Deals in focus: luxury health clubs make an Encore

Encore is no stranger to the luxury health market, having acquired Canary Wharf-based Reebok Sport Club in 2006. Having been invested for around two years, the financial crash of 2008 created a degree of uncertainty around the holding. "The business suffered slightly, but we worked hard with the management team to batten down the hatches," says Shirin Gandhi, partner at Encore. "We came through relatively unscathed. At least we can say the business has been thoroughly stress tested."

Following the financial downturn, Encore realised the benefits of being in the luxury health market and the resilient desire for people to spend on their well-being. "We began hatching plans to create a larger group across London," says Gandhi. "First, we invested heavily in its Reebok site – it was about improving on what we had as we decided this would be a long term play."

The second stage was to look into expansion, says Gandhi: "So we looked at what was out there in the market, which is not a huge amount. We were aware of Third Space and 37 Degrees and approached their respective backers, Graphite and Albion."

Now for something different
"Following both deals, we now have four sites in London. We're in constant discussions and negotiations with landlords and developers in London who want to do something a bit different," says Gandhi.

Encore's plan to create a group of clubs, rather than a chain, picks up on an emerging trend gathering pace across the entire leisure space. It is most noticeable in the restaurant sector where the cookie-cutter branded casual dining trend is losing out to groups that comprise a number of more individual and bespoke sites. A good example of this is Polpo: while it has three sites of the same name and the same Venetian small-dish style, the company also offers a range of other restaurants including American-Italian themed diner Spuntino, open kitchen Polpetto, and Mishkins, a Jewish deli with cocktails.

"We describe ourselves as a group of clubs rather than a chain," says Gandhi. "We want to create something related to its environment. Third Space is right for Soho, and Reebok is well-suited to Canary Wharf. So with the developers we're speaking to, the conversation is about creating something a bit different. We believe there is a market for this kind of offering; people will spend money for something part of a wider group but with a unique, boutique feel to each site. It combines the benefits of economies of scale enjoyed by a larger group, but with an individual feel to each location."

Be yourself
Encore is looking to take the idea of individuality within a larger group one step further by creating ancillary product lines. "We are going to look into additional areas such as clothing, nutrition and general wellness. The aim is that within the next three to four years, whatever the brand is, if it is part of that wider group, people will know they are buying into an overall proposition," explains Gandhi.

For the time being, Gandhi says there are likely to be some interesting developments for the group over the next 12 months, "especially in terms of the people who will be working with us". Furthermore, Encore will look to create a micro club concept to better serve niche offerings including yoga, pilates or spinning. Watch this (third) space.

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• Topics
• UK / Ireland
• Expansion
• Deal in focus
• Encore Capital