OrangeTheory CEO: ‘We constantly have one eye’ on COVID trends in the U.S.

OrangeTheory CEO David Long discusses the company's signing of Steve Aoki as Chief Medical Officer and how the fitness brand has emerged post-pandemic.

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RACHELLE AKUFFO: Welcome back, everyone. So if you were able to keep up with the workout routine at home, good for you. But for the rest of us, it's an in-person fitness experience that really does tend to get us off the couch. Well, for more on that and the future of fitness, let's bring in Yahoo Finance's own Allie Canal. Good to see you, Allie.

ALEXANDRA CANAL: Hi, Rachelle, and I'm very excited to be joined by Orangetheory CEO, David Long. David, thanks so much for joining us today. There's so much to talk about, but I want to start first with the announcement of Steve Aoki as chief music officer. That is not a company title you hear every day. Steve Aoki is such a recognizable name in the space. What specific duties will he have in this new role? And why was it important to you to create a whole new position for this?

DAVID LONG: Yeah, fantastic. Thanks for having me on, and so excited to talk about Steve Aoki today. You know, our-- music is a really important part of our workout, especially as we're pushing our members to these bases, pushes them all out so they have real intensity to go for 30 seconds to two minutes. And virtually all of our members continue to tell us how important music is to motivate them to get the best work that they can. So we really searched for the right collaboration partner to really take music to the next level within our studios.

So it's going to be happening-- first drop will be next Saturday, March 26, as Steve has curated a custom playlist that's specifically matched to our exact workout and our intervals. And you can even think almost timing BPMs to the heart rate of our members during that hour. So that's going to be dropping once a month throughout the year. And Steve's going to be working with this through our medical advisory board, that we're going to create a music advisory board, actually, to really take music to the next level for our members each and every workout that they take with us.

BRAD SMITH: Hey, Dave. It's a pleasure to have you back on. Brad here. Just wondering, with regard to a partnership like this, are there others that you would be looking to weave in similar to Steve Aoki? Of course, the CMO or Chief Music Officer at first now, but any other artists that you're thinking about adding to the roster in the future?

DAVID LONG: You know, right now, we feel like Steve was the perfect fit to lead this. He's got a passion for health and wellness with his grueling travel and show schedule. And so we thought it was super authentic. He loves the Orangetheory workout. We were able to do a bunch of on-site work with him at our studios. And obviously, he pulls in so much-- such a broad number of genres of music into his playlist that we thought we were able to get so much, harnessing Steve's creativity and the access that he has to so much.

ALEXANDRA CANAL: And David, we've seen this pairing between fitness brands and celebrities before-- Peloton with Beyoncé, Justin Bieber and Rumble. Why do you think these celebrity partnerships are effective in not only elevating the brand, but also differentiating yourself amid the stiff competition?

DAVID LONG: Yeah, I certainly think it's, part of it's around differentiation and something unique with how Orangetheory tracks heart rate and drives members to hit certain intervals to get the best results each time they take a workout. We really felt like it resonated with the work that Steve Aoki could do to match that up and drive that specifically, just created a really special partnership.

And it's also something that not only our almost a million members are excited about and will continue to be excited about. We have almost 25,000 staff members around the world, and they're excited about this collaboration. So it's really about bringing more energy to the studio, which is already a motivating, high energy place. And we said, what can we do additionally to level it up even further?

RACHELLE AKUFFO: And you really do get a sense of community when you're in these classes between the music, the coaching, everyone really encouraging each other. And even though, for the most part, we have turned the corner with COVID here in the US, the CDC hinting that perhaps another surge could be around the corner. What is your plan to really sustain membership and really perhaps adapt some of your offerings, if we do see another surge?

DAVID LONG: So, you know, we constantly have one eye on that. I mean, I was on a couple of months ago with you all, and it was exciting to see that we're hitting the stride of having all of our studios open globally. We crossed 1,500 studios this week, actually. Celebrated 12 years being in business, serving our members. Always keeping an eye on that. We had a few months ago, Canada went through a short-term shutdown. And we have an Orangetheory live product, which brings the class with the coach actually seeing the members and guiding them and seeing their heart rate to life in their home.

So we have different modalities that we could switch on in 24 hours notice. So we keep that piece of the business always running, should we ever have to shift gears for a short period of time. We don't think there's going to be any long-term shutdowns ahead, but should even a market or an international market need that support, we're geared up and ready to go.

ALEXANDRA CANAL: And David, besides COVID, there's also inflation that's hit virtually every sector of the economy. Orangetheory classes, they're not cheap. What are you hearing from consumers who are trying to save right now? Maybe they're cutting back on some of those classes because of all of these inflationary pressures.

DAVID LONG: You know, what we're seeing is the pressure is kind of the same where it's always been for our brand, is that we have to just deliver an amazing experience. And when our member, when our customer is getting an amazing workout from a coach that they love, and they're motivated and they're seeing the results in real-time and then post-workout, and the way that we are curating the workouts each day to really drive their personal goals. We're seeing that when the members are engaged, and they're coming regularly, the price becomes less of a factor. As you can imagine, if they fall off the routine of coming in, obviously, the price all of a sudden becomes really important.

So that's really our focus. How do we deliver an amazing experience consistently throughout the world, and making sure that every single workout really is about driving results to the member in that studio. And as was mentioned, that feeling of community is still such an important factor. And it's become even more so as we're coming out of the pandemic that our members are just loving that two to three hours a week where they're coming back to their studio communities, and when they travel as travel has picked up. Our members are extremely portable. They're loving visiting different places and finding studios when they travel and plugging into those communities.

BRAD SMITH: Dave, you know, it kind of raises the question on the other side for so many who are part of that experience for the members. You've got the staff, you've got the instructors. How has that kind of changed the pay scales that even at Orangetheory, at the leadership level, you think about ensuring that even as some of the inflationary pressures are hitting consumers, could also be hitting a lot of those consumers who are actually running the experience as well for the classes?

DAVID LONG: Yeah, it's a good point. You know, our franchisees are very proactive, and really done the right thing throughout the pandemic of really taking care of staff when we were either temporarily closed or running shorter hours, and really working to make sure that their career paths and tracks for those studio staff, so they can continue to balance their own lifestyle with inflation, as you mentioned. And we're seeing hourly rates and things come up.

And along with that, there are some modest membership rate increases that have been happening throughout the year in a lot of the markets. And as I mentioned before, when the experience is delivered really well, we're not seeing that as being a barrier to our members continuing to participate at a really high level. Our member growth this year has been above budget, so we're thrilled with the growth that we're having, just almost finishing up the first quarter now.

RACHELLE AKUFFO: All right, we do thank you for your time this afternoon. David Long there, Orangetheory's Fitness CEO, and of course, our very own Allie Canal. Thank you, guys.