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Planet Fitness Boosts Plans for More Gyms

As consumers seek new health and wellness options and more traditional retailers close, the owners of shopping centers have become more receptive to leasing space to gyms, salons, and other ventures that can generate regular foot traffic and face little competition online.

Photo Courtesy of CoStar.

Planet Fitness has become a highly sought-after tenant.

And now, chain plans to deliver more locations this year than originally planned.

In its latest earnings report, the company said it planned to open 250 to 260 new locations this year. It opened 230 locations last year.

Planet Fitness opened 53 new franchise locations in the second quarter alone, putting the total count at 1,859. Locations typically occupy about 20,000 square feet.

New locations have helped increase the company's revenue. It reported $181.7 million in the second quarter, a more than 29% increase from last year. A key figure is same-store sales, which increased 8.8%.

The new guidance on store locations reflects strong financial backing of franchisees and their growing sophistication in expanding within their territories.

But it’s also in how Planet Fitness has approached finding real estate for new locations. Over the past year, “we put more boots on the ground where we’re working with the commercial real estate brokers for the landlords,” said Dorvin Lively, the company’s president.

Three or four years ago, “we were basically letting franchisees bring sites to us” for approval, Lively said. “And in many cases, we would decline the sites.”

Lively noted the chain is now a highly sought-after tenant, unlike four or five years ago. “We weren’t No. 1 on the calling list when something was coming up,” he said.

Though founded in 1992, the chain didn’t start selling franchises until 2003, and it took a while for the business to take hold as a franchise.

Kohl’s announced earlier this year that it would lease space next to its department stores to Planet Fitness. The goal is to generate more traffic for the retailer.

If successful, Kohl’s, which has more than 1,100 stores around the country, said the program could expand.

The company is on track to open five by the end of the year, four franchises and one corporate-owned, with more to come next year.

2019 CoStar.

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