TWO’S COMPANY: JON WRIGHT AND PETER BODDY OF XERCISE4LESS
Here, we hear from Xercise4Less founder, Jon Wright, and his chairman, former Fitness First boss Peter Boddy. Xercise4Less is a true challenger brand, one which has forced many of the more traditional gym chains to make significant changes to their business models to compete. The budget club concept addresses a consumer need while bringing innovation to the market – truly the sweet spot for any business.
JON WRIGHT – FOUNDER AND CEO, XERCISE4LESS
I used to play rugby for Harlequins, but when I was 22 I was injured, and so had to come out of the sport. The first job I was offered was selling gym memberships, and I’ve stayed in the industry ever since.
Xercise4Less was born out of another, less successful, company. I had another health club in 2006, which was based on the traditional model. We were dealt some pretty bum cards and it was a struggle. I wasn’t some visionary who came up with the idea of budget clubs and then succeeded – it came out of things not working at first and then trying something different.I saw the idea of a budget club in Hounslow in 2008. Once we got halfway through 2009, I realised that this wasn’t just a good business model, it was a great business model. We converted our Castleford site into the new budget model and that was immediately successful. When you’re struggling for a couple of years and all of a sudden it starts to work and you’re not paying salaries with your credit card, you feel relief.
We quickly expanded, but there were also frustrations because banks wouldn’t lend me any money, so I couldn’t progress as far as I wanted with opening new sites. Looking back, it was good because we spent those first three years really forming the model, experimenting a lot and learning a lot.
In August 2013 we had eight sites open but wanted to expand further. A few people were interested in investing but I was put off by private equity. Someone told me about Business Growth Fund and I quickly realised it was very different.
We let 17.5pc of the business go: 82.5pc of something very big is better than 100pc of something small. I must have met about five potential chairmen before I saw Peter. It was all new to me, but I was quite clear that I needed a person who would fit in with Xercise4Less’s culture. As soon as I met Peter I knew he was right – he’s energetic and we got on straight away. Peter is a good sounding board and that’s useful because a lot of situations I’m coming across I haven’t been in before.
Being a chief executive and founder, it can get a bit lonely sometimes. It is good to hear from Peter that “I’ve been there before”, and to understand his thoughts on situations.
Our plans for the future are ambitious: we want to have 100 clubs open by 2016, and we plan to expand into Europe, too. But we have a clear business strategy, and we are used to fast growth and change – this is just the sort of environment we like.
PETER BODDY – CHAIRMAN, XERCISE4LESS
Before I met Jon, I was really interested by what he was doing with his business. It was disruptive, new and fresh – and in the leisure sector that’s interesting. Then I was introduced to Jon through BGF. He’s very driven, very committed and I got on with him and liked his approach.
With a young, new business, everything’s possible. When I’m at the table with Jon and his senior team, everything’s “can do, will do, am doing”. There are new ideas flying around all the time. The business is growing very quickly and what Xercise4Less is doing in terms of size, its equipment, its approach to the customer and harnessing social media is all very exciting.
Jon is an excellent manager and a great leader. I thought I could help him because I’d managed a much larger chain, Fitness First, and although I wasn’t the owner in the same way Jon is, I had been on the inside of a big group and could provide insight when needed.
Jon is the driving force behind this business and I see myself as someone who he can talk to. A key role for me is liaising between Jon and BGF. I have to make sure that both parties understand what the other is thinking and between us we have all got the same goal. BGF is an excellent partner; it is a minority investor that behaves extremely well. The people there are very clear and they are very supportive, so it’s not really a big deal. I have learned from the experience.
Jon’s approaching business issues with a fresh set of eyes, and I’m taking a lot of what I’m learning with Jon over to other businesses where I am chairman. Equally, I’m bringing ideas from other businesses to Jon’s table. That’s a big part of my role, too, and it is great to be able to cross-fertilise good ideas.
We’re just about to break through 200,000 members, and the company has gone from scratching around for money to having people offer to lend money and being keen to be involved. I recently picked up a report on the health and fitness business in the UK and Jon’s business is recognised as one of the challenger brands, which is incredibly exciting.
There are so many things that have happened that I have taken enormous delight to be involved in. I can certainly see our achieving Jon’s aim of opening 100 clubs by 2016.
There will certainly be ups and downs, because no business doesn’t have those. There will be competitors, incorrect decisions – all these things are part of business – but I see no reason why we can’t succeed and take the business forward.
Times’ Business Heroes in association with BGF
The UK boasts many of the most innovative and fast-growing businesses in the world. Collaborating with The Times and The Sunday Times, BGF is uncovering some of their stories to salute our British Business Heroes. These are the stories of the business owners and entrepreneurs running successful companies, creating valuable employment and driving the UK economy. Click on the link below to take a look at their video stories and also watch an introduction by Stephen Welton, CEO of BGF.
Other BGF portfolio companies featured include:
BGF in £5.6m follow on funding
In May 2014, BGF announced investments totalling £5.6m, of follow-on capital, into two investee businesses: award-winning Mexican street food chain, Barburrito (£3.6m) and budget gym chain, Xercise4Less (£2m).
BGF retained a minority stake in each of these businesses following the investments.
John Swarbrick, BGF’s Head of Portfolio, commented:
“We are an investor of just three years standing and the majority of our investments are still less than 18 months old. However, we are already seeing many encouraging signs of growth across the portfolio of companies that we have backed. This sort of sustained growth often requires the provision of further funding and the ability to provide this forms a critical element of BGF’s offer.”
Morgan Davies, MD and founder of Barburrito, said of the additional funding:
“We started this great burrito race in the UK and as I have always said, this is more than a business…it’s a passion. The further funding provided by BGF is a great step forward for our business. It offers us a vote of confidence and most importantly, the funds with which to continue to take the business forward.”
Since BGF backed Barburrito with an initial investment of £3.25m in March 2012, it has opened three new restaurants across London and additional sites in Leeds and Nottingham; and has established its position as the UK’s first burrito bar with a national presence. Its existing sites have also continued to experience strong like for like sales growth. The company’s turnover has doubled over the past year alone with a net sales run rate of over £8m, and it now employs 200 people nationwide.
Following this latest investment, Graham Turner the former CEO of the Tragus Group (the UK’s largest independent restaurant companies with more than 290 sites across the country) has joined the board of Barburrito as a Non-Executive Chairman. This introduction was made via BGF’s Talent Network.
Leeds based low cost gym chain, Xercise4Less, which received a £5m investment from BGF in August 2013, is also performing strongly and is on track to secure a further 11 sites this year, bringing its total to 29 gyms located across the country.
Founded in 2006 by ex-rugby player and experienced industry operator Jon Wright, award-winning Xercise4Less, one of the UK’s leading low-cost gym chains currently has around 250,000 members and a successful chain of existing gym sites, predominantly located across the North of England but with a growing footprint of sites across the country.
As a result of its organic roll-out, Xercise4Less now operates 35 gyms, employs over 600 people and has an increasing national coverage with sites across the north of England, the Midlands, the South West, Scotland and Wales, and has opened its first gym inside the M25 in August 2015, In Hounslow. Further sites are planned in London and the South East.
Uniquely to Xercise4Less, its gyms are typically located at large out-of-town sites with floor sizes of 30,000 square feet or more that offer advantages to customers over traditional city centre budget gyms such as additional space, more gym equipment and a wider variety of choice and plentiful parking.
The budget gym sector has increased the size of the UK private fitness market by around nine percent since 2011, with one in 12 people owning a gym membership. Compared to the industry average for budget gym chains, Xercise4Less’s members are twice as likely to keep their membership longer than 12 months.
BGF originally backed Xercise4Less in August 2013, with a £5m investment to provide the business with capital needed to support management’s 5-year plan, which included the rollout of new gyms nationwide. A new growth capital injection of £7.6m in 2016, in addition to further funding provided in 2014, takes BGF’s total investment to £19.7m.
Since BGF’s original investment, the Leeds-headquartered business has opened 23 new gyms. Total sales grew to £21.9m in the 12 months to July 2015, up from £12m in its previous financial year.