ETHOS is a chain of boutique Yoga & Fitness hybrid studios with headquarters in Cambridge, UK and a new flagship London studio opening in the iconic Old Spitalfields Market (a prime location between the City and Shoreditch). The company aims to expand internationally from London.
We aim to bring all high profit trends to one location: Cycling, Yoga, Hot Yoga, Barre, TRX and Cross-Training and believe that this is unique amongst all other London studios and gyms. We strive to provide overworked and time-deprived customers with a one-stop shop for optimal mind/body health where they can do all activities with an easy Pay-As-You-Go model. This is delivered alongside a FitLab where science and health technology are integrated into the ETHOS approach.
Founded by two Cambridge University graduates, the emphasis is on getting the best and disrupting “hipster fitness” — we believe in quality over fads. The team includes a decorated Royal Marine Commando, yoga champions, professional dancers, scientists, scholars and a professional athlete, including a multiple gold medalist of Ironman – all sharing a single integrated vision.
The philosophy appears attuned to our audience with a rare industry customer retention rate of 83% achieved since opening in 2013. We believe this proves ETHOS is achieving what other big players in the industry like Soul Cycle, a chain of spinning studios, have managed to do: create a lifestyle phenomenon out of fitness and health. Soul Cycle filed for an IPO with disclosed earnings of $25.3 million in 2014 from revenues of $112 million, which were up from $75.3 million in 2013 (source: New York Times).
We believe such growth demonstrates the capabilities of a boutique studio to move fast in the industry, with an authentic approach to quality and lifestyle — a path we believe ETHOS is already on.
PROGRESS
“Nationwide, more people are heading to their nearest SoulCycle studio, barre class, or CrossFit facility rather than to a large health club.” – Market Watch 2015
“The latest trend in fitness comes from cool, specialised centres where intimate, targeted classes get results and you’re a name not a number.” – Healthista
Investors appear to be noticing that the market for boutique fitness is ripe. This is exemplified by the recent success of OneRebel, an emerging boutique fitness studio in London, which just closed a c.£3 million investment round on Crowdcube @199% of target In terms of the highest achieved investment ratio this puts it in the top four by any company to-date (source: Forbes).
The boutique studio concept comes from the US, where early movers like Soul Cycle have grown to 38 studios nationally with international expansion plans through their recent joint venture with Equinox fitness, worth circa $25 million. Barry’s Bootcamp is another successful studio concept with 20 studios across the US and an international franchise operation.
We see our competition having built their models around the fitness industry, while the ETHOS hybrid offering of yoga, sports and science strives to offer more growth potential by bringing together the industries of fitness (over £50 billion); yoga (over £18 billion); and US healthcare (nearly £1.9 trillion).
In our experience, and listening to customer feedback from those who have taken classes all over the world, many studio concepts are not able to combine multidisciplinary offerings and maintain quality across fitness, yoga and specialties like barre. Instead they seem to focus on one or two areas, rather than appealling to different sets of customers. This is where we believe ETHOS has already proved to be one of the first multi-concept studios in the UK with its launch in 2013.
We also aim to differentiate with our design, allowing for large social community areas where customers are encouraged to hangout rather than being rushed out the door for the next class.
SALES (key sales drivers):
USE OF FUNDS:
EXPENSES AND PROFITABILITY:
EXISTING DEBT OR EQUITY INVESTMENTS:
CASH:
SALES:
Key sales drivers: nearly 70% of revenue earned is from the sale of packages and memberships of our studio classes.
Other sales drivers: 10% of revenue is earned from our other Cambridge offerings in treatments and retail.
Teacher Training: In 2014, ETHOS launched its 500 Hour Hot Yoga Teacher Training. Tuition is currently £6,200 per attendee for an oversubscribed 9-week programme. We hope this will grow with the opening of the London studio and international expansion. As a comparable, Bikram Hot Yoga training has roughly 800 students annually.
FUTURE REVENUE STREAMS:
EXIT STRATEGY:
ETHOS is currently operating to a base plan of opening 5 studios within 5 years at the rate of 1 new studio per year.
Subject to meeting performance metrics at new sites as planned, ETHOS aims to operate on an Upside Plan of opening 10 new studios over these 5 years. The company’s strategy is to expand through the opening of additional studios funded through free cash flow. On this basis, a return on the initial investment of 8-12 times is forecast after 5 years.
This expansion programme could be brought forward through further equity/debt funding. International expansion is possible through the opening of more facilities either on a wholly owned basis or a franchise/licensing basis. The speed at which the business can be expanded more aggressively through these routes is dependent on the availability of further funding.
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