TFS Pumps up on new concept
Management company introduces Express Fitness Model

Manny Butera's Brentwood-based Total Fitness Systems LLC plans to bulkup its business in Middle Tennessee with 10 fitness centers over the next two years. Using $1.5 million of investment cash and current revenues, Total Fitness will open in Maryland Farms and Cool Springs in September and in Smyrna near HCA Inc.'s new Stone Crest Medical Center toward the end of the year. The company has been working with Colliers Turley Martin Tucker to nail down leases. The Maryland Farms location is near the YMCA and the Cool Springs spot will open in a new shopping center off Moores Lane.

Butera plans 10 centers based on the company's World Gym Express platform - a trimmer version of the customary fitness center with the World Gym brand name - developed by Total Fitness. "We'll be opening the first World Gym Express in Tennessee," Butera says. "With internal revenue and the seed capital, it will be enough to grow us to 10." With those 10 in operation, Butera says the company should be able to line up the investment cash needed to take the concept regional, with plans for 25 centers in Georgia, Kentucky, Alabama and Tennessee.

Butera, a former minor-league hockey player with a masters in business administration, started Total Fitness four years ago. The $1.5 million of investment for the expansion came from a single investor in Georgia whom he won't name. Butera also manages fitness centers for other owners, primarily World Gym franchisees. With a half dozen employees and 25 fitness centers under contract, the company's revenues are in the $700,000 range. But Butera wants more than the management piece.

Butera's company surveyed 1,600 fitness club members and found that less than 10 percent were using group exercise, aquatics and other equipment that cost the most to maintain. By developing fitness centers in the 7,000- to 9,000-square-foot range that offer free weights, circuit training, unlimited tanning bed use, medical rehabilitation and weight loss components, the turnaround on investment should be much quicker, he says.
"Our front-end revenue is higher with 40 percent less expense," he says.

Long term, Butera says the company would like to get into some property deals with its fitness centers as anchor tenants for commercial developments. Only a minority of the 20,000 or so health and fitness clubs in the United States offer the full array of services, says Bill Howland, director of research for the International Health, Racquet & Sports club Association. "We definitely see the most popular activities being pretty straight-forward training activities," Howland says. "It has to do with how simple the activities are. Most don't perceive themselves as athletic and the implication of an aerobics class is that you need coordination and be able to follow choreography."

According to the association's figures, fitness clubs numbered 20,200 as of January, up 3,000 from a year earlier. In 2002, the number of Americans belonging to clubs climbed by a third to 36.3 million, while industry revenues were about $12.2 billion. With average dues of $24.50 per month, new equipment and the type of facilities most in demand, Butera says his Fitness Express will compare nicely with the larger fitness clubs. In Maryland Farms, he is projecting 600 members within 45 days. Butera also is looking at Hendersonville and Spring Hill in the near future.

He says Total Fitness will soon begin a second round of fundraising to reach its 25-center target. "We know the capital is available. Once we get the name out there, I think we'll have takers to grow the model," he says.