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Wednesday, Jun 29, 2022

OC’s Boutique Fitness Whisperer

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Anthony Geisler has built a lean, mean and well-oiled boutique fitness growth machine.
The founder and CEO of Irvine-based Xponential Fitness LLC has been on a roll, expanding its portfolio of nine cycling, rowing, stretching and other increasingly popular exercise brands.

Xponential has grown to more than 1,750 locations in four years, with 2020 systemwide sales topping $435 million through a combination of franchising and acquisitions, reaching a fever pitch that’s now prompted murmurs of a possible IPO this year.

The company is not commenting on potential plans for going public, which news reports indicate could value the company around $1.3 billion, but Xponential is continuing to swell.

Its most recent acquisition of New York-based Rumble in March, which brought into the fold a boxing concept with heavy celebrity co-signs that include David Beckham, Justin Bieber and Kendall Jenner, among others, is not expected to be Xponential’s last by a long shot.

Geisler confirmed to the Business Journal another acquisition this year is “definitely a possibility.”

“We’ll see how it goes in the next few weeks or months,” the CEO said. “We’re not about to close on any of them, but we’re out in the market looking for deals that make sense. Still, I think it’s a possibility we could find one of those this year.”

Xponential franchises include the Club Pilates, CycleBar, StretchLab, Row House, AKT, YogaSix, Pure Barre and Stride fitness concepts.

Boxing Roots

Geisler, who was one of five entrepreneurs honored May 6 with an Excellence in Entrepreneurship Award by the Business Journal, is a veteran of the fitness industry.

He started with LA Boxing, making the acquisition of Rumble—reported in other media outlets to be in the $300 million range—particularly apt for the executive.

“It’s a lot of fun to come full circle. I started off in boxing because I had a love for it as a modality,” Geisler said. “Over the past year, I started watching boxing again. I started to really enjoy it.”

He sold that business at the end of 2012 to UFC Gym in Newport Beach. He bought Club Pilates, then based in San Diego, in 2015 when it was only half a dozen locations. Today, it totals more than 600 locations. Xpo
nential has since gotten into numerous other up-and-coming fitness offerings.
The business is backed by Geisler and investment firm Snapdragon Capital Partners. 

Achieving Scale

The growth of Xponential’s portfolio brands has happened at breakneck speed, with Geisler and team knowing how to quickly identify winners in the market ripe for expansion.  

“That’s what Xponential does well and that’s what we’ve been able to prove is we can take these brands and scale them across the U.S.,” Geisler said.

In the case of Rumble, it had a companywide staff of about 100 with 13 locations going on 14 in major markets such as San Francisco, Philadelphia and Chicago at the time of its acquisition. Xponential is taking over 3,000 to 4,000-square-foot spaces grossing an average of $2.5 million to $3 million in revenue.

Management thinks it can grow the business moving forward with locations using a smaller footprint, 2,000 square feet or so, likely grossing less revenue than the larger locations but still expected to “generate a great return,” Geisler said.

Franchised Rumble locations are expected to begin opening towards the end of this year.

Future acquisitions will fill holes in the portfolio of what Xponential does not already offer. In other words, there would be no doubling up of workouts so as not to cannibalize on the existing business of franchisees, Geisler confirmed.

Growth Focus

This year, the company’s YogaSix business is on course to open the most locations as they sold the most, about 500, in 2019 and have so far opened 100.

“There’s a backlog of 400 to get open and that is the biggest backlog of any of the brands,” Geisler said. “So, if 2020 hadn’t happened, YogaSix probably would have opened a lot more.”

Xponential came out of 2020 in better shape than some companies.

The company’s franchisees held some 250 grand openings last year. All locations have reopened since the coronavirus  shutdowns. The company also spent 2020 continuing to develop its on-demand and livestream offerings, now able to accommodate a growing consumer base not yet ready or now uninterested to go back inside a gym.

The results set Xponential up for what is likely to be another blowout year, exceeding growth from 2020 assuming no setbacks occur in the course of the vaccine rollout.

“This world is a little hard to predict at this point, but all things staying constant, this year should be better than last year,” Geisler said. “We’re always focused on the same thing, which is growing our business, and the only way for us to grow our business is to grow the franchisees’ business.”

Xponential’s strategy remains a lean but focused one: grow franchisee revenue and expand locations.

“It’s pretty crazy [that] we were able to never close permanently any of our locations, so we actually came out of the pandemic with more open stores than we went into it,” Geisler said.

“I don’t know any retailer that was able to open 250 locations in 2020, especially a retailer like us that was part of an industry that was shut down. We’re very proud of that.”

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