Yoga Studio

I: The manager of a client company wants to see whether they should invest in a yoga studio. Also suggest recommendations on how to improve the studio. Relevant figures for calculation are:

Rent per month : Rs. 50,000
Equipment and other Expense per year: Rs. 2,64,000
Salary of trainer/month: Rs. 16,000
Profits in 2019: Rs. 24L
Profits in 2020: Rs. -24L
Customer fee / month: Rs.1,000

C: Based on the figures provided, the total expenses for the yoga studio per year is 24L, and since the profits generated that year was 24L, the revenue will be 48L. From this we can get the number of people enrolled as 400 people. Since 2020 is when the pandemic hit, is it a fair to assume that due to lockdown and restrictions, the number of people who came to the studio was nil?

I: Absolutely, the yoga studio focused on semi-personal training with special attention given to every customer enrolled with them. During the pandemic, we had no customers. 

C: Can you provide some details regarding the structure of the classes and any other offerings made by the studio.

I: Sure, classes are held for 2 hours together, and customers have the choice of picking the dates that they would like to attend for at the beginning of each month. The studio has equipment, but other than that does not provide anything specific to the customers. The studio has been running for over 10 years and customers are extremely pleased with the sessions conducted as well.

C: Can we assume, the studio has been generating high returns for a consistent period of time before COVID?

I: Yes

C: Since the studio was generating high returns prior to covid, and was giving consistent returns for a prolonged period, with certain adjustments to the studio, they should be able to regain the customer base.

I: Can you provide solutions on what has to be done with a proper structure.

C: I would like to go about it with a three-stage process.

Since the studio focused only on offline sessions, with the onset of COVID, they need to consider having online sessions at a reduced price. This can allow for a larger number of customers to attend the same training sessions as well.

Offline training with equipment can be provided for a much smaller customer base at a premium price.

Prerecorded sessions can also be provided to customers via an app-based platform.

Diet plans can also be provided to customers to try and appeal to a larger customer base at the company, and this can be integrated via the app.

I: Good, I think we have covered all the aspects of the case.