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Eric Casaburi - Fearless
05/03/2012 - By Paul Williams
Photo: Linda Rowe Photography
"The Devil Is In The Details"
If you look up that word in the dictionary, you may very well see a picture of Colts Necks Eric Casaburi next to it. Eight years ago, Casaburi, just 29 at the time, went all-in when he created Retro Fitness, his original brand of a national gym franchise. His distinct vision of manufacturing an affordable, revolutionary, 1980s-themed fitness alterative in New Jersey has now grown to a 100-plus location enterprise with more than 300,000 memberships across 11 states. Risk is an inherent cost of starting any business, and especially one as grandiose as Retro Fitness. Yet, Casaburi managed to successfully build a flourishing franchise through the teeth of the recent economic recession. And, hes on the brink of creating another with the launch of Lets YO!, a self-serve frozen yogurt shop that has opened more than 20 locations in New Jersey in the last nine months.
As Casaburi carried Living in Colts Neck on a journey through the twists and turns of his life - while his iTunes appropriately played a soundtrack of 80s rock legends U2, Journey, Bon Jovi and more - it became apparent that his energy, passion and fearlessness transcend even his business acumen. His entrepreneurial career began after he walked away from the opportunity to become a member of the LAPD and moved back to his roots in Monmouth County to continue working in the environment he loved most: a gym. Casaburis self-made wealth is a success story of someone who has been rewarded for having a nose-to-the-grindstone attitude, and the enthusiasm and bravery to commit to making a career out of what he enjoys the most.
LICN: Where did you grow up?
EC: I was born in Staten Island and moved to Marlboro in 1984. Most of my early memories are from that area.
LICN: I understand you started working in a local fitness club as a teenager?
EC: Both of my parents were insistent on giving a days work for a days wage. They had the blue-collar mentality. In fact, my dad was a cop so he truly wore a blue collar every day. When we moved to Marlboro, it was on me to instantly get a job. I was interested in fitness growing up. When I was about 13, my mom made a deal with me that if I could get a job at a local gym, I could go to it. So I cleaned the bathrooms, locker rooms and equipment there. When I go into my gyms now, I always do what I call a touch test. I walk around and Ill know the last time a machine was dusted just by rubbing my hand on it.
LICN: Where did you grow up?
EC: I was born in Staten Island and moved to Marlboro in 1984. Most of my early memories are from that area.
LICN: I understand you started working in a local fitness club as a teenager?
EC: Both of my parents were insistent on giving a days work for a days wage. They had the blue-collar mentality. In fact, my dad was a cop so he truly wore a blue collar every day. When we moved to Marlboro, it was on me to instantly get a job. I was interested in fitness growing up. When I was about 13, my mom made a deal with me that if I could get a job at a local gym, I could go to it. So I cleaned the bathrooms, locker rooms and equipment there. When I go into my gyms now, I always do what I call a touch test. I walk around and Ill know the last time a machine was dusted just by rubbing my hand on it. Its not that Im a kinesthetic person, but Ill just check them because Ive been there. When we built our operations manuals for our fitness centers we took that into account. The devil is in the details. When youre doing business, hanging the sign and turning the key is one thing, but all that goes on behind it is so important. My mother was an oldschool Italian who was so neurotic about cleanliness she used to bleach the sidewalks. She passed that on to me, and I passed it on to the gyms. And its the same thing with the yogurt shops, too. Kids are flipping topping all over the place. Cleaning is like turning on the lights. You have to pay the electric bill, and you have to pay to keep the store clean. I learned that at a young age.
LICN: Coming from a blue-collar family, what made you gravitate towards being a white-collar entrepreneur?
EC: Ironically, my dad was an entrepreneur himself. He was a police officer who got into the jewelry business. So, he had the entrepreneurial spirit there, and I got a good taste of the small business ownership since I used to work in the shop on the weekends; I saw the hours he put in. Growing up, my dad wasnt at my ball games; my mom was. I was 16 years old when she passed away. It changed me as a person. The rock in my life had disappeared. So I had two choices: I could go and do drugs and drink, or I could hit the weight room, pound it out, get a job, and put my nose back into the books. Hats off to my coaches and teachers in Marlboro. They cared enough about me and kept me heading on the right path. That period of my life thickened my skin to the point where I didnt have much to fear about anything, and that personality has worked well in business. I try to channel that into everything I do.
LICN: Did you go to college?
EC: I dropped out of Arizona State after a couple of years. One of the last things I did out there was take the test to be a police officer for the LAPD. I was 20 going on 21. I came from a family of cops so, in my mind, I was going to be a gym teacher or a cop. I had four semesters of Spanish in ASU because it was required and that helped me score highly on the test, so they hired me. I stayed with a cousin out in L.A. and I said, Ok, I guess Im going to follow this path. At about 4:30 a.m. the day I had to report to the academy, I was driving. It was pitch black for miles and then I saw one streetlight on. The head of it was broken and hanging down and the light was shining on a payphone in the parking lot of a dilapidated building. I said, Wow, thats strange. I pulled into this lot and looked at the pay phone and I said to myself, Mom, are you trying to tell me something here? It was the only light on the boulevard. I picked up and called my father collect. My dad picked up the phone and I told him, I dont know about this. And he goes, All right, Ill see you at the airport. I hung up the phone, turned around and went back to Newark that afternoon. I closed the door; that chapter was done.
LICN: Just like that?
EC: Just like that. Once I got home my dad told me it was time to go to work. I got a phone call from an associate of mine who knew I liked working in gyms and he said he had a location for a new gym. I knew the business from always being in it, and I told my father I had an opportunity to open a gym in Brick. My father then tells me theres a gym in Staten Island he drives by every day and Im going to go work there first and learn something. I started as a trainer, which I was overqualified for. They eventually promoted me to their sales department, and I was going through the motions and learning what I could. I would sit there and eat my lunch with the bookkeeper so I could pick her brain. Id ask things like, Why do you take credit cards? What do you do with the contracts? to learn everything they did. After the place closed, I would follow the cleaning guy around and ask him, What do you do? Where do you start? Why do you start that way? What do you use? So, I would go home and tell my dad everything I learned at the end of the day. He never mentioned it to me but he must have called his brothers and said, Ok, this kid gets it, lets loan him a couple of bucks to get his own gym started. And I had to pay every penny of it back, with interest.
LICN: How long did you work in Staten Island before you were able to get the loan?
EC: Almost a year. By then, my wife, Kim, came to New Jersey and she worked as a retail manager for The Limited Corporation in Woodbridge. Then, she would come down to Brick and work in the pre-sales office when I was getting that together. There is always a great woman behind every good man. Kim is the most frugal shopper in the world, but she has an open paycheck now because when we were struggling back then she was paying the bills. Once I left my job in Staten Island to devote myself to the gym, there was no income on my side. And every dollar I did bring in went to the gym. We opened at the right place, right time and right location. It was a smash hit right away.
LICN: After it was successful, did you think of franchising?
EC: Not right away, no. I moved into my second club around 2002 when I opened up Manahawkin, and thats when the franchise thought first came into my head. I was a big operations person and I had some sales and marketing systems in place. I kept a book that documented everything. What I was really creating, and I didnt know it at the time, was the beginning of an operations manual. Most of the gyms popping up back then were 20,000 to 30,000 square feet. My first gym was 15,000 square feet, so the next step would have been to go to 25,000. But I started to look at it, and thought about what I could do with just a 10,000 square foot location. The number that always matters in budgets is the one in the bottom right hand corner, and it was close to what I was making in a bigger gym. It was less risk and more profit per square foot. Personally, Kim and I had just had our second child. We were building our family so I didnt want to jump into a large location and take on $2 million in debt. We made the deal and the gym went out like a rocket. Its a Retro Fitness now, and its still one of the top dollars-to-square-foot locations we have.
LICN: What role did the second gym play in your development of the franchise?
EC: I learned about driving the profit centers in the club there. Most tried to think of us as just selling gym memberships, but we had personal training, juice bars and tanning, too. Back then, I learned that aerobics classes were such an impediment on the bottom line. You have to pay the instructors and they only attract a small percentage of the members. The industry standard was six percent or less, and we were under that. So when I launched Retro Fitness, I decided not to spend all this time, energy and money on programs that dont really do well. That club enabled me to learn a lot of the systems to run the franchise successfully.
After that, I was moving closer to opening my third gym in Lumberton. I attended a seminar in Scottsdale, Ariz. and had just read The EMyth, which talked about if your business could really be systemized, and could you franchise it. Basically asking, could your business exist without you there? I had come to a crossroads where I said, Am I going to keep going like this, or start my own brand? I had a green book where I would keep all my notes in, and I was sketching different ideas to find who my target audience was. At that time, I felt like Generation X was my target. I was doing a very good job of penetrating the 20 to 40 year-old market. We were always targeting who our customer was. So I asked myself, If I think I know who the majority of my customers are, how can I identify with them the best?
LICN: Were you committed at that point?
EC: I was. In a post-seminar interview, they asked me to make a decision on what I wanted to do. Did I want to grow my own brand or stay the course? Those are two separate paths, and once you choose one, thats it. So I had a gut-check time. I knew my business was systemized. Now, I just had to create a brand that warranted people paying me for it. I was still jotting down notes and I asked myself: if most of those people in Generation X are pop-culture fiends, what would make them feel good? I remember I wrote down the word retro in my book and I underlined it twice. And, I thought that was kind of catchy - Retro Fitness. Thats how it started. Then, I drilled down further as to how I would relate to my market, and I saw Atari joysticks and Rubiks cubes. Back then, the market was trying to cater to the baby boomers, but at this point Generation X was out of college and they all had jobs. Everyone was overlooking them and I saw them as a huge play. The next day I trademarked Retro Fitness. At that point, I was going forward. I converted the two gyms and sold the big one in Brick. I wasnt sure at the time if that one fit the model. Weve since converted it back. When the owner of it came to me and said he wanted to fit our model, we doubled the membership in four months. I was happy to see that because that was my first club and it was an emotional win for me.
LICN: You became a very successful businessman at a young age. How did you educate yourself on all of the facets that go into a business?
EC: I had all the passion you could want in a bottle, but I wanted to make sure that it wasnt wasted on foolish efforts if I had the wrong people around me. So I surrounded myself with all the right educated people, like business lawyers and accountants. I used them to help me start negotiating with all the big vendors. Here I am, a 24-year-old kid slamming my fist on a desk saying, Im going to open up tons of gyms, but they were a critical part for me because I was so young.
LICN: How did the vendors react to your Retro Fitness concept?
EC: At first they said, Who is this crazy kid? Hes got this weird color scheme and were going to build this custom equipment for him? No one could even wrap their head around what I was thinking. I was so passionate about making everything the same. I wanted to be the franchise of the fitness industry. If you walk into a McDonalds or Dunkin Donuts, you know whats on the menu and what the prices are. Those are inherent expectations and theyre the beauty of the franchise. When people walk in they know what theyre getting. It doesnt have to be the best product in the world, but its the most consistent product in the world. You know youre getting the same product whether youre in China or New Jersey. So, I said thats what I wanted. I wanted a member to be able to go into any Retro Fitness anywhere and get a very similar expectation of their workout and their juice bar. When I launched the Retro juice bar, I was adamant that we had to have a machine that produced the same shake every time, so whether Mary, Tom or Frank made it, it came out the same in Naples, Fla. or Neptune, N.J. It was strange to me that no one had made a true franchise like that in the fitness industry yet. That became my sales pitch.
LICN: You were able to successfully expand your business through the weakened economy over the last few years. How did you do it?
EC: Its almost crazy to say, but the recession might have been the greatest thing that ever happened to us. I was charging $19.99 a month for memberships when most others were charging $40 to $60 a month. When the recession really hit hard we became rock stars almost overnight. People would walk in and notice that we looked just as good, if not better, than the gym they were paying $50 for. I didnt produce a bottom of the barrel gym for $19. I still wanted to give you the Taj Mahal of fitness centers, and I knew I could win customers business that way. Im no economist. Im no finance expert. I dont even have a college degree, but I just knew that when I saw we could still make money at $19 a month, why not do this for our consumers? We can still make money at this price, and theyll love us. People would thank us for keeping gym memberships affordable for them during the rough economic times, and that was satisfying to hear. We almost call it the retro bubble. We ignore whats going on around us and conduct business in a regular manner, because we know we can be successful in what we do. We also think if we can make money now, just imagine what we can do on the other side of it when things get better.
LICN: When you started your franchises, did you expect them to be this successful?
EC: Ive always been a big, global thinker. When I first started I stayed conservative in my thoughts because I wanted to keep my feet on the ground. The willingness of some of the early investors and entrepreneurs helped. At that point, you feel pretty good because youve been accepted and accredited for all the hard work youve put in, and then you know you can expand.
LICN: How has the business environment changed since you started?
EC: We dont have a turnstile of investors coming to us like we did early on, but now they are more sophisticated business people who dont just want to buy one location; they want to invest in three or five at a time. Initially, we were just here in New Jersey and the East. Now, were in 11 states and we just started selling California. Eventually, well be in the Midwest, too. Were still doing it, we just keep swinging.
LICN: What sparked the idea for Lets YO?
EC: I always want to serve a product to you that I would want myself. I love our products. I eat yogurt every single day. Whereas most guys might spend their free time playing golf, tennis, or out partying, I spend a lot of my free time researching and scratching out business plans. After Kim and the kids go to bed at home, I clock back in and start doing some more research. So last summer I went down to see my brother, whos now retired, in Florida. He knows I love frozen yogurt and brought me to a shop down there and I observed the business end of it. Im one of those people that when I go to dinner, Im always observing how everything is run. Not that Im judging, but I always want to understand and analyze the business end of everything. When I came home, I started scratching some stuff together and assembled some business plans for a self-serve yogurt shop. Ironically, in the Northeast theres a tremendous consumption of frozen treats. People may think we dont eat them because its cold, but thats not true at all. The market for yogurt is phenomenal up here. So, I set out to try to find the right product to serve. I asked, Where is the best? There are a million distributors, and I wanted to find the best one that someone wasnt using up in this area to separate ourselves from the others. Another goal of mine was to educate the customers on the health benefits of yogurt over ice cream.
Again, like in Retro Fitness, I wanted to find our target audience and make our brand stand out. Thats why our logo is the text message bubble. We are all on these different phones and machines today, and everyone could associate with my logo. So, then I thought about how a mom who comes into the yogurt shop with her friend and two kids could enjoy her yogurt, and still keep her kids occupied. For that, I wanted to put iPads in the shops to let the kids play with all these apps, and that lets the adults enjoy their treat while they can keep an eye on their children. I consider myself an average customer, and I always ask, What would make me feel really good about this if I were the consumer? Thats how most of my ideas get formed.
LICN: What do you find the most gratifying aspect of owning your franchised business to be?
EC: I have a high level of interest in building businesses. I enjoy watching them succeed from the ground up, and watching people succeed from something that weve created for them. Weve made a lot of money. Were going to continue to make more, theres no doubt about it. But at some point there has to be something other than that to drive you to want to achieve. For me, its seeing that success of our franchisees making money and succeeding from something that we started. I enjoy seeing our franchisees at our conventions and hearing how they are doing. If you isolate yourself in an ivory tower in business, youre in trouble. I like to hear and understand how the stores are doing on a regular basis. That helps me make the franchise better.
LICN: Do you love the 80s?
EC: I do. I am infatuated with pop culture. It was such a great time in my life. Maybe it ties back to an emotional point with memories of me with my mom, but a lot of people love it as well. It just seems like the world was different back then. Music was a lot of fun, fashion was insane, and it was a little bit slower of a pace than today. Today, its such an age of instant gratification and information overload. It just wasnt like that back then. And theres good and bad to both eras. But if you look on my iPod, Im layered in with 80s rock. I still work out to it today.
LICN: What do you like to do for recreation?
EC: I enjoy working out and I love spending time with my three kids. As far as hobbies, I enjoy reading about marketing and playing with ways to fine-tune my business. My father jokes around with me now. He says he couldnt get me to pick up a book in school if it didnt have a football attached to it. But right now, theres so much information out there that if you push the pause button, youre missing something. If you want to be successful these days, you have to pull the hands of the clock right off. My business isnt work for me, so I feel like Im in my hobby all day long.
LICN: Do you have any other franchise ideas youd like to open in the future?
EC: Because Im always interested in business and learning about it, if theres an industry where I feel we can make an impact in, then I could explore that. Im not going to get into something like coffee or hot dogs because thats just not me and its been done already. It would have to be something I could put my stamp on, and, if its a franchise, it has to make people some money, too. I can say I dont think weve heard the last of my brand, but I wont go all in if I dont think its something that we can be the best at, or run it effectively. I dont want to go into anything to just be par.
LICN: Eric, it was a pleasure talking to you today! Thank you for sharing your story with us. Congratulations and best of luck to you and your franchises in the future.
EC: Thank you, my pleasure.
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