(For video of Pura Vida and an interview with J Madden, click here.)
After four years of ramping up his high-end urban health club model, Pura Vida, and proving it could survive even during a recession, J Madden is looking for a new zip code in which to expand the model.
“It would be fun to have the opportunity to expand our wings,” Madden says.
Pura Vida is a 30,000-square-foot facility with yoga and Pilates studios, a Kinesis room, a spa, a pro shop area, cardio and strength areas and a parking garage all across the street from the upscale Cherry Creek Shopping Center in Denver. Some smaller urban clubs offer a “hipper, groovier” nightclub setting for an audience that likes that, Madden says, but he created Pura Vida to be a clean, modern, fresh, sensory experience that is not locked into a certain genre.
Situated in an affluent neighborhood, Madden could have marketed the health club as exclusive, but once the recession began in full steam, his team began marketing it as inclusive instead. Branding it as such helped the club attract members of all incomes, Madden says. Instead of members being exclusively people with high incomes, members are people who see Pura Vida as fitting their lifestyle and who choose to spend their money on their health and wellness rather than someplace else.
Initially, the average age of members was 53 years old, but once the inclusive marketing began, that average dropped to 36 years old, Madden says. Members range from 18 years old to 70 years old.
Despite the desire to be inclusive, Madden concedes that he had to price his club a little higher than many facilities in Denver. Lowering the $165 per month membership dues even by $50 would have meant he likely would have to turn people away.
“What we want to do is have separation from our competition, maybe exceed expectations of what has been tested in the market before,” Madden says. “There is pricing associated with that. You have to be at a point where it is more discretionary, more discriminating.”
More than 20 percent of Pura Vida’s members come from outside Denver, many from one of the coasts where they may be used to paying the $165 per month membership dues, Madden says.
All of these elements helped Pura Vida grow during the recession, showing that the model can work, Madden says. Because the club is still maturing, Madden would not share revenue numbers. However, at $165 per month on 2,000 memberships, annual dues revenue could equate to about $3.9 million (which does not include ancillary revenue)—a number Madden did not confirm. However, Madden did share that as of last month, revenue at Pura Vida was up 18 percent year over year.
The club has reached Madden’s goal of 60 percent of revenue coming from dues (which covers operating costs) and 40 percent coming from nondues (which goes to investors). Twenty-five percent of the nondues revenue comes from SpaVital, the company’s spa business, while the other 75 percent comes from personal training and Pilates equipment classes.
Madden also owns 25-year-old Greenwood Athletic and Tennis Club, Greenwood Village, CO. Both clubs are based on providing high-quality service, he says, but the brands are different in their demographics (Greenwood is more family-oriented and Pura Vida is more single-oriented), their location (Greenwood is in the suburbs and Pura Vida is in urban Denver) and a different approach to fitness programming (Greenwood offers tried-and-true classes and Pura Vida offers cutting-edge classes).
“So there is continuity in ideas but under a different wrapper in a more urban and modern approach that Pura Vida is,” Madden says.
At one time, replicating his 14-acre, 152,000-square-foot Greenwood facility in another city might have been a possibility, Madden says, but too many operators are already running large, high-end suburban models elsewhere, and the cost to replicate Greenwood would be prohibitive. However, the same is not true of Pura Vida.
“Pura Vida is transportable; Greenwood is not,” Madden says.
Although many operators today expand through licensing or franchising, Madden is not considering franchising.
“I don’t understand the franchise,” Madden says. “I do understand how to do it on my own. But the stars have to align and many things have to happen before that ever becomes remotely a possibility.”
Madden would not disclose the buildout cost of Pura Vida, but he says the next Pura Vida would not be as expensive to build, due to lessons learned from the surprises encountered during the gutting of the four-story building that had been a well-known bookstore in Denver.
“Our build-out numbers morphed more than we had hoped,” Madden says. “We are far more sophisticated on this matter now and believe that when we build the next Pura Vida, our construction budget will not have surprises in it but will be based on hard and defined numbers.”
Although he says that he often works from his gut (which has served him well in the past), this son of a real-estate developer says he would prefer to fully investigate locations for a second Pura Vida, naming Palo Alto, CA, and Bellevue, WA, as possibilities. However, he has yet to do much investigating, he says.
“Maybe someone will decide for me. Maybe someone will say that we are looking for you,” Madden says, but then adds, “If nothing happened, it would be fine, too. It’s not going to make my life. My 10-year-old twins—it’s not going to matter to them.”