Orangetheory Fitness CEO David Long joins Yahoo Finance Live to discuss the state of fitness and its future, the in-person experience, how to pivot when restrictions change, recovery, safety, and the challenges to getting new customers through the door.

Video Transcript

BRAD SMITH: No friends in the fitness industry for these companies. While Peloton faces headwinds for connected devices plus an activist investor calling for an executive overhaul, on premise gyms and classes they are trying to chart their own return to normalcy. And so here to discuss the state of fitness we have David Long who is the CEO of Orangetheory Fitness.

David, great to have you here with us. And thanks so much for taking the time. Orangetheory it had built a $1 billion unicorn status and sales, I should say, prior to the pandemic. So how has the pandemic reshaped the operations and even the correlating valuation perhaps?

DAVID LONG: Yeah, thanks for having me on, Brad. Yeah, we reached $1.4 billion in 2019, that note was around the corner. And I think what's really been the fortunate is we pivoted very quickly during the pandemic. We provided both complimentary workout of the day to our members around the world, as well as a live interactive experience of our members through temporary closures could stay in the habit, which is so important and stay in the habit of their regular exercise.

As we come out on the other side of this and we look back at 2021 we added 500,000 new members of the Orangetheory brand worldwide. So even through Delta and through Omicron we had incredible growth last year. And we really expect over the next few weeks to be back on that 10-year growth tier that we've had.

- David, the recent headlines around Peloton and the fact that the company is halting some production of his equipment products has raised, you know, or sparked a lot of conversation about what the future of fitness, the gym looks like. They're one of the big beneficiaries during the pandemic, but what are you seeing? How is-- how is it evolved now that we're kind of in this space where, yes, the pandemic is still ongoing, people are still kind of learning to live with it?

DAVID LONG: Yeah, it's a great question. You know, the at-home fitness had been around for decades before. It just obviously was in the limelight during the pandemic because that was really the only option. And I think this is really an and not a or discussion.

And as we learn from our members over the first decade and surveyed them every month throughout the pandemic we learned that they just can't replace the in-studio experience or the coaching, the accountability, the motivation, and that feeling of accomplishment of going to an on-premise studio. And so as we've come out of this we really believe that that's still the cornerstone of most people's fitness regimen. And I think the advancement of like, digital platforms and when we have our own are really good ancillary and off days, but the core of really having somebody progress understand how they're motivated and how they're getting results really still lives inside the studio.

BRAD SMITH: I would love to know what the interest from potential franchisees looks like right now-- incurring some of those costs to get off the ground and then continuing to try and woo members into that in-person experience with the precautions in place as of right now on a state-by-state basis.

DAVID LONG: Yeah. And so, you know, we are fortunate that our brand, you know, pre-pandemic had really more demand and supply for new franchise units to open, and it's the lion share of existing franchisees that are growing. And so if you could imagine, that did slow during the pandemic, but we expect our growth throughout 2022 to pick up as far as new studio openings.

And then when you look at, you know, the new member acquisition marketplace it obviously varies by DMA. There are markets that have more restrictions. And we learned very quickly, you know, back in 2020 how to provide the safest environment, how to pivot when restrictions change, and make sure that we're communicating really crisply both to our existing members as well as folks that want to try us so they know what to expect before they decide to walk through the doors and try Orangetheory for the first time.

- Where are you right now compared to pre-pandemic levels? I mean number one, if you're still behind, what do you think it's going to take to get there? And ultimately, in terms of recruitment, getting new customers through the door is it about a better price point? Is it about safety? What are you hearing?

DAVID LONG: You know, I think the right price point and making sure that the safety is there is really table stakes for us. It's really about building on the great experience that we already have and driving results and really showing incredible value for people that, you now, are only going to take two or three hours out of their week to make fitness a priority. And we have to deliver a great deal on those two or three hours. That's really been the cornerstone that's gotten us at this point.

And we look at recovery, some markets are very close to 100% recovery, others are lagging because of longer term restrictions. But when we look in aggregate at our global business, we really expect to be back to 100% or plus recovery in 2022. And that's the way we're trending so far this year.