Mike Grondahl, founder and CEO of the growing Planet Fitness corporation, is a man who doesn’t mince words. Grondahl’s passion for the company, love for his family and pragmatic approach to life are apparent from the first word, and it’s clear that this is a guy who is not afraid to tell you what he thinks. Perhaps slightly less conspicuous, yet just as present, is Grondahl’s deep understanding of the unique role Planet Fitness plays in bridging the gap between the fitness industry and Americans who have not traditionally been members of a health club.
NEW BEGINNINGS
After graduating from college in the late 1980s, Grondahl started building a career in commercial real estate, but he soon grew disillusioned from the strain of living on straight commission and decided to go in a new direction. “I thought the fitness industry would be fun, and working in commercial real estate had taught me how to speak to landlords, which gave me an edge over other gym owners who only knew how to talk about fitness,” he says.
After a short-lived run as a Gold’s Gym franchisee, Grondahl jumped into the industry with both feet and acquired his first club – a financially struggling location in Dover, N.H., in 1991. “I couldn’t get capital funding at the time, so I slashed our prices to try to compete with the better-known brands in the area,” he recalls. This turned out to be the right move – the impact was immediate and membership sales took off. Soon Grondahl’s brother Marc joined the team as a partner and, in 1993, current partner Chris Rondeau came on board to round out the threesome that would become the driving force behind Planet Fitness as we know it today.
From 1992 to 1996, Grondahl and his partners studied the industry and analyzed their market position to determine what their real customer base would be. By early 1997, they had created a model based on their growing realization that bodybuilders and powerlifters – who made up a significant percentage of the membership base for many gyms – were turning others off to the idea of joining. “We wanted to create a place where our members could relax, get in shape and have fun without being subjected to the hard-core, look-at-me attitude that exists in so many gyms,” he says. “So we developed an environment that bodybuilders wouldn’t be comfortable in.”
Over time, Grondahl also observed that group exercise programs, childcare and other services were not used by members enough to justify the considerable expense and energy they required. “We dropped daycare and group exercise in 2000, keeping only cardio, weights and tanning,” he shares. “By eliminating these services we were also able to keep our membership fees much lower than our competition.” The elimination of group exercise classes also put a stop to the periodic influx of large groups of people, making the locker rooms and parking lots less crowded for everyone else. “In order to run a large group exercise program, a club should be able to accommodate 80 to 100 people in the locker room at once, and there aren’t too many clubs that are big enough do this comfortably.” Grondahl’s strategy worked, and by 2003 Planet Fitness had opened five clubs in New Hampshire. But perhaps more importantly, it laid the groundwork for a full-fledged franchising operation.
A DIFFERENT APPROACH
While Grondahl obviously values physical fitness (motocross is a very physically demanding sport), he openly admits that he doesn’t really like to work out. Although unconventional by industry standards, this approach has turned out to be a good thing for developing a club concept that is able to reach out to the average person. “Too many big players in the fitness industry are out of touch with regular people,” he says. “Someone who is new to working out doesn’t want or need a fancy routine or highly technical equipment, and we shouldn’t treat them as if they’re wrong for feeling that way – not if we want to earn their business.”
So how does a club go about earning the business of people who have never joined a gym and who might even dislike working out? Grondahl says it comes down to marketing, listening to the right people and creating a comfortable environment for new and novice exercisers. He says too many clubs spend time listening to ideas and suggestions from members who are already working out regularly. “You need to try to reach the other people in order to grow – it’s really the person you never hear from who you should be listening to.”
To do this, Planet Fitness has taken a unique approach in its marketing by actually making fun of bodybuilders and powerlifters. For example, they ran a series of radio ads featuring two fictional characters – Tony and Ricky – who are stereotypical, self-absorbed, fitness fanatics. Although comical (think of the 1990s Pumping Up With Hans and Franz from Saturday Night Live), the ads gave Planet Fitness a chance to do more than just poke fun at the status quo. “At the end of each segment we delivered our message, reaching out to people who are intimidated by hardcore lifters and fitness clubs,” Grondahl says.
Equally important to getting this message out is creating a comfortable environment for people once they come in to the club. To do this, every Planet Fitness location has been dubbed a Judgment Free Zone – a philosophy that addresses many of the fears the average person may have about working out in a club. The club also banned tank tops, grunting and dropping weights, and installed “lunk alarms” that sound off to embarrass offenders whenever this behavior occurs. “We make it clear that we don’t want to attract hardcore fitness types,” says Grondahl. “Yes, I am turning my back on a part of the industry. We are catering to a very specific niche market – the casual exerciser.”
Planet Fitness is built around the idea that virtually everyone wants to be better than he or she is today. “No one wakes up in the morning and thinks ‘I want to be worse,’ and using our facilities is not likely to make you worse,” says Grondahl. “If a member can only make it once a week, we realize that’s better than never coming in at all, so we’re not going to make that person feel bad about it.” In fact, he says, this supportive, pragmatic approach is one key to the company’s success, and members are encouraged to move at their own pace. While some do eventually outgrow Planet Fitness and graduate to a more traditional club, this doesn’t seem to bother Grondahl, who says, “I hope everyone moves on eventually, because it will mean we are getting through to people, and there will still be plenty of potential new exercisers out there. I’m very comfortable with where we are positioned on the path for average people who just need to get used to working out in a club.”
BUSINESS BUILDING
Mike Grondahl’s down-to-earth manner is disarming, and his laissez-faire attitude toward working out definitely seems to go against the grain, but don’t let it fool you. Beneath it all lies a highly skilled businessman who counts Napoleon Hill, Jay Abraham and Michael Gerber among the biggest influences on his business philosophy.
“I tell my son that if he reads Think and Grow Rich, studies Jay Abraham, and reads The E-Myth Manager by Michael Gerber, he can accomplish anything.”
When Grondahl and his partners made the decision to franchise, they first had to buy the name from a club in Florida, which cost them $75,000. Today that number might sound small, considering Planet Fitness earned $99 million in revenue in 2008, but at the time it really took guts. “We were in the midst of buying out an old partnership, so we had very little access to capital and no credit,” Grondahl shares. “We wondered if it would kill us, but it turned out to be the best move we could have made.”
With more than 1.7 million members in almost 300 clubs, and plans already in motion to open as many as 70 more locations this year alone, it’s obvious that Planet Fitness is on to something. When asked about finding success, Grondahl said club owners should not be afraid to look outside the box if what they’re currently doing isn’t working. “A consultant might tell you to get better at service, but what does that really mean? ‘Service’ is subjective. Instead, focus on becoming the best at one thing,” he says. “Then, find the people who need what you’re good at and go after them.” – CS
KEYS TO SUCCESS:
- KNOW who you are and be true to it – don’t try to be all things to all people.
- ELIMINATE services that your members aren’t using. If it’s costing you money or just breaking even, what’s the point?
- TAILOR your marketing message to convey exactly what your club is really all about.
- REACH out to non-exercisers by speaking their language. Chances are, they won’t respond to fitness lingo.
- SUPPORT your members – even the ones who don’t do everything you tell them to do. Otherwise, they might lose heart and give up.
- READ as much as you can about business and marketing. Some truths are universal, and there’s no sense trying to reinvent the wheel.
