How did the CycleBar and Rumble acquisitions come about?
Following the successful acquisition of Row House last year, Xponential reached out to our CEO and founder, Paul Flick, about the divestiture of CycleBar and Rumble. We were really excited at the prospect. It gives Extraordinary Brands a lot of scale in the marketplace and we believe all the modalities can be powerhouses in their own niches.
We now have a geographical spread – Rumble and CycleBar are international, Row House is coast to coast in the US and Neighborhood Barre is predominantly in the south-east of the US, so there's a lot of blank space to grow.
You joined in 2024 when the company acquired your start-up, Neighbourhood Barre. Tell us about your experience
I did a strategic partnership with Extraordinary Brands in August 2024. At the time Neighborhood Barre was 13 years-old and had grown to 20 sites. This growth had been self-funded and bootstrapped and we were seeing pretty good average unit volume, but once we joined the Extraordinary Brands portfolio, we started to grow more than 20 per cent month over month. This year we're up more than 26 per cent month over month from last year.
The move has allowed team members to focus on what they’re great at. Being a small team, we were spread thin and to get support with franchise development and marketing took a huge burden off of our shoulders.
What are your plans for CycleBar and Rumble?
Our primary focus in the next 12 months is franchisee profitability and stabilising the operations, so we’ll be looking at it from a granular level and won’t be growing any of the businesses until we have the models really ironed out. We want to be confident we're selling a business model that sets people up for success.
Many franchisees feel as though they weren’t prioritised by the last franchisor, so we have to build trust by following through on our promises.
A priority for CycleBar and Rumble is refreshing the brands, so they understand who their customers are – that will automatically help the sales process. Some of the studios need resources for their front desks and teams and we’re also reviewing our baseline operating costs.
All brand presidents are getting into the businesses now and assessing the health of each individual location. Two of the biggest challenges we’re coming across are the cost of leases and loan repayments which are burdening many of the franchisees.
We're doing what we can with third party partners to see if we can save these owners money on their leases or restructure their loans. Our franchise business coaches will also be working with them to implement new strategies developed by the brand presidents, so each franchisee is going to get one-on-one help to optimise their business.
Our new director of training and product strategy, Michelle Parolini and her teams will also be looking at the core product and seeing where tweaks and changes can be made to elevate the client experience.
Our new brand president Lori Klein has a lot of experience in cycling, including experience helping turn around CycleBar studios, so she knows what she's looking for. We also have Andy Stern, the co-creator of Rumble on board as brand president.
Was there any trepidation over CycleBar given that indoor cycling is on a downswing?
The markets are cyclical so we’d rather take it on now and reposition it in the market so when the upswing begins we’ll be right there. Maybe CycleBar will be the brand that actually starts to pull cycling back up.
We’ve worked with a branding agency to diagnose the market and make sure we're positioning CycleBar where it needs to be, rather than just going after the same group of people it’s been marketed to for the last 10 years.
How is Row House doing?
It took a while to stabilise the business and some sites closed because the owners had had enough, but Row House is in a stable position now, with some exciting plans afoot.
We’re just implementing a brand refresh – it's still Row House, but it's so much more elevated and positioned as a leading rowing modality.
Our branding agency has positioned it to go after Xenials – older Millennials through to Gen X, people who want high energy, but low impact. This was not what we had assumed, but when they showed us the data and facts we totally got it.
We have some really cool campaigns mapped out over the next year and a new brand lead – Jen Kearns – has just started. She has previous Row House experience and the franchises seem to love her, so I think we're going to see Row House start to turn.
How much does pricing come into what you're doing?
Pricing is one of those things a lot of franchises and GMs really focus on, but it’s the sales process that makes the biggest difference. You have to make people who come into your studio for the first time feel as though you really want them to be there.
For example, I was in New York last week and I went to a barre class which was the closest to my hotel. I checked myself in on an iPad and no one spoke a word to me for the whole time I was there. Nothing. When you don't speak to people it alienates them. Had I been lacking in confidence, or unsure of what I was doing I would have felt as though I didn't belong there and would never have gone back.
We want our GMs and business owners to get to know their communities – everyone within four blocks of their studio should know who they are.
Are you looking for more brands?
Yes we are. We're capable of creating brands from the ground up, but that isn’t the goal at the moment, so more acquisitions are definitely on the table – especially if the brands have a little more scale.
Our brand Neighborhood Barre is in growth mode, and we need to keep it there. Row House is stable and we need to get it back in growth. Then we need to stabilise CycleBar and Rumble.
Who are your financial backers?
Right now the only financial backer is Paul Flick, our founder and CEO. He has another portfolio called Premium Service Brands, which runs home service companies, so he has experience of acquiring and rehabilitating brands.
Although we’ll look for financial backers further down the line, right now Extraordinary Brands is bootstrapped and entrepreneurial, but with a strong team and a lot of industry knowledge. We’re aware we’re looking after the money of our franchisees and spend it as though it’s our own.
