Speedfit boost profits, predicts $5m sales after refusing Sharks’ offer

By Sarah Stowe | 28 Nov 2019 View comments

Two years since turning down an offer on TV show Shark Tank, SpeedFit has tripled the size of its business, surging ahead with year-on-year double digit growth in Australia’s competitive fitness industry, and attracting lucrative medical investors from the Middle East. 

SpeedFit offers an alternative to high intensity, high impact activity with a workout tailored to individual needs, from disabled, seniors, the injured to elite athletes. 

The business appeared on Shark Tank but rejected investment from Boost Juice founder Janine Allis and Dr Glen Richards.

Speedfit boosts profits

CEO and founder Matej Varhalik took a step back to set the business on a sustainable path, after realising the target of 15 studios in a short period of time was risky.

“We were ambitious at the time,” he told Inside Franchise Business. “We had a lot of enquiries and we looked at developing the system rather than selling the licenses. One licensee opened various studios and we realised we didn’t have the infrastructure to support it.”

Investors rather than hands-on operators were clamouring to join the network, looking for passive income. But that investment model required too much from the franchisor, Varhalik revealed.

“We didn’t want to push for something we weren’t ready for. Now we know how to deliver training and build a team, and we’re looking for sustainable growth.”

Varhalik has refined the business model based on feedback from franchisees. 

As a result of the fine-tuning SpeedFit increased profit by 23.98 per cent but also decreased wages/cost of labour by 6.15 per cent. 

The business has also seen a 60 per cent growth in sales from $2.1 million to more than $3.5 million, with projections of $5 million this financial year.   

The franchisees who invested in the company

The brand’s performance and growth from five locations to 15 [before the end of 2019] has attracted investment from the founders of a Middle Eastern private hospital medical empire, the Shetty family, who are also part of the Forbes 1000 international list.

Neema and Sharad Shetty who are based in Perth, came across SpeedFit as clients and were excited enough by the use of technology to fill a gap in the fitness market they invested in an individual studio in Western Australia.

The business model proved so effective the pair have now made a sizeable, but minority. investment in the parent company. 

 Sharad Shetty said “SpeedFit has just tapped the market, the wave is just beginning now. It is very exciting. This is where the growth is going to start. I think it’s ready to explode,” he said. 

“We thought, why isn’t this everywhere in Australia? It’s all around Europe, it’s tried and tested, and we have personally experienced its impact ourselves.

“There’s only very few studios and the only way is up; the East Coast is really yet to experience what SpeedFit can bring. So, for us, it was a simple investment decision in that regard.”

“The barriers to entry are not that high, the cost of entry is not that high.  Here’s the opportunity to be involved in the boom.”

SpeedFit has seen investors from other fitness models drawn to their business. A franchisee who owns multiple F45 locations has opened four Speedfit locations in less than two years. 

The Shettys see SpeedFit as the ideal investment for those looking to start their own franchise, in a booming fitness industry.  

“Anyone that has an interest in having their own business, with a low upfront cost, has the potential to have a really good source of income,” Neema Shetty said.

“You’re not competing with the fitness market, because a person with sports injuries, a person with joint issues, a person with movement issues can use this.

“Each studio is a neatly packaged business on its own, with a pretty good yield and a pretty good income. Whether you’re involved in the fitness business or not, it still suits everyone,” she said.