Are Yoga Studios in a Pickle?
Yoga Studio are a three-way partnership between owners, landlords and customers. But an over supply of yoga studios has given customers a negotiating advantage.
Since each studio needs to match what the others are doing, this intro offer is nearly ubiquitous. These offers can be as low as $30 for 30 days (a dollar per class if the student is persistent), and while it doesn’t come close to covering the studio’s daily operating costs and teachers’ pay (which can be as high as $1,000 a day), the studio must hold on to the hope that this new student will stick and buy in to the more expensive membership.
Yet, when the intro period is up, many of these savvy yogis take their business elsewhere, ever in search of new studios who will allow them to buy the cheap, introductory offer. With an iPhone and a yoga mat, these savvy yogis can do pretty well. In a big city, they can spend the better part of a year practicing and showering at yoga studios for nearly free. They share a bland detachment from ordinary social values, such as fair exchange.
Rather than renounce earthly pleasures and practice outside in a park, they take full advantage of the effort, investment and daily toil of teachers and cleaners. They believe that they tread lightly on this earth.
Landlords are a more earthbound and conservative class of partners in the yoga studio business arrangement. They want to see their neighborhood attract yoga studios, because this means rents are on the rise and the streets are safe. They have no direct economic relationship with yoga students, and are just as happy to see them coming or going. Landlords are happy as long as they are getting the rent every month.
With two parties happy this three way relationship, how do you think the owners feel? For this to be balanced, all three parties would need to be a little unhappy. If two parties are happy, then one might be very unhappy.
Rent is the highest cost for a studio owner. When they open negotations, they should hire a lawyer to fight for the lowest rent possible. They need to have several options for locations, and be detached from each of them in case a deal can not be made. However, most owners open with optimistic expectations and accept the asking price without much argument.
For a yoga studio the owner always needs to renovate the space. The landlord will say they have no problem with that, as long as they don’t ask them to pay for it. Owners assume the financial burden of renovation is supposed to be on them. It doesn’t matter, because when it is done the new studio will be so beautiful students will run to the door with fists full of dollars.
In this situation, the owner is getting the short end of the stick. He or she starts with optimism and love for yoga as their motivation. they believe their affirmations will bring back all the money they invested. Doubts are weakness of mind. Six months after opening, when they still can not meet basic operating expenses and need to borrow from their rich relative or credit card to cover absurdly high monthly utilities, their attitude takes a turn for the worst. They have been played. Now the pattern of hipsters taking advantage of their intro special and going somewhere else has become clear. Now they realize that they will never see the original investment in the renovation again, and someone has already asked them if the landlord helped, or not. They go in every day, Sunday through Saturday, and teach 2–3 classes, because they can’t afford to hire teachers. They are tired. Their voices are tired, they are tired of standing and showing poses, and their class demonstrations are beginning to look terrible. There is a ghastly pallor on their face. Wait! back up the truck. Let’s not go too far. Are you saying that these yoga teachers who took the step up to become studio owners have become depressed?
If they can’t secure enough regular members who pay full monthly dues, they are losing money. When a business is losing money, it is among the majority of new businesses that are heading into obscurity.
Some yoga studios become desperate just to have people in class. They succumb to deep discount internet companies that sell their classes for half a dollar. Their customers are not the studio’s customers. They are the least likely to suddenly get rich and become members of a yoga studio.
Meanwhile, the landlords might get anxious about their future revenue stream if they see the studio is struggling. Tenants might request a decrease in rent if business is slow. The landlord might grant it if the local economy is slow because their chances of finding a new tenant are dim.
At the start, an optimistic studio entrepreneur with confidence in the universe will take on the whole investment to renovate the space they lease. Mirrors, sinks, showers and floors are some of the more expensive items that can not be taken away when the lease ends. All of what gets bolted in becomes the property of the landlord. Owners can ask the landlord to take on a part or all of the build-out. But the landlord has little use for the insulated hot yoga space, unless the next tenant is a Bikram studio.
It is wise for new studio owners to proceed with caution. Much of the projected revenue is made up out of air, while the expenses are under estimated. Spreadsheet revenue has to cover actual monthly operating expenses to clear a picture of what you are getting into. Eventually, you want to make back the cost of building it. Once you do this, you’re living the dream.
