Deloitte Indy 100: Flexing some business muscle

Nearly losing his legs spurred Duncan Bannatyne into developing a chain of health clubs
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The Independent Online

Duncan Bannatyne, 55, is first and foremost a businessman. His drive to seek business opportunities everywhere meant that, even when a skiing accident in 1992 resulted in him nearly losing his leg, he formulated a business plan during the recovery process. "Muscle waste forced me into a gym for the first time in my life, and I was sitting there doing a rough estimate of overheads and instantly saw the potential to make money from having my own gym." He set up Bannatyne Fitness in 1997 and now has 32 health clubs across England, Scotland and Wales.

Duncan Bannatyne, 55, is first and foremost a businessman. His drive to seek business opportunities everywhere meant that, even when a skiing accident in 1992 resulted in him nearly losing his leg, he formulated a business plan during the recovery process. "Muscle waste forced me into a gym for the first time in my life, and I was sitting there doing a rough estimate of overheads and instantly saw the potential to make money from having my own gym." He set up Bannatyne Fitness in 1997 and now has 32 health clubs across England, Scotland and Wales.

In the first year of business the company, based in Darlington, County Durham, had a turnover of £127, 572. Current adult membership is almost 80,000 and turnover for the year ended 31 December 2003 was £28.1m. This has been a "normal year", Bannatyne says. "We have expanded at the same rate for the past two or three years."

In what Bannatyne admits is "becoming a much tougher market", funds have been agreed for a further three clubs this year and four the year after that. The original plan to have "40 clubs by the end of 2005" looks well within reach.

Four company directors assume a lot of the day-to-day responsibility for the business. This includes identifying new sites, financing and hiring staff, (of which there are now over 1,000). All but one of the sites, which was taken over from the ailing Top Notch, have been developed from scratch. They encourage family membership with large changing rooms, restaurants and pools at all clubs, except Just Fitness clubs.

"There are six big players in the UK and they are all our competition," he says. Several of the major health clubs have suffered the consequences of over-expansion. Bannatyne says this year will be a "slight slow-down with only three new clubs opening". They would consider buying out a troubled business or sites from other chains "but only if the multiples are right".

"Saturation, shrinking membership and price wars have made business tough, especially in London. We didn't go into London, because you have to rent sites there. We own the freehold to all our sites which I think is important." European expansion doesn't seem to interest him. "Not in the short term, but Australia maybe."

The fitness clubs have not been Bannatyne's first business success. In 1986 he purchased his first nursing home and went on to set up Quality Care Homes, which he floated in 1992 for £26m and later sold for £46m. He has also dabbled in ice-cream vans, nursery schools and he still owns The New Grange Hotel in Darlington.

Bannatyne recently won North England Entrepreneur of the Year and although he is low-key, he doesn't hide a desire to succeed: "It's good to get involved in these events and even better to win."

What does the future hold for Bannatyne Fitness? "The aim is to sell it eventually. We would be looking for a high price though." As to whether Bannatyne would consider retiring at this point, the answer is a resounding "No. But, I would definitely consider setting up another business". Deloitte/ Indy 100 - watch this space...

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