The Studio CEO: Business Coaching For Yoga & Pilates Teachers & Studio Owners

Why Most Yoga Studios Stay Stuck at 1–9% Profit (And What the Data Says to Do Instead) with Julian Barnes

• Jackie Murphy • Episode 49

Share episode

Send Jackie A Message!

In this episode of the Studio CEO Podcast, Jackie Murphy sits down with Julian Barnes, CEO of BFS Network, to unpack real data on studio profitability. Drawing from the most comprehensive State of the Industry report to date, this conversation reveals why most yoga studios remain stuck at 1–9% profit — while Pilates studios are far more likely to exceed 20%.

You’ll learn the structural differences that drive profitability, why pricing isn’t the real issue, how two new members per month can dramatically increase profit, and what systems actually matter for sustainable growth. This episode is essential listening for yoga and Pilates studio owners who want clarity, benchmarks, and a realistic path forward without burnout.


Timestamps

  • [00:00] Welcome + guest introduction

  • [07:00] Industry data overview

  • [13:00] Profitability benchmarks explained

  • [18:30] Yoga vs Pilates profitability

  • [24:00] Pricing myths

  • [30:50] Two-member profit math

  • [38:00] Business model differences

  • [47:00] Intro offers + FER framework

  • [55:00] How to assess your studio


Key Takeaways

✔ Most studios aren’t profitable — and that’s not personal
 ✔ Pilates studios benefit from built-in scarcity
 ✔ Profit comes from systems, not hustle
 ✔ Pricing reflects positioning
 ✔ Two new members per month can change everything


Quotes

  • “This isn’t a hobby. It’s a business.”

  • “Your town isn’t the problem.”

  • “The offer isn’t broken — the process is.”



Resources Mentioned


FAQ 

Why are Pilates studios more profitable than yoga studios?
 Because of lower rent, smaller teams, and built-in scarcity.

What is a healthy profit margin for a studio?
 10–20% after paying the owner is considered strong.

Do intro offers matter?
 The process behind them matters more than the offer itself.


yoga business, Pilates studio, studio profitability, boutique fitness, studio CEO, pricing strategy, fitness business data


Links:

BFS Pilates Report: https://report.bfsnetwork.com/2024-pilates-report


Work with Jackie Murphy


SPEAKER_03:

Welcome to the studio video. The only podcast that I'm home with yoga and a lot of teachers and studio owners step confidently into their role of video. If you are ready to help how to take your business experience and burning the help, you are gonna hide your home and more than third time. Join me as we dive into it to have it be in fighting and real world advice that will help you grow your value. Build a timing and create a business that serves you as a mic that you serve your students. It's time to embrace your inner CEO and make more money without working more. This is just the beginning. All right, welcome back to the studio CEO podcast. I have a really special episode for you today. We have a guest on the show, Julian Barnes has been the CEO of the BFS Network for seven years. Is that correct?

SPEAKER_01:

Correct.

SPEAKER_03:

Good. He has been advising thousands of fitness, wellness, and recovery business owners. And he creates industry reports that he's bringing today to really talk about what the yoga and plate's industry looks like right now and then into 2026. So welcome, Julianne. We are so happy to have you here.

SPEAKER_00:

Thanks, Jackie. I am happy to be here. Looking forward to our conversation today.

SPEAKER_03:

Yeah. Why don't we just start with a little bit about your background and what made you want to even create the BFS network? How did you get into this?

SPEAKER_00:

Well, that's a long story, usually involves a couple of cocktails, but I'll give you the short version today. I grew up in movement. My mom was an active volunteer with the YWCA. And when I was she was the chairwoman of the board of the YWCA, I literally grew up listening to the conversations around finding new new participants, recruiting instructors, back office, operation sales. Like that was the dinner conversation between six and 16.

SPEAKER_03:

Wow.

SPEAKER_00:

Mom was talking about running the YWCA of Central Westchester, suburb of New York City. So that's I've grown up in and around the back of house aspect of sports, fitness, and movement.

SPEAKER_03:

That's a very interesting, very cool. Are you still in New York?

SPEAKER_00:

I am still in New York. I'm in Harlem in New York.

SPEAKER_03:

Oh nice.

SPEAKER_00:

So then the shorter version is athlete, entrepreneur, educator. My first educating job was teaching tennis when I was it's the summer after college, and then I continued teaching throughout law school. After short stint practicing law early in my early 30s, I started teaching for New York University. They asked me to create their institute in entrepreneurship and small business management. I did that for a few years, and then about a decade after that, Swedish Institute College of Health Sciences, which is the oldest massage school in the country, created a program called the Advanced Personal Training Program. So it was an 18-month degree granting program. You actually got an associate's degree, and it prepared you to take one of the qualifying tests to become a certified personal trainer. So I've been teaching, teaching, advising general small business owners, and then more specifically, personal trainers and other wellness professionals who wanted to enter this career. I've been doing that long before BFS existed.

SPEAKER_03:

Yeah.

SPEAKER_00:

And so then when my business partner, NT E Talk, and I created BFS in 2017-2018, initially we were producing conferences, like the a one-day version of Mind Body Bold. And one thing we knew is that the small studio owner didn't have time to leave their studio to go to a conference for three days. So we created a one-day conference. And we did that in New York, Washington, DC, and Chicago. And we did that five times in 2018 and 2019 pre-COVID. Obviously, the world shifted in 2020, and we started our peer. Well, I should say the state of the report that we're gonna talk about today began with those conferences, right? It was really version like 0.50, not even 1.0, 0.5. Because at that point, it was simply a survey of everyone who attended the conference. We wanted to gather some basic information about them. So it was a survey, but it wasn't really broad. But that's the origins of the survey at our own conferences. During the pandemic, our state of the industry took on a much different tone. There was a lot of economics, it was a lot of policy, a lot of headwinds, tailwinds, what's happening with science and different states and who's opening and who's providing support, what our 2020-2021 reports look like. And then finally in 2022, we could get back to an actual state of the industry. What does the industry look like? Still more economics, headwinds, tailwinds. And the current report that we're going to talk about today is the most comprehensive report that we've ever created. You've seen it, it's shock data, right? And when we started the process a year ago, we had a really clear intent. And that was for anyone reading the report or browsing the report. We wanted the report to provide a blueprint, a framework, a guidebook for producing a profitable studio, not based upon anecdotes or opinion or trends, but based upon irrefutable data. This is the conversion rate that profitable yoga studios have in suburbs. So it's there's no guessing and there's no opinion, it's data. So that's what we created. Really proud of it and really excited to talk to you about that today.

SPEAKER_03:

Yeah, it is so comprehensive. And we're gonna link it in the show notes so you can go download it if you're listening to the podcast. But it's so key that you have an understanding of data. I work with a lot of clients who will either beat themselves up or they're over-exaggerating how well they're doing because they don't have the benchmark data to go off of, specifically with profitability. I think this is a conversation that is starting to happen more and more in the industry, but we also have lots of people coming into this industry, opening a Pilates studio and kind of writing the momentum that that method is having right now without the understanding that, like, most likely this is what your profit margin will be and what you can expect. And we need to plan for that. What did your most recent report find about profit margins?

SPEAKER_00:

So let me just back up and say it it takes a lot of time and effort and resources to to gather all this data through partners like like yours and others. This report would not have been possible. The Pilates report would not have been possible without our partners at the offering trees. So I'll go macro and then we'll go into the modalities. Last time we produced this report was with 2022 data. And you know what? Before I get into numbers, let's give some context to your audience of who we surveyed so they understand. Most importantly, these are independently owned studios. So we're not talking about or there's no Solicor, no Sol Cycle, no Barries in here. The studios in this survey are overwhelmingly independently owned. 71% of the studios in our survey have one location. 19% have two or three locations. So 89% of all the studios, and we surveyed over 500 studios worldwide. 89% of the studios we surveyed have three or fewer locations. If there's a franchise in here, they're the franchisee of corporate-owned, right? So there may be a bar three franchisee, but it's not a bar three corporate-owned location, right? So in other words, the people, the data that we're going to talk about comes from people like your clients and your audience independently on. I think that's important to say so that people know who we're talking about. And there's broad geographic representation throughout the United States. So we had surveys from studios in 46 states, plus the plus District of Columbia, another 40 from Canada, another 10 each from the UK and Australia, and then a sprinkling throughout the world. So throughout the United States, basically every state. And then even within that, it was about 45% in cities, population half a million or more, another 45% from suburbs, which was which we define last year as 50,000 to half million, and about 10% in rural areas. So almost every state, equally suburb versus city, though in Canada and a couple of other countries, every modality covered. So we really touched every basis in the survey. So I just think that background is is useful before we get started.

SPEAKER_03:

I have a question about that, and then we'll go back to our first question. But what made you want to cover rural, suburban, city across the world? I hear a lot of times it's my city, it's my town. So XYZ is happening. So I'm so curious. Like, what was your intention?

SPEAKER_00:

As you know, every studio owner thinks they're special.

SPEAKER_03:

And they are very special as a human being.

SPEAKER_00:

Yes, right. But they think, or I should say, they think their business is different.

SPEAKER_03:

Yes.

SPEAKER_00:

They all think their business is different. Your business isn't different. That's okay. It's okay that your business isn't different. It actually is beneficial. So when I talk, when we have this conversation today about what works, I can tell you, and you can tell your clients, this is data from Syracuse and New York City, from Miami Beach and from Tampa, and the small town in the panhandle, right? This applies to our clients in Dubai and Birmingham, UK, and Sydney, and it applies to small towns I never heard of throughout Latin America and in Eastern Europe. We even have a studio from Kazakhstan, right? The fundamentals of running a studio do not change of uh rural area, um, city, market size, regardless of modality. And I would even say to you, this is an entirely different podcast, but the fundamentals of delivering a personal care business don't change, whether it's yoga, getting your nails done, getting your hair done, getting a massage, you expect the same type of client experience and customer service regardless of the modality. It's much broader than oh, well, I'm a little plotti studio in my town, and my town's different. Your town may be different, but the fundamentals of running a profitable business are the same.

SPEAKER_03:

Yeah. Which is great news because then you can use this data and it's in very helpful, and you're never stuck. I think when you're believing you're different, that is when you start to see studios get stuck. So let's circle back to profit.

SPEAKER_00:

Profitability. Yeah. So the great news is that in 2022, only 9.2% of all of the studios we surveyed had a profit margin of 20% or more. 9.2. And in 2024, 2024 data, that number almost doubled to 17%. Right? So you think about where we were 2022, we were still coming out of the effects of the pandemic. And by 2024, the pandemic was largely in the rear view, and people were. We know that during the pandemic, we lost about 30% of all uh brick and mortar fitness studios within like 2020, 2021, 2022. So, but a natural consolidation occurred. The spaces may have decreased, but the amount of instructors didn't necessarily decrease, and the amount of people who were looking for a place to exercise actually increased. So the strong businesses that survived, by the time they got two or three years past the pandemic, they actually had a larger pool of potential clients. And and that translates into the numbers we see, the profitability. So that not 17% profitability across all industry. Now, for your sectors of yoga and Pilates, it's a tale of two cities because they're not equal in terms of profitability. By far, well, when we asked the question in our survey, our assessment last year, and we've changed it this year. Last year, the question asked, are you profitable? And if so, how profitable are you? And the highest option we had was 20% or more. We didn't have 30%, 40%. We have added that this year, so I really can't wait to see what the 2026 report says. So when we say next 17% were 20% or more, well, anecdotally, I had a lot of conversations with Pilates Studios this year that are 30, 35, 40% net income. And we define net income as after they paid themselves a salary. Right. So Pilates Studios were more likely to have a 20% net income, higher total revenue, higher profit margin. And I think that metric under-reports the actual gap. Like when we have next year's data with a 30% profitability and a 40% profitability, I think we're gonna see the gap between profitability for Pilates Studios and everyone else is gonna actually increase.

SPEAKER_03:

Yeah.

SPEAKER_00:

Then number two, we asked the average profitability for all studios, regardless of modality, was 10 to 19%. And I should say all of the numbers that we're gonna talk about today are based on only the profitable studio. So every studio that completed the survey wasn't profitable, right? It was a total of 57% that were profitable. Of those 57%, 17% were more than 20% profitable, but there was 30, what, 43% that were break-even and and not profitable. We're we're not talking about them. I'm not talking about them. I'm only talking about the 57% of the of the studios that were profitable. Okay, so if you were profitable and you were a Pilates studio, you are far more likely to be 20% or more profitable. If you were profitable and you were any modality, you were most likely going to be in the 10 to 19% profitability. And unfortunately for some of your listeners, if you were a yoga studio and you were profitable, you were most likely going to be in the 1 to 9% profitability. Now, again, we're defining profitability as after you pay yourself.

SPEAKER_02:

Yeah.

SPEAKER_00:

Okay. Replacement costs. So there's the high-level answer to your question about profitability.

SPEAKER_03:

It's so interesting.

SPEAKER_00:

Tell me, what's what what do you find most fascinating about it?

SPEAKER_03:

Well, it doesn't surprise me that Pilates is more profitable than yoga. I think that Pilates has come in with a really clear understanding of where to price their memberships and class packs and the value of what they're offering. And the yoga industry can often struggle with can I charge that much? Will someone pay me that much? And making sure that they're delivering a service across the board, like you're talking about, that's consistent and solid every single time. You tell me, what do you see when you're like yoga and Pilates? What do you think the difference is?

SPEAKER_00:

Correct me if I'm wrong. You're a yoga instructor.

SPEAKER_03:

I was for over, yeah, for a long, long time.

SPEAKER_00:

So you know that world. I know it. What do you think is the number one difference between a yoga instructor and a Pilates instructor who then open their own studio? Oh. One word. Give me a one-word answer. I know you know the word.

SPEAKER_03:

No, I don't know if I do.

SPEAKER_00:

Mindset.

SPEAKER_03:

Yeah.

SPEAKER_00:

Okay. So I say this without any judgment. And I'm not talking about the benefits of the modality, only talking about back of house operations. Like that's our wheelhouse. BFS is a back-of-house focused company, not front-of-house teaching, teaching quality modality benefits of one versus the other. We don't get into that. Strictly from back of house perspective. Everyone who teaches, who works in fitness, or almost everyone, I I would hope, does it because they want to change lives, they want to impact lives, they want to help people become the best version of themselves, right? Would you agree? That's more important. However, this is a business.

SPEAKER_03:

Yeah.

SPEAKER_00:

This is a hobby and it's not a charity. If you want it to be, go to the why. Go teach at the JCC, at the Y, volunteer, volunteer your church, your synagogue, in the park, do donation classes. Lots of ways to share the method that you've discovered that changed your life to share it with others. You don't have to make it a business to do that at all. If, however, you decide that you're going to make this a business, the purpose of a business is to make a profit. And I would say even make it even More real, the primary purpose of a business for an individual is to provide a quality of life for that individual andor his or her family. Number two, once you decide you're going to run a business, you have an obligation to take care of your team, your employees, your instructors, right? They're counting on your ability to stay in business for them to be able to pay their rent, their mortgage, tuition, car payments, etc. They can't be their best version of themselves if they're wondering if they're going to get paid this week.

SPEAKER_03:

Yeah.

SPEAKER_00:

And if they're not the best version of themselves and they're not bringing the best version of themselves into your class, now you have a problem because you're not actually impacting your clients and your clients won't stay. So your number one obligation, if you decide you want to do this as a business, your number one obligation to yourself, your family, your employees, your instructors, your team is to maximize profit. And that goes against the heritage of most yogis. And I say that without judgment. I they want the world to be a better place. That's great. So do I. But once you sign a lease, five-year, 10-year lease with escalator clauses where the rent increases every year, and then you have a team and your instructors are asking for salary increase every year. Your costs, your your towels and the equipment costs go up every once you decide you're going to actually do this as a business, it can't be a hobby. And if it's a business, then you have to maximize pricing. You have to charge the most amount of money that people are able, willing and able to pay. And that's going to vary by market size. You have to charge the most that people are willing and able to pay so that you can take care of yourself. You're not running this business and teaching at five other places at the same time and doing DoorDash and Uber and babysitting, right? Because that means you're not bringing your best self to the business. So I'm going to give you and your listeners the most captain obvious statement I could possibly give. And it's from this report and from every previous report we've ever published. The studios that have the highest total annual revenue and the highest profit margin are the studios that charge the most for their services. Captain obvious.

SPEAKER_03:

But but very, very, very important to state because I think you're speaking of something that is so common that the passion starts the business and gets the initial momentum going, but profitability is what's going to sustain it and keep it for years and years and years and years. And you have to do that with pricing. So I know the pricing is in the report. Specifically, you guys mentioned intro offer prices, membership prices. When you say the studios that are doing the best are priced the highest, what is that number? What should they quote unquote be pricing?

SPEAKER_00:

It's gonna vary by neighborhood, right? This is why we broke, we asked the the market size question, because again, I'm in I'm in New York City. And even in New York City, there's different pricing in different neighborhoods, right? There's East Side price, there's the Trebeca price, there's the West Village price, the the Williamsburg price. Those are different prices from East Harlem, from Washington Heights, from other neighborhoods. So even within the confines of New York City, they're different prices. And then you go north of here, Syracuse, Ithaca, Rochester, Albany, Buffalo, those are cities, but they're not as expensive as New York City. So your pricing is super local, right? And that's why I say it's a function of what your clients are willing and able to pay. And you only figure that out by doing some research in your area and then deciding what type of business do you want to be and where do you want your pricing to be? So, for example, let me try and visualize this for people listening. Imagine a simple XY chart, a sheet of paper with two lines, your x-axis and your y axis. So you create four quadrants. So anyone listening, just take a sheet of paper, draw one line through the middle horizontally, one line vertically, create four quadrants. The middle, the intersection is for this exercise, that's where you are. And you can decide that the horizontal line is distance, near and far. And the vertical line is price, premium, and budget. So each of the four quadrants represents most expensive and premium, least expensive and premium, close to me, far from me, right? So I'm in Harlem. If there was a studio that had like five dollar reformer classes, but it's in Coney Island, that's an hour and a half for me. So the fact that it's a premium studio but low price, but it's an hour and a half, an hour and a half for me doesn't help me. So you ask what should the price be? I say this exercise helps you determine the optimal price because what someone should could do is place the logo of every competitor, and I'm defining competitor broadly. Place the logo of every competitor in one of the four quadrants, right? So if it's Barry's, then that's premium. Are they near you or are they far away from you? Put them in the box that's appropriate. If it's uh Jackie's yoga, is what does she charge? Is she a premium? Is she mid-market? Is she affordable? Is she near you? Is she close to you? So you take every place where one of your clients could go exercise. And I don't mean limiting it to Pilates or yoga, like every place, the local parks, the big box gyms, the person teaching out of the home. List all those in one of the four quadrants and then step back and look at the at the map and say, where do I want to be? Do you want to be similar to a premium business? Do I want to be affordable? Do I want to be luxury? Do I want to be mid-market? You decide where you want to be when you look at what's in your community. That's why this is a hyperloc exercise. It doesn't matter what they're charging in Beverly Hills and in the Hantons. What matters is what they're charging in your neighborhood. And this, they call this a XY pricing chart. This pricing chart helps anyone determine where their pricing should be in their community. And it gives you the option of determining where you want to position your brand in your community. Do you want to be a premium brand, an affordable brand, or mid-market?

SPEAKER_03:

Yeah.

SPEAKER_00:

There are pros and cons and consequences of each. There's no right or wrong answer. But remember the Captain Obvious statement: the studios that have the highest annual gross revenue and the highest profit margin. I say those two together because there are a lot of mostly owner-operated studios where the owner is teaching more than half the classes, and there's like a part-time manager and maybe one or two other instructors. There are a lot of those studios in mostly secondary and tertiary markets where the owner is taking home 50% profit margin. But that business total annual income, total annual revenue rarely gets above 300,000, 350, because the limits of that type of business doesn't allow it to build a bigger business. Again, no judgment. There's no judgment in that. It's about being intentional. Why am I doing this? What kind of business am I trying to create? Am I trying to generate as much revenue as possible? Then you need to hire, you need to invest in a manager, you need to invest in systems so you can actually do the type of things I know you counsel your clients to do, proper processes. Can't do that when you're teaching half your classes. If you love teaching and you're not trying to build a big business, you just want to teach, you want to teach, you want to create, and you want to be able to pay your bills and have a comfortable life, by all means do that. Nothing wrong with that. Just be clear and honest with yourself about what your objectives are for your business.

SPEAKER_03:

Yeah, I love the pricing matrix you're describing, to put it all visually and see it. And keep in mind, right, it was 43% were not profitable on your report. So, like 43 of those studios or gyms that you're putting up there are not profitable. What I see happen all the time is my clients will guess at what their pricing should be and they're modeling their business after a business that's broke. And I'm like, just be very careful. If you're looking at these other businesses to decide these things for yourself, take into consideration exactly what you're saying. Where do I want to be on this matrix, premium or super accessible? And what capacity do I have in studio to be premium or to be super accessible?

SPEAKER_00:

It also depends on your neighborhood, right? If you're in the Hamptons, you probably have a greater ability to charge$75 for a class. I just found out recently that in Riyadh, Saudi Arabia, the average boutique fitness class is$100.

SPEAKER_03:

Whoa.

SPEAKER_00:

That's the number, right? So that's your market.

SPEAKER_03:

Yeah.

SPEAKER_00:

But if you're in Huntsville, Alabama, just picking a small town. Right. That market's probably not going to be$100 a class. Probably not$50 a class. The definition of premium varies in every market. Okay. Yeah. I want to go back and touch on something because there's good news in this report, right? It could seem like, well, wait a minute, you're telling me that I need to invest in a manager and do all these things to make a profit. I don't know how to do that. I could be overwhelmed. Let me go back to the good news from this. The average studio in our survey, the average profitable studio did less than half a million. And I don't know exactly what they did because that was the bottom option, less than half a million and profitable. So let's just call it half a million. And we emphasize that profitability is after they pay themselves. So 10% profitability on a half million dollar business is$50,000. Profit on December 31st after paying yourself. So remember, the average profitable studio is 10 to 19%. So if you're at 10% profitability and you want to get to 20% profitability on a half million dollar business, you're only talking about adding an extra$50,000 annually. Extra$50,000 is less than$4,500 a month. I've forgotten the numbers. If you assume an average membership price of$175, kind of average around the country, you only need two net new members, net accounting for churn, two net new members every month for 12 consecutive months at a price of 175. And by the first day of the 13th month, you will have increased your net income, profit margin, by 50,000. So if you were at 10% profitability, you can get to 20% profitability in one year just by adding two net new members. That means you don't need any fancy marketing agency, you don't need meta ads, Instagram ads, you don't need to pay someone to do the marketing for you. It's two. Every other week you are enrolling a new member at an average of 175. I'm sure this is what you teach your members anyway, right? The funds to do it. So if you do this consistently for 12 new members for 12 consecutive months, you go from a$50,000 profit to a$100,000 profit, which goes from 10% to 20%. Or if you're one of those 43% who are not profitable, you're break-even. We just gave you a formula of going from breakeven to 10%. Yeah. What do you think of that?

SPEAKER_03:

Well, I love how you broke it down to two members. When I look at data, I really think all data is good news because without the data, that's the only bad news. You don't know what's happening or what to do or how to fix it.

SPEAKER_00:

And so it's any driving blind.

SPEAKER_03:

You're driving blind. And any data, whether it's saying you're profitable or you're not profitable this year, like that tells you what to do next. Like go sign two new members every single month and see what you can do from there. We do love meta ads. I teach my clients how to run mega meta in Google Ads. And I think part of that is they can do it themselves.

SPEAKER_00:

Yes. I'm being hiring an agency. Totally. You don't need to hire an agency to do your ads if you need two, just two.

SPEAKER_03:

Just two, just two. But I think having that benchmark, everyone listening, I would recommend that you end December 31st, whether it's your CPA telling you or you're going to find this data yourself with exactly how profitable you are. A lot of my times, my clients that come to me don't even know. They're coming in saying, I have no idea. You have to know that number, and then you have to set a goal for next year and break it down just like you just did. How are you gonna get there?

SPEAKER_00:

Yeah, it makes it more tangible when you can see the actual number. Give me a second, let me pull up the number. It is 4167 a month. Extra 4167 every month for 12 consecutive months will give you an increase of$50,000. And I say that because the average profitable business is doing half a million. So we so we know the universe we're talking about is half a million. So 10% and 20% on half a million is 50,000 or 100,000. We're not billions here, yeah. Right? We're breaking this down to to make it tangible. 47 every month, 12 months. That you increase your profitability.

SPEAKER_03:

Yeah, yeah. Did you have, and I don't know if this is in the report off the top of my my mind, did you have a data point in there on how long it takes average studio to become profitable?

SPEAKER_00:

No, we didn't. It's a good question. We didn't ask that.

SPEAKER_03:

Next year, ask that.

SPEAKER_00:

Because you know, it's gonna vary, right?

SPEAKER_03:

I mean, some open profitably. Some I know it takes years.

SPEAKER_00:

Well, that's what I was gonna say. So what might be helpful for your audience is to understand why Ploty Studios are so profitable and what lessons they can take from those studios. Some of them are innate to the business model, but it's it's still useful, I think, to understand why they're profitable. And I'd love to get your your opinion on this. I've had some conversations with some of the, what's the phrase, some of the Pilates educators who've been in this industry for like 30 years, who've explained to me how Pilates started 30 years ago, they didn't make not how to start, but how it moved from it's grown, yeah. It actually, I was talking to the founder of Polestar Pilates recently. He was telling me how when they were teaching classes at Bally's Total Fitness in the 90s, some of the hardcore Pilates, what do they call themselves?

SPEAKER_03:

Oh, the like traditional classical Pilates instructors.

SPEAKER_00:

They were they were like totally objecting to that, right? So we're only talking 30 30 years, right? Early 90s. So so what I'm about to say was not by design, it was by luck, but the business model works. What do we know are the fundamental building blocks of running a profitable brick and mortar business? And I say brick and mortar, so we're not talking about someone teaching out of the home. Nothing wrong with that. That's that's a different business model. Once you sign a lease and you're working on Main Street, you're a brick and mortar business, like a restaurant, like a barbershop, like a drugstore. So what's the biggest expense that a retail brick and mortar business has?

SPEAKER_03:

The rent.

SPEAKER_00:

Rent, right? And so how many reformers does the typical Pilates studio have in there? 10 to 12. We know that from the club Pilates model, we know that you can put 10 to 12 reformers in 1,500 square feet of space.

SPEAKER_03:

Yep.

SPEAKER_00:

How many people are typically in an indoor cycling class?

SPEAKER_03:

I would say 30 bikes, 30 or more.

SPEAKER_00:

You can do 30, 40, 50.

SPEAKER_03:

Yeah.

SPEAKER_00:

How much space do you need for 40 or 50 bites? You need a lot more than 1500 square feet. Same thing for a hip class, right? So uh in one case, the Pilates industry through through no planning of its own created a model where it needed a smaller footprint, smaller footprint, smaller rent. That is one of the reasons why Pilates studios are more profitable. They generally have a lower rent. Second biggest expense for any brick and mortar business on Main Street or Broadway in any town in USA. People. And if your instructor is doing the check-in and you don't have a front desk person, that's a payroll you don't have, or that's a person on payroll who doesn't exist. So generally, Pilates studios are low to medium frills, they don't look like Equinox, they're not built out, tricked out, you know, locker rooms, bathrooms, showers, all the amenities don't need all that space. So smaller footprint, lower rent, smaller team, lower payroll. So the two biggest expenses in running any brick and mortar business, rent and payroll, Plotties benefits from having smaller footprint, smaller payroll. That right there contributes to a lot of the reasons why they're higher profit margins. And then because they have 10 to 12 reformers, that leads to scarcity. And scarcity leads to Premium pricing. So when you only have 10 or 12 spots, you can charge more for that. If you're trying to put 50 people in a yoga class or an indoor cycling class or a hit class, well, it's hard to charge more for something. It's just the laws of supply and demand. There's more of it. I can't charge as much for it, right? So these things, smaller footprint, smaller payroll, scarcity leading to premium pricing. Now I have fewer spots available. I can sell them for a higher price. This is the reason why they're largely more profitable per location than other modalities, and why in next year's report, I expect we're going to see the spread, the gap in profitability is going to be even larger than this year.

SPEAKER_03:

Yeah. Yeah. I think about this all the time because building out yoga studios, you're paying for a heating system to go in and humidity and locker rooms, and the build-out cost itself is so different than a build out for a Pilates studio. Not that the machines aren't an expense that yoga studios don't have, but it is drastically different in your expenses month to month. What would you say, like the yoga studio owner that's listening to this is like, oh my God, I should change to Pilates? Like they're thinking, what do I do? How do I take this data and use it to not be a yoga studio that's one to nine percent profitable?

SPEAKER_00:

So don't give up on yoga. Yoga is really important. The modality is really important. I would think about your footprint. Do you need a space for 50? Space for 20. Like there's something to be said about scarcity. Let's say you're thinking about opening a studio. There's a lot of technology available now through automations and others, other aspects that can allow you to provide a high-touch experience with fewer people. So make sure that you're maximizing your use of technology to still deliver a world-class experience. And I would be super specific in marketing, well, two things. I would identify a very specific target audience for your yoga or multiple target audiences, and I would be super specific in my messaging around why and how yoga should be part of someone's entire program, not yoga versus Pilates, yoga and Pilates and cardio and strength, because we know from all the research studies, the body needs all of those things. Most people who are not exercise scientists, which is like 99% of us, fall in love with a modality because we like the modality. But as we get older, we're not thinking about how each of the modalities actually contributes to our longevity. They each serve a purpose. Strength training serves a purpose. Cardio builds on our VO2 max. Pilates builds on works a lot of our stabilizer muscles, flexibility, mobility, yoga, same thing. Flexibility, mobility, the mental aspect, they each work together, right? So there is a purpose for yoga. I wouldn't leave yoga and go into Pilates. I would say, what are the aspects of Pilates that I can apply to yoga and serving a smaller number of people, giving them a higher touch experience? If there's 20 people in a class versus 40, I can actually call their names in the class. They're open to adjustments. I can reach someone when it's one out of 20 versus one out of 40. And that's that will then should translate to a higher quality experience for that yoga studio. And what do we know drives retention in class? Well, the total experience drives retention. You can probably charge a little bit more if you're positioning your yoga as part of someone's longevity and well-being routine. Like messaging and high-touch experience and premium pricing and reduce your rent.

SPEAKER_03:

That's so good. I did a podcast episode a few weeks back when this airs about intro offer pricing. And one thing that I love from the report is that there was kind of this range of all these intro offers that could and can work. And I see this with my own clients. Two weeks unlimited works great for one person. Half off your first month, unlimited works great. Five class pack. When you look at this data from intro offers and you think about quote unquote, what's working in 2025 and 2026? What is your first reaction?

SPEAKER_00:

Any offer can work. As you said in your podcast, it's not about the offer, it's about the process behind the offer. And so the takeaway from our report was summarized in three letters. F, E, R. That is the new framework that we developed. F, find new leads. So the takeaway offer is not the issue, it's making sure that you're finding the right people who resonate with your community. That's the F. And that's why I mentioned earlier the studios with the highest profitability invested in a manager because the manager's primary responsibility is to implement these SOPs. So the F is find new leads, 50 new leads every month. The E is to enroll those new leads into your community every month. And the R is to retain those new members. So it's not about the conversion, it's not about the offer, it's about your sales SOP. And like you said, we could do a whole episode just on speed to lead technology earlier and how studios should be implementing technology. The technology exists such that if someone finds your studio because they're running, they're running a meta-ad, they're following your playbook for meta-ad, but the person is doom scrolling at 2 a.m. and they fill out the form, what is your response to that person at 201? Are they getting a personalized but automated reply at 202? Hey, Jackie, thank you so much for your interest in our studio. We have a class today at 8 a.m. Can I book that for you? World that we're moving with AI agentic agents, that's going to happen, right? The meta-ad that you're helping your clients run is going to actually offer to book the class, speed to lead. For what in this hypothetical, I have insomnia, I'm up at two in the morning, I'm doom scrolling, I find your studio, I'm interested, I complete the form, I fall asleep. I get up, take care of the kids, go to work. And if I don't hear from you in two days, I don't even remember that doing it. But if I get an instant reaction from you, and then you're telling me, Do you want to come in this morning? Do you want to come in this afternoon? Do you want to come in tomorrow? You know, you're responding rapidly. That's where the conversion, that's why the offer doesn't matter. Yep. It's the process behind the offer, it's your sales operating procedures, it's your speed to lead, it's getting them in the door, it's your messaging after I book my class. Are you are you telling me more than, hey, bring your water bottle, bring your towel? Are you going beyond that? A, telling me that you're really excited to see me, B, asking me why I'm here when I get there at the front desk. If there's a front desk person, is she excited to see me? Is she on the phone? Am I interrupting her lunch? Or is she completely engaging me? Hey, Julian, so glad to meet you. So glad you're here. What's your yoga experience? Have you ever done yoga before? Or is she giving me a towel and a key and say, go there? Like all of that, all of that, right? Same thing for the instructor. And then the message after I walk out the class, the class ends at 2 p.m. When am I hearing from you? Am I hearing from you at 2 01? Like automatic message. Great job, great class. You are amazing. When I leave that class before I leave the studio, is the instructor or the front desk person booking my second class before I leave? So it's the process around the offer. It's not there, is one key takeaway from the data. It wasn't the offer, it's the price. The number one price was less than$50. Yep. This is where my opinion versus the data comes in. I don't think you need to offer more than three classes in an intro offer. I think most people are going to figure out within three classes if they vibe with that environment. Maybe they come on a weekday, weekday morning, they come on a weekday evening, they come on a weekend. Your job as the owner of a studio running an offer is to get the person to come into the studio at least two times, book them two times on the offer. And we know people wait to the last possible moment. So if you give me a month, I'm going to use my two classes in a month. If you only give me a week, I'm going to use it in a week. So shorter, cheaper, reduce the friction, get me engaged, get me in the studio, and then say, So now that you love it, are you ready to join us?

SPEAKER_03:

Oh, I something you said like this will happen in the future because of the technology we have. I 100% agree with you. I think it's going to really separate studios from who is adopting it and using AI. I think the human component has to be in there and it will also make or break the sale, but it's not like can do you want to use this technology. It's like you will need to learn how to use this technology to stay in the game and delivering a really good experience.

SPEAKER_00:

There's a book and building platform. I won't name them for now. They just released an AI workforce of six different agents that run the business. So this isn't like 2030 coming down the street.

SPEAKER_03:

Yeah.

SPEAKER_00:

This exists now. Yeah. Right? And that's actually good news, right? Because everything I said earlier about the limited ability of the owner operator to have a higher total revenue, that may change if these agents take a lot of the admin work off of the individual owner. But we'll see. Bottom line, I agree with you when you in your previous episode where you said it doesn't matter what the offer is. It's not the offer, it's the process around the offer that matters. And that's I know that's what you teach to your clients.

SPEAKER_03:

Thank you so much for being here and sharing all of your data so generously with everyone in the industry, but also all of your knowledge today. If you'll just tell people where they can find you, we'll link everything in the show notes.

SPEAKER_00:

Great. So first we want everyone to contribute to the 2026 BFS state of the industry. So visit bfsassessment.com, complete the assessment. It's about 50, 55 questions. It takes about 10 minutes. When you complete the assessment, you will automatically receive a scorecard that benchmarks your performance against other profitable studios. So it is say you're above, below, or at baseline for number of leads per month, conversion rate of lead to show, conversion rate of show to next purchase, number of recurring payments every month, churn, LTV. That's in the BFS scorecard. You get that instantly for free after you complete the assessment. And then you receive a cop, you will receive a copy of the 2026 report, State of the Industry, when it comes out next year. You can download for free today BFS Pilates Report.com and get like a I think it is a 55-page report again, presented by Offering Tree. 55 pages full of data. You can get that now, bfspolitiesreport.com. And you can find me on LinkedIn, Julian A Barnes. My Instagram is at Julian Barnes NYC. Email is exec team e X E C team at BFSnetwork.com. Comes directly to me.

SPEAKER_03:

Awesome. All right. Well, we will link all of that in the show notes. If you are done driving blind, go ahead and take that assessment and get your scorecard. And Julian, thank you so much. This was so lovely and I appreciate your time.

SPEAKER_00:

Thank you for having me.