Wednesday, September 29, 2010

Yielding to Yoga; Number of studios is growing, but so are fears ofoversaturation.(Crain's Small Business).

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Moksha Yoga Studio, originally uploaded by danpire. USA, LLC

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People who crashed out of the high-flying 1990s can be found on Saturday mornings at the Moksha Yoga studio in Chicago's River West neighborhood. The collection includes Bob Mayer, once an enthusiastic futures trader on the Chicago Board Options Exchange, now a meditative sort, happy to leave the corporate life behind.

``I've found a new life path,'' declares Mr. Mayer, 46, who quit the exchange after a dozen years of trading and now boasts a resting pulse rate of just 57 beats per minute. He describes himself as semi-retired.

``For years, I stood and fought people over money, and that became so aggravating that I couldn't stand it anymore,'' he says. ``I come here to be calmer. I feel better about myself now.''

Following racquetball, marathon runs and weight training, yoga is a new after-hours pursuit for many professionals, leading entrepreneurs to open studios like Moksha in the city and suburbs.

The trend rankles some practitioners who fear a flood of yoga studios will make the pursuit less pure and more like a fast-food franchise, with locations on every corner. And it's already causing some observers to fret about overbuilding.

Sharon Steffensen, editor and publisher of Yoga Chicago magazine-which has grown to 64 pages from its eight-page start in 1994-estimates there are up to 300 facilities for yoga in the Chicago area, with more on the horizon.

Entrepreneurs looking to cash in on the pursuit of tranquility should beware: Health-conscious Americans have short attention spans.

William Howland, director of research at the International

Health Racquet and Sportsclub Assn. in Boston, warns, ``Americans will embark, typically, on a new fitness regimen and within six months to a year, half of them will throw in the towel and quit. That's the challenge our industry faces.''

While yoga has a certain anti-capitalist allure to converts like Mr. Mayer, that won't go far with landlords and creditors if class enrollments tumble in an oversaturated market.

Sizing up the audience

But the yoga market is hard to measure.

A Time magazine cover story a year ago pegged the number of U.S. yoga followers at 18 million, a total that apparently came from the Berkeley, Calif.-based Yoga Journal. A spokeswoman for the publication admits that the figure ``is our best guesstimate. What we do know is that growth is exploding.''

Meanwhile, the Sporting Goods Manufacturers Assn. in Florida found 9.7 million yoga practitioners nationwide a year ago, a 70% increase since 1998. That's still far behind aerobic dance, at 16.9 million people, and runners and joggers, at 35 million, according to the trade group.

Many people who start yoga studios aren't novices in business planning.

Elizabeth Range Kiely, 38, who opened studio Om on the Range on Chicago's North Side in February, has an MBA from Northwestern University's Kellogg School of Management. She gave up work as a fund-raiser for the Art Institute of Chicago and the Brookfield Zoo to manage the studio full time. Her husband and business partner, Terry Kiely, 39, who has an MBA from the University of Chicago Graduate School of Business, kept his job as a consultant for Loop-based consulting firm Headstrong Inc.

The Kielys spent nine weeks and $5,000 each on training in Los Angeles in the practice of bikram yoga. Then, they invested about $30,000 to get started in a 2,000-square-foot space in a century-old industrial building. Much of the money went into a new furnace, designed to heat the main classroom to more than 100 degrees, the sort of ``hot box'' customary for practicing bikram-style yoga, where sweaty bodies are a fitness ideal.

Ms. Kiely charges $15 per student for each class, which averages 15 students. Teachers make $40 to $60 per hour. She estimates first-year revenues will exceed $100,000. ``Right now, we are covering our costs with our revenues, which is what we need to do to stay open,'' she says.

Corporate advantages

So far, she's confined marketing efforts to advertisements in local church bulletins and Yoga Chicago, along with direct mailings to about 5,000 neighborhood households.

Not surprisingly, Ms. Kiely is convinced the heightened interest in yoga is more than a fad.

``More studios are opening because more and more people want to experience yoga,'' she says. ``Those in the corporate world are learning that yoga is a secret weapon. Through meditation, people gain more clarity, more calmness. They learn to be less rigid, more fluid. They learn not to rush into decisions.''

Laura Jane Mellencamp was surprised by the paucity of yoga studios in the suburbs when she relocated to Downers Grove from California is 1995. She opened Yoga Among Friends in 1998 with an investment of $10,000. But since then, eight competitors have set up shop in her corner of DuPage County, with more planned.

``As yoga becomes more popular, it runs the risk of becoming like McDonald's-it'll get bastardized by poor quality and instructors who lack experience and knowledge,'' says Ms. Mellencamp, 47. ``Some of these new owners may be disappointed. They think this is easy money, but running a studio means working seven days a week, sweeping floors and cleaning toilets and preparing payroll in between the fun part, which is teaching.''

She charges $12 per student per class, but feels the competition constantly. ``I'd have a lot more students if these new studios hadn't opened.''

Betting on the trend

Alexis Gacki and her brother, Conrad, are relatively unconcerned about competition. They plan to open Bikram Yoga College of India in a Naperville strip mall in January.

Ms. Gacki, 25, who has been a yoga teacher for less than two years, and her brother plan to spend $50,000 on a 5,000-square-foot facility. It will include locker rooms and showers-rare amenities for a yoga studio. They say they will send a percentage of their sales to the founder of bikram, Bikram Choudhury, in Los Angeles. Such royalty arrangements are a rarity in the yoga field, but some observers expect more yogis to seek fees for their roles in developing certain disciplines.

Ms. Gacki has no business plan and has done no marketing studies. ``I don't think there can ever be too much yoga,'' she says. ``I'll bet my life on that.''

Other studio owners exhibit similar confidence.

Mac Ozmum quit a job as a marketing executive at Crescent Cardboard Co. in Wheeling and renounced her Bally Total Fitness Club membership before spending $65,000 to open Niyama Yoga earlier this year in a 1,300-square-foot space in Wilmette. She has close to 1,000 students-twice her projection-but still must shoulder heavy overhead.

At $50 per hour, teacher salaries will eat 62% of her projected first-year sales of $200,000. Another 10% of revenues will go to cover rent and 3% to pay utilities.

``Summer was hard, when people went on vacation, but since October we've been cash-flow positive,'' says Ms. Ozmum.

She predicts a national chain offering yoga will arise eventually. ``There is a good chance we'll get a Barnes & Noble of yoga someday, but for now, it's a mom-and-pop business.''

Quinn Kearney, the co-owner of Yogaview on North Clybourn in Chicago, believes yoga studios will supplant health clubs for many exercise enthusiasts.

``People have jogged and blown their knees out and they've lifted weights and found that not very satisfying after a while,'' says Mr. Kearney. ``With the spiritual benefits it offers, yoga is easy to get hooked on.''

Mr. Kearney, who opened Yogaview in July with partner Tom Quinn, calls his business plan a ``rough draft of sorts. For now, we're paying our bills, and that means we're viable. That's what matters to us.''

Broad appeal

Meanwhile, well-entrenched yoga studios also are seeking to expand.

The Himalayan Institute Midwest was shoehorned into a 1,100-square-foot studio in Glenview for 27 years before moving to a 3,000-square-foot space in Evanston in October. In January, it will almost double its schedule of classes to 30 per week.

``We'll start a class for teenagers in January,'' says administrative director Angela Donnelly. ``Our class for senior citizens is already well-attended. Yoga is growing, in part, because it's reaching out to people of all ages.''


Money in meditation: Elizabeth Range Kiely expects her yoga studio's annual revenues to reach $100,000 in the first year of operation. * A hot trend: Elizabeth Range Kiely leads a class at Om on the Range in Chicago. The studio specializes in bikram-style yoga, which requires the classroom be heated to more than 100 degrees.

Source Citation
Murphy, H. Lee. "Yielding to Yoga; Number of studios is growing, but so are fears of oversaturation." Crain's Chicago Business 9 Dec. 2002: SB1. General OneFile. Web. 29 Sept. 2010.
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