Really interesting post, thanks for sharing. One question I have on the model is how scalable it is to second-tier U.S cities where there may be more sticker shock to paying $30 for an hourlong workout class, when some potential consumers likely pay that much for monthly gym memberships. It would be interesting to know whether the Company has considered sub-brands with different offerings to appeal to these markets. Also, how would the Company acquire instructors, its key asset, to work in these second-tier cities? It seems like recruitment would become quite difficult, relatively fast, leading to growth constraints.
Really interesting company. Does Microstar provide any data on return on capital invested? Given the significant upfront (and I would imagine, continuous) capital spend needed to maintain and grow its sizable asset base, how does the company track returns on that capital? Additionally, it seems that the business does best in areas of significant density as it can spread the logistics cost over dense pick-up/drop-off routes – it would be interesting to learn how they manage for growth given this dynamic.