27 Jan Episode #311: Terry Blachek, Austin Fitness Group, CEO
Pete Moore: This is Pete Moore on HALO Talks NYC, lone star state coming back for his second podcast. Hey, Hey. Hey, your friend in mine. T bla check Austin, Texas OTF. Thanks
Terry Blachek: Pete. It’s great to be here and excited to talk with you again. It was wow. Three years, right?
Pete Moore: Three years ago. So we actually did the first podcast when we using it as kind of part of like a, a marketing tool to go and get the growth capital. And actually we had some great quotes in the last one, you know, and I said to you, and I didn’t actually practice. Yeah, I didn’t, I didn’t do any prep for this. So, you know, but I remember everything that we talked about and I said, how quick can you grow? And you’re like, Hey man, I got to crock pot a manager. I can’t microwave them. Yep. And that was kind of the script in, in a lot of the groups that we talked to. Yeah. That was
Terry Blachek: A great closing a closing a quote for the ClearLight folks, ClearLight partners. They listened to that podcast and they liked what they heard and liked what we were talking about. And they brought that up actually a couple times to me now. Yeah, no, it
Pete Moore: Was great. It was great. So we’re on podcast about 3 0 6 now or something. So you were one of the first ones, so I’m glad you’re back around. So you’re down in Austin, you had an area development agreement, put some jet fuel on this and give us an update on where you are, you know, professionally with the
Terry Blachek: Company. Yeah, three years ago, we did a, a deal with private equity group called ClearLight partners out of California. We had 18 stores at the time and we completed that deal in September of 2018. And, and they were the gas to really help us to take off. We immediately went out and started talking to other folks and we did a number of acquisitions in 20 to 19. We bought the state of Arizona with 36 stores. We bought Kansas with 13 stores. We got and purchased Oklahoma with probably 10, 11 stores and purchased the Philadelphia and south Jersey markets with probably 33 35 stores. Today, we have 135 stores in six different states under our umbrella. And we actually have ownership of 61 of those studios. So when we started, we were 18, we’re now at 61, basically tripled the size of the company here and got through COVID. Right. Sure. Sure.
Pete Moore: So talk about before we get to anything COVID related, you know, ClearLight was one of the first private equity firms in the planet fitness network. Cause I was one of the first private equity firms in orange theory, you know, backing you as, you know, the top operator. And how quickly did you need to move and kind of look at the map as like, okay, we’re playing like that game of you know, risk where it’s like, Hey, I can pick up these states, I’ll digest them over time. And how did you think about the ability to kind of integrate those in and, and, you know, staff those up
Terry Blachek: Properly? Yeah. You know one of the things we looked at was, you know, how many white spaces did we have to open up? And then what was the opportunity for, to purchase and acquire and in their planet experience planet fitness experience, ClearLight had not done a lot of purchases or acquisitions until later years with planet fitness. And they felt like that was in the stake mm-hmm <affirmative>. And so when they got involved in our group at orange dairy fitness, they said, let’s start the acquisition process sooner, quicker, faster. And we were on a tear. I mean, literally we went from 18 to 59 stores in a year mm-hmm <affirmative> and the good news is, is we acquired a lot. At the same time. We were opening probably five or six studio. We took our eye off of that opening game, the presale game, we should have kept our eye on that better.
Terry Blachek: What transpired out of that mm-hmm <affirmative> was we probably shouldn’t have done it that fast. There’s a great note. When we look back at it, the ability to digest tripling the size of your company, and also to build an infrastructure. That’s not only remember, we were only in Texas, we were in Austin and San Antonio. So the concept there now you’re in six different states. You have to have an infrastructure to handle marketing operations, facilities, maintenance. <Laugh>. It just it compounds it when we do it, did it so fast. So I wish we slow that down. Gotcha.
Pete Moore: So, you know, a as, as we kind of roll through COVID here and come out the other side, what are some of the, you know, silver linings on maybe how you’ve modified your operations, how you maybe you’ve looked at acquisitions maybe just say, Hey, I could grow, but I’m going to grow at my own pace. I’m also going to make sure I don’t put the company at risk at the same time, because I really don’t know what macro things are going to happen that are outside of my control.
Terry Blachek: You know, Pete at, at, at the heart of my, you know, my experience and myself, I’m a sales guy, I’m a marketing guy. And I love to be out there on the front of the spear, you know, the tip of the spear and trying to make things happen. And I’ve always been that way. I’ve tried to get things done. If it takes a normal guy two years to do something, I try to do it in a year. If it takes you, you know, 12 weeks to get in shape, I try to do it in five. You know, I just I’m try. I try to accelerate that. And so we had done that the first year, but certainly the, we, you know, we came to a screeching halt on March 17th, made an announcement, let 700 employees go and shut the business down.
Terry Blachek: Mm-Hmm <affirmative> and it was it was a tough day. Yeah. A very tough day in business. And everybody had a tough day and has had a tough time in in COVID I’m not saying we’re any different from anybody else, but you know, today, I think when we look at what’s happening is you see a lot of acquisitions out there. You see still consolidation of the orange theory market. And, you know, it’s hard for me to step back and not want to race or be competitive, you know? Sure. I’m competitive. I’m right now, today, I’m the second largest group consolidated group of orange theory Fitness’s in the in the network. And you see some other groups doing a lot of acquisitions and I’m very competitive. I want, you know, I want to be out there, however, that’s probably not in the best interest of our group.
Terry Blachek: And I need to stop thinking about being less competitive and really focusing on the health and the wellbeing of my business. Mm-Hmm <affirmative> and the, a true to the business and stay true to not overpay for things right now. You know, we look at acquisitions versus opening a, a studio. We can open studios at a much lower cost than we can to acquire a studio, another a studio. So the value, right? What’s my job as a CEO provide value to the share home. Sure. And so the value is really in the opening of studios and we’ve kind of re reset a little bit here coming outta COVID. We just opened up the first store outta COVID, by the way, for orange theory hit over 500 members in pre-sale. Where is that? It’s in bull Verde San Antonio. So stuff. Yeah. Yeah. It’s but it’s all good. Mm-Hmm
Pete Moore: <Affirmative> let me just make one note on, on, on the growth side, because I think a lot of you know, there’s always, there’s this phrase in, you know, private equity or, or most deals like, you know, grow or, you know, you’re going to get grow or die or grow, or, you know, you going to get lapped, but in your case, you kind of ran four laps around the, the track. And then now everyone’s kind of catching. You still think that you’re at pace with them, but you’re actually four laps ahead on like a NASCAR. Yeah. Yeah. So you might want to digest that for a second. When you say like, Hey, I want to grow. It’s like, bro, you grew already like, let everyone kind of grow up and catch up to you. Yeah.
Terry Blachek: Yeah. I think that’s a great point. We, again, we were off to the races and we still have a plan going forward. We have, you know, good stuff happening. So let me ask
Pete Moore: You a question cuz you and I have been around this industry for, you know, 30 plus years, I’ve been probably 25. You probably got 10 on me. <Laugh> when you not, not looks wise just age and mileage, just mileage, but that’s like, you’re a seasoned executive doesn’t mean like we’re old or old, too old, but a lot of the companies in our industry when they get to a certain size, it, it kind of falls apart. You know, if you think about New York sports clubs, you think about 24 hour fitness, you know, LA did some big acquisitions. I love those guys there. But you know, they try to digest 160 club deal on ballets. I’m assuming people internally said they probably not the best use of our time probably could have built, you know, the 60 clubs that they kept at the end of the day.