Get Ready for the Starbucks of Yoga
"Yoga juggernaut" seems like an oxymoron, and a laughable one at that. Until you consider Denver-based CorePower Yoga, the brainchild of serial entrepreneur Trevor Tice.
In the late 1990s, Tice was busy building Tech Partners International, an IT outsourcing company. Tice had grown up in Telluride, Colorado, enjoying skiing, hiking, mountain biking--"all the things you do in the mountains," he says--until a rock-climbing accident shattered both his ankles.
Knowing he'd never be able to rock climb or mountain bike in the same way again, Tice turned to yoga. He was traveling all over the world with his IT company, and whenever he'd land in a new city he'd ask the hotel concierge to direct him to the hot yoga place in town. What he discovered surprised and disappointed him: "I was very underwhelmed by the facilities, the delivery, the consistency," he says. "It was lacking anything a good customer experience would have."
In response, Tice founded a chain of yoga studios in 2002 that has since expanded nationwide. His CorePower Yoga focuses relentlessly on consistency and customer experience. The studios, with full locker rooms and climate control, have more in common with high-end health clubs than with independent studios; they teach only CorePower Yoga, which Tice designed himself, inspired by power yoga, ashtanga yoga, and Bikram yoga. Classes are 60 minutes, not 90 as at most studios; there are mirrors and music.
The business model is more like that of a health club as well, focusing on members who pay $135 to $170 a month to take unlimited classes at any studio, and relying less on drop-in classes, which generally cost about $20. In 2012, CorePower Yoga had$45.2 million in revenue; Tice says revenues are now on a $100 million run rate.
Tice says he funded the first 20 studios, each of which costs from $500,000 to $750,000 to open, with proceeds from the sale of his last company. In June 2013, CorePower Yoga turned to private equity firm Catterton Partners, receiving an investment Tice describes as "well north of $100 million."
Catterton is not the only investor to see promise in the yoga industry, which is made up mostly of small studios run by independent owner-operators. Yoga and Pilates together grew at about a 7.7 percent annual rate from 2007 to 2012, according to market researcher IBISWorld, and are now a $7 billion market. In 2012, Yoga Journal's Yoga in America study found that 20.4 million Americans practice yoga, compared with 15.8 million in 2008.
Jeff Tkach, group publisher for Yoga Journal and Vegetarian Times, thinks those numbers will only grow. Online classes abound, he says, and yoga is now found in hospitals and schools. "Yoga is becoming wildly more accessible," he says.
"If you just track the awareness and uptake of yoga over the past 12 years, it's been incredible," Tice says. "Now it's in commercials and movies."
In February 2012, Canada's largest chain of yoga studios, the 13-locationYYoga, raised $9 million for its expansion. Last summer, Great Hill Partners paid about $45 million for YogaWorks, a chain with 29 studios in California and New York,according to The Wall Street Journal.
There's every reason to believe the Catterton investment will allow CorePower to outpace both of them. CorePower has 119 studios, and prior to the cash infusion, it had been on track to open 10 to 15 new ones a year. Now it's shooting for 25 to 30 in 2015, accelerating over the next five years. Tice doesn't think it's a stretch for CorePower Yoga to eventually become a public company operating more than 500 studios in the U.S.
Managing the sort of growth Tice envisions can be a daunting challenge, however, so CorePower used some of its private equity money to bolster its management team, allowing Tice to remove himself from the company's day-to-day operations. Amy Shecter, formerly president of Elie Tahari, became the company's CEO in May; Heather Holland, who had been general counsel for Le Pain Quotidien, came on board in September 2013; and Tess Roering, formerly vice president of marketing for Athleta, joined in September.
CorePower Yoga has its critics, which Tice says sometimes include studio owners in the neighborhoods where CorePower Yoga has opened up shop. "The local yoga studios have felt extremely threatened when CorePower Yoga has entered a market," he says. "In hindsight, their concerns were unwarranted." He says most of the independent yoga studios actually have benefited from the arrival of CorePower Yoga. "I know most of the studio owners in the geographies where CorePower Yoga is," he says. "I always get the call that they're worried, and four years later I talk to them again and they're doing great."
"We are seeing an onslaught of new franchises," says Tkach, mentioning not just CorePower but additional companies such as Pure Yoga, Yogafit, and Exhale. But so far, he thinks there's ample opportunity for all of them. "There are so many different styles of yoga," he says. "You tend to find your tribe, so to speak."
For all of these companies, there is also the danger that yoga is just a fleeting trend--and that by the time CorePower has built out its 500 studios, its one-time fans will have moved on to other pursuits, like Tae Bo or trampolines. Tice isn't having it. "People have been concerned for years that yoga is a fad," he says. "I don't believe it is. It's such a powerful practice. People who have experienced it will agree." The bigger challenge, he says, is much simpler: "Now we have to execute efficiently and properly."