We had to make 'tough choices' amid coronavirus pandemic: Orangetheory CEO
Non-essential businesses remain closed as coronavirus cases continue to spread globally. Orangetheory Fitness CEO Dave J. Long joins Yahoo Finance’s On The Move to discuss what Orangetheory is doing to engage users amid the virus pandemic.
Video Transcript
ADAM: But we're going to turn our attention now to personal fitness. Because in 2018, Orangetheory fitness exceeded $1 billion in system wide revenue. At this time, they were planning to be at South by Southwest. But right now, obviously, those plans have changed.
Joining us now from Orangetheory, the CEO David Long to tell us how you're getting your fitness instructors to help all of us stay in shape while we work from home. David.
DAVID LONG: Thanks, Adam, for having me on. Yeah, it was a tough moment. We also had one of our annual training conferences that same week at South by Southwest. Are you getting me OK?
ADAM: Yes.
DAVID LONG: With 1,000 attendees. So we pivoted over the last week and launched Orangetheory at Home. And it's in line with the same things that we're doing in the studio. There's a workout of the day that members are able to participate in globally. We're providing that content free. And we're using our coaches, both here in our headquarters in Boca and the around the world to actually film and broadcast those workouts so members can connect with some of their favorite coaches.
JULIE HYMAN: Dave, Julie Hyman here. Thank you for joining us. So I imagine as you go to a more remote platform that you don't need, perhaps, as many instructors, as many people. So I'm curious what kind of personnel decisions you have made as a result of this. And I know those kinds of decisions are very difficult. What went into it? And how are you proceeding now with regard to your staff?
DAVID LONG: Yeah, it's been it's been a really tough couple of weeks for us. So we, at headquarters here, we owned locations as well. And we have had to reduce that workforce significantly. And then our franchisees, obviously they have their own staffs across the globe.
And so they've had to make tough choices from either going to a reduced workforce to eliminating the workforce temporarily so they can preserve cash to reopen their studios at the right time. So what we're really looking to do is we have our entire headquarter staff here still working hard to keep the brand strong and keep the platform working on Orangetheory at Home. And making sure that we've got a really strong brand when we reopen doors
BRIAN CHEUNG: Hey, Dave, it's Brian Cheung here. For a lot of businesses it seems like right now, the concern is how do you pay rent on a lot of your locations. Because you're so prevalent in many corners of the country. I'm wondering what has that conversation been like? Can you offer a little bit of light into how that process goes with negotiating with your landlords over how to pay your bills although you're not getting any revenue from those locations right now.
DAVID LONG: Yes, it's been challenging. We've put forth a set of best practices. And asking for landlords to even just defer rent for later in the lease term, or add it to a lease term where we're willing to actually extend our lease term for that trade off. And so around the globe, our franchisees are having those conversations with hundreds of different landlords.
And I would say the response has been very broad. But many of the landlords have leaned in to really work with us, knowing we're a very high quality tenant. We've never closed a location in North America. So we're the type of tenant that hopefully they want to they want to have with on the other side for many years.
ADAM: Dave, I want to pick up on what you just said about the response from those landlords being broad. Because not only the franchisees, but your business kind of exemplifies what small businesses, medium sized businesses nationwide are going through. So where does that stimulus that Congress just passed, perhaps, help you and help your franchisees? Or does it not?
DAVID LONG: We really hope that it does. We've been tracking it second by second. We had and army of attorneys on the phone late Friday night really dissecting what that means for us and for our franchisees so that we can give them guidance on how to best leverage it.
And we're going to be encouraging all of our franchisees to apply for the SBA portion of that. And our hope is they can use those moneys coming in timely to hire staff back earlier and keep staff on, so that they can be poised to really get back into the market in a strong place.
ADAM: All right, Orangetheory CEO David Long, we appreciate your being here on Yahoo Finance.
