And while Bansal isn’t averse to the comparison with Patanjali, despite the obvious difference in product styling, the differences don’t stop there. The user segments the two are looking at are very distinct: Cure.fit wants to garner 3-4 million customers in urban India over the next five years. “We can build a billion-dollar business with two million customers. We are not building a mass product. We are focused on the middle-class and tech-savvy crowd and that is where most of the spending power is in India, even with e-commerce,” says Bansal. For Patanjali, the catchment is much bigger, it’s the masses.
What is the cost?
The overhead costs of running a modern yoga studio today ranges from Rs 200,000-600,000 ($ 3000-9000) per month. “The profits completely depend on the operation costs and capital expenditure, touching even 67% operational profit margins if your op-ex is low,” says Sarvesh Shashi, founder of Zorba, a chain of alternative fitness studios in which Talwalkars Better Value Fitness holds a 50% stake. Even for legacy fitness chains such as the Talwalkars, the return on investment for a gym is close to 25-30%.
Cult.fit fitness centers have higher initial costs, ranging from Rs 2 to 3 crore (~$460,0000). If it sticks to its plan of setting up 500 such centers over the next five years, it would be spending a whopping Rs 1500 crore ($229 million). In the existing 20 Cult centers, 30% of members are on the annual subscription of Rs 36,000 ($ 550), the rest are on 3-month packages.
“10% of our members pay per class (which costs Rs 300). Renewal is in the 65% range. Breakeven in Cult happens from [the] second or third month and in 12-15 months we recover our entire capex. There is no equipment, it is a capex light model,” says Bansal, adding that the Cult gyms are designed for regular people, not bodybuilders who need specialized equipment.
The other point of difference is that members book classes on the app and at the gym, sign in using biometrics. Cure.fit’s biometric system has faced criticism from users who find it bothersome to share private data. Bansal says this is a common practice in gyms across the globe. “For those who do not want to share their biometrics we are rolling out an access tag which they need to carry to the gym,” he says, stressing that the fitness chain takes data security seriously.
To allow its customers to monitor their nutrition requirement, Cure.fit integrates with Eat.fit, a food ordering service which is available in select zip codes of Bengaluru with a high concentration of young professionals. Not surprisingly, Bansal’s former company Myntra places a significant number of orders.
Eat.fit is just four months old but Bansal claims it is contributing 20% to Cure.fit’s revenues, averaging Rs 3 crore ( around $ 460,000) a month. However, hyperlocal food delivery is not easy to crack.
“We are not burning money per order. Ours is also a kitchen and delivery business and the capacity is much larger. To cater to at least 2000 orders from each kitchen. This is different from others which cater to fewer orders,” says Bansal, referring to similar models such as Freshmenu, which has multiple kitchens across the city that can handle 1000 orders each at full capacity to service different zip codes.
Acquiring the Kristy’s Kitchen
To get a foot in the door, Cure.fit acquired Kristy’s Kitchen, a health food outlet that now processes 1500 orders per month across two outlets in Bengaluru.
It helps when the demand is concentrated. Eat.fit is doing that by signing up users for periodical plans. Food companies that cook and deliver still burn money on each delivery. The comparison here, other than Freshmenu, is with food-technology players such as Faasos and Box8, who do not work with partner restaurants unlike a Swiggy and Zomato.
And as with gym and yoga, Cure.fit acquired the hyperlocal food delivery company Opinio and its fleet of delivery boys to build its food business. Not something which Patanjali is planning to get into even though it is talking of food parks. For now, it sells packaged food, from noodles to spices, with a tag of being healthier and cheaper than what’s there on the market.