The below Q&A has been edited for clarity and length.
Q: How many days have your gyms been closed?
A: [We’ve been closed since the] 28th of January to now—so 50 odd days—and starting to open now. Hopefully all of them in Shanghai...[will] open by the end of the month. The challenge is because of the virus around group exercise—because of the close proximity.
Q: Did you take the downtime to work with manufacturers to complete any preventative maintenance on equipment?
A: No, we didn't. We couldn't get into the clubs when they were closed. In Shanghai, the city was basically in lockdown. No one was in and out of their common block. So we had to close the clubs down properly, carefully, which we've never done in the past for an extended period.
Q: What was the milestone that the government used to determine when you can reopen your clubs?
A: I think it was when they had a number of consecutive days of no [coronavirus] cases in Shanghai; it could have been as many as 10 or 12. I don't think they had a particular number to be honest.
Again, there's no playbook for this, right? They're learning. They kind of did a lockdown of the city. Very, very few cases, then a certain number of zero-day cases, which I think was low teens...and we weren't the first [to open], other places were allowed to open. Coffee shops could open: No seating, only take away, only three people in at a time, everyone had to wear a mask, no touching, things like that.
They've done things in phases based on the degree of risk. And we're probably not the lower part of that scale. So we're kind of coming late. Cinemas haven't opened yet, so we think those will be next week and for cinemas it will be alternate rows and no one sitting...any closer than five seats.
Q: In North America, we're being told masks might not be the most useful. And sometimes we're hearing reports that they can increase risk of infection. Are there different uses or protocols in Asia?
A: No, not really. I just heard the Singapore government was very upfront and said, “Listen, we don't believe a mask can help. We want to save them for the healthcare workers.” Only wear the mask if you are sick, or if you're elderly, if you're high risk—it kind of varies.
But for us, in Hong Kong and in Shanghai, it was different. People felt more comfortable. Perception is reality—people feel more comfortable. We have people in the office that do wear masks and some that don’t. But in terms of the clubs, it's important that all the frontline did.
The sentiment over here is that you're better off wearing them and that's what they do. And I've read the same reports that, you know, if you wear a mask, you touch your face more. The best thing you can do is wash your hands and not touch your face and that’s basically what the WHO says.
But, if people feel better with a mask, they feel better with a mask, and we can’t argue with it and we’ve got to respect that. It was a good thing for us. But again, it's a different mentality over here.
Q: Did you say you did, or did not, charge for suspensions...and can you share the percentage or a group of people who cancelled versus went on hold?
A: We did charge for suspensions. Suspension is normally about 25% or 22% of the normal monthly rate. The number of people suspending relative to terminating was about five to six times more people ended up suspending than terminating. In terms of numbers.
But in terms of a normal run rate, our termination rate doubled. So instead of 100 members suspending every month, it would be 200. If suspensions are normally 150, to one to 1,500.
Q: I missed the info on the temperature gun. What was the brand or specs that you used to make sure it's a reliable option?
A: There's a lot out there to be honest, and the other thing is when people are buying, be careful—there's a lot of scams out there. We almost got scammed with an order of 350,000 masks but luckily the agent got onto it early and we didn’t send them money. Be very careful.
Q: Did you have to lay off any employees or did everyone get paid when you were closed?
A: It varied. The staff that were mainly commission based, like sales people, they're normally on a very, very low base. We ended up paying double the base or something similar. The range could have been anywhere from 30% or 40% of their normal take home to 80%. It kind of varied depending on the position.
Some of the staff were working from home. I think that most of the market paid about 20%. At the time, we felt it was the right thing, we've got to pay way above market. They have to pay their own rent and food, so it kind of varied.
Q: How do you create a positive and energetic environment on-site for customers? Are there practices in place to ensure an optimal experience level?
A: It comes down to the culture of the organization: being open, being transparent, being supportive, that the staff feel you've got their back. Also, that we're taking the right measures and taking their grievances seriously about whether we should do more with the members or we should take more mats out, or we need more cleaners. So we got to use a strong suit. If we do stuff like that and the members see that we’re behind them, they feel better, they react better, but also making sure that they know they play a very, very important part in this.
Q: We have closed. The local guidelines were not clear, and we've now found other gyms have stayed open. What do you recommend if we decide to reopen? How do you approach that?
A: What we're doing now is we're working on a rebound plan. Out of this, more people are going to want to lead healthier lives. And a lot of it is around safety and hygiene. So we're putting videos together, documenting all the elevated hygiene measures that we're doing now, that we will continue to do, to make sure that we've got a safe and clean environment. We're adding three slides to our sales presentation that we're going to talk about because that's going to probably be in for the foreseeable future, top of mind for everybody: the hygiene.
I think, depending on the circumstance and the environments, you've got to choose to either stay open or close and you may be forced to, like some governments and cities are doing that. But safety first. And if you're seen as being responsible and doing the right thing...you've got to do that.
What we found was when members were coming in, they saw that temperature was checked and they saw everything was cleaned, they would tell their friends and the word would get out. That's important word-of-mouth from your members as well. They ended up telling you, “I'm working out again, I'm going to Pure, it's great, this is what they do.” And then the word gets out.
Q: How to take care of your staff during this time?
A: Communication. Open, honest communication. Listen to their grievances. Make sure they know also that the company financially is doing very well. “We will get through this together, you don't need to worry.” The whole economy is struggling big time, but they need to know that they're working for a company that is prudent, that is doing the right thing for the long term, the sustainability of the company, but also putting people's health up front and center.
Q: Were you getting negative feedback regarding opening and if so, how did you respond?
A: We get complaints no matter what we do. You're always going to get the detractors. You're going to have people out there that are very, very fearful that may not come back for six months, and it doesn't matter what you do. You're going to get people that are going to say, “I’m going to work out, I have to, it’s safe, I don't mind.” And then you’ve got a group in the middle and they will do it depending on how they feel and if they’re comfortable.
That's the group that you want to try and pull in. You're not going to get everybody back, but you've got to do what you can and what you can control, and that's the environment within your locations. That's what you've got to focus on.
Q: What would your strategy be and when to attract new members again, and re-enroll those who cancelled?
A: That's a good question. So we're preparing a rebound plan….The two critical things for a successful rebound plan are timing and tone: You can't add too soon and you can't be too aggressive.
What we're doing is we're going to...start going to get our suspended members reactivated and in the club; we think they’re the easiest. We then want to start looking at this group of members that terminated, and get some of them back, and then we have to get new guests in. Between now and probably the middle of April.
Again, it depends on the situation. We're in a much better place I'd say than two, three weeks ago. Much better. We've now seen a bit of a spike Monday, Tuesday this week, we saw a bit of a spike because people were getting nervous. When I say spike, I mean a spike in terminations and suspensions again, because of the worry about all these people returning back to Hong Kong.
Q: You have clubs in New York, correct? How are you handling the outbreak and restrictions in the U.S. and do you expect your experience there will be a similar timeframe of closure of 50+ days?
A: I think you can do a lot of [staff] training you couldn't normally do when you're open. You've got to get your sales team, your yoga teachers, your Group X, your PTs engaging through social media with members to make sure that the members know that we care about them, even though we're closed.
Send them online content through social media, send things to your members, daily workouts, how to eat well, home workouts….Think about it. Your members are at home, right? OK, what are they going to want? They’ve got a small amount of space. We did videos about home workouts, and we will push them to members every day. That was helpful.
It's hard to say how long it's going to be. We thought it was going to be a week, six-seven weeks ago, and some of the places are still closed. We don't have visibility on Beijing yet. You’ve got to be prepared for one month, two months, three months...we just don't know.
Q: If your yoga studios use various props, did you get rid of them or consider getting rid of them?
A: No, they’re disinfected between each class—the mats are, the straps, the blocks. There used to be, at peak time, 15 minutes between class. That has been expanded to 30 minutes. So we have taken out mats, and we've expanded the time between classes to allow more time for cleaning.
We used to hand out a class pass. If you were in Studio One, we would give you a little plastic pass. We stopped doing class passes to stop any cross contamination between people. But all the props are cleaned with disinfectant.
Q: How did you present the reason for charging for suspensions and what's the best way to ask people to continue to pay?
A: The reason was that we were remaining open, we have to pay our employees, and we have to pay our rent. You can choose to terminate, or you can choose not to come in the club, we prefer that you live a healthy lifestyle and come in, like the other 10-20,000 people that are working out on a regular basis. We didn't have the luxury of waiving that, unfortunately. And we, again, we believe we provide a safe environment.
We've added the immunity yoga class, and we just did a lot of communication and education around leading a healthy lifestyle and the fact that your first offense against getting sick is a strong immune system. There's a lot of science behind that. We did a lot of communication and shared all the hygiene measures that we do, temperature checks, everyone's wearing a mask (etc). There's hand sanitizer, [at] all of their clubs, we have more cleaners. We've taken out the studio pass, we've taken out mats in group class, we've done all these—so you list out all the measures.
Q: Did the government implement economic support in any of the locations of your clubs?
A: Yes, they have...whether it's a tax benefit, or rebates, or small business in food and beverage or retail. They have a whole host of initiatives that we're looking at right now. Yes.
Q: Last question, say what was the most challenging issue for you and your team to deal with during this whole process?
A: The request by members for free suspensions. We feel it with a very small group of probably only 30 people. But through social media that made a lot of noise. When you've got 30 people complaining, but you've got 35,000 people coming in on a regular basis to exercise, and they actually, they were pushed back by some of the members saying, “You know we’re working out, you don't have to come and work out." And they were also asking us to close actually, they said, “It's not safe, you should close.” That was probably the most challenging thing.