Multiplex gyms will change business models to accommodate reopening: Mindbody CEO

Mindbody Founder & CEO Rick Stollmeyer joins Yahoo Finance’s On The Move panel to weigh in on consumer behavior and booking trends as more states look to reopen wellness services.

Video Transcript

JULIE HYMAN: We have been seeing a lot of people go online for their workout needs during this pandemic. What's interesting is how many of them might stay that way. We are joined now by Rick Stollmeyer. He is the CEO and founder of Mindbody. Now, this is a platform, an app that allows you to book wellness and fitness classes.

And Rick, thank you for joining us. You're joining us from California. You guys did some research, and you found that while 93% of consumers plan to return to their previous workout routines once places open back up, 43% plan to incorporate a virtual element. And that's really a big change here. Were you surprised by that finding?

RICK STOLLMEYER: I'm not surprised at all, Julie. You know, this trend of virtual wellness, the ability to deliver via on-demand and streaming video and audio has been going on for several years. I mean, we're all aware of Peloton and Mirror, platforms like that.

Certainly, the COVID crisis has rapidly accelerated. I think the larger question in our mind, would-- would people return to the bricks and mortar offline experiences? And so we're very pleased to see, as you said, the vast majority of folks that are pursuing wellness activities plan to go back into those businesses, but now they're going to be supplementing it with the virtual activities as well.

ADAM SHAPIRO: Hey, Rick. It's Adam Shapiro. So will they supplement it with paid virtual activities? Or will they only opt for the free virtual activities? Or vise versa, you know, a cheaper gym membership?

RICK STOLLMEYER: No, I think the paid activities have special features. So first of all, let's first of all go back to the fact that these businesses and these practitioners aren't going to keep doing it if they can't earn a living. I mean, this is just a fundamental. We all actually have to eat. And so the-- yes, you can access a lot of free content.

You can go on to YouTube and find various things, but you're never going to have a connection or a relationship with that practitioner. So what we see happening today are these local and authentic experiences, which you have a form of a hybrid membership. You might go to the yoga studio for the face-to-face classes, let's say, six times or eight times a month, and then you're also going to supplement with streaming classes and on-demand classes as part of your membership.

DAN HOWLEY: Rick, I kind of want to ask, as far as, you know, you see the effectiveness of at-home workouts versus in a gym when you have someone with you. Is, you know, is there any risk that if you're trying to do a full workout at home, you may be more prone to hurting yourself versus an at gym, because you don't have that person with you, a personal trainer guiding you and showing you correct forms and things along those lines?

RICK STOLLMEYER: Well, it's an excellent point, Dan, because yes, that-- that is actually the issue. In fact, you know, my own personal experience, I have a personal trainer. And once we went into the shelter-at-home, he started training me at home, initially via Zoom.

And-- and I had exactly that issue. I actually did hurt myself because I was doing a workout where he was unable to see precisely what else I was doing. And I think many people have this experience. And the real challenge, of course, is if you're not already a regular practitioner, if you've never done yoga before, if you've never done Pilates, if you've never done high-intensity interval training, it's going to be really hard to adopt that in a meaningful way without having that interaction with your trainer.

And so in an experience-- I mean, one of the reasons that Peloton works so well is because a spin bike is pretty safe. This is a device, or a treadmill, that most people can-- can figure out how to use remotely. But if you're in a class with 20,000 other people, there's not much way that that-- that teacher is going to be able to actually see what you're doing and give you the kind of pointers you need.

JULIE HYMAN: Rick, one of the other findings from your study that stood out to me was that about half of those surveyed felt more comfortable going back to boutique fitness classes, Pilates, high-intensity interval training. Only about a quarter felt comfortable going back to multiplex gyms. In the states where we have seen reopenings, do the bookings mirror those kinds of findings?

RICK STOLLMEYER: Yeah, I think this is an important distinction because that's right. The boutique studios, first of all, is a much smaller group size, right, and they can easily manage the social distancing. So what we're seeing in most of these studios now as they are reopening, in certain states, is that they're planning out their mat distances, or their bikes, or whatever equipment they have, so they have the minimum of six feet, oftentimes going for double that, more like 12 feet, and so you have about half to a third of the actual class capacity. A multiplex gym isn't going to be able to manage that as well.

So I think it's going to be much tougher for them. They're going to have to fundamentally change their business model. And I think we'll see an interesting blending of the activities, because many of the bricks and mortar boutique studio owners are saying, look, in this new model, it doesn't really work for me to keep my full-time lease 24/7, 365. Instead, I could sublease a space in one of those large clubs and use that with my clientele on a prearranged basis. And I think we're going to see that kind of blending in the months ahead.