America's fastest growing gym serves pizza

Planet Fitness's low-cost, barebones model is catching on across the United States. And yes, it serves pizza and bagels every month.

A gym that serves pizza, gives away breakfast bagels, and discourages its members from pumping iron is the fastest growing full-size health club in the U.S.

Planet Fitness has over 4.5 million members, 750 locations, and its 3-year CAGR is 31%, said PR director McCall. Its growth was recently profiled by CNN Money, which referred to the company as the “Southwest Airlines of the gym business.”

System-wide sales for the past few years are:

  • 2009: 295.8M
  • 2010: 403.9M
  • 2011: 510.5M
  • 2012: 679.5

Its 5-year growth path (in terms of # of clubs opened each year):

  • 2008: 242 clubs
  • 2009: 302 clubs
  • 2010: 389 clubs
  • 2011: 488 clubs
  • 2012: 606 clubs
  • 2013: 749 as of year-end (more than tripled in size since 2008). 45 locations are corporately owned, the rest are owned by franchisees.

How did it get there? McCall credits the company’s targeting of what its calls “awesome Joes and Janes,” who are either first time or occasional gym goers. Its goal is to create an environment that’s judgment-free and non-intimidating, she said. That means its doesn’t equip gyms with Olympic racks or heavy dumbbells.

Planet Fitness also received a financial boost from the private equity firm TSG Consumer Partners in 2012. It also has owned Vitamin Water and Smart Balance.

Another key aspect of its model is pricing. There are no fruit smoothie stands, spas, or daycare, which keeps membership rates between US$10 or $19.99 a month, which includes unlimited fitness training by certified instructors and an assortment of cardio and strength equipment, McCall said. All of that, and pizza that’s served once a month for member appreciate days. A few gym buffs really hate it - just Google it.

Some body building blogs scoff at Planet Fitness’s policy against “grunting” and serving its members unlimited pizza. It’s disruptive to customary gym culture.

Grunts aside, we asked McCall whether its model increases the frequency of attendance or member retention. She responded saying that average members usually come in a “few times per week,” and that Planet Fitness believes it has a higher retention rate than most clubs, according to its internal research.

“It's really hard to say if Planet Fitness is retaining more members than other gyms. We don't have data from all the major club companies to determine the retention rates for each company,” said Stuart Goldman, executive editor of the trade publication Club Industry.

He added that Planet Fitness has become a “major player” in the industry due to its pricing model and that it leads the low-cost category. However, other clubs - especially the larger companies in the industry - are generating more revenue.

Planet Fitness believes that simplicity is the key to its success: doing basic things such as keeping the gym clean. “We’ve found that when members are happier then there’s no way to disappoint them,” McCall said. Simple is more profitable, she explained, because operational expenses (and expectations) stay low that way.

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