Planet Fitness leads thriving market
The fitness industry is pumping up the personal services sector, which saw sales climb 7.6 percent from 2014 to $14.2 billion thanks in large part to the massive growth of brands such as Planet Fitness, Anytime Fitness and Snap Fitness. Together these concepts added more than 500 units in 2015 and each saw double-digit sales growth.
With 206 more locations opened last year, Planet Fitness reached 1,124 units of its “lunk alarm”-sounding, purple and yellow gyms, a 22.4 percent increase. Sales shot up 25 percent to $1.5 billion, growth CEO Chris Rondeau attributes to strong unit economics and development from the brand’s multi-unit franchisees.
“About 90 percent of those units are by existing franchisees opening their 15th, their 20th unit,” says Rondeau. “It’s not a onesie-twosie system.”
And while it costs close to $2 million to open the gyms, Planet Fitness profit margins run about 35 percent; with only 12 to 15 employees per location, labor costs are low. “You keep it clean, market it and follow the business model and it works,” says Rondeau.
Planet Fitness went public last August at $16 a share, valuing the chain at $1.58 billion; a year later shares are trading around $21. The IPO is “one more feather in the cap” when franchisees are meeting with banks and landlords, says Rondeau, adding “it forces you to run the business a lot more disciplined because there’s no making up the numbers the next quarter.”
Elsewhere in the 24/7 gym business, Snap Fitness sales grew 30.5 percent to $671 million despite opening just nine units while Anytime Fitness reached $1.1 billion in sales, a 13.8 percent boost.
In a sector that also includes moving services, Two Men and A Truck had another strong year with sales gains of 14.3 percent, from $369 million to $422 million. New locations—34 of them—contributed to that increase but CEO Jeff Wesley says the brand is now realizing the benefits of reinvestments it made during the recession.
“Technology and business change at a rapid pace, so we want to be at the forefront,” he says of Two Men’s investment in updated operating systems and better web and social media platforms. “We’re doing a lot of little things and we have people surrounding the brand who are passionate about it.”
Elsewhere in the sector, people still want low-cost haircuts, as Great Clips, SuperCuts and Sport Clips all increased sales, with Sport Clips reaching the $500 million mark (a 17.1 percent jump) and 1,540 units.