The early months of the pandemic were arguably the worst time to be in the health and fitness industry. Now, at another time of economic uncertainty, one chain has emerged ready to bulk up.
Barry's Bootcamp is one of many boutique workout class chains that entered survival mode through most of 2020 as it halted what had been an ambitious growth plan, instead investing in preserving its customer base. After more than a year of digital workouts, outdoor classes and pop-up gyms, and additional years of stalled growth, the Miami-based operator said it's now in the best shape of its roughly quarter-century existence.
"Here we are, five years later, thriving and back into growth mode," Adam Shane, Barry's chief development officer, told CoStar News. "We've come full circle through the dark times and back to the light, and now we're looking to expand the business all around the country."
The company is known among celebrities and everyday fitness fanatics for its high-intensity interval workout classes, where participants can burn up to 1,000 calories per session. Each class runs around $34, though that price varies per location.
While other fitness companies — such as indoor cycling concept SoulCycle and gym operator Xponential Fitness — have struggled to recover from the pandemic, Barry's is creeping back into growth mode. The firm, with 100 locations, plans to open 20 new studios annually over the next several years, with a goal of owning U.S. outposts and franchising international ones.
The company brought on financial partner Princeton Equity Group to help fund its expansion into roughly a dozen new cities through the remainder of the year, all while fortifying its position at the highest end of an already premium slice of the market.
"Now that we have that fresh slug of capital, we can be more aggressive and ambitious," Shane said.
With other operators such as Pilates studio Solidcore, Hot 8 Yoga or Beem Sauna Studio all vying for similar locations, Shane said the company has been pitching itself to landlords as a tenant that invests heavily in its space that increases not only the value of their properties but also attracts a high-spending customer base for the surrounding retail ecosystem.
"But sometimes it just boils down to who pays the most rent," Shane said.
Headwinds vs. tailwinds
Barry's growth plans come as the fitness industry remains in deep recovery mode from the blows dealt by the pandemic, with gyms and boutique studios alike struggling to build loyalty among a fickle consumer base.
Xponential, for example, divested from two brands last year — Stride Fitness and Row House — after they failed to gain traction. SoulCycle had a cult-like following in the years leading up to 2020 but has since failed to regain its popularity amid an unsuccessful initial public offering, widespread studio closings, executive departures and declining membership.
There are notable tailwinds, too, as global fitness clubs grew their membership base 6% in 2024, according to a report from Lincoln International. The growth underscores "growing consumer commitment to wellness," the report said, citing the post-pandemic retail buzzword that refers to healthier, holistic lifestyles.
The retail landscape is far different from what it was prior to lockdowns and social-distancing mandates, a shift Shane said has redirected Barry's focus as the company adapts to new growth markets and chases after burgeoning demographics.
Rather than prioritizing space in downtowns that are still scrambling to rebuild workforce foot traffic, the operator is looking to bring its red-lit studios to popular suburbs on the outskirts of cities such as Chicago, Boston, New York and San Francisco.
"After pausing our growth strategy, we took it slow by being very selective and strategic about when and where we opened," Shane said of opening just a handful of locations over the past few years as it emerged from the depths of the pandemic. "We've been successful in slow rolling some of that growth and focusing on building our presence in core markets."
The company has future locations slated for areas in and around Denver, Phoenix, Northern California and elsewhere across the United States.
Premium brand, premium space
Barry's has long prioritized its emphasis on maintaining a premium brand, catering to a demographic of affluent customers.
Where fellow boutique workout class operators Pure Barre or Orangetheory may offer a shower stall, Barry's decks out its locker rooms with luxury products and finishes that rival high-end gyms and hotels. Each studio is designed as a nod to its respective location, and its Fuel Bars serve as a post-workout social hub with smoothies for sale.
All of that has meant putting a premium on high-end real estate as well, with locations focused in areas that not only attract the upper-end of a demographic pool, but are also in spots that make it so customers want to hang around. The problem now, Shane said, is that competition for that type of quality space is higher than it's ever been.
"Coming out of COVID there has been this explosion of boutique fitness and wellness that has made it so there's more competition for space than I've seen in a long time," he said. "There's Life Time fitness, multiple Pilates options and now there are more recovery-focused businesses, and we're all chasing after the same 4,500 to 5,000 square feet. The businesses might even complement each other, but at the end of the day, there's only so much space for everyone."
It's a sentiment echoed among other retailers across the United States as businesses from local coffee shops to major big-box chains are all wrestling over a shortage of availability.
After more than a decade of constrained development, the amount of available retail space has fallen to historic lows, according to CoStar analysis, and the spate of recent closings and bankruptcies has done little to move the needle or free up additional real estate.
What's more, the quality of available space is concentrated on the lower end of the spectrum, accounting for nearly 40% of what's available nationally.
In other words, operators such as Barry's that put an emphasis on premium real estate are having an increasingly challenging time as they face a dwindling pool of options. Even so, Shane said the company would hold off on making a decision rather than compromising on a less-than-ideal space.
"We have to be very strategic on where we go because we want to be around the right consumer and in the right environment," the Barry's executive said. "We want a character to the neighborhood we're in, so traditionally, that has meant we don't just go to a suburban shopping center, we go where other lifestyle tenants are that are part of a bigger brand and create a sense of place for our own customers."
Evolving pitch
Barry's post-pandemic real estate strategy has morphed to focus on two primary elements: go where its customers have since gone, and create a hub-and-spoke model that anchors the company's brand.
Its location in San Francisco's financial district, for example, has set the stage for locations scattered across Silicon Valley as well as future outposts in Walnut Creek, California, and possibly Marin County. Even as office markets nationally slog through their own recovery, Barry's growth trajectory means it will have outposts that cater both to employees beginning to revert to their pre-pandemic schedules as well as ones that have relocated to the suburbs and want to sneak in a workout on days when they can work from home.
"We want to make sure we keep a pulse on places like Chicago, San Francisco and other cities as more people come back to work, so we're tracking all of that," Shane said. "But our strategy has shifted from being a primarily urban brand to understanding where our clients are in the suburbs. We've planted our flags and are now doubling back to build out our suburban markets since we know our customers are in cities, but they're also moving out beyond them, and we want to meet them where they're at."
For Barry's, the company believes its investments will pay off.
"In 2020, the most important thing for us was to keep our client base engaged with our brand," Shane said. "We needed to make sure that we were there for them during a hard time and that they'd be there for us. It was the most important part of how we survived and how we were able to maintain our brand position. COVID is in the rearview mirror now, and our brand is stronger than it's ever been."