James Collins is the first franchisee to invest in Retro Fitness as part of Project Lift, with his Eastwood Capital Partners signing a deal to open up to 70 gyms in communities of color in the Dallas, Houston and Southeast Florida markets. Through Project Lift, Retro Fitness has a goal to open 500 gyms in 50 Black and brown communities over the next five years.
There’s an opportunity, said Collins, to focus development in “Black and brown working class and middle-class communities” to help address what he noted is “one of the biggest social determinants of health”—access to health and wellness resources. The obesity rate in the United States reached 42.4 percent in 2018, according to the most recent Centers for Disease Control and Prevention data. Black and Hispanic populations exceed that national rate, at 49.6 percent and 44.8 percent, respectively, and the two groups each account for less than 13 percent of fitness club members.
“So by putting these accessible and affordable fitness locations in these communities, we hope to help improve these outcomes,” said Collins, founding partner of Eastwood Capital. Retro Fitness, which describes itself as a high-value, low-price franchise, has 120-plus locations and membership plans start at $19.99.
Though his private equity firm is based in New York, Collins noted he’s setting up a corporate headquarters in Houston to develop and support his Retro locations, with the aim of hiring from within the community there and at the gym level to also “do our small part to decrease the wage gap.” The McKinsey Global Institute reported the median annual wage for Black workers is approximately 30 percent, or $10,000, lower than that of white workers.
James Collins is the founding partner of Eastwood Capital.
Collins, whose career includes stints at Roark Capital and Bain & Company, formed Eastwood Capital in 2012, investing his own money and raising funds on a deal-by-deal basis with a focus on middle market investments in consumer and business services. The agreement with Retro Fitness is his first deal with institutional backing, as Eastwood partnered with financial giant BlackRock through its BlackRock Impact Opportunities Fund. The new fund, which BlackRock announced May 11, has secured more than $800 million in initial commitments toward a $1 billion target and is investing in “businesses and projects owned, led by, or serving people of color, with a particular focus on Black, Latinx and Native American communities.”
Eastwood Capital is among the fund’s first three investments. The partnership, said Collins, arose through his relationship with Ladell Robbins, managing director of BlackRock Alternative Investors. “This type of deal … is pretty much an ideal fit with what they’re looking to achieve,” said Collins.
Retro Fitness initiative about ‘lifting communities’
Project Lift is the brainchild of Retro Fitness CEO Andrew Alfano, who joined the West Palm Beach, Florida-based company in 2019 after spending the majority of his career in regional and senior VP roles at Starbucks.
“Part of coming on board, this was not just going to be another job,” said Alfano, who in between Starbucks and Retro Fitness was president at The Learning Experience. “It was, I wanted to build a company with a purpose and mission.” There’s a “disparaging difference” in access to fitness options within Black and brown communities, and the aim to open 500 gyms in target cities nationwide is about “lifting people, lifting spirits and lifting communities,” he said.
Andrew Alfano joined Retro Fitness as CEO in 2019.
Retro Fitness has a “strong preference” to bring in franchisees of color through Project Lift, but it’s open to all investors and incentives include waiving the franchise fee and 50 percent off year-one royalties. The investment range to open a Retro Fitness is $1.8 million to $2 million.
Beyond developing gyms, Project Lift calls for Retro Fitness to donate tens of millions of dollars to nonprofits and community organizations, working in partnership with the local operator. “We are truly going to be engaging in these communities,” said Alfano. “We’re giving back to organizations in these communities for the entire life of the business.”
Alfano added Retro Fitness also plans to launch programs and events to promote mental health, nutrition and general wellness, and has partnerships with The Culinary Institute of America—Alfano is on the board—and Sadhguru, a world-renowned yogi.
Project Lift, stressed Alfano “is not an inner-city program,” and Collins noted he sees Black and brown communities as ideal markets for investment that are often overlooked.
“I know how fertile these markets are,” said Collins. “There are many, many working-class Black and brown consumers who can and are willing to spend on quality fitness options.” He also hopes to serve as an example to other Black- and brown-owned businesses, and “show investors you can make money backing Black and brown people.”