The sweat smell of success

David Patchell-Evans built one of the world’s biggest fitness chains. But will looming American competition bring his good life to an end?

GoodLife Fitness founder and CEO David Patchell-Evans (Photo: Sean J. Sprague)

On a blustery December evening, a strip mall parking lot in Cambridge, Ont., is windswept and largely empty. Precisely what one expects when a daylong snowstorm is followed by a bone-chilling deep freeze. But at one end of the lot, a huddle of cars crowds a single entrance. A 30-foot-tall, lime-green dancing man made of balloons and the words “GRAND OPENING!” plastered across a wide swath of windows offer a less-than-subtle hint that something’s happening.

The opening is just one of several marking the end of a very successful 2010 for GoodLife Fitness. Inside the new club, there’s a festive atmosphere, highlighted by healthy snacks, giveaway draws for free memberships and that new treadmill smell. David Patchell-Evans, GoodLife’s 57-year-old founder and CEO, is making the rounds, enthusiastically meeting with new and potential members and signing free copies of his latest lifestyle book, The Real Sexy, Smart and Strong. The walls of the club are lined with Patchell-Evans quotes that wouldn’t feel out of place on that sunset poster in your dentist’s office.

“When you allow laughter into your life you are contributing to your health and the health of those around you.”

It would be easy to roll your eyes at the earnest Chicken Soup for the Sweaty Soul of it all. Just another CEO packaging up feel-good platitudes in the hopes of duping yet another flabby rube into an inflated gym contract. Easy to think that, except you’d have to dismiss the message’s appeal—and its undeniable success. The London, Ont.–based company last year expanded its club count by 60%, to nearly 300 outlets. This summer, it will open a new 45,000-square-foot behemoth of a flagship club in downtown Toronto. Patch, as he likes to be called, has convinced more than 750,000 Canadians to join his fitness clubs through a philosophy of moderation and focus on a target market that sprawls from suburban moms to high-performance athletes. GoodLife won’t open its books, but a company representative said that revenue grew by 24% in 2010 and a whopping 307% between 2004 and 2010.

It is now the biggest chain in the country, fifth-largest in the world, and the largest worldwide with a single owner.

And the company’s success extends beyond its sheer size. Patch released his second lifestyle-advice book last year, while continuing his role as head of Can-Fit-Pro, Canada’s largest fitness educator and certification program, and staying actively involved with the autism research group named for his daughter at the University of Western Ontario. It’s quite a load to lift—CEO, lifestyle guru, educator and philanthropist—but while the GoodLife credo preaches “good enough is good enough,” Patch’s goals for the business are nowhere near satisfied.

But GoodLife’s run for continued growth is now an uphill climb. With rapid expansion, it becomes increasingly challenged to maintain its level of service and quality staff across all its clubs. As it expands beyond its Ontario stronghold, GoodLife faces increased competition from strong regional clubs and the threat of huge American chains jumping the border. They’ve so far run a marathon at a sprinter’s pace, but can Patch and Co. possibly keep it up?

In a makeshift broom closet of an office at the new Cambridge club, Patch takes a break from the festivities and wedges his lean six-foot-five frame behind the desk and smiles. He’s wearing a purple-orange-and-white-striped shirt, dark slacks and sensible shoes, his huge hands and long limbs offering a glimpse into his past as a five-time national rowing champion. With the sympathetic eyes and reassuring tone of a favourite teacher, he looks you in the eye when he speaks, leans in and reveals that his business strategy has much in common with his gym’s exercise mantra—it’s all about moderation. “One way is to try and have [the gym] full when you open. We don’t do that,” he says. “If you had 4,000 people join right away, how could you possibly teach them all to use the equipment and everything effectively? It’s impossible. You want to grow membership gradually, so each member is educated and serviced properly, then they’ll stay members for a lifetime. That’s been our strategy, to have a reasonable amount of [initial] growth and then plan further growth over three to four years. It’s more expensive upfront, but in the long run it makes a lot more money.” Keeping members happy may not be a revolutionary business strategy, but it means more than half the club’s membership comes from referrals, says chief operations officer Jane Riddell.

Patch’s guru-like demeanour may seem like marketing hokum, but colleagues and friends say it all flows from his own life. In the fall of 1972, 19-year-old Patch was riding his Honda motorbike in London, Ont., when a car cut him off and left him with a broken collarbone, a dislocated shoulder and a laundry list of torn tendons and muscles. The resulting physical rehabilitation process inspired him to make his university major phys. ed. and kinesiology, and train to make the Canadian national rowing team for the 1980 Olympics. It was while training for rowing that Patch stumbled upon the opportunity to buy his first fitness club in London, in 1979. That initial club was slowly followed by more clubs around the province over the next few years in places like Windsor, Peterborough and Sault Ste. Marie. But as he built his business, Patch was diagnosed with rheumatoid arthritis at 32-years-old. Once again, fitness allowed him to continue an active life and further impassioned him to spread that word.

“There are a lot of CEOs and presidents that are very smart business people, passionate and excited about the process of building a company, but not necessarily passionate about their product,” says Patch’s wife and former Canadian Olympic rower Silken Laumann, who also heads up the GoodLife Kid’s Foundation. The two met in 2007 when Laumann was the keynote speaker at Can-Fit-Pro’s annual conference in Toronto. “He’s seen the impact of fitness on his physical body but also on his mental health and entire life direction. He’s speaking from such a deep place of ingrained passion for fitness as a way to improve our lives.”

If the company’s goal is to get every Canadian to adopt a more active lifestyle, then it should come as little to no surprise that GoodLife’s success has largely been built on the back of avoiding the intimidating gym cliché of Mr. Universe wannabes pumping iron, in favour of a more open, welcoming environment.

“GoodLife has found a niche that is very inclusive to your everyday person,” says Laumann. “I was an elite athlete, and I’m comfortable doing my workout there because I know they have the best equipment, but so can the hairdresser from down the street. Patch is very clear about what he doesn’t want in his clubs. He doesn’t tolerate people monopolizing equipment or loud grunting, because he knows that makes the 65-year-old woman working out nearby uncomfortable and intimidated.”

The pace of the company’s growth has been steady from the start, with gradual expansion coming from the purchase of flagging gyms in mid-sized Ontario communities, but has accelerated in recent years. In 2001, GoodLife set up smaller, women-only fitness clubs within more than 50 Loblaw Superstores across Canada. In 2007, the company established a stronger presence in Toronto by acquiring a number of Bally Total Fitness clubs. In 2009, GoodLife bought Nubody’s in the Maritimes with its 23 clubs and 50,000 members, then last year merged with Energie Cardio and its 65 clubs, 140,000 members and 1,600 employees across Quebec.

The Canadian fitness industry has roughly 6,000 clubs, spread between small, medium- and large-sized chains, independent mom-and-pop operations and hotel facilities. According to the Fitness Industry Council of Canada (FICC), there are about 18 different chains, including Extreme Fitness, Steve Nash Fitness World & Sports Club and Gold’s Gym. The mom-and-pops are increasingly losing ground to the chains, while the Canadian-based chain clubs warily look over their shoulders at American franchises moving north.

Life Time Fitness, a Minnesota-based publicly traded company with 92 clubs across the U.S. is set to open its first Canadian location in Mississauga, Ont., in February 2012. The company, which reported $912.8 million in 2010 revenue, has a reputation for huge clubs and putting on more than 175 annual events such as triathlons and Colorado’s infamous 100-mile mountain bike race, the Leadville Trail 100. Company spokesperson Karen Jayne Leinberger said Life Time is always on the lookout for strategic markets. “Canada is just the logical next step for us,” she said.

One Canadian club executive, who asked his name be withheld, said the surrounding GoodLife locations “are going to get killed” by the sheer size and breadth of facilities Life Time will soon offer. Patch dismisses such claims as baseless Chicken Littling. “People are always saying, ‘The Americans are coming!’ They’ve been trying to attack Canada since the War of 1812. And my ancestors fought them then! To be honest, we’re not really worried about it. Bring it on.”

Indeed, GoodLife’s constant expansion may pose a greater challenge to its success than any other chain, says FICC executive director Brian Gilbank. “There’s no threat from any other chain, really,” he says. “I would just worry about how all their new clubs are going to do. They’ve opened in some markets they haven’t been in before, like Quebec, out east and out west. Just keeping those up and making sure the numbers are where they want them to be will be the biggest concern.” Finding quality staff for the new outposts is the biggest concern, says Schulich School of Business marketing professor Detlev Zwick. “I don’t see an end to their growth, but the challenge will be the ability to find and keep quality staff that is up to their standards.”

Being the owner of Canada’s largest fitness education and certification program has helped GoodLife maintain a steady stream of qualified staff. While run as a separate business, some of GoodLife’s competitors see Can-Fit-Pro as an unfair advantage, given that it allows the company to effectively set certification standards for the entire industry. However, most, like Ziad Jaber, head of Gold’s Gym in Canada, acknowledge its net benefit to the fitness industry in general. “It has helped a lot of people, so I don’t have an issue with it,” said Jaber.

Patch has taken the millions earned making people sweat and funnelled it into a distinctly different health initiative. It started in 2003 with a request from Dr. Derrick MacFabe, a neuroscience professor at the University of Western Ontario. He had heard Patch’s daughter Kilee had been diagnosed autistic and thought Patch might be able to help with his fledgling research effort. The first donation ended up in the ballpark of $750,000 and founded the Kilee Patchell-Evans Autism Research Group at the university. To date, Patch has personally donated upwards of $4 million to its research. The group’s recent findings, concerning the role of gut bacteria in autism, has been listed among the Top 50 scientific discoveries in Canada by the National Sciences and Engineering Research Council of Canada. “The research has done well, and there’s no way it could’ve been done if we didn’t have this committed pit bull to make this work go,” says MacFabe. “He’s played a bigger role than I think anybody realizes.”

And Patch’s role in the health of Canadians is only getting bigger. Despite GoodLife’s standing as the country’s biggest, the CEO sees plenty of potential to build on its recent gains. “The number of people exercising is growing at a constant clip,” he says “All those clubs and more can be in the marketplace, and I could still double in size. Only 15% or 16% of the population exercises in a fitness club, so there’s lots of room for growth.”

As the Cambridge club opening comes to an end, and the last new member walks out the door into the cold night, Patch gathers all the employees around him, warmly patting backs and shaking hands. “Did everyone have fun tonight?”