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305 Fitness reopens all studios

Sadie Kurzban, Founder & CEO of 305 Fitness, joined Yahoo Finance Live to discuss the reopening of all the company's studios and her outlook for the fitness industry.

Video Transcript

SEANA SMITH: Let's stick with athletics, let's stick with fitness. We're going to talk about boutique fitness studios reopening across the country right now, as more states relax their COVID restrictions. For that, we want to bring in Sadie Kurzban, the founder and CEO of 305 Fitness. And Sadie, it's a big day for you. You're reopening your studios today after months and months and months of being shut down. What is the reopening process been like for you? And I guess, talk to us just about how you've gone about rehiring some of your workers.

SADIE KURZBAN: Well, I am so grateful to the team that's behind me. They are just kicking butt at every turn. It has been quite an ordeal to reopen. We're obviously enthusiastic and so excited to get back. But as you can likely surmise, glass half full glasses don't pay the bills. So right now, we are still limited at 33% capacity. We have, of course, masks and temperature checks and plenty of space between people. But with that reduced capacity, things are you know, just getting back, not quite at where we were before, just getting back.

We have seen demand be super strong. And in terms of the reopening so far, again, the team behind me, incredible, incredible team. But they have been doing everything under the sun. There are so many rules and regulations. There's a lot of new procedures we had to put into place. Labor-wise though, we are very strong. 90% of our staff is returning, which I know for retail and fitness is a very rare, considering we were shut down for about 14 months. Pretty crazy.

ADAM SHAPIRO: So let's, wait, wait, wait, wait. You employ close to, what is it, 1,000 jobs. Or is it even greater than that at these studios nationwide? This is really important. Where, I mean, for instance, New York, they're telling us 100% capacity. Does that apply to the studios that might be here on May 19?

SADIE KURZBAN: So May 19, we're not quite sure what it means for fitness yet. We know that in general, you can go back to 100% capacity. But of course with fitness, you don't just have government restrictions, you have what people are actually comfortable with. So currently, we are still in that 33% limited capacity mode, which is how we're operating right now.

And we'll see if by May 19, which is just a week away, how comfortable people feel. We don't anticipate this is going to be like pre pandemic until the end of the summer, September. But whatever happens this summer, it's already a few months ahead of where we thought we were going to be. So it's a huge miracle that we're open and we're just excited to get back to things.

SEANA SMITH: Sadie, we just had a full screen up there showing the high demand that you've seen for your classes now in just the first week. I know though over the past several months when you've pivoted your business, you've held some outdoor classes. We're showing some footage of that right now. How much of that do you plan to continue here as you do get, quote unquote, back to normal?

SADIE KURZBAN: So, yeah, outdoor classes have been a huge hit. And we do continue, we will continue that. We anticipate continuing that well through the summer, maybe through the fall, as long as people really want. We find that outdoor classes is really a space where like the diehards come through. They know the [INAUDIBLE], they don't mind getting out there embarrassing themselves dancing in public. So it's not for everybody, but it definitely filled the cup for a lot of people who either want to be outdoors or just really want to show off their 305 pride.

In addition in the pandemic, we did launch two new revenue streams on top of outdoor classes, so three in total. One of them is an instructor licensing program, where we teach dancers how to basically profit off of their passion. We give them a license to teach our method, and for a really small monthly fee, it's like a micro franchise. They go out there and they teach their own classes. As well as a digital subscription business. So we launched both of those in the pandemic, and we definitely are going to continue both of them. They've been really awesome revenue streams for us.

ADAM SHAPIRO: I just got to ask you, is 305 Fitness, does the name come from the 305 area code, Miami, Florida?


SEANA SMITH: It sure does. But I was, I made it cool before Silicon Valley made it cool.

ADAM SHAPIRO: No, no, absolutely.

SADIE KURZBAN: I was born and raised there.


SEANA SMITH: Sadie, real quick before we let you go, so we're talking about getting back to normal right now. What about expansion plans? You've done so much in the past 14 months, but looking ahead, what, five, 10 years down the road, where do you see 305 Fitness?

SADIE KURZBAN: So 305 is a workout. That's a party. That's really the thing that we do. And that transcends studios, it transcends any kind of business model. So you are going to continue to see some studios pop up in big major markets. But these two new revenue streams that we launched in the pandemic, especially instructor certification, I really see that as our vision forward. There's just this whole generation of people that want to be entrepreneurial, they want to make money off of something they feel passionate about. We don't require equipment. And it's a very capital efficient way to scale the brand, by basically licensing people to do it.

So you will be seeing 305 everywhere, all around the world, but it won't always take shape in a studio. It might look sometimes like an outdoor class or a virtual Zoom class with a licensed instructor nearby. It might look like you're going to take class outdoors or in someone's basement, either in a gym, or you might take a class in one of our major flagships with a live DJ for $30. So what we found, is that without needing equipment, we can really scale this brand through people all around the world through different kinds of 305 experiences.