In fall 2016, Lubbock, TX residents on the southwest side of town received welcome news: a smoothie shop called B&C Nutrition was opening its doors promising healthy alternatives for breakfast, lunch, and even dinner. A year and a half later, B&C is still mixing up a range of classic and original flavors like French Vanilla, Peanut Butter Cup, Mint Chocolate, and Sopapilla Cheesecake, but with a twist—each smoothie contains a helping of Herbalife supplements.
There are some other unique aspects about the smoothie shop. The only signage is an unbranded black and white banner across the top of the store and a small sticker on the front door. Glass windows surrounding the building are tinted, making it difficult to see inside. Also, trying to find information online is difficult because B&C has no official website and does not appear to own either Yelp or Google Business pages. In fact, the shop appears to be avoiding all forms of marketing except for its Facebook and Instagram pages and regular “Shake Parties” held in the evenings once or twice a month.
Buying smoothies and tea from B&C Nutrition is also an odd experience. There are no prices listed on their menu boards and rather than purchasing an individual smoothie or cup of tea, customers sign up for individual “daily memberships”. Want to take your smoothie to go? You’re only allowed to carry out one single serving in an unbranded cup.
Despite these quirks, B&C Nutrition’s Facebook and Instagram pages convey a busy store that has garnered almost 200 (largely positive) reviews. So, what’s the secret to the store’s success? It turns out that B&C Nutrition is not an actual retail store but one of hundreds of Herbalife Nutrition Clubs popping up across the country.
What are Herbalife Nutrition Clubs?
In 2006, Herbalife (one of the largest multi-level marketing companies in the United States) began a test launch of distributor-owned storefronts in Mexico. These Herbalife Nutrition Clubs would be a place where current distributors could provide samples of the company’s supplements and be a gathering place for an even more lucrative offering—pitching members on becoming part of the Herbalife multi-level marketing structure.
Herbalife never intended these clubs to be retail stores and created strict rules to avoid legal and regulatory hurdles like obtaining a business license or getting regular inspections by the Food and Drug Administration (FDA). According to Herbalife’s official rules document governing Nutrition Clubs, these stores are meant to be “social gatherings, bringing people together with a focus on good nutrition. They are not retail stores or outlets, nor are they restaurants.”
Herbalife’s rules regarding the clubs include:
- Membership fees may not be represented as the price or cost of products offered to members or their guests for consumption.
- Nutrition Clubs must offer their members regular opportunities to socialize, as well as frequent educational and coaching sessions (group and one-on-one) on nutrition and weight management.
- Non-Herbalife products may not be provided, sold, or promoted on the Club premises.
- Carry-outs must be in unbranded containers of not more than one single serving.
- Nutrition Clubs must ensure the interior of the Club is not visible to persons from the exterior, by use of window and door coverings, and external doors must remain closed.
- Nutrition Clubs are social gatherings publicized exclusively through word of mouth and attended only by persons who are personally invited by the Club operator, another independent distributor, a club member, or a customer, either through oral conversation or through conversation accompanied by the provision of a written invitation.
- Owners may not use the word “Herbalife” in the name of their club or on the exterior of their store.
The rules are clearly designed to provide a legal and aesthetic mask over these retail shops which would otherwise be subject to stronger governmental oversight.
Herbalife Nutrition Clubs Under Fire
From Herbalife’s perspective, the nutrition clubs have been a huge financial success. In their second quarter 2012 earnings call, executives disclosed that 30-35% of overall product purchases in the United States came from nutrition clubs. This revenue is almost pure profit because sales from Clubs come with minuscule costs for corporate Herbalife—all of the operating expenses like product purchases, rent, utilities, supplies, and licensing fees are shouldered by Club owners.
Understandably, Club owners have been less thrilled with their experience. In 2016, as part of the FTC’s landmark $200 million settlement with Herbalife, the FTC argued that nutrition clubs were predatory because they “operate primarily as a tool for recruiting new members rather than as a method for profitably retailing Herbalife products.” Instead of helping owners increase foot traffic to their stores as most franchise-based quick service companies do, Herbalife places onerous restrictions on the ability for owners to leverage both online and traditional marketing tactics while “[creating] the impression that Nutrition Club owners will make significant full-time or part-time income from retailing Herbalife products.”
It’s very difficult to start a new business by only utilizing word of mouth, which is why, according to a survey by the FTC, 57% of Nutrition Club owners made no profit or lost money after spending an average of $8,500 to open their club. It’s difficult to tell exactly how Herbalife Nutrition Clubs exist in the United States because the company’s own tracker is hopelessly outdated and Google searches are incomplete since owners aren’t able to use “Herbalife” in club names.
What’s Next for Nutrition Clubs
Despite the FTC settlement, nutrition clubs continue to operate in essentially the same basic fashion as they have since 2006. Mirroring the multi-level marketing industry as a whole, most owners quickly realize that turning a profit is impossible and either close up shop or shift their focus to recruiting others to join their distribution team.
For now, B&C Nutrition appears to be bucking this trend by attracting a steady stream of “members” to its store and recruiting events. Other Club owners, like the ones in this YouTube video produced by the group Facts About Herbalife, haven’t been so lucky.
List of Herbalife Nutrition Clubs
While certainly not a complete list, here is a sampling of the clubs we were able to verify:
- Homain Nutrition – Waikato, New Zealand
- Smart Way Nutrition Club – Dallas, TX
- Vida Life Nutrition Club – Garland, TX
- Global Nutrition Fitness Club – Garland, TX
- Legacy Nutrition – Dallas, TX
- Shape Up Dallas – Dallas, TX
- Plano Nutrition – Plano, TX
- Fitness Bar Nutrition Club – Dallas, TX
- Empire Nutrition Club – Brooklyn, NY
- The Healthy Spot Nutrition Club – Hemet, CA
- The Nutrition Spot – Little Rock, AK
- River City Nutrition – Little Rock, AK
- Ignite Nutrition Club – Houston, TX
- Nutrition In Action Club – Houston, TX
- Active Nutrition Wellness Center – Houston, TX
- Midwest Nutrition – Overland Park, KS
- Liberty Nutrition Yoga – Liberty, MO
- Parkville Nutrition – Kansas City, MO
- Get Right Nutrition – Oklahoma City, OK
- Fit Body Nutrition – Moore, OK
- Nitro Fit Nutrition – Warr Acres, OK
- Core Nutrition – Oklahoma City, OK
- Momentum Nutrition – Edmond, OK
- Uptown Nutrition – The Village, OK
- Essential Nutrition – Yukon, OK
- Precision Nutrition – Del City, OK
- New Vision Nutrition – Oklahoma City, OK
- Thunder Nutrition Club – Oklahoma City, OK
- Live Fun Nutrition – Las Vegas, NV
- B&C Nutrition – Lubbock, TX
Are you the owner of an Herbalife Nutrition Club? Tell us your experience at firstname.lastname@example.org