Chuck Runyon is the co-founder and CEO of Anytime Fitness, the world’s largest co-ed fitness club franchise. With more than three million members worldwide at 3,700 gyms, the company has more than $1 billion in system-wide revenue. Runyon credits the people behind the brand for this success. This is the topic of the new book he wrote with his Anytime Fitness co-founder and President Dave Mortensen, “Love Work: Inspire a high-performing work culture at the center of people, purpose, profits, and play.”
We had a very engaging conversation about this, as well as leading and scaling a franchise business amid the changing trends in the fitness industry.
When you were in school, what did you think you wanted to be when you grew up?
Chuck: I didn’t complete much college. I wanted to do something a bit unconventional. I loved sales. I liked that immediate gratification and the competition within sales. You are competing with yourself and with others. I liked the creativity demanded by sales and in business. I started my career in the fitness industry at a young age and I fell in love with it. I got a rush out of going to a workplace every day that was fun and where you empowered people to be better versions of themselves. It fed my competitive juices.
After we founded Anytime Fitness, the entrepreneur in me enjoyed travelling the country, working with different clubs about every two months. I was helping start a mini-business in every city, helping franchisees generate awareness and memberships for their clubs and increase their profitability.
Then, as Anytime Fitness started to scale, I had to turn that entrepreneurial spirit into leadership and focus on how to grow a team. In the last 15 years, we’ve grown from a start-up to a company now with hundreds of employees. That requires different skills. For me, I am still gratified by learning new skills and adapting them to the business and pushing myself. Can I lead a company this big? Can I lead a team this big? How do I inspire my team to perform? I am still competing. I’m still selling. Those competitive fires are still gratified every day in my job.
As a co-founder, did you lose the coin flip? How did you get the job as CEO?
Chuck: That’s a great question! I own a larger percentage in the company than my partner, Dave Mortensen. We each have our own set of skills that we bring to the company. I may be a little bit better at the vision and communication side, as well as the culture-building side. Dave is a little bit better at problem-solving, especially those immediate problems that nearly every business faces. We both overlap in quite a few areas. So, I don’t want to give myself too much credit here. The CEO title came down to ownership and perhaps I’m just a little better suited for certain roles.
Is there a specific moment where you thought, “This can work. I can be the CEO and build a significant organization?”
Chuck: Yeah, there have been a few of those moments over the years. In 2005, a few years in, Anytime Fitness had a critical mass of 200 clubs and really started to spread and grow like crazy. That’s when we started to add more and more people. I remember at the 50-employee mark it was pretty chaotic. We were hiring quickly. I didn’t know everyone as well. When we were a start-up I knew everybody, and we had an all-hands-on-deck mentality. It was easy to foster team chemistry.
Beyond 50, we needed more discipline and rigor around strategic planning. We needed titles and an organizational chart. We fought titles until we had to implement them. The other mark was 150 employees. We really had to get far more rigorous and have more discipline on things such as the budget, finance, organizational structure, titles, and strategic planning. Now that we’re above 150, we’re operating in a way that’s scalable. The difference between 150 and 500 is not nearly as big as the difference between five and 50, or between 50 and 150.
Yes, absolutely. I talk about this often. Once you learn to fly an airplane, you fly it by wire or computers. When you have a management team in place, it doesn’t matter if it’s a 747 or a fighter jet. The basics are the same.
Chuck: Yes, that’s correct. It’s funny you mention a management team. We’ve got some very smart subject matter experts that we’ve brought together. We’ve largely matured in that regard over the years. Our team was different at 50 employees, 150, and today. We’ve got this nucleus of talent in place that’s going to help drive the business forward. That’s another area where it required time to develop the self-confidence and maturity to find and hire very smart people and let them drive the business.
Chuck: If you think about the fitness space, we launched in 2002 around the time when the first iPod came out. There was no social media, no smart phones, no Facebook. We now continue to operate this business in the middle of a disruptive tech era. Everything is now more directed towards consumer intimacy and being consumer obsessed. When we started, our primary stakeholder was the franchise owner. We built tools and processes to help them operate the business. Now we’re far more consumer centric. We focus backwards toward the franchisee, where before we operated from the franchisee first, and then the consumer. From a data standpoint, we’ve got to nail it when it comes to the consumer experience and understanding our consumers.
That’s a good point. What do you think the key challenges are for a franchise business vs. being a direct owner and operator of the clubs?
Chuck: Every business has a stakeholder. Are we B2B or B2C? We are kind of both. We make money from our franchise owners operating successful franchise gyms. On one hand, franchisees are a critical stakeholder. Yet we have to help them fulfill the needs of members. We have this delicate balance of prioritizing tactics and strategies around our three million global consumers and our franchise owners.
We’re not always going to make franchisees happy. When you are looking for uniformity and platforms that scale, you have to limit some of their freedoms.
When we started in the early days, we gave our franchises a tremendous amount of freedom; probably more than most franchise systems. That allowed us to scale and grow fast. But, ironically, around the years 2008 to 2011, this fractured operational system inhibited our growth.
Now, we’re trying to foster uniformity and standardization in our system to assure that the consumer experience is consistent. As a result, we’re strategically limiting some of the freedoms that franchisees previously enjoyed. This especially impacts those who have been with us for a long period of time. So, we go to great lengths to explain the reasoning behind the decisions we make. Still, as you can imagine, sometime there’s resistance. They say, “Hey, you let me do this for years and now you are taking it away.” Our explanation has to be, “Yes, but we need the data and uniformity to scale this and to benefit the entire brand.” We’ve gone from pleasing our franchisees as our top priority to now putting a little more emphasis on pleasing our consumers and operating like 3,500 clubs, not 30.
From a culture perspective, since you have franchisees and not direct employees, how do you make the Anytime Fitness experience consistent no matter where I am?
Chuck: That’s one of our biggest challenges. We’ve grown fast, so we are doing our best to create a consistent experience. We have a diverse group of franchisees and, for many of them, it’s the first time they’ve owned a business or worked within a franchise system. People love health and fitness. It’s a low-cost franchise compared to many other franchise businesses. Because it’s their first time owning a business, some of our franchisees may lack the experience to manage certain business problems. They can be highly emotional. We’ve on-boarded quite a few people in a short amount of time. Some franchisees absolutely knock it out of the park. They really care about their members. For others, that may only be true to a lesser degree. So, we need to be very intentional about building a consistent brand culture. We have training platforms, tools, and software and we are always trying to coach them on how to operate the business and interact with consumers.
McDonald’s is famous for Hamburger U. Do you have an equivalent?
Chuck: Yes, the training here never stops. It’s funny, one of my first jobs for many years was at a McDonald’s. It’s arguably one of the best franchises of all time. My Mom was a store manager for 20 years, so I grew up in that system. The Anytime Fitness headquarters is one mile up the road from a McDonald’s my Mom opened. So, this is the second franchise I’ve worked for on this street! I still remember the days when I on-boarded at McDonald’s. They utilized suggested sales strategies and repeatable processes. When I reflect on that, I think we’ve got to do the same. McDonald’s has been around for 60 years. But, yes, we have our own version of “Hamburger U.” We do a lot of training and quite a bit of e-teaching. Whether it’s 2:00 in the afternoon or 2:00 in the morning, a franchisee can get the tools, training, and reporting they need. We also do a ton of in-person training throughout the year.
What caused you and Dave to write the “Love Work” book?
Chuck: I’m a huge believer in culture. Everything about the brand has to start here at the Anytime Fitness headquarters. We have to live it, breathe it, and personify it. Franchisees who come to headquarters have to bundle our culture, put it in their back pockets, and take it back to their communities. They have to behave and work with the same type of culture.
Our culture has developed over the years. I think these four words – people, purpose, profits, and play – are a very interesting mixture that creates a chemical reaction of amplified performance for employees. If you can invest in people, give them a purpose to their work, profit financially and in terms of lifestyle, and have fun, then I think that’s the code for great team performance. We’ve discovered over the years that these four elements can create a successful culture and brand. Writing the book is helping our club owners understand our culture even more and operationalize it into the business.
I assume you have a fairly young average employee base. What has changed over the last 20 or 30 years in your business career culture wise?
Chuck: I think more people are studying it to try to understand why some companies and teams outperform others. They want to understand what it is about a culture that surrounds a group of people or company and allows them to consistently succeed more so than others. Leaders are trying to get closer to the mindset of the employee: Do they love their work or dislike it? Are they engaged or disengaged?
Over the years, there’s been so much attention paid to culture that it’s come to be thought of as a strategic asset that powers a company through the ups and downs of economic or business cycles. I believe that. I think culture is one of our best weapons in a highly competitive industry.
We mention this rather unique term in the book called “Undertime.” Everyone who employs people has it, where employees are not working but rather looking at Facebook or online shopping or whatever they are doing. Anytime Fitness has it, but we have less of it than most companies. If we have less of it, we can perform better. If our company performs one percent better per day over time, over 200 workdays per year, that’s going to make a big performance difference.
There’s a lot of talk about the millennial generation. Are there any differences that you pay special attention to at Anytime Fitness?
Chuck: I think that’s a little bit overblown. I think every generation wants purpose in their work. Everyone wants regular feedback and to provide their opinion on the business and get some alignment. I don’t think it’s just a millennial thing. Every generation responds to the four Ps. They are getting more mobile and want more visibility in the company. They want to go to work for a company with values they can believe in. It doesn’t matter if you are 50 years old or 20, everyone can identify with that.
Now that you are at hundreds of employees, it’s harder to know what’s going on at every level. What techniques have you found helpful for keeping your ear to the ground and staying close to the people in organization?
Chuck: It’s funny you just brought that up. Right before your call I was in a two-hour meeting with our IT group. We call them “coffee chats.” These are super helpful informal meetings and they give Dave and me deep insight into what every team does, their current initiatives, and what they are seeing from their lens of the business. In every meeting that happens here, we want titles left at the door. By that I mean, we want even the newest employees to feel comfortable speaking up and offering their opinions. We want to give everyone a chance to weigh in on the business, give us their perspective, and ask questions. We want someone’s fresh insight, no matter if they’ve been here for three days, three weeks or three years. When you’ve been here for a while, your perception gets clouded, and the work gets in the way. We ask, “What would you do if you were us? Tell us something we don’t know.” We try to foster candor and openness. It doesn’t mean we’re going to go with your priority or suggestion, but we definitely want your input. When newer employees get to weigh in, then they are more likely to buy in to the business.
Do you use any formal tools to make sure everyone is aligned?
Chuck: We have these wall-mounted containers that look like little mailboxes. We call them the “Just Ask” boxes. They are both functional and symbolic. As a leader I’ve noticed that, when we were smaller and everyone knew each other, employees would feel free to walk into my office and ask candid questions about what we were doing. They knew they’d receive open and honest answers.
As we got bigger, many employees didn’t feel like they had the familiarity with me to do this. To correct that, the “Just Ask” boxes give any employee the opportunity to write a question about anything without any fear or intimidation of the CEO title. Every three weeks, we answer every question as honestly and directly as possible. People know that we’re going to be candid and direct about where we’re strong or weak, where we are going, etc. This is one example of how we create an open, candid environment.
You are on the front lines of what’s going on in the economy. I assume you get store data relatively often? Is there anything you think CEOs might want to know?
Chuck: All the trends in wellness and beauty continue to rise. In the last 15 years, this industry has proved to be resilient. It’s an overheated commercial real estate market right now. It’s very difficult to find sites to rent and open. There’s also a labor shortage and a construction backlog. Many units are paying higher rent and higher construction costs. There are delays in openings. This is happening in most places around the globe, not just in the U.S., but also in places like the UK and Australia. It’s more costly for our franchise owners.
What else do you think is important right now as a leader?
Chuck: We really try to approach everything with a “listen-first” mindset. We’re always trying to harvest ideas and input from our franchisees and members. On the one hand, it’s very noisy out there. The flip side of that is, because of social media, it’s easier to listen to members and franchisees directly. It’s also easier for a CEO or leader to communicate what they believe in and the values they stand for. It’s kind of a strength and a weakness. We now have the ability to communicate more often and, hopefully, cut through the noise. I do social media (@chuckrunyon), because I know our employees and franchisees, and hopefully our consumers, follow it. As the brand gets bigger, it’s nearly impossible to communicate too much. I have to communicate over and over again via videos, podcasts, tweets, etc. You have to drive home the message constantly with your stakeholders.