McFit

Fitness for Free

  • Why it matters

    Why it matters

    Gym usage is on the rise among Germans, and McFit has twice the market share of its closest competitor.

  • Facts

    Facts

    • Europe’s largest fitness studio chain, McFit has more than 270 branches in seven countries and about 1.5 million paying members.
    • McFit founder Rainer Schaller is planning to build the largest fitness studio in the world in Oberhausen by 2019, without membership fees.
    • A new fitness studio typically costs about €3 million to build. The new mega studio, called Mirai after the Japanese word for future, will cost closer to €50 million.
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    Audio

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Cheap as chips. Source: McFit

The achievements of Rainer Schaller, founder of the McFit fitness studio chain, are best described in the superlative.

McFit is already the largest gym operator in Europe, measured by memberships. Soon, if everything goes according to plan, it will be the operator of not only the largest gym in the world, but the cheapest.

Mr. Schaller, a 48-year-old entrepreneur, wants to convert an old industrial building in the western German city of Oberhausen, and some of the wooded area around it, into the world’s first health club without any membership fees. The property’s surface will measure 55,000 square meters, or 592,000 square feet — ten times the size of an American football field.

McFit has already proven itself a trailblazer with its inexpensive pricing scheme. A standard monthly contract costs only €19.90 ($23.67). But how can a company, even one that specializes in budget deals, afford to give away its services for free? “Through sponsoring and partners from the business world,” Mr. Schaller said.

A new, modern fitness studio can easily set an investor back from €2.5 million to €3.5 million. Mr. Schaller’s new project will likely cost a whopping €50 million. The Mirai, named for the Japanese word for future, is slated to open in 2019.

Mr. Schaller hasn’t locked down the financing yet, but he has signed a lease agreement with the city. Oberhausen is at the heart of one of the most densely populated regions in Europe. Roughly 13.6 million people live within 90 minutes of the city, according to estimates by McFit.

With around 1.5 million paying customers at more than 270 branches in seven countries, McFit is the market leader in Europe. It has 3,500 employees and group revenue of about €330 million. By comparison, the entire German fitness sector, with its some 8,300 gyms, saw annual turnover last year of €5 billion. It was the year the number of Germans going to the gym topped 10 million.

The wider European fitness market has a value of €26.7 billion. After McFit, the largest gym chains on the continent in terms of membership are the Netherlands’ Basic-Fit with 1.3 million members and 440 clubs, and British chain Pure Gym, with 872,000 members and 172 clubs. According to research by Deloitte, McFit ranks fourth in terms of revenue, but the leading chains are all in the premium market.

With German revenue rising year after year, it’s easy to imagine why Mr. Schaller would want to build a fitness studio that’s not only big or even bigger, but the biggest.

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Mr. Schaller had the idea to build The Mirai even before he founded McFit, which he started as a “fitness studio for everyone.” At the time, 20 years ago, Mr. Schaller had just opened his first studio with used equipment he procured from a bodybuilder named Frank the Bank.

Later, Mr. Schaller lived in a storage room of one of his studios in the city of Bochum for two years. He has gotten to understand Germany’s industrial areas and the possibility of the unused spaces, such as those in Oberhausen.

“It’s not just about making money. If it were, we might not be doing it. Of course, the concept has to pay off, but when you’re already the No. 1 like we are, you look for new challenges,” Mr. Schaller said.

And what greater challenge is there for a discount gym chain than to pursue its own low-cost principle to its most extreme degree? Though this does return to the question of how McFit is supposed to make money without membership fees.

That’s where Ralph Scholz comes in. Until recently, Mr. Scholz directed the annual FIBO fitness trade show in Cologne. He knows the industry as well as the local political scene in Germany’s Ruhr area, where Oberhausen is located.

“Planning a project like this from scratch is a once-in-a-lifetime opportunity,” Mr. Scholz said in an interview at McFit’s headquarters in Berlin.

Down in the basement, he and Mr. Schaller set up a war room where they could discuss and map out their plans and timelines for The Mirai. “As a trade show man in Cologne, I used to spend the entire year preparing for a four-day event,” he said. “The Mirai could be a permanent, year-long showcase for our industry.”

“Planning a project like this from scratch is a once-in-a-lifetime opportunity.”

Ralph Scholz, managing director, McFit

Adidas, Nike or Puma could present their newest collections, as could workout equipment manufacturers. Anything that generates revenue will be welcome. Mr. Schaller hopes The Mirai will bring people and industry together.

The Mirai knows it won’t be enough to simply erect a few colorfully decorated walls with the aim of attracting young and old, men and women, bodybuilders and amateur joggers. For an ambitious project like The Mirai to succeed, there must be concerts, industry conferences, autograph sessions and live sports performances. The retail market, fitness studios included, is increasingly focusing on entertainment and experiences to increase customer interaction and brand loyalty.

The German Industrial Association for Fitness and Health (DIFG) has lauded Mr. Schaller’s idea as “a pilot project for the world.” Dustin Tusch, a spokesman for the German Association of Fitness Studios (DSSV), said, “Projects that get people thinking more about fitness are also good for the industry.”

If The Mirai catches on — and Mr. Schaller is confident it will — he said he plans to introduce the concept to other parts of the globe, perhaps China or the United States. “There’s nothing like this anywhere else in the world,” he said.

 

Thomas Tuma is a deputy editor in chief at Handelsblatt. Amanda Price adapted this article to English for Handelsblatt Global. To contact the author: tuma@handelsblatt.com

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