Retro Fitness Embarks on Transformation to Become a World-Class Franchisor

In May 2019 when Andrew Alfano was hired as CEO at Retro Fitness, he was tasked with transforming the brand, and driving future growth and expansion. Little did he know then that his effort to do so in his first year would be capped by a global pandemic that would require even greater transformation for the high-volume, low-price brand, which Alfano refers to as high-value, low-price (HVLP).

Alfano joined Retro Fitness with years of experience as an executive at Starbucks where he served as senior vice president. While there, he was accountable for more than $3.5 billion in revenue. Under his leadership, the international coffee brand saw record growth and revenue in high-profile markets such as Chicago, Boston and the flagship market of New York. He was also a member of the team that helped lead the U.S. side of Starbucks out of the company's downturn in 2008.

Before he accepted the position at Retro Fitness, Alfano did due diligence on the fitness industry, he told Club Industry in an interview in mid-February. (See the full interview in the video above.) What he saw was a lot of health club brands using the same equipment and software, and promoting the same offerings.

“That's not a disrespectful statement at all,” he said. “It is just an observation coming from a brand like Starbucks.”

So when he stepped into the leadership role at Retro Fitness, he looked at how to differentiate and transform the company into a world-class franchisor, he said.

One of the first steps was to ensure the company was supporting its franchisees, which also would make it attractive to future investors, he said. The company brought everything in house. That includes on the real estate side where Retro Fitness does the site selection and the construction. The company created a support center for franchisees and a call center. It handles all the training and development, and it offers accounting services. 

In September 2021, the company engaged Join Now Media as an in-house marketing agency that supports franchisees who opt into this program. So far, about 60 percent have opted in, Alfano said.

The company also supports franchisees with reports and has regular calls with franchisees about their monies.

“The model here is we make money when you make money,” Alfano said referencing franchisees.

Not only did Alfano look at franchisee support, but he and his team also looked at how the brand could innovate and get consumers engaging more with the brand. The company’s research showed that the average member was at the club between 3 ½ and 4 ½ hours per week, but Alfano knew that people living a healthy lifestyle are pursuing that healthy lifestyle all the time. He wanted members to not just see Retro Fitness as a brand that they want to belong to but as a brand they want others to know they belong to.

Even as the pandemic temporarily closed clubs in many of the 12 states in which Retro Fitness operates, the company leaned into its investment, rolling out for its franchisees a variety of programs to help them engage their members.

The company began focusing on nutrition. It added healthy cooking expertise through a partnership with an alumni chef from the Culinary Institute of America, which is one of the top cooking schools in the world (and a place that Alfano happens to be a graduate of). Its clubs offer in-house nutritionists.

The company also focused on mental health through a collaboration with Sadhguru, a well-known yogi.

In addition, Retro Fitness introduced in December 2021 its at-home bike, the COBRA, which is priced for an HVLP consumer, Alfano said. With the bike purchase comes an app with multiple ride sessions and a three-year in-club membership called the ultimate membership.

Weighing in on the reason for offering an at-home workout option, Alfano said: “Fitness was never intended to be isolating. At the end of the day, especially following a global pandemic, people need people. So we've always had great confidence that people were going to come back to the health clubs, and we felt good about that. But we also recognize there are days you simply can't get to the gym for whatever the reason. … We do think that at-home solutions, whether it be digital, whether it be the bike that we now offer … it's a subsidy. It subsidizes the times you can't get to the health clubs, but it will never replace the times that you're going to go to the health clubs.”

And when people do come into the clubs, they’ll see a new look, courtesy of designer Rudy Fabiano, who helped the company say goodbye to the bright red and yellows that Retro Fitness was originally known for when it started in 2004.

“We started the journey for the member out in the parking lot,” Alfano said, noting the importance of an inviting and approachable curb appeal.

So far, the efforts have scored results with investors, who Alfano said see the HVLP market as attractive now that the pandemic drove home the importance of staying healthy. In October 2020 during the COVID-19 pandemic, the company received an investment from Boston-based venture capital firm Arena Capital Partners to expand and develop health clubs throughout the greater Boston market.

For more on Alfano’s plans on expanding the brand, watch the full video.