#7 on the Franchise 500: Planet Fitness Knows You Don't Want to Go to the Gym
Eighty percent of Americans don’t have a gym membership. That’s bad for the health of the nation, but it’s good for Planet Fitness’s bottom line. The New Hampshire–based gym franchise has built a seemingly foolproof business by going after customers often ignored by the fitness industry: the newcomers.
“Forty percent of our members had never belonged to a gym before joining Planet Fitness,” says CEO Chris Rondeau. “We’re really going after that casual first-timer.”
The company reaches its target customer with bargain pricing (basic memberships cost $10 a month) and the promise of acceptance (the gym calls itself a “judgment-free zone”). And the plan works: In five years, Planet Fitness memberships doubled from seven million to more than 14 million. “People who love to work out will spend $150 to join CrossFit or Orangetheory,” says Rondeau. “But for most people, working out is a need to do, not a want to do.” For the low-cost model to succeed, the company keeps its own costs in check. “We don’t have pools, we don’t have classes, we don’t have instructors to pay,” Rondeau says. “We run our stores with 15 people.”
What comes next? More growth, says Planet Fitness. It had 1,859 locations as of last July, and with a steady flow of first-timers coming in, it wants to double that figure in the years ahead. The company is also as committed to self-improvement as its members. Unlike many gyms, Planet Fitness retires all its cardio machines after five years and weight machines after seven, and every 10 years, each location undergoes a full remodel. “It all keeps driving sales for our franchisees,” Rondeau says. That’s also making investors happy: Its third-quarter 2019 results showed a 7.9 percent increase in same-store sales, leading to a jump in stock price.