Photo by Sven Mieke on Unsplash
Can Orangetheory and Self Esteem Brands Dominate the Fitness Industry?
In a bold move set to reshape the landscape of the fitness industry, Orangetheory Fitness and Self Esteem Brands have announced their intention to merge as equals. This union intends to give rise to a new powerhouse company, boasting one of the most extensive arrays of fitness, health, and wellness services globally. With a combined portfolio that includes renowned brands like Anytime Fitness, Orangetheory Fitness, Waxing the City, The Bar Method, and more, this merger is poised to make waves in the $5.6 trillion wellness economy.
The fusion of these two giants, rooted in their shared commitment to holistic health and wellness, marks a significant milestone in the industry. Chuck Runyon, co-founder of Anytime Fitness and CEO of Self Esteem Brands, reflected on the company’s journey from humble beginnings to global influence. “We’ve enjoyed rapid growth worldwide thanks to both the power of small-business franchising and our mix of brands that meet ever-increasing demand for more holistic and personalized health and wellness services,” he said.
He also emphasized the merger’s potential to touch more lives worldwide through franchising and community engagement, underscoring the ongoing evolution of consumer demand for personalized wellness solutions.
This merger not only signifies a coming together of brands but also promises to leverage resources and scale for exponential growth. The new company’s expansive reach, representing $3.5 billion in systemwide sales and spanning 7,000 franchise locations across 50 countries and territories, positions it as a formidable competitor in the global market.
Dave Long, co-founder and CEO of Orangetheory Fitness, highlighted the merger as a catalyst for innovation and transformation. He envisions setting a new standard for leadership in fitness and wellness, driven by a shared commitment to empowering individuals on their health journeys. “We are excited about what our combined companies will be able to accomplish together to capture an increasing market share, unlock future growth and pioneer a healthier tomorrow for consumers around the world,” Long stated.
Behind this landmark agreement stands Roark Capital, a private equity firm with a keen focus on franchise and multi-unit businesses. The firm’s continued investments in both businesses over the past decade underscores confidence in the potential of both Orangetheory Fitness and Self Esteem Brands to thrive as part of a leading global franchise platform. Erik Morris, Roark Capital’s chief investment officer, expressed enthusiasm for the partnership’s ability to shape the future of the health and wellness sector.
Amidst speculation about the organizational structure of the merged company, a spokesperson for Orangetheory revealed that Dave Long will continue in his role as CEO of Orangetheory Fitness while also assuming a position on the board of the new company. This marks a departure from earlier reports suggesting Long’s relinquishment of his executive duties upon the appointment of the new CEO. In comparison, the two co-founders of Self Esteem Brands plan to step away from their executive roles and transition to the new joint company’s board.
The composition of the board reflects a blend of seasoned industry veterans and strategic partners:
- Chuck Runyon: Co-founder and current CEO of Self Esteem Brands
- Dave Mortensen: Co-founder and current president of Self Esteem Brands
- Dave Long: Co-founder and CEO of Orangetheory Fitness
- David Hardy: Orangetheory Fitness partner and president of Franvest Capital Partners
- Kevin Hoffman: Managing director of Roark Capital
- Erik Morris: Chief investment officer of Roark Capital
Throughout the merger process, both Self Esteem Brands and Orangetheory Fitness will continue to operate their respective businesses without disruption. They will also continue searching for a new CEO for the combined entity.
In an interview with Health Club Management, Long expressed optimism about the future, envisioning global demand for up to 10,000 locations — a sentiment previously noted by Dave Mortensen. While the merger undoubtedly contributes to both brands’ growth targets, it hints at even loftier ambitions for the newly formed entity, including the possibility of an IPO in the future, although no official statements have been made to that effect.
As the two fitness brands embark on this journey, the timing of the merger remains contingent on regulatory approvals and customary closing conditions. Yet, the vision is clear — to redefine the boundaries of possibility in fitness and wellness, fueled by innovation, community, and a shared commitment to improving lives.
Discussion Questions
How will the merger between Orangetheory Fitness and Self Esteem Brands reshape franchising, personalized wellness solutions, and global market penetration in the fitness industry?
How might the expertise of the merged entity’s board members influence the development of innovative fitness technologies and experiences, impacting consumer engagement and retention?
Poll
Loading …BrainTrust
David Spear
VP, Professional Services, Retail, NCR
Lisa Goller
B2B Content Strategist
The heath and wellness sector continues to grow at pace and this merger creates a significant entity that is slightly larger than Life Time Group. There will be the usual economies of scale from a merger, and possibly some opportunities to boost growth, but I think the real reason is that it creates a clearer pathway to a potential IPO. Despite the bigger scale there is still a huge amount of competition as the health and wellness industry remains fragmented with a stack of smaller companies and independent practitioners in segments like yoga.
I have always held the LifeTime group as the gold standard in health/fitness but this is an interesting merger and will be curious to see the outcome. It makes sense, how do you communicate it to your customers plainly and succinctly??
Yes, also a fan of Life Time!
This arrangement would work really well. I like that they’re pursuing a relationship where the brands all complement each other, yet are different enough to create a holistic portfolio.
As with any merger of well-established brands, the entities must be careful to continue to do what they’ve done to maintain the loyalty of their base, while looking for ways to build synergies of scale. The health care industry has done well since the pandemic, and has the opportunity to continue to develop new consumers across different demographic groups. Assuming the deal is approved, it will be interesting to see where they take this.
For people engaged in the pursuit of “personalized health and wellness solutions” this is a big deal. Emphasis on “personalized”. This whole equation is many steps removed from, “I think I’ll go to the gym…someday…maybe.” There was a time I would not have put “gym” and ‘experiential retail” in the same article. But personalized health and wellness is definitely experiential retail. But, no AR, no AI…just total engagement of the 5 senses and a healthier life as a dividend. Self care as experiential retail.
And I think Neil nails it with the comment about a pathway to an IPO. Of course it is, and congratulations to all. And of course the founders and the VC guys are on the board, but on the way to the IPO they may want to appoint a whole bunch of women to the board also. I think they make up a sizeable portion of the health and wellness market.
70+% of the country is overweight or obese, making wellness as a category seems to me to be more than a little trendy, and rarely followed for long periods of time. Huge centers like Lifetime fitness are expensive for many ($100 a month), and the last time I was in one you had to walk a gauntlet of people trying to upsell you, along with the ubiquitous offerings of protein powder, etc. Not a great environment.
This merger offers economies of scale (almost always a good thing financially) but I do not see where the innovation will come from. Innovation at a gym lies in the details. Is the equipment up to date? Are there enough bench press stations? What is the vibe like? Do you have to put up with idiots who sit at a bench press station for long periods of time staring at their phone, ignoring everyone else?
And, finally, how do you motivate people to “stick with it”? One case study here is Peleton-super hot when everyone is mandated to stay home. After the Pandemic? Not so much.
This merger would personalize and digitize holistic wellness on a grander scale. Biometric data-driven offerings would help consumers look good and feel good, and give companies measurable insights on new opportunities to serve them.
I belong to a local Crossfit gym and community plays a big part of the vibe. If these two mega brands can drive synergies to strengthen this aspect of their franchised gym’s and wellness centers, the merger has huge potential. Importantly, Roark Capital should be able to find economies of scale and bring new innovation that can outfit the facilities with the latest fitness technologies that will continue to attract new members.
This is a great point. Can the merger group play a big role in the community? If it can, then it definitely has a chance and will attract new membership.
Mergers generally fail or bring major changes to the organization acquired. Many employees leave and the company who made the purchase usually imposes their culture on the acquired company. All this merger does is bring more locations under one roof. Is that good for customers? Unlikely. Is it good for investors? Very Likely.
100% YES! I love this idea. I’ve belonged to many gyms and fitness clubs throughout my life. I’ve tried Orange Theory, Cross Fit, Planet Fitness, my local rec center, P90X, etc.
If I didn’t start my own software company, I would have started a gym with my sister (a registered dietician) next to a Whole Foods or Trader Joe’s. My plan was also to have a financial advisor and life coach available as well. To complete the whole wellness objective.
I love this idea and I’d love to be part of this. The timing is right. Commercial property is cheap. Make everything connected and put a TV sitting area in the middle where you can plan social events. I think this has winner written all over it! I’m looking forward to the IPO!