Expansion Proximity

With indoor climbing’s continued trend in popularity some facilities are feeling the strain of overcrowding. The most obvious next step for owners of facilities bursting at the seams is to open another location. Waiting until lines for ropes are long and bouldering areas become congested can turn off customers that otherwise become members, but pulling the trigger on a new facility is a complicated and expensive proposition.

There are several important factors when thinking about growing your brand within your local market. The most obvious question to answer is, ‘Just where should I build?’.

A new gym should be far enough away to attract new members, but if need be, close enough to encourage some members to migrate to the new gym. When done right it expands the business and keeps members climbing rather than waiting for their turn on the wall. The trick is finding the sweet spot where a new location grows total membership rather than swaps it from one location to another.

The Time to Grow

Before considering a new location a gym owner should have a sizeable customer base and enough funds available for what should be an expected dip in customers at the original location.

Triangle Rock Club Managing Partner Joel Graybeal told CBJ, “You will definitely lose memberships when you get too busy.” Not long after they opened their first facility in Morrisville, NC, it got to a point where people were waiting in lines for ropes and if it was too busy some customers would turn around and drive away rather than join the lines at the already packed gym.

To alleviate this problem, Graybeal and his team decided to open a new facility in North Raleigh, twenty minutes from the Morrisville location. He knew that the new location would siphon climbers from the original gym, but said, “We knew we were and we needed to.”

The plan worked. The initial migration delivered a loss in memberships and revenue to the original Morrisville location, but it also helped alleviate congestion. After a later expansion at the Morrisville location, they saw another, smaller migration from the North Raleigh gym back to the Morrisville location.

Each space has since grown its membership base despite a bit of overlap. The proximity allows for a flow of members between locations, but with hindsight Graybeal thinks it would have been better if the gyms were slightly farther apart so as to reach a wider geographic area. “I would have ideally located another 10 minutes further,” he said.

Triangle has a unique perspective in regards to the effects of new facility locations. They recently opened their third gym an hour away from the Raleigh area in Fayetteville, NC. Because it’s a significant distance away Graybeal said there has been no migration from their other gyms.

Going the Distance

“People hate driving,” St. Louis-based Upper Limits Founder Chris Schmick said. “If it’s over 20 minutes it’s too far.” That rule of thumb has guided Schmick on where to expand within the St. Louis community.

Upper Limits has three gyms, each about 20 minutes apart. Schmick has found this distance to be ideal, whereas Graybeal from Triangle Rock Club finds that the magic number is about 30 minutes.

Schmick started with his first gym in downtown St. Louis and the next one was in Maryland Heights, about 20 minutes west. There was some migration to the new location, but many of the college students in the downtown area remained there. Some of this is likely due to the fact that cash-strapped college kids often don’t have their own transportation, but larger demographic factors also played a role.

“People from the downtown area would not come down [to Maryland Heights],” Schmick said. “Which I found kind of surprising.” Schmick admits there was a recovery period after the second gym opened, but “the customer base built itself up around the new gyms.”

Each gym ended up having its own demographic, which gave Schmick the opportunity to more easily target each group with his marketing. At the downtown gym his team markets to college students, and at their newer locations in the suburbs, they shifted their focus to families.

What has helped to make the gyms feasible as Schmick continued to push and open a third gym in Chesterfield, another 20 minutes west, was the name recognition of the Upper Limits brand. “It’s not like we’re starting from scratch,” Schmick said about opening new gyms. Though the regulars typically live or work close by, there are those who occasionally make a longer trip and it’s as if they are just waiting for a closer gym to open. It would seem that one of the biggest selling points is the convenience factor.

Distance, Time and Population

Something that appears to be a constant through the US market is the transportation time between gyms in metropolitan areas with a population between 1-2 million. In these cases, the population of a city doesn’t appear to carry as much weight on the number of gyms in an area as the population of the entire metropolitan area does.

According to CBJ’s research, 20 minutes, based on the average drive time measured between 50 gyms throughout the U.S, is average for gyms located in larger population centers. This doesn’t necessarily mean climbers will only drive 20 minutes to get to a gym, as each area of the country is different.

Mileage also seems to have little effect on how close some gyms are placed in relation to each other. A buffer of busy city streets in places like Chicago and New York City keeps the travel times high even when the gyms are only three or four miles apart. In these cases, it’s faster to walk, bike or take transit, especially when considering the logistics of finding a parking spot.

There are obviously outliers. In Jacksonville, FL there is just one gym. The city holds more than 850,000 people and the greater metropolitan area swells to 1.35 million. Boulder, CO, with a population slightly higher than 100,000 has three gyms, which is even farther from the norm. Most other cities, including New York, have between two and eight gyms.

In each city, if you simply based it on population and drive time from other gyms, there remains room to grow. Of course knowing where to put a new gym is only one part of the problem, knowing when to pull the trigger and how to finance the project are equally important elements.

Success Through Growth

It can help to have some cash on hand, but waiting until the project can be completely funded through existing cashflow is often too long to wait. For a Craig Burzynski, owner of Adventure Rock in Milwaukee, the time for expansion came when they had between 30-35 percent of funds they would need for the project.

Their newest location opened on the east side of Milwaukee about seven months ago, and targets the large demographic of young post-grads that call the city home. It’s about 28 minutes west of their first location, in Brookfield, which was at capacity. The expansion was accomplished after a couple other projects fell through on the owners. In the end they had to bite the bullet to get something that worked. “It was not affordable, it was available,” Burzynski explained. “It was kind of an ideal location for us.”

Most gym owners should expect a one or two year period before a new gym reaches a point of profitability. Based on the recent projects completed by Triangle Rock Club, Adventure Rock and Upper Limits, it can happen inside a year or as quickly as six months. This may be an indicator that less cash-on-hand is required for expansion, and that investing in future capacity is a wise move.

Graybeal offers some sage advice for brands looking to grow, “You can never save your way to success.”

By Alex Beld [From Climbing Business Journal],
Original Article here.