Planet Fitness Expansion Occurring Despite Pandemic
Planet Fitness hopes to open 100 new locations next year by appealing to the sometimes exerciser.
Last month, some more Planet Fitness expansion took place with a gym in Logansport, a small city in northern Indiana, taking over a former Sears location. It’s the 20th Planet Fitness that the franchisee owns and he told a local newspaper he was branching beyond his circle of gyms around Indianapolis simply “because there’s no Planet Fitness in the area.”
Despite the COVID-19 pandemic’s decimating impact on gyms and fitness studios, a surprising number of Planet Fitness locations have announced plans for expansion i.e. to open or already cut ribbons in the last month. A new gym opened in Greensboro, North Carolina. A franchisee is working with zoning officials to open one in Jersey City, New Jersey. Crews are moving equipment for one in a mall space in Boardman, Ohio. Another is coming to Fairborn, Ohio. A franchisee in Rapid City, South Dakota, is seeking a second location.
The budget gym chain with its “ announced a goal to open 100 locations in the next fiscal year, countering industry trends that have caused 17 percent of U.S. gyms and fitness studios open at the start of 2020 to close permanently, according to data from the International Health, Racquet and Sportsclub Association. Buckling under the weight of shutdowns, customer hesitance to return and a chaotic reopening process, the industry of fitness spaces saw a devastating 58 percent drop in revenue in 2020. A few chains, including Planet Fitness’ direct competitor 24 Hour Fitness, filed for bankruptcy.
Planet Fitness was, of course, not immune. Total revenue decreased from the previous year by 41 percent to $406.6 million. Its pace of opening locations slowed to 130 from an average of about 200 a year since it went public in 2015.
Why is Planet Fitness so confident that is can keep expanding in 2021?
One reason is its track record of expansion. The New Hampshire-based company, known for its yellow and purple color scheme, was founded in 1992 and reached 2,000 locations in January of 2020. Even through the pandemic, it budged that number to 2,124. More than half of those locations opened after it went public in 2015, a pace of about 200 locations a year.
The company found a winning formula. Gyms are simple and open nearly 24/7. Membership fees are rock-bottom, about $10 at most locations, and it’s “No Judgement Zone” marketing formula is tailored for non-gym goers. Its niche is people who are not currently gym goers and wouldn’t center their schedules around fitness routines. It has found such customers in every corner of the U.S. and Canada where it sets up shop.
That customer base does not include the types to drop a few thousand dollars on a Peloton or Tonal or one of the other trendy home workout devices whose cult appeal and ability to deliver the gym experience, community and all, at home threatens other gyms. They may also be the same people to keep their membership through another COVID-19 surge, because it’s only $10.
Also, 95 percent of Planet Fitnesses are owned by franchisees. Its simplistic approach lends itself well to copying and pasting across the country. The central company puts much of its focus on marketing and advertising needed to sustain and grow those locations, creating a well-oiled and nimble machine to respond to market changed. “We consider ourselves as much a marketing company as a company that operates gyms,” its CFO, Tom Fitzgerald, recently told the Wall Street Journal.
The company’s CEO Chris Rondeau told Yahoo Finance he’s looking past the pandemic. “I think the rest of the year we could see a stronger half than we have ever seen as people get out there and get back to the real world again.”
Even as more sophisticated gyms, built for the dedicated fitness buff, falter amidst changing trends and COVID-19 disruption, Planet Fitness has reasons to believe it can continue to invade strip malls across Middle America.
