SWERVE Fitness CEO on pivoting to at-home bike rentals
Eric Posner, SWERVE Fitness co-founder and CEO, joined The Final Round to discuss the studio's pivot to at-home bike rentals as the date for gyms reopening in NYC remains uncertain due to COVID-19.
Video Transcript
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SEANA SMITH: Welcome back to "The Final Round." The coronavirus pandemic has taken its toll on the fitness industry. We've talked about big names like 24 Hour Fitness and also Gold's Gym filing for bankruptcy. But let's talk about what boutique fitness studios are doing to weather this challenging time. And for more on that, I want to bring in Eric Posner. He's the co-founder of indoor cycling studio, Swerve Fitness. And Eric, let's just start big picture, because I know the last several months has been extremely challenging for you. So how have you navigated this very difficult time?
ERIC POSNER: Well, first off, thanks for having me. And it's certainly been a very disruptive time. But when the pandemic hit, we thought about, you know, we got our leadership team together and we said, OK, we're going to approach this in three ways. Number one, let's figure out how we can keep our people our top priority and take care of them and maintain culture.
Number two, how can we continue to drive revenue when our doors are shut? And number three, how can we focus, take this time to really make sure that we are on the offensive coming out of this and not let this just impact us and just crush our business? So as you mentioned, kicking off a bike rental business was a way that our team got together and said, hey, these bikes are just sitting here. We might as well put them out into the wild. And so the first step to that was we surveyed our riders, and we said, hey, would anybody be interested in renting our bikes? And the demand was overwhelming. So much so, that two days later, all of our bikes for rented out.
SEANA SMITH: So Eric, that's interesting, because when you talk about the overwhelming type of demand, and we've talked about how consumers are shifting their behavior in this full working out from inside your own home, it has this new appeal. A lot of people love doing it now. Is this a shift that you think could be a permanent shift for your business?
ERIC POSNER: You know, it's a great question, and I think what this has, what the pandemic has done to our industry, it's just accelerated the need to be omnichannel. So for us, while we're putting the procedures in place to open up safely once we do get word from the governor that we can't open up our doors, the idea is, that we've identified a an opportunity here that we're going to continue to capitalize on and continue to rent bikes and continue to acquire even more bikes, which we have been acquiring in large volumes to meet the demand.
But then also, we've been streaming content so that people can take classes while they're home. And so what we know, is that people are yearning for that in real life connection that you can only get inside of a studio. But there's certainly room for something at home. So for us, it's focusing on being omnichannel for the future.
AKIKO FUJITA: Eric, when you talk about these new services you started up, whether it's the rental or the online courses, and then you look at the losses that you've incurred as a result of the closures and the virus, how much of those losses have you been able to recoup with the new services you've introduced?
ERIC POSNER: Well, what I can say to that, is that our revenues are down significantly. But they're growing. And that's because we are seeing more and more demand with this, and the word is spreading that we are offering that service. Given it is a pivot for us, we call it the pandemic pivot. But so yeah, we think that another blessing to that is that our costs are also down. So while revenue's down, costs are down, but revenue is certainly growing.
RICK NEWMAN: Hey, Eric, Rick Newman here. It kind of sounds like you're describing an accidental Peloton. So why don't you tell us how you differ and differentiate yourself from Peloton? And I always like to ask you how much stuff costs, so people know how much does it cost to rent a bike.
ERIC POSNER: Yeah, great question. So I'd say that the biggest difference right now is that we're doing month to month rentals. It starts as low as $199 per month. And the idea there is that we don't know how long this pandemic is going to last. So some people aren't looking to buy a bike. They may want to just have it in their apartment or their home for a few months to kind of wait this out and see where things go. Because also, a lot of people don't necessarily have the space for a bike. So we're seeing opportunity in rental versus purchasing.
But then I would say another thing is, our instructors are, they've built really strong followings. And we've been around for over seven years now. We have three studios in New York City, and we've gone up against our competitors. And we filled our studios and we have been able to grow organically. So the instructors have built a following and the community is really showing up big. And they're the ones who are taking these classes.
And what I can say is, we're also, people are streaming classes from all over the world. We've had people who have experienced Swerve way back when who we haven't seen since because they moved, but now they're taking Swerve classes. So it's been a really interesting way for us to cast a wider net.
SEANA SMITH: And Eric, just, I mean, we obviously don't know what the future holds when it comes to the pandemic. So it's a little bit hard for businesses like yours to prepare to reopen. But when you do think about your reopening plans, how are you preparing for that?
ERIC POSNER: So safety first. And also thinking about our team. And so I think we're fortunate. It's been a challenge that New York has kind of been behind. Governor Cuomo initially announced that we would be in phase four of reopenings, but then gave word that we were no longer in phase four without any timeline in sight. Although today he did mention that we will have more, the guidelines will come out next week. So we are excited to hear that.
But we've been able to watch other markets, whether it be in Asia or in Europe, and see what they're doing, so that we can implement those things. But it's definitely, it's going to be a challenge. There are likely going to be limited amount of bikes that we can put in the room. So I think that's again, why we're staying. Even though when we do open, we know it will be safely, but we're staying very focused on the digital offering and the rentals while we can.
SEANA SMITH: All right, Eric Posner of Swerve Fitness, we wish you all the best. Thanks so much for joining the show today.
ERIC POSNER: Thanks for having me.
