Innovation

As good as it gets?

Written by Michelle Magnan

Two weeks into his first year of business studies at the University of Western Ontario, 20-year-old David Patchell-Evans made a simple mistake while riding his motorcycle: he signalled left and turned right. The ensuing accident left him with several broken bones and torn muscles, and his right shoulder dropped inches lower than his left.

In the eight months of rehab that followed, he became passionate about how people get fit. “I was a little obsessed with why people get stronger. How do people get fit fast?” he says. “I had no desire to spend my life in a gym. I simply wanted to have the benefits of working out.” Turns out, he has spent the better part of his life in gyms-his own.

As founder and CEO of London, Ont.-based GoodLife Fitness Clubs, Patchell-Evans knows first-hand the role exercise plays in creating a happy, satisfying life, and he’s committed to selling the idea to others-so much so that he wants to double the size of what’s already Canada’s largest chain of gyms. It’s no small task, but Patchell-Evans has a history of overcoming challenges.

Determined to return to full physical fitness after his accident, Patchell-Evans took up rowing, eventually becoming a five-time Canadian rowing champion and a member of the 1980 Olympic team. At school, he switched gears and studied physical education, putting himself through university with the proceeds from his snowplowing business. He graduated from Western with an honours degree in physical education and was halfway through his master’s in exercise physiology in 1979, when he jumped at the chance to buy the small London club he worked out in. Patchell-Evans saw big opportunity in providing affordable fitness with top-notch equipment and knowledgeable staff to help customers get the most from it.

But the reality wasn’t quite what Patchell-Evans expected. “Whoa, baby, what have I done?” he says, reflecting on his first club. “I thought I knew what to do. On paper it looked really good-national rowing champion, phys ed degree, lots of business background-but I knew nothing.” Fortunately, the man who likes to be called Patch learned fast. For a few years, he opened one gym a year. Then it became two a year. Now, it’s one every two weeks.

Today, GoodLife boasts 123 locations across Canada (11 of them franchised), 300,000 members and 4,000 employees. In a sector that has long suffered from image problems wrought by dubious marketing claims and shabby business practices, Patchell-Evans has built his company on a foundation of highly trained staff, innovative programming, top-notch equipment and facilities, and strategic partnerships. Along the way, GoodLife has raised the bar of service excellence and professionalized an industry in which clubs were traditionally run by sports jocks with little business expertise. Ensuring consistently high standards in every club has won the hearts and wallets of members and helped Patchell-Evans turn GoodLife into a valuable brand with plenty of good expansion potential.

That philosophy has paid off financially. Since its launch 28 years ago, GoodLife has enjoyed average annual revenue growth of 25%. In 2006, GoodLife’s revenue reached $125 million. While Patchell-Evans won’t divulge profits, he says his margins are the envy of the industry.

Now, GoodLife is set to bulk up again. To achieve his overarching goal of bringing fitness to every Canadian, Patchell-Evans aims to up the number of clubs to 200 by 2009. To achieve that goal, the company will rely on the same principle on which the chain was founded: helping people become stronger, healthier and happier. “It’s all about caring,” says Patchell-Evans. “We’re a relationship-based organization.”

GoodLife gained muscle early on by opening new clubs and acquiring struggling gyms in small communities and then refurbishing them. To help finance expansion, Patchell-Evans adopted an innovative client-billing system that was gaining popularity in the U.S. Instead of demanding an up-front fee, members pay via biweekly, pre-authorized payments. It’s an easy and affordable option for members, says Phil Sorel, a management consulant that works with GoodLife, and gives the firm predictable cash flow. To accelerate growth, GoodLife also began franchising, offering ownership to several long-term employees.

While competitors sell memberships, Patchell-Evans focuses on selling an experience that helps people feel better about themselves. “We’re not selling a product,” he says, “we’re selling a service.” Targeting mid-income, mature individuals who have never been in shape or want to stay in shape, Patchell-Evans’ goal is to ease the trepidation and discomfort of new gym-goers with his “caring” approach. The best way to do that: determining the problems people have-whether it’s to lose weight or simply to become healthier-and offer guidance and solutions.

Delivering the guidance, motivation and reassurance that members-new or otherwise-need to stick with an exercise program means staff must make personal connections. That requires enthusiastic employees who embody the company’s core values-a perennial problem for every fast-growth company. Patchell-Evans finds them among the members of his gyms.

Since clients bond with employees, not equipment, GoodLife works as hard at retaining staff as it does members. In addition to competitive salaries, the firm provides formal training, which not only ensures employees have the resources they need, it signals the firm wants to invest in their development. “It’s important to us to keep our good people and to grow them,” says Jane Riddell, GoodLife’s chief operating officer. “We have a talent-management plan that’s a big part of our strategic plan.”

Every new employee attends “base camp,” three to five days of intense training on everything from verbal communications to basic sales to how to manage work/life balance. Every six months, staff participate in goal-setting exercises. The company also recently introduced the Black Belt Program, a 10-stage, self-directed training program that builds sales skills and leadership abilities. Upon passing a test at each stage, trainees graduate to the next level, receive a cash incentive and become eligible for a promotion. Employees choose how fast, if at all, they progress. “It’s a great indicator of people who work without much supervision very well,” says Riddell. “That’s something we need to know when we look for people who are going to be future managers.” Such attention to HR is paying off: attrition in key positions-general managers, divisional managers and membership co-ordinators-is down 50% over the past two years.

Recognizing that group exercise classes are key to retaining GoodLife’s mostly female membership, Patchell-Evans recruited fitness director Maureen Hagan. A 17-year GoodLife veteran who is now VP of operations, Hagan has twice been named Program Director of the Year by San Diego-based IDEA Health & Fitness, an industry association for fitness professionals, for her creative programming and leadership abilities. Among Hagan’s innovations is the “No Sweat Workout,” an introductory workout that new members can do at home to help them quickly get stronger and feel more comfortable when they hit the gym.

To demonstrate its continuing commitment to leading-edge programs, in June 2005 the chain landed the exclusive Canadian rights to offer an exercise program developed by New Zealand-born Olympic discus champion Les Mills. A series of seven choreographed group classes with names such as BodyAttack and BodyStep, Mills’ programs are choreographed by the best trainers in the world, says Hagan. Considered the gold standard of group exercise programs, Les Mills classes are offered in 10,000 clubs in 85 countries. They are a favourite among die-hard gym-goers for their trendy music and easy-to-follow steps. Each quarter, new music and moves are introduced, giving participants variety and challenge. In the year following the introduction of Les Mills’ programs at GoodLife, group exercise participation increased 12%.

GoodLife’s attention to quality and innovation has attracted not only consumers but corporate Canada as well. In 2001, grocery giant Loblaw Cos. Ltd. came calling. Initially asked to turn around an ailing club in Loblaw’s Toronto head office, Patchell-Evans sniffed out a new opportunity in women-only clubs. Loblaw was rolling out its Real Canadian Superstore concept, bringing popular everyday products and services, such as dry cleaning and photofinishing, under one roof.

Patch figured fitness clubs were the missing piece of the puzzle. The new Superstores offered everything GoodLife looks for: high-traffic locations, visibility, plenty of parking and, most important, women with high household incomes. Says Sorel: “It’s an easy way to get into a market, by piggybacking on Loblaws.”

In fact, the deal was win-win. Real Canadian Superstore became a convenient “one-stop” destination at which women could get a quick workout, pick up groceries and run other errands. GoodLife gained direct access to women aged 35 to 50, who comprise the fastest-growing exercise segment. Even more important, partnering with a respected, high-profile company such as Loblaw increased the fitness chain’s visibility and credibility, giving new wings to the GoodLife brand. Today, 53 GoodLife locations reside within Real Canadian Superstores.

Still, perhaps the strongest force behind GoodLife’s growth is Patchell-Evans’ passion for fitness and for motivating others to get fit. “David really believes in providing fitness at a moderate price, that it’s a very important thing to do for people,” says Michael Levy, a former competitor and the chair of the International Health, Racquet & Sportsclub Association (IHRSA). “David has a real belief in what he does, and it shows. He cares a lot about his members and his staff, and that makes him successful.”

The self-titled chief entertainment officer is always upbeat, motivated and absolutely driven to spread the word about fitness. No wonder. Besides recovering from his debilitating motorcycle accident, Patchell-Evans has battled rheumatoid arthritis since the age of 32. The condition was so bad at one time that he couldn’t turn a doorknob, but it’s now under control due to regular exercise and proper nutrition.

Knowing the value of healthy living fuels Patchell-Evans’ constant drive to seek out new opportunities and best practices. He says being on the board of the IHRSA and Fitness Industry Canada allows him to connect with industry peers around the world and keep his finger on fitness trends.

“Even more, I look at other leaders in other industries and how they differentiate themselves,” he says. His two primary role models, says Patchell-Evans, are Rupert Murdoch, for his ability to build companies anywhere in the world, and Richard Branson, a man he admires for maintaining his core values.

Such eagerness to learn and try new ideas can cause friction in the management suite. “Sometimes there will be quite a disagreement between what he thinks is going to work and what everybody else thinks,” says Sorel. “Some are great ideas; some are crazy ideas. And you have to sift through them.” Hagan agrees, mentioning it’s not unheard of for Patch to call at 2 a.m. with a new idea. Riddell likes to joke with Patch that sometimes she can’t tell whether he’s having a vision or a hallucination.

There’s certainly no confusion when it comes to Patch’s long-term strategic vision. With the bulk of the chain’s clubs in Ontario, it wants to increase its presence in both the East and the West. Sorel says that in the past year, GoodLife has raised a significant amount of capital from Toronto-based venture capitalist Penfund Management Ltd., which will help finance the development of co-ed gyms across the country and women-only gyms in new Superstore locations.

Sorel says they’ll also look at new gym models for smaller markets. “We’re going to roll out some different concepts in 2007 on an experimental basis,” he says. One idea is to put smaller gyms with fewer services than GoodLife typically offers in communities that can’t support the costs of a full-sized gym, The move would allow GoodLife to establish a presence with lower rent and payroll costs.

Later this spring, the firm will increase its Internet offerings with an online nutrition and fitness program, and support it with a toll-free number. Members will have free access, while non-members will pay 30ÀšÃ‚¢ per day. “The goal will be to make it easy for people to access correct information like how to lose weight or control mood swings,” says Patchell-Evans.

The challenge going forward will be to find the right people-and enough of them-especially in Western Canada, which is already seeing labour shortages. Riddell is confident the firm’s successful “get, keep and grow” strategy will attract quality staff.

Plus, growth does not have to come at breakneck speed, especially if it is going to be sustained. It’s a lesson Patchell-Evans learned the hard way. In the firm’s early days, it opened too many clubs at once, putting strain on financial and human resources. “We had to work like crazy to get it under control,” he says. “That’s why we’re cautious right now. Even though we’re growing so fast, it’s far more conservative than it was.”

While Patchell-Evans says he’s been approached about international opportunities, for now there are no plans to go beyond Canada. “I have lots to do here,” he says. “The neat thing about Canadians is that they appreciate the fact that you do care.” There are two other considerations: his school-aged daughters, Tygre-Joy and Kilee, the latter of whom is autistic. “I want to spend more time with them.”

And as each year passes, Patchell-Evans says he is determined to stay as fit as he was the previous year. “I’m going to be young, and I’m going to stay young,” he says. “If you go hiking with me, you’re going to have a hard time keeping up.”

The competition has been warned.

Originally appeared on PROFITguide.com
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