Inside the Club: What Does Planet Fitness’ Valuation Mean for Fitness?

Photo courtesy of Planet Fitness. You may have read last week in a Reuters article that Planet Fitness is looking to possibly go public. While this has been a discussion since about 2012, the most recent evaluation of $2 billion makes it a slightly interesting move for the industry.

So what does this mean for our industry? Sure, you could contend that many other club chains over the years have been valued by more than a billion dollars, but with the business plans of 24 Hour Fitness and others, Planet Fitness clearly sits on a large island by itself in terms of business strategy.

True, now there are a lot of other players that have taken to the low-price fitness model, but typically they do this to compete with the Planet Fitness that is either already down the street or is coming to a location near the gym.

Additionally, for a fitness model that’s average customer is paying $9.99 a month, the price tag of $2 billion can be one to garner attention for the model. Certainly over the years some of the business decisions by the fitness chain have been challenged, but with every new decision there are even more stickers appearing on cars and more clubs opening worldwide.

Does this move to go public mean that Planet Fitness might actually become exactly what its name suggests, a fitness facility for the planet? It makes one question, in all the emphasis we attribute to personal training, sales and other costly amenities, is it truly the desire of the average consumer?

In Planet Fitness’ model, the average consumer is looking for a low-cost gym membership where they can burn some calories and trim down. Likewise, if they simply need a place to get in a lift, they can certainly do so, under certain guidelines, but also grab a bulking slice of pizza on the way out. Planet Fitness doesn’t have to deal with sales turnover to the extent of other fitness clubs, and it doesn’t have to spend money on a training department. While some owners might contend that they are missing out on a vital revenue stream, I’d ask once again, what does a $2 billion evaluation of Planet Fitness mean for the industry?

 

Tyler Montgomery is the Editor-in-Chief of Club Solutions Magazine. For thoughts on his blog, the print issue or the industry, reach out to him at tyler@peakemedia.com

2 Comments

  1. Sean Gagnon

    February 12, 2015 at 2:18 pm

    Well said Tyler. Planet Fitness is a good customer of ours as are many of the chains around the globe. However what I think they do better than anyone is understand the mind of the general consumer. The NON-exercisers that represent the largest potential source for new members. While most clubs duke it our for the 1-2 percent of elite fitness consumers, Planet goes for the ‘everyman’. And their model is working! They open more clubs in a year than most chains even have! So if the industry continues to put out all of its trends, and Planet has VERY few of them, yet they grow faster than anyone, what does that tell us. It tells me that perhaps we should be listening more to our CUSTOMERS!

  2. Michael Wohltmann

    February 12, 2015 at 9:52 pm

    Planet Fitness surely revolutionized the industry. Time will tell as to whether it is for the better or for the worse.
    Truth be told, they are a contender to every club’s marketing evaluation to some degree. Yes they are becoming ubiquitous. I just read an article a few weeks back on how they are looking to have 20 clubs in the Atlanta area.
    Truth be told in that in that marketing evaluation, Planet has caused club owners to be better and leaner.
    I am at a similar “scratch your head moment” as I wonder to the sustainability of so many clubs and more clubs to come. That 15% participation level of the public does make me scratch a little longer…
    2 Billion… My colleague responded to that by saying “That is unbelievable!”
    For me, it comes down to projections. I mean a projection is really just a hunch. All the graphs and charts should not dilute the truth that it really just a guess-a guess to what you can collect as a revenue.
    We can play that linear game of more clubs to more revenue I mean if we get all those other people off the couches. Has that been done already and if so, did I miss that statistic?

Leave a Reply

Your email address will not be published. Required fields are marked *