Past Issues

The business of fitness and wellness.

Xponential’s Next Act


According to Anthony Geisler, CEO of Xponential Fitness, the company’s acquisition spree is over, saying “that’s it for now.”

Starting in 2015 with the purchase of Club Pilates, Geisler and Xponential have been hard at work building a portfolio of successful boutique fitness studios. In the time since, the company added seven concepts, including CycleBar, StretchLab, Row House, AKT, YogaSix, Stride, and Pure Barre. Now, with eight brands under the Xponential banner, the focus is shifting from scooping up studios to setting up franchises the world over. In Geisler’s words, “we’ll expand all of our eight brands internationally, but we’re not looking at any more acquisitions.” 

Given Geisler’s previous experience as the owner of LA Boxing Club, where he scaled the business to nearly 200 locations before selling to UFC GYM, onlookers (including me) speculated that he might get back into boxing. But Geisler shot that idea down. Given the number of studios in the mix, including iLoveKickboxing, UFC GYM, TITLE Boxing Club, 9Round Fitness, CKO Kickboxing, EverybodyFights, Mayweather Boxing + Fitness, and others, there wasn’t an opportunity to create a truly differentiated concept or value proposition. 

The latter two points are essential to Xponential’s winning formula. “Xponential wasn’t ever intended to cover all modalities,” Geisler said. Adding, “I want to be the best and biggest franchised brand in each area – I don’t want to go into a market and be number two.” 

Looking at the studio landscape, this rationale checks out. Take Orangetheory Fitness for example. Having already signed more than 1,000 leases for prime locations, the studio is likely gaining exclusivity on HIIT training in the shopping centers and developments they’re entering. So, instead of trying to create another Orangetheory and going head-to-head on HIIT studios, Geisler selected concepts that could define a category, saying “I can go in next door to [Orangetheory] with a rowing brand or a running brand.”

If you look at SoulCycle’s expansion curve, in my opinion, it’s over. They can’t put more locations in Manhattan, Chicago, Seattle, Los Angeles, Dallas. They’re done – and that’s why the business today is worth less money than it was three years ago. There’s no more growth, nobody [can buy] SoulCycle and make money...” 
— Anthony Geisler, Xponential Fitness CEO

Xponential doesn’t want to compete on head-on with a specific concept, and it’s also true that they aren’t interested in competing for certain cities. While Geisler is willing to concede that SoulCycle and Flywheel may be better known than Xponential-owned CycleBar, he’s quick to point out that CycleBar has 50% more locations than SoulCycle and Flywheel combined. 

However, in Geisler’s opinion, SoulCycle and Flywheel erred on two fronts: First, by making their product too expensive, they priced out operators and customers in smaller markets. At the same time, these studios also maxed out their presence in larger cities. Meanwhile, Xponential positioned itself to serve an entire segment of entrepreneurs and exercisers in cities like Louisville, Kentucky, who are clamoring to open or work out at SoulCycle or CorePower Yoga but don’t have access. CycleBar, on the other hand, is accessible for both parties. 

So, if everything goes according to plan, what’s next for Xponential Fitness? According to Geisler, over the next five years, each of their eight concepts will reach more than 900 locations individually. Over the same period, Geisler expects boutique studios “to crush” big-box gyms as Xponential becomes the leader in the boutique space. As Geisler concluded, “I’m not aware of anyone with more locations or modalities than us even now, nor do I foresee anyone being able to duplicate what we’re doing.”

Headlines & Happenings

🚳 Back Pedal  

Last week, we looked at Peloton’s legal troubles. To catch you up, the representative for nine musicians, including Rihanna, Justin Timberlake, Lady Gaga, Bruno Mars, and Ed Sheeran, filed a $150M lawsuit claiming that Peloton is using unlicensed music in its workout videos. According to the suit, the company is using more than 1,000 unlicensed songs. 

In response to the suit, Peloton’s CEO John Foley notified members that any classes featuring the artists mentioned in the lawsuit would no longer be available. As the workouts were removed from the platform, the criticism piled up. Some Peloton members took to Reddit, where they voiced their dissatisfaction and pointed out that the company should have known better. Shedding light on the magnitude of the problem, some members claimed that while more than half of the workouts they’d completed still remained on the platform, much of their ride history had been gouged, removed for copyright issues. 

Seizing on the moment, David Israelite, CEO of the National Music Publishers' Association, told CBS Money Watch: “Removing music that hasn't been properly licensed for years is too little and too late, and proves that Peloton should not have offered such music in the first place.” 

As Peloton seeks to minimize the damage, the fallout continues. We’ll keep you posted on any new developments.

🐄 “Milk” Money

Big dairy has a big problem: we’re drinking every kind of milk besides the real thing. From nuts to oats and soy to coconuts, consumers are dropping dairy in favor of plant-based alternatives. As a result, sales of dairy milk plummeted by $1.1B in 2018, sliding from $14.7B in net sales for 2017 to $13.6B.

But one industry’s slump is another's surge. In this case, demand for dairy alternatives is soaring. Currently valued at $17.3B, the global dairy alternatives marketing is expected to reach $29.6B by 2023. Vying for the chance to disrupt the dairy industry and capitalize on the shift in consumer preferences, a growing list of startups and investors have hit the scene, all jockeying for space on the shelves at your local grocery store. 

Setting the stage for the industry shake-up, Danone acquired plant-based dairy producer WhiteWave Foods—including Silk and So Delicious Dairy Free—in 2017 for $12B. In 2018, Dean Foods picked up Good Karma Foods, makers of flaxseed-based milk and yogurt alternatives, for an undisclosed sum. Meanwhile, Califia Farms and Ripple Foods, makers of almond-, oat-, and pea-based beverages, raised $115M and $108M, respectively. Keep watch as the industry is reshaped by consolidation, funding rounds, and startups out to redefine “milk” as we know it.

🔮 What Isn’t Wellness?

In Silicon Valley circles, there’s a belief that “software is eating the world.” Now, in a similar fashion, wellness is gobbling up everything. From beauty products and self-care to supplements, boutique studios, and even healthcare, everyone wants in on the wellness boom.

The most recent example? Mystical services. Following the path paved by Goop, the emblem of pseudoscience, daily horoscopes, psychics, and tarot card readings attracted some $2B in consumer spending last year. And that’s just the beginning. By co-opting aspects of the broader wellness economy, astrological reading apps like Sanctuary are remaking Miss Cleo for a millennial audience. By claiming to alleviate anxiety in stressful world, these companies hope to secure a spot on the wellness spectrum somewhere between crystals and vampire repellent. 

“[Astrology is] ...a way of filtering and working through all the chaos in the world.”
— Ross Clark, Sanctuary co-founder and CEO

Will it work? Yes and no. While companies like Sanctuary are sure to make a buck by pitching their product as wellness-adjacent, mystical services are unlikely to deliver on any of their actual claims... because how could they? Even then, they’ll have executed the wellness playbook perfectly — brand is everything, results may very.

💰 Money Moves


Centre Partners acquired a majority stake in One World Fitness PFF — operator of 18 Planet Fitness gyms across Philadelphia and New Jersey.

Empowered Education, Inc. secured $8M in Series A funding from Rethink Education for its online training platform for wellness coaches and health practitioners.

Singapore has allocated $106M for food security initiatives, including investments in sustainable urban food production, tropical aquaculture, urban agriculture, and advanced biotech-based protein production. 

Elvie, a health and lifestyle brand developing smart technology for women, raised $42M in Series B funding.

TerViva, an agriculture technology company commercializing the protein-rich pongamia trees for the supply of plant protein, vegetable oil, and biofuel, raised an additional $20M in the first close of its Series D funding.

Xealth, a software that allows medical practitioners to prescribe digital health tools remotely, landed $11M in Series A financing.

Balanx raised more than $350K on Indiegogo for a whole-body training suit made with electric muscle stimulation technology that, according to the company, produces more effective workouts.

NextGen Jane, a reproductive health technology company, closed $9M in Series A funding. 

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