September 24, 2020

How 305 Fitness Founder Sadie Kurzban Is Pivoting Her Business Model Amid Covid-19 Closures

While hundreds of New York’s boutique fitness studios are still fighting to reopen, one company is resolute to remain shut through the rest of 2020.

“There’s no break even in sight,” says Sadie Kurzban, founder and CEO of 305 Fitness. “At this time, the team and I do not expect to reopen our studio locations before 2021.”

Since August 24, New York State has begun lifting restrictions to allow some gyms to operate at one-third capacity and under specific guidelines, including but not limited to requiring masks during class, upgrading HVAC systems, and allowing for 6-10 feet of social distance in class. Kurzban explains that in an average 305 studio, 10 feet of distance means reducing classes to less than 25% of a normal class size.


“As a business, we cannot cover our usual expenses, plus increased cleaning costs, when we are operating with 25% of a normal class size,” she continues: “We’re not even looking at the 50% break even mark for awhile and we want to preemptively and strategically get ahead of that.” 

Since winning a Stanford business pitch competition in 2011, Kurzban, a Miami native, has signed on investors like Nets star Kevin Durant and celebrity DJ Mark Tiesto. While the fitness brand’s moniker pays homage to the electric nightclub vibes of South Beach, Miami, 305 Fitness is very much a New York-based business with a total of 7 flagship studios across Manhattan. This includes a 5,700 square-foot, two-level studio in Union Square that celebrated a grand opening on February 24, only to shutter on March 12 due to Covid-19.

By April, Kurzban laid off 90% off staff. She continued to offer furloughed workers healthcare and a portion of pay up until August, when officials expressed uncertainty about the future of group fitness classes. “I made the tough call to really brace ourselves,” she says. “We grew this company aggressively into an eight-figure business but now we will take awhile to recover.”

Mayor Bill de Blasio last month announced that while regular city gyms could open on September 2, group fitness studios could not. This mobilized more than 20 companies to form the Boutique Fitness Alliance.

Anne Mahlum, CEO of Solidcore, a workout that focuses on high-intensity strength training, joined the brigade of fitness brands. “We have had 50-plus of our locations open across the country for months and we have had zero instances of Covid spreading in our spaces. This data is powerful,” she says.

With 305 opting to remain shut for the year for financial as well as safety reasons, Kurzban has not joined the alliance. “So many gyms and boutiques are eager to open doors and I understand the feeling of being a small business owner and wanting to reopen… But now is the time to test how strong your community really is.” 

But not all workout concepts are as nimble as 305’s cardio dance workouts. “There are not a lot of options for outside space in New York,” says Solidcore’s Mahlum, “especially since our machines weigh hundreds of pounds and need to be covered if it rains. The humidity is also not good for our machines as it promotes rust.”

And although 305 fans, or self-proclaimed #Fivers, can easily take the equipment-free dance classes online or outdoors, Kurzban agrees exercising al fresco is not enough to sustain its original brick-and-mortar business model. “With overhead, negotiating with landlords and supporting front desk and a cleaning crew for indoors, reopening at a quarter capacity is not a recipe for us to and we can’t continue to lose money on top of enormous loses we’ve already lost.” 

This is why Kurzban is betting on a revenue stream she’s been toying with since early 2020: “Our real big business is certification, so we’re focusing on certifying and empowering individuals in hopes that they can monetize their fitness credentials during this time.”

During the first quarter of 2020, the company was hosting certification programs. Its last training sessions held at its Union Square location in February attracted 75 women from across the country, including one that braved a winter road trip all the way from Los Angeles. The weekend-long program consisted of 8-hour days of rigorous dance as well as business workshops that focused on public speaking, marketing and social-media skills. The live program cost roughly $500, but the digital program launched amid the pandemic costs $190. The company offers scholarships for those who qualify.

So far, the company has certified close to 1000 instructors this year. While this has brought in roughly less than half-a-million dollars in revenue, Kurzban believes she can scale this model and make it a major revenue stream for 305.

“I didn’t know how the energy would translate online,” says Kurzban, “but there are a lot of people out of work, so the ability to do this without equipment or rental space, and lead this fitness movement in a park or in a rooftop at a time when everyone is starving for connection means something.”

The cash-strapped entrepreneur is also training its #Fivers to grow robust followings, and hopefully double-up as free brand evangelists for 305. “Our customer-base of female Millennials can now take this brand and make additional income, which is so empowering and so needed at this time,” says Kurzban.

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