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<\/a><\/p>\nSuch staggering numbers make SoulCycle a unicorn in the fitness world and beg the question: in an industry littered with so many losers \u2013 Crunch, Bally\u2019s and David Barton Gym to name a few \u2013 what\u2019d SOUL get so right?<\/p>\n
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The Business: More than Just a Workout<\/strong><\/span><\/p>\n When co-founders Elizabeth Cutler and Julie Rice opened their first studio on West 72nd<\/sup> Street in 2006, they set out to answer one simple question: why does exercise have to be such a chore<\/em><\/span>?<\/p>\n The answer, it turns out, is that it doesn\u2019t!\u00a0 SOUL delivers an efficient, full-body cardio + weights spin class in just 45 minutes.\u00a0 But SOUL enthusiasts would argue that the experience transcends just the physical.\u00a0 Some call it \u201ctherapeutic.\u201d\u00a0 Others describe it as a \u201cdance party.\u201d\u00a0 Some even call it \u201cstrangely sexual.\u201d\u00a0 Whatever it is, SOUL has created a truly unique fitness experience for its customers and, in the process, built a powerful lifestyle brand and cult-like following<\/span>.<\/p>\n It\u2019s the extraordinary loyalty this community has shown SOUL over the years that has propelled the business to such giddy levels of success.\u00a0 At $34 per class (plus $3 to rent shoes and $2 for water, natch) in Manhattan, SoulCycle can generate over $2,000 for a sold-out, 60-person class.\u00a0 And though not all classes are sold out, boxes are still handsomely profitable, generating on average a 53% studio contribution margin on ~$4M of annual sales.<\/p>\n Operating with Intent<\/strong><\/span><\/p>\n From the grapefruit-scented candles to the free packs of gum, EVERY DETAIL about the SoulCycle experience is deliberate and intentional.<\/p>\n We\u2019ll focus here on just two of the most important aspects of SOUL\u2019s operational design that underscore the customer experience.<\/p>\n The Intangible: Instructors & Studio Personnel<\/strong><\/em><\/p>\n As a service-oriented business, the success of SoulCycle begins and ends with its people, each of whom serve as brand ambassadors and play key roles in cultivating the company\u2019s unique culture and community.<\/p>\n Most important are the instructors.\u00a0 They curate music playlists, dictate the rider experience and most importantly cultivate deep relationships with the customers<\/span>.\u00a0 Becoming an instructor isn\u2019t easy; less than 10% of those who audition ultimately make it through a rigorous eight-week training process.\u00a0 Once complete, instructors begin a full-time career at Soul (i.e., they\u2019re barred from teaching at other studios), receiving benefits and ongoing training at SOUL University. \u00a0They\u2019re also paid $125-150 for a sold-out class.\u00a0 Veterans reportedly earn \u201csignificantly more,\u201d with the very best<\/em> NYC instructors rumored to make over $500K per year.\u00a0 It\u2019s no wonder that Soul\u2019s turnover rates are among the lowest in the industry.<\/p>\n A HUGE aspect of the SOUL experience is the personalized and consistent customer service one receives as a member of the community. \u00a0The investment in employee training and compensation creates a culture of exceptional service and ensures a differentiated fitness experience, ultimately resulting in immense customer loyalty.<\/span><\/p>\n The Tangible: Studio Layout & Design<\/strong><\/em><\/p>\n Boxes are designed to be small, squeezing onto the streets of metros such as NYC and LA, to minimize fixed rent \/ overhead in such high-cost locales.\u00a0 However, they\u2019re also efficiently laid out to maximize productivity.\u00a0 SOUL packs up to 60 bikes into their ~3,700 square foot studios.\u00a0 It\u2019s a tight squeeze, but one could argue that the close quarters\u00a0enhance<\/em> the feeling of community and belonging inside the classroom.<\/p>\n Lockers are located outside of the actual \u201clocker rooms\u201d and limited facilities encourage SoulCyclists to change and shower at home.\u00a0 Additionally, SoulCycle strips away many other non-essential \u201camenities\u201d (e.g., steam rooms and stretching space) offered by full-service competitors such as Equinox, whose gyms can often be 10x as large.<\/p>\n Where SOUL doesn\u2019t skimp is the quality<\/em> of its studios.\u00a0 The company makes a significant initial capex investment of ~$2.3M for a high-end interior remodel, the purchase of proprietary bikes and the installation of a top-of-the-line sound system.\u00a0 With its studios, SOUL identified what its customers really care about (the quality and the details) and what they could live without (a big room with lots of extra amenities) and focused their money and efforts into creating a physical space that truly reinforced and enhanced the customer experience<\/span>.<\/p>\n Turning what once was a bothersome task into an enjoyable time to connect with oneself and one\u2019s community, SoulCycle has revolutionized the way many think about fitness.\u00a0 And though it\u2019s proven to be successful \u2013 and quite profitable \u2013 thus\u00a0far, the brand will have to grapple with many difficult questions regarding its value proposition and operating model as it continues to scale.\u00a0 Can it continue to find, train and retain instructor talent?\u00a0 What will box economics and profitability look like outside of core metro markets?\u00a0 And perhaps most fundamentally: can the loyal community SoulCycle has built thus far expand to include the masses<\/span>?<\/p>\n Sources:<\/p>\n http:\/\/www.sec.gov\/Archives\/edgar\/data\/1644874\/000119312515270469\/d844646ds1.htm<\/a><\/p>\n http:\/\/www.nytimes.com\/2015\/08\/09\/upshot\/soulcycle-you-say-cult-i-say-loyal-customer-base.html<\/a><\/p>\n http:\/\/www.nysun.com\/real-estate\/equinoxs-real-assets\/27263\/<\/a><\/p>\n http:\/\/nymag.com\/thecut\/2013\/01\/evolution-of-soulcycle.html<\/a><\/p>\n<\/a><\/p>\n
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