Crunch Fitness President Chequan Lewis On Rapid Expansion Post-COVID

A list of the fitness companies provided by CoStar Group that occupied at least 100,000 square feet of space had 111 names, and Crunch Fitness was No. 8 with 9.8 million square feet, neck and neck with No. 7, 24-Hour Fitness. Tops was Planet Fitness Holdings, with 46 million square feet.  

They are all seeking to tap into a seemingly deeply rooted desire to get and stay in shape, said a spokesperson for Health & Fitness Association, a Boston-based global trade group for the health and fitness industry. In a May report, the association found that the fitness industry was worth $22.4 billion, and placed the number of clubs and studios at 55,294.

A report from the data firm Placer.ai, also from May, found that year-over-year visits to fitness chains were up nearly every week between January and April of this year. “Interest in gyms is not going away any time soon,” the report said. 

“People put a high value on their gym memberships,” the Health & Fitness Association spokesperson said. Attendance dropped drastically during pandemic shutdowns, but customers maintained their memberships. And while average gym attendance hasn’t reached pre-pandemic highs, memberships now exceed 2019 levels, and activity has been strong enough for wellness to be the kind of draw that helps enliven a retail complex.

A lot of landlords want gyms in their complexes, because they provide a regular stream of visitors, according to the spokesperson. “You can pick up cat food for your cat. Or stop by a Trader Joe’s to get your smoothie, or maybe go pick up some clothes from the dry cleaner after your workout.” Asked if gyms are at least part of the answer to the decline of the traditional department store as an anchor, the spokesperson said, “I believe so, and that’s what a lot of people in the industry believe.”

Whatever might be holding back other industries, then, it’s growth time in the gym space. Online search results for Crunch Fitness essentially reveal a road map of that growth: 40,000 square feet in St. Cloud, Minn., on July 11; a new location in Pleasant Hills, Pa., a suburb of Pittsburgh, on July 9; a 40,000-square-foot location on Fredericksburg, Md.’s “Golden Mile” on July 4 (that one’s not ready to open), and so on. You’ll find Round Rock, Texas (a suburb of Austin), Erie, Pa., and Kyle, Texas, in there, too, recently.

Crunch’s motto is “no judgments,” so someone who can stand to lose a few pounds can exercise next to an Adonis and not worry about drawing a reaction.

Chequan Lewis has been Crunch’s president since February, when he left his job as chief operating officer of Pizza Hut. Lewis hopped on Zoom in early July to explain that and other things about his company and industry. 

This interview has been edited for length and clarity. 

Commercial Observer: So you came over from Pizza Hut and now you’re the president of Crunch. One might say you got folks fat and now you’re capitalizing on getting them back into shape. How might you respond to that?

Chequan Lewis: Coming from the world’s largest restaurant company, I had a chance to learn a lot. 

We were looking for a way to motivate a group of friends, to get to that group of friends. What’s the next step in transforming people’s lives? How do we connect with people to further themselves? Is it going on a different platform? Obviously, it’s about making people a little bit healthier, but it’s also about connectedness and community.

Do you feel pressure to stay in shape? I saw a picture of your CEO, James Rowley, and he had arms like tree trunks.

I don’t feel pressure. I look at it as a positive. I’m here every morning. I live and breathe what it is, and the results of that aren’t pressure.

With a name like Crunch, it doesn’t connote the things that Equinox is supposedly doing to make its gyms into hangouts for the affluent. I presume you saw the recent story in The New York Times that Equinox has opened hotels, they even have eucalyptus-smelling soaps in the showers. Are you guys competing on that score, or are you trying to be a little more populist?

We are focused on being the best value proposition for folk that are looking for a gym. I don’t think you have to be at an Equinox price point to deliver a world-class experience for members. We’re able to get that done. I think if you talk to the average Crunch member, I think that you will hear that.

As a more general rule, are you looking to increase the amount of time that your members spend in your facilities? Are you looking to make your facilities more user-friendly?
It was always going to be a place where it was going to be much more than exercise. One of the biggest factors is our culture and our community. You certainly get a lot of opportunities and a lot of ways to experience them.

You can go to our competitors — which I won’t name — if you just want gym equipment. Or you can come to us if you want world-class equipment and proprietary things [such as a yoga studio, a group fitness studio, massage beds, babysitting service, or a sauna].

Crunch clubs make serious exercise fun by fusing fitness and entertainment. You can come to us for group fitness classes that only we provide. So, I guess the way to think about that is we want to meet the members where they are in this moment, and respond to their needs. We’ve done that in the past, and we will do that in the future.

Going on the internet and searching for “Crunch Fitness” is really an exercise in seeing the pace at which you are opening new locations, which is pretty breathtaking. And a lot of those have been in suburban locations. I’m wondering where you are in the growth pipeline?
I’d say we’re in hypergrowth mode. We expect to open more than a club a week in 2024. We expect to meaningfully exceed that next year. We’re not done. We’re working together selectively to find client inventory fast enough in the right spots so we can meet the need we’re feeling from our members.

So you have 462 locations. What is that going to be, say, on Dec. 31, 2025?

We’ll approach 500 this year. By the end of next year, I expect us to add another 100 clubs or so. And we’re looking beyond that. We’re looking at planting the flag outside the U.S.  

Why? What is going on in this market that makes you guys so confident that you can grow at that kind of pace?

I think the way our clubs have performed. A franchise begins with putting in the right parts, and with us helping to grow their business, and then making sure they’re set up and making sure they’re ready to grow and proliferate the concept. Our franchisees are the best in the world.

So when we open up, we see really great things happen. Our people keep coming back, they keep referring us. What we find is that when we have that intersection of the right partner and the right location, the assets open up. The people come.  

Are you guys making money? When you add a location, is it accretive? Describe for me what is going on financially at your company.

Institutional investors continue to invest in Crunch, and franchisees keep opening new Crunch locations. Investors and franchisees are excited to bring the Crunch brand to everyone  — from the first-time gym-goer to the seasoned athlete — and to help Crunch rapidly expand across the U.S. and around the globe.             

What constitutes a good Crunch location? Do you have a certain minimum square feet? Are you looking to be on ground floors in shopping malls, or in open-air plazas?

To put it in real estate terms, our clubs right now range from 12,000 square feet to 60,000 square feet. We have to be able to be in a place like New York or San Francisco, where there’s not that much available space. This is a flexible model that allows us to go into different types of spaces and still have a concept.

Generally, Crunch pursues spaces with an average size of 25,000 to 35,000 square feet, in variation. We can do some ground-up. We don’t do it very often. What we want to focus on is finding the right place so we can make sure our model fits that.

Is there a different profile for urban downtowns as opposed to suburban malls?

It’s important for us to be flexible and creative enough. We’ve got to be able to play in San Francisco as effectively as we play in South Florida. So we may do something smaller there, have amenities — something along those lines. The suburbs look and feel different. But the important thing is we can get in anywhere and make it work in partnership with our franchisees.

How Crunch uses a space on a coast may be different from how it uses a space in the middle of the country. For example, my local Crunch gym in Dallas is 40,000 square feet. In New York and San Francisco, there’s not so much available space. Crunch’s space planning is nimble to accommodate smaller floor plates with the addition of a mezzanine where possible.

Pretend I’m a retail landlord, and have an old vacant Bed Bath & Beyond space. Convince me to put in a Crunch Fitness.

As we sit here in 2024, what we have now is landlords coming to us. They realize we are one of the premier fitness tenants. Landlords recognize the benefits of the Crunch brand presence for both current and potential co-tenants, specifically acknowledging the high frequency of visits by Crunch members. 

Crunch plays well in places that are socially important, meaning they complement commerce and communities. We play well alongside businesses that provide essential daily needs, including grocery and big-box retail stores.

What we bring is an incredibly high draw from a young, strong and social base. We also bring mature and senior people. At Crunch, we pride ourselves on our membership consisting of people from different walks of life.  

Our strongest hours are 4 to 8 p.m., Monday through Wednesday, which generally is the slower time for other retailers. 

The other thing I want to say is the reason our neighbors enjoy us so much is that we are one of the cleanest facilities in the world. My general managers are going to walk the parking lot and walk the front of that asset like it’s a place they live.

Do you find yourself taking over the role of anchor? Traditionally that’s been the role of department stores.

That’s one of the reasons why we’re attractive to landlords. We can be a junior anchor. The big thing is when we go in we like to think about what that community needs.