The Taste of Retention: Although cafés and juice/smoothie bars often are not big money makers for clubs, they keep members coming back for more.
The decision to offer a café at the Fayetteville Athletic Club was one that was practically made for Bob Shoulders, owner of the Fayetteville, AR, club. Four years ago, he added a children's center and a tennis center in a $3 million expansion. His research into the tennis market led him to add the restaurant to the tennis center.
“Tennis people like to stick around and watch other people play when they get finished,” Shoulders says, referring to his research. His café serves wraps, sandwiches, smoothies and soups.
Offering a juice bar or café in a club is not just for the tennis crowd, and it is certainly not new to the industry. In 2001, 44 percent of International Health, Racquet and Sportsclub Association (IHRSA) member clubs had a snack/juice bar facility, according to a survey by the organization. That number has remained fairly constant through 2007, when the latest survey showed that 43 percent of member clubs offered snack/juice bar facilities, according to Rosemary Lavery, public relations coordinator for IHRSA.
Debbie Lee, marketing director at Gainesville Health and Fitness Center in Gainesville, FL, says that almost all the clubs that she is familiar with offer some kind of juice or smoothie bar, if not a café.
“Twenty years ago, you would find that few clubs had juice or smoothie bars, but today, when you build a health club — unless there's some really good reason not to — you've got a smoothie bar,” Lee says. Gainesville Health has had a smoothie bar since the late 1980s.
Two years ago, Equinox Fitness Clubs, New York, partnered with a New York chef to open an upscale sandwich eatery in its facilities. Life Time Fitness, Chanhassen, MN, also partnered with a chef to open upscale restaurants in some of its clubs. LA Fitness, Irvine, CA, offers food and beverages to members at its 50 clubs through an agreement with a café company. Recently, the Downtown YMCA in Nashville, TN, announced a massive expansion that will include a café.
Designed as a convenience for club members, juice/smoothie bars can give members healthy food options, create a social environment and help retain club members. However, making them profitable isn't always easy, which is why some club owners and executives have decided to stay away from the idea.
“We are not real believers in them, and we look at it like this: We are in the health club business, not food service. We keep that for the professionals,” says Chris Rondeau, CEO of World Gym Franchising.
Other club owners, however, are eager to offer these services to their members, but they often know that to make them work, they must either offer them as an amenity and accept minimal revenue or profits, or they must outsource their operation.
One club that is taking on the operation of a café on its own is Telos Fitness Center, an upscale, one-club operation in Dallas. When Brent Darden, co-owner of Telos, purchased the club several years ago, it already had a large restaurant, kitchen and eating area. Darden decided to maintain the café as an amenity for members. The café offers 30 smoothies, five gourmet salads, tacos, baked chicken and fish.
“We are a luxury-level club, and it helps separate us from our competition with something not everyone has, which is a full-service restaurant,” Darden says. “We have a chef in our club, Jack Jabara, who's been with us since we took over and is responsible for creating the menu.”
Darden acknowledges that with a full-service restaurant run by the club's employees and a chef, his club is an anomaly in the industry.
“Over time and almost without exception, clubs with [club-run cafés] didn't fare very well,” he says. “There have been several clubs around Dallas that have closed, and with virtually all of those clubs, before they actually closed the doors on the entire club, the restaurants had at some point closed first or at least were reduced dramatically in hours. It's all about members' foot traffic, and unfortunately, sometimes there's just not enough to sustain a restaurant.”
Outsourcing and Franchising
Despite Darden's confidence in running his club's café, many more club owners choose to outsource the operation of their juice/smoothie bars and cafés.
“Several years ago, we tried to run our own smoothie bars with our own recipes, and we weren't very good at it,” Shoulders says. “Our failed attempts were based around not marketing well, bad recipes and poor size control, all of the things food service operators would know how to do.”
In the late 1980s to the early 1990s, Gainesville Health and Fitness Center also attempted to run its smoothie bar, but because it wasn't its core business or area of expertise, management eventually outsourced the operations, Lee says.
“We believed that if we didn't have the staff power or expertise to accomplish it, then we are going to hire someone who loves what they do for a living — eats, breathes and sleeps this particular product — [and would help us retain our members] better than we could,” Lee says.
Some club operators are going beyond the normal outsourcing companies to offer some well-known and not-so-well-known franchised food options to members. The Maryland Farms YMCA in Brentwood, TN, is home to a full-service Subway restaurant. The business is completely separate from the Y and is not advertised outside the club, says Phil Newman, director of communications for YMCA of Middle Tennessee.
Shoulders turned to a lesser-known franchise for his café operations, actually purchasing the franchise himself and opening it in his club.
“Everything was pre-packaged when we bought the franchise arrangement,” says Shoulders. “We didn't try to reinvent the wheel. It's a franchise concept that you see in other places, but we let them do all the leg work in creating the concept and the recipes.”
Whether or not club owners run their own food operations or outsource them to a franchise or an operating company, the wave of the future in this area is fusing menu offerings with juice/smoothie bar core products, according to Juice & Smoothie Bar Consulting. The idea is to create a menu with quick-serve products, such as soups, wraps and salads, which can be made in front of the customer.
“QSRs (quick-service restaurants) have the concept of restaurant-quality food at fast-food speed,” says Lee. “Nothing is pre-made at our café. They get their ingredients from local produce centers and use them in their sandwiches and smoothies.”
QSRs fit well within health clubs' missions because they have all of their own marketing materials, provide all of the menus and recipes, and have already been established elsewhere, Lee says.
Are They Worth It?
The typical club surveyed by IHRSA regarding non-dues revenue reported generating 32.1 percent of total revenues from internal profit centers, but the report did not break out how much of that was from juice/smoothie bars and cafés.
The cost of running a juice/smoothie bar varies. Darden spends $20,000 a month (including payroll and cost of goods) to run his café at Telos. The café operates profitably on a minimal level, but it is not a big profit contributor, he says.
“We have considered cutting back, but if we were to get rid of it, we would disappoint a lot of our existing customers,” Darden says. “We do make a profit, but it's a marginal profit. We picture it as more of an amenity than anything else.”
The food service business is hard, and it's difficult to make a profit, Shoulders says, adding that if club owners can break even on their food service operations, then they are doing well. At the Fayetteville Athletic Club, Shoulders reports sales of $30,000 a month, with a small profit.
Lee would not say how much revenue Gainesville's juice bar generated, but she says it's insignificant. Despite that, she says, making money isn't the primary reason for the juice bar.
“We wanted to create a social atmosphere for our members, which we believe to be increasingly important in the health club area to make people come back because they have friends here,” she says. “Of course, having another revenue-producing area is important, but the purpose of our café is not to make a bunch of money. For the time being, we are OK with that — as long as we are not losing money.”
Newman says that juice/smoothie bars and cafés are right in line with the heart of the Y's mission and vision.
“We have found that people crave places to connect, make friends, relax and talk,” he says, “especially in the case of ‘health seekers’ who might be intimidated just walking into a room filled with cardio and strength equipment.”
Shoulders says the café at the Fayeteville Athletic Club is there to stay.
“Our members enjoy it,” he says. “Our staff enjoys having a place on-site where they can buy food at a discount. It's a nice staff retention tool. It's not making tons of money, and it's not a huge income item, but it serves its purpose.”
One of the ways we fulfill our mission of helping people to grow in spirit, mind and body is by providing places where they can connect with others, build friendships, and find encouragement and support. Café areas help us to achieve that goal.”