Comparing Apples & Oranges: The Brilliance of Orangetheory

I've written about a number of emerging fitness concepts in a prior post. A friend told me to look into Orangetheory Fitness - a fitness brand under the Ultimate Fitness, LLC umbrella, and backed by a private equity sponsor. It is hard to label Orangetheory as 'emerging', given that it has nearly 600 franchised locations already (growth plan is to hit 700 locations by the end of 2017). The company's motto is "Keep Burning" and is endorsed by celebrity personalities like Erin Andrews - the longtime sports reporter who now hosts 'Dancing with the Stars' as well as covers the sidelines for Fox NFL.

So what is Orangetheory?

Orangetheory fitness utilizes studios that range from ~3,000 to 5,000 square feet and are based on one workout, aptly named 'The Orangetheory Workout'. In short, the workout is based on a 5 zone heart rate training program. The workout is predicated on high-intensity interval training (HIIT), which combines both cardio and strength training. The workout is constantly monitored by a heart rate device, which will acclimate the workout to achieve each individual's target zone. The studios have an on-site trainer monitoring the sessions and the traditional equipment that you'd see in any gym - weights, rowing machines, etc. However, the equipment is utilized in a way that achieves similar power with less impact on joints. Like most fitness studios, Orangetheory offers a number of different tiered memberships that range from Basic ($59 per month for 1 class) to Elite ($99 per month for 2 classes) to Premier ($159 per month for unlimited classes). All tiers are on a non-contract, month-to-month basis.

So why does Orangetheory work?

  • It is Inclusive: The majority of the new fitness concepts out there are very much geared for 'the pretty people' - the ones that are already in shape. In fact, the joke about Equinox, which is somewhat true, is that you should work out at a cheap gym to achieve a fitness level that will make you feel 'comfortable' around the people at Equinox. Orangetheory prides itself on catering to all people - from the person who is overweight looking to get in shape all the way to the fit athlete looking to maintain their fitness level or even extend it to a new level.
  • Metrics-Driven Personalization: Orangetheory isn't going to provide you with a one-on-one coach guiding you through the program like a personal trainer at a gym would offer, but by leveraging a heart rate monitor that is critical to the entire concept, it provides a real measurement of the efficacy of your workout. Numbers don't lie and your metrics will incite the 'instructor' to push you to pick-up-the-pace if you're falling outside of 'your' personal target heart rate zone. Additionally, after the workout, you , it provides each individual with a digital readout on his or her smartphone after a workout, which shows key metrics such as duration of the workout, average heart rate, and calories burned (see pic below).
  • Blending In While Standing Out: Perhaps the biggest reason why Orangetheory works is that it allows all participants to engage in a workout that enables each person to achieve his or her fitness goals, without the self-conscious undertones that often undermine other types of fitness offerings. At Orangetheory, participants are so engaged in meeting their own workout targets that they do not have time to stand around and 'people watch' like they might at another gym or studio. That type of 'anonymity' is likely the most undervalued asset of democratizing a fitness concept - it's about making everybody feel welcome AND enabling everybody the permission to hit his or her targets without the feeling of lingering 'on-lookers'. At the end of the workout, the trainer will stay around for a little while to help participants interpret his or her 'data' and provide tips to improve on future workouts.

Final Take

Fitness has become a dichotomy of social status - you have the super expensive concepts that provide an experience that the average consumer simply does not have the means to engage in - the 'high-end' spinning studios are great, but at $35 per session, it's hard to shell out $800 per month for daily workouts, or $400 per month for an every-other-day cadence. On the flip side, the once pervasive gym membership has fallen to $30 per month or in some cases, lifetime memberships at $500. While these memberships are cheap, the experience has become cheapened in the process - smelly locker rooms, broken equipment, and lack of decent sanitation standards. 

Orangetheory provides the middle-ground - a personalized experience at a reasonable cost. With a digital component that enables friction-less booking of workouts, and the use of heart rate monitors to create real-time measurement invoking a sense of personalized sessions, it has captured people of all levels of fitness who are looking to keep burning. And that's why there is a lot of brilliance in the juice squeezed out of Orangetheory.

Sample Workout Mobile Readout:

Sample readout after a workout from the Orangetheory mobile application.

High-End Fitness: Here to Stay?

High-end fitness clubs have always been around. Most of them are small regional clubs. One could certainly argue that Equinox was the first mainstream high-end, luxury fitness chain.Over the past five years, there has been a proliferation of fitness clubs that have gained popularity via social media and other communication channels that have expanded from regional chains to nationwide, and in some cases, worldwide operations. Additionally, Millennials place a high value on health and fitness, and many no longer feel like the standard $29/month 24 Hour Fitness membership is good enough. Additionally, these high-end concepts have done an exceptional job of selling their products as much more than fitness; they've marketed them as "lifestyle" plays where you somehow feel more elite and refreshed by a high-priced workout vs. a low-priced workout - it's absolutely brilliant if you ask me. most high-end discretionary spend, it will be interesting whether these concepts have the stickiness with customers to withstand some type of economic downturn.  On one hand, my guess is 'yes', given that the clientele that these concepts have are less affected during downturns. On the other hand, fitness concepts tend to be very fickle and people always want to try something new, which is why ClassPass is a very interesting and likely sustainable concept (it offers tons of variety).  In any case, it will be interesting to see what discretionary spend items Millennials start cutting in a potential economic downturn.  Here is a sense of some of the prices of a few of these fitness concepts:

  • Equinox: Think W Hotels meet Fitness Club.  Sometimes more a 'place to be seen' than a place to work out. There's a funny saying that "people work out at lower tiered gyms before they feel comfortable joining Equinox." Membership prices range from $160/month to $175/month for single club access, and $195/month to $250/month for global access.  There is also an initiation fee of $200 - $300 based on membership access.
  • SoulCycle: A 'revolutionary' approach to the traditional spinning class. SoulCycle has spawned a number of similar concepts - all are pricey at around $35 per session. SoulCycle filed an S-1 in July as a precursor to its IPO, but still has not hit the public markets. 
  • ClassPass: A very unique concept that offers a network of different independent health 'studios' that encompass a number of different types of exercise (dance, yoga, Pilates, etc.)  It is a membership-based structure and the price in NYC is $125 per month.  You can visit the same studio up to 3 times per month.
  • Pure Barre: One of the hottest new concepts. Pure Barre utilizes the ballet barre to perform small isometric movements set to music - a total body workout that lifts your seat, tones your thighs, abs, and arms, and burns fat in record- breaking time. Prices range from $25 - $35 per session.
  • Barry's Bootcamp: Bootcamp style workouts gone high-end. $30 - $40 per session.
  • Crunch: Another general fitness club (like Equinox) that brings an upscale atmosphere with the amenities to match to the normal gym concept. Membership prices range, but are on average, $100 per month.
  • Pure Yoga: High-end yoga studio in select cities around the world (almost exclusively in Asia). Their only studios in the U.S are in NYC where they have two locations. Monthly memberships range from $155 to $280 per month (there is a $15 premium to access both NYC studios). 

As you can see, the individual sessions can add up in cost quite fast. If one were to do two SoulCycle classes per-week, that's $280 per month. One SoulCycle class in-itself is more expensive than a monthly membership at a lower-class gym like 24 Hour Fitness or LA Fitness.


Demo by Lululemon at Dallas' Northpark Mall.

Demo by Lululemon at Dallas' Northpark Mall.

People say that Lululemon is nothing more than overpriced 'Athleisure' wear with a good brand and will be a fast-fad, much like many of the high-end fashion brands that have proceeded it.  I haven't done a deep dive into the financials of $LULU, but I do know what I see - that damn horseshoe is everywhere.  And its been around for a what has it done that other high-flyer niche fashion companies have not?

There's a lot in Lululemon's marketing that strikes a chord with the consumer. Lululemon has really taken the idea of 'lifestyle marketing' to a whole new level. The company offers yoga classes and really promotes a lifestyle that people connect with. As this country goes through this whole 'health-and-wellness' phase, there is a lot of appeal for a company that promotes wellness and 'zen' as a part of everyday life - not a radical change to the way a person lives, but a perception of brand-promise.

The damn bags:

So you have to start with the damn red bags. Yes, they're bold and confusing - nobody could ever tell you what they say, but it's likely something very 'zen'. However, they're recognizable & reusable. In a day where most companies are still selling product in disposable bags, the idea of a reusable bag as a marketing tool is brilliant. And yes, you see the horseshoe, which has significant brand connotation now.

Wear it. Be it (sort of):

I'm not sure if most of the people walking around with that horseshoe logo on their clothes actually do any type of yoga or physical exercise. In fact, I'm quite certain that some of them don't. However, the logo provides a feeling of empowerment - an image of "I'm hip AND healthy". There is something very clever about how the company has spun its lifestyle image to empower people who have no clue what fitness is. I'm no branding expert, but when you can convince somebody that wearing a particular brand (at a premium price) will project an image of health and wellness - that's incredible.

Did I just see that?'re in a mall and you happen to see a bunch of people huddling around a red banner and you get curious about what the heck is going on [ref: pic above]. You get a little closer and you see two people (a male and female) doing crazy yoga poses.You think to yourself, "wow, that's odd."  But then you look around and there are a whole bunch of people watching. What the heck are they watching? Well first, they're watching some crazy yoga poses. But second, they're watching a company market itself. It's bold; it's a bit odd; but, it gets peoples' attention. Is that not what marketing is all about? Creating initiatives that get people interested and eventually find their ways into your stores?

I'm quite amazed. I'm quite confused. I'm quite impressed.