What We Can Learn From SoulCycle's Filing

This week, Soul Cycle filed a preliminary prospectus with regulators indicating its plans for an IPO. 

From the documents filed with the SEC we get a unique insight into their growth so far and strategy for the future. I have read this (lengthy) document and here’s what I learned about their operations that might be interesting to you:

They have a purpose. Their purpose, mission and central belief is around empowering their clients.

"Founded on the belief that fitness should be inspiring, SoulCycle is a rapidly growing lifestyle brand that strives to empower our riders in an immersive fitness experience. With inspirational coaching and high-energy music, SoulCycle was created to strengthen both the mind and the body. Our goal is to change a typically solitary activity to an inspiring and collective experience. " 

They know their clients REALLY well, not just their location or income bracket but what they are really looking for when they walk into their studio.

“ For many of our riders, SoulCycle is not about how much weight they can lose, rather, it’s about letting go, turning inward and finding the strength to meet life’s daily challenges, overcome obstacles and break through"
"In becoming part of our community, our riders are instilled with greater awareness of not only their bodies but also their emotions. We believe this awareness leads to healthier decisions, relationships and lives. We are not a business that values only transactions, rather we create a community that cultivates and sustains relationships. Our immersive culture of inspiration and empowerment contributes to the engaged and connected rider base in each of our studios. “

They know they are delivering an experience, not just an hour of working out.

"Visitors are greeted with a smile by our front desk staff, inspired to open themselves to the possibility of change by our instructors and embraced and encouraged by our community of riders”
"We believe the distinctive SoulCycle experience creates passion and loyalty and generates tremendous word-of-mouth brand awareness, fueling our growth"

They put their core values into every touch point the client has with their business. (Their core values are service and hospitality)

"Our focus is to change people’s relationship with exercise by creating a workout that doesn’t feel like WORK. We have accomplished this by consistently delivering an elevated fitness experience that is physically efficient and challenging, spiritually uplifting and above all else, FUN, paired with our focus on offering welcoming and personal service at every touchpoint. "

They know they are building a community and actively engage with their riders inside the studio and online.

"Our riders arrive early and stay after class to socialize with their fellow riders, the studio teams and instructors. Riders voraciously consume, comment on and share content from our blog and social media channels."

They invest in their team of instructors 

"Our overall training philosophy provides “freedom within a framework” to create structure, but not limit creativity and entrepreneurialism, as we believe empowered employees are the most engaged. In addition to our eight-week instructor training program, we have created “Soul University” with over 45 proprietary training programs to scale the distinctive culture and service of our studio operation. "

They offer their instructors a full-time career and a career path 

"Our instructors teach indoor cycling only at SoulCycle and receive an attractive compensation and benefits package. We want our instructors to feel like they have a real career path at SoulCycle and believe this is a key differentiator versus competitors in the fitness industry. “

They understand what they have to constantly deliver

"every time our customers step into one of our studios, they are making a choice to be there. We therefore consider ourselves obligated to ensure that riders enjoy and find value in each and every studio visit and interaction with our brand."

And when it comes to expanding and opening new studios...

It takes 2 years for their studios to reach maturity & It takes 2-3 years for payback of their initial investment

"When opening new studios, we target investment levels and returns that are in line with what we have experienced with our historical new studio openings. For new urban studios, we target an investment of approximately $2.3 million per studio, annual revenue in the year of maturity of approximately $3.5 million, Studio Contribution Margin in the year of maturity of approximately 46% and payback periods of approximately two years. For new suburban studios, we target an investment of approximately $2.2 million per studio, annual revenue in the year of maturity of approximately $2.6 million, Studio Contribution Margin in the year of maturity of approximately 50% and payback periods of approximately three years. Our studios typically reach maturity in the second year of continuous operation."

 

And then there’s the numbers...

300,000 unique riders
$112 million in revenue in 2014 from it’s studio fees and had a profit of $25 million
2.8 million rides or 7,916 rides per day in 2014
$35 million EBITDA in 2014
38 studios - as of the end of March 2015 all but 1 are NYC and LA based.
 

Interesting times.. watch this space!


Source: S-1 Form SoulCycle Inc. (http://www.sec.gov/Archives/edgar/data/1644874/000119312515270469/d844646ds1.htm)