Insider No 60: The 2020 Outlook

The Assembly

As we close out 2019 and move into a new decade, we’ve taken stock of emerging fitness and wellness trends to create the 2020 Fitt Insider Outlook.

From fitness to food and wellness to wearables, we’ve surveyed the landscape to gauge consumer behavior, investment activity, and whitespace across the industry. Then, we drilled down into the business implications of what’s happening and why.

Contents

  • Going Beyond Wellness
  • The New Fitness Landscape
  • Alternative Healthcare 2.0
  • Confronting Burnout
  • The Plant-based Revolution
  • Food For Thought

It’s worth mentioning, this isn’t intended to be a definitive piece. Instead, we hope that this report provides context for the evolution taking place across the fitness and wellness industry.

>> Read the full report here


🥗 Scaling Salad

Sweetgreen, the build-your-own-salad startup, is trying to justify its unicorn status. Since its inception in 2007, the company has raised nearly $500M in funding, with the most recent round valuing the restaurant chain at over $1B. Now, as a recent NYT article explores, they have to prove their worth.

With a mountain of cash on hand and extensive investments in technology, marketing, and infrastructure underway, spreading the Sweetgreen Gospel across America is no longer a distant aspiration, but a mandate. “We can’t stop now, because this doesn’t work at 100 restaurants… The next stop is 1,000.”

While chains like Subway and Chipotle pioneered assembly line ordering, Sweetgreen has evolved the method while layering on local ingredients and leveraging the wellness movement.

  • 2019 revenue exceeded $300M, over $3M per store.
  • Its app has more than 1.5M users, accounting for 55% of order volume.
  • Interestingly, 50% of Sweetgreen’s customers had been to a McDonald’s in the previous 10 days.

Looking ahead: with hopes of reaching 200 stores in the next three years, Sweetgreen is busy building out new locations — including its new 3.0 format and delivery-only ghost kitchens, Outpost office delivery, kitchen automation tools, supply chain technology, and its own fleet of delivery couriers. But, in order to compete in the $60B fast-casual sector, the company will have to maintain its highly curated brand while simultaneously lowering prices — a Sweetgreen salad is double the cost of a Big Mac. Until then, the question remains: does salad scale?

🤝 Done Deal

Bringing some closure to what was a tumultuous year for Flywheel Sports, Town Sports International has agreed to purchase the boutique cycling studio.

Circling back. Last May, Kennedy Lewis Investment Management, seized control of Flywheel to explore sale options. Then, in August, news broke that Flywheel would close 12 of its 42 studios. Now, with a deal in place, Town Sports will take over the remaining Flywheel studios, launching a premium offering where its members will have access to the cycling studios.

  • Town Sports, counting 630K members as owners of New York Sports Clubs, has also confronted its own issues in recent years. But shares were up 30% with this news.
  • Of note: The deal will not include Flywheel’s at-home business — Kennedy Lewis is in talks with other buyers for that unit.

A sign of the times? This news points to a broader shift among boutique fitness studios, especially those in the cycling category. In 2020, expect the battle between indoor cycling studios—from locally-owned to franchised to high-end boutiques—to intensify as more at-home options, connected equipment, and on-demand workouts enter the space.

🤔 Too Big to Fail?

ClassPass is reported to be raising $285M in Series E funding that would value the fitness company at more than $1B.

Over the years, ClassPass has had a number of ups and downs, but under Fritz Lanman, who took over as CEO in 2017, the company has made strides to refocus its business. Still, users and fitness studios alike wrestle with the pros and cons of the service.

  • Users have endured price hikes, changes to crediting, blackouts, and spam emails from studios they’ve visited.
  • Studios have seen their services commoditized as ClassPass drives the price down to the lowest denominator while becoming the middleman between studios and users.

Looking ahead: Whether or not the business is sustainable is yet to be seen. And judging from the comments on my LinkedIn thread, there are a lot of doubters. The overarching question looms: can discounts, dynamic pricing, and multi-studio memberships fulfill the dreams of fitness-seekers, studio owners, entrepreneurs, and investors? Or will discounting fitness, no matter the method, lead to a Groupon-like—or worse, MoviePass-like—future?

While you’re here: read our report on fitness booking platforms and multi-studio memberships.

📰 News & Notes

💰 Money Moves

  • ClassPass is reported to be raising $285M in Series E funding at a $1B valuation.
  • Elysium Health, an anti-aging startup, raised $40M in Series C equity and debt financing. More on Fitt Insider: The End of Aging 
  • OWYN, makers of plant-based protein beverages, secured a $7.5M growth investment from PowerPlant Ventures. Terms were not disclosed. 
  • Trainiac raised $2.2M to match people with personal trainers.
  • Berlin-based VAHA, an interactive, at-home workout screen (à la Mirror), raised an undisclosed seed round.  
  • Skinary, a health tracking app for your skin, raised a pre-seed round of funding.
  • Daring Foods, a UK-based plant-based meat company, raised $10M in funding Rastelli Foods Group.
  • The Coca-Cola Co. has acquired 100% of fairlife, a manufacturer of high protein dairy products, up from its previous 42.5% minority stake. Terms were not disclosed.
  • UK-based sparkling water brand Dash Water has raised £1.6M in Series A funding.
  • Willow, the developer of an in-bra wearable breast pump, raised an additional $20M in funding. For more: The Women’s Health Revolution
  • QALO, silicone ring-maker, was acquired by Win Brands Group.
  • Soulfresh, a ‘better-for-you’ food and beverage company, received £26M in funding from consumer and retail investor True.
  • Nutriati, a plant-based ingredients company, received $12.7M in funding led by Manna Tree Partners and supplemented by Open Prairie.

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