar also love the vertical to get into the virtual platform when they’re traveling or they just can’t make it into the gym for the day. Yeah, and we doubled down. So what we said was, hey, we know that the pandemic, when you looked at mortality, we knew that it was driven by a smaller or an immune system that had issues. And what creates immune system issues typically can be driven from obesity and from health and fitness. And so we said, how can we continue to enhance the consumer experience to get them to use the gym more, to improve and increase their motivation. So we invested into things like cryotherapy. We invested in a thing, some other fitness verticals and innovations via technology to keep the consumer more engaged to the products so they use it more, get results, and that motivates them to hopefully stay with it long-term. BRIAN SOZZI: Adam, you have UFC in the name. And this is a brand that has absolutely flourished over the past decade. I would say it has hit another gear during the pandemic. How are you looking to bring that experience more into your gyms? ADAM SEDLACK: Well, I mean, listen, first of all, we’re proud of Mr. Dana White and what he did once lockdown happened, right? What did he do? He kept events going. He kept the human spirit alive, the energy alive. And we are planning to do the exact same thing via Dana’s lead, which is to bring an experience to the consumer that allows them to train like a UFC athlete, that allows them not only to get to the best shape of their life, but do it as part of a community. Because what, again, during COVID was exposed was that lack of community, right? So as we’ve been able to bring members back, get them into our fitness funnel, absolutely, we’ve seen incredible results on the other side, meaning reduced customer spend around marketing acquisition and increased marketing investment as they join the facility. JULIE HYMAN: I’m also curious, though, if some people find you– the UFC sort of brand– intimidating in any way and how you guys sort of focus on, as you talk about community, making it sort of a welcoming place as well as an encouraging place, which is what we all want our gyms to be, I think. ADAM SEDLACK: Well, Julie, you’re a fighter, right? And we’re all fighters. We all fight for something, right? Some of us, our fight is obesity. Some of us want to fight to feel better about ourselves. Some of us want to actually fight and get into an octagon. So our job is to make sure we open up that funnel for the consumer no matter what your goal is. If you want to take a Zumba class, you can come into UFC and do it. And you can absolutely do that. If you want to come in and take a boxing class or just work out an equipment, you can do that. But it’s about how you bring consumers together to create the right type of experience so they can hold each other accountable to keep on driving their personal results. And so I think we’ve been able to do that within our gyms domestically and internationally. JULIE HYMAN: See, I only fight with Brian Sozzi on air. That’s [INAUDIBLE]. Yes, I’m sorry, Soz. Go ahead. BRIAN SOZZI: I need to become a member because I got to pick up my fighting game. But I will say– I will ask this, Adam. How many of these gyms will you open this year and then even next year? ADAM SEDLACK: Well, we’re seeing an all-time demand at this point now. So we’re going to start opening one gym per week going forward. And probably as we get into 2023, 2024, you’re going to see that increase to two, three, four gyms per week, just driven by both domestic and international opportunities. Certainly the comeback post-COVID is happening slower on the international side. But domestically, again, It’s a straight up vertical. JULIE HYMAN: And finally, I wanted to ask you, as we ask almost everybody these days, what you’re seeing in terms of shortages. In other words, are you having trouble finding qualified trainers right now? Have those people migrated into different professions? And on the equipment side, are you having trouble sourcing stuff? ADAM SEDLACK: Yes to all of it, right? Supply chains, people chains, I mean, it’s a very unique time to go out there and attract talent. Now, thankfully, for the UFC brand, we’ve been able to get more people into our funnel from a fitness perspective. With 17% of the gyms closing permanently, there are so many passionate people about fitness. And we’re incredibly lucky to have a great team. But certainly the supply chain has created equipment issues and increased costs across the board, which puts pressure on the business. But as long as you stay true to the fundamentals in regards to the value proposition, we’ve been able to navigate through it just fine. BRIAN SOZZI: Well, we wish you the best on the path forward. UFC Gym CEO Adam Sedlack, good to see you. We’ll talk to you soon. ADAM SEDLACK: Thanks for having me. Take care.

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