In this exclusive interview, Geisler discusses his recent departure from Xponential, analyzes the current fitness and wellness landscape, and shares his predictions for the future.
Anthony Geisler founded Exponential Fitness in 2017 and has grown the company into the largest fitness and wellness franchise in the world. Under Geisler’s leadership, Exponential has acquired brands such as Club Pilates, StretchLab and Pure Barre and grown them into well-known brands around the world.
Geisler stepped down as Exponential’s CEO earlier this year, telling Athletics News that the time was right for him to step down.
Geisler doesn’t plan on staying on the sidelines for long: He plans to stay in the fitness and wellness space, but he’s not ready to reveal his next move just yet.
In an exclusive interview with Athletics Tech News, Geisler spoke about his departure from Exponential and shared his thoughts on the fitness franchising business, the rise of GLP-1 weight loss drugs, and the challenges and opportunities facing the industry in 2024 and beyond.
The following conversation has been lightly edited for clarity and length.
Athletech News: I know there is still a lot of uncertainty, but can you talk about your recent departure from Xponential?
Anthony Geisler: I am proud of everything we’ve built at Xponential Fitness and wish the company nothing but success. It was time for me to take the next step.
ATN: How have you been spending your time since leaving Xponential?
AG: Spending more time with my family, staying healthy and balancing my work life, just like I have been doing for years now.
ATN: You’re not one to sit still. What do you have in store for your career? Do you plan on staying involved in the fitness and wellness industry?
AG: Yes, absolutely. There is a huge opportunity in the fitness and wellness space, especially in the technology space, and I’m excited about my next move.
ATN: A lot of new fitness and wellness franchise concepts have emerged over the past few years. Is the market saturated or is there still room for new concepts?
AG: There is always room in the market for a healthy concept. Does this mean we will see an explosion of successful goat yoga or “boxylate” studios? I don’t think so. But there is a lot of opportunity for concepts that are widely accepted by a large and rapidly growing market that is focused on staying healthy and eating right.
ATN: There’s speculation that Solidcore is considering a sale at a valuation of $750 million. Is such a large valuation justified?
AGA few things to say about this deal. First, Solidcore has great bankers involved in the sale. Second, Pilates has a lot of upside potential. We saw this with Club Pilates (owned by Xponential Fitness), which has over 10x the number of locations as Solidcore and is the #2 player in the space.
Third, while I am biased towards the franchise model, I believe there is a lot of room for growth in the Pilates space, especially in a differentiated concept like Solidcore.
ATN: Do you expect to see increased M&A activity in the second half of 2024 and into 2025?
AGNo. M&A activity has been fairly slow in recent years due to rising interest rates.
I’ve spent most of the last 20 years exploring acquisition concepts and making M&A decisions, but the dynamics underlying these decisions have changed dramatically with the rise in interest rates over the last few years. When the standards for debt financing increase by several points, it becomes much harder to close deals. As a result, business strategies must change.
Even if the Fed makes big moves in the coming months, we don’t expect rates to fall enough to change these fundamentals.
ATN: What is the biggest headwind facing the fitness and wellness industry right now?
AG: We foresee three major headwinds. First, interest rates will be a major drag on M&A.
Second, operators are finding it harder to access quality real estate. Location is crucial to launching and running a successful fitness business. This has always been a challenge and will continue to be a challenge. This is an area where being a franchisee with a quality system can be an advantage. Top franchisors have relationships with REITs (real estate investment trusts) across the country, which should give franchisees access to quality real estate that other franchisees don’t have. With the right system, this is a benefit of buying a franchise concept instead of starting your own.
Number three, access to quality labor. This is true for any business, whether you’re running Google or a gym. But I think too many people in our industry underestimate this and don’t invest in quality talent where they can. This is a big mistake.
At the end of the day, for our business to be successful we need good rates, a great location and great people.
ATN: What do you think about the at-home fitness sector? Do you think brands like Peloton, Tonal, and Hydrow can survive and even thrive?
AG: Home training has always been and always will be necessary. If you watch the videotapes of the late Richard Simmons or Suzanne Somers, you’ll see that people train at home because it’s convenient or it fits into their lifestyle.
But outside of a global pandemic, where people have no choice but to stay at home, these concepts are destined to remain a small part of the overall market.
There’s a simple reason for this: it’s very hard to build a community digitally. Humans are social animals. We get better results and more satisfying workouts when we’re all in the same room together and can create a community. Living with other people enriches our lives, and that’s usually true for how we train too.
ATN: How will GLP-1 weight loss drugs impact the fitness and wellness industry? Could they create a new consumer demographic for operators?
AGIt’s unclear how GLP-1 will be regulated or how many people will take these drugs, so it’s difficult to assess how big an impact they will have on the market.
That said, GLP-1 burns 50% of the muscle mass in patients, which is a big problem that needs to be addressed (by fitness brands) and can be offset by weight training, which of course ultimately benefits the gym industry, especially the gym industry that is so focused on weight training and building muscle mass.
I think that eventually the American Medical Association and insurance companies will require patients to have a comprehensive plan for the use of these drugs, and in the future, if there isn’t an approach to restore 50% of the lean muscle mass that is lost while taking GLP-1, you won’t be able to take the prescription, because if not addressed, this loss of muscle mass will lead to a variety of other health problems.
ATN: What are your three predictions for fitness and wellness for 2024 and beyond?
AGFirst, better technology will come to market, which will have a major impact on areas such as POS and CRM. We will see the integration of AI into customer relationship management and other functions. The fitness and wellness sector has been decades behind the rest of the economy when it comes to technology, but I think that gap is finally closing. The success of businesses in this sector depends on it.
Secondly, there is a correspondence between increased GLP-1 and individuals thinking holistically about their weight loss and muscle building efforts.
Third, as people become more aware of its benefits, weight training will grow both as a technique in its own right and as an added feature to other fitness concepts. This is certainly a trend we are seeing across a variety of concepts, but I think we are just at the beginning.
