Fast-Growing Gym Chain Demurs When Asked About Club Openings This Year
Planet Fitness was one of the biggest lessees of new U.S. retail space last year, and while
the health club chain is still expanding, it's not revealing real estate plans for 2022 quite
yet.
The Hampton, New Hampshire-based company, which bills itself as one of the nation's
fastest-growing gym chains, has not only survived but grown during the pandemic,
according to its executives. For full-year 2021, 132 new Planet Fitness sites opened, with 62 of those debuts in the fourth quarter, bringing the total count to 2,254 as of Dec. 31.
That expansion came even though an estimated 25% of U.S. health clubs permanently
closed as a result of the coronavirus outbreak, according to Planet Fitness CEO Chris
Rondeau, citing data from the International Health, Racquet & Sportsclub Association,
an industry trade group. But not one Planet Fitness gym was shuttered forever during
this period, he said Thursday.
Planet Fitness was part of a group of companies — including Dollar Tree, Burlington, At
Home and Target — that leased the most new retail space last year, according to CoStar
data. Planet Fitness ranked No. 5, with 786,004 square feet, according to CoStar. During
the fourth-quarter earnings call, Rondeau and other company officials said there's a
long-term untapped opportunity for the chain's growth, in part because the pandemic
underscored the importance of overall health and fitness.
Planet Fitness, whose clubs are mainly franchises, just boosted the number of company owned clubs it has with its acquisition of Orlando, Florida-based Sunshine Fitness
Growth Holdings — its first and one of its largest franchisees — in an $800 million deal
that closed earlier this month. Sunshine has 114 clubs in the Southeast.
Under questioning by a Wall Street analyst, executives declined to say how many
company-owned clubs they plan to open this year. Typically, it has opened six to eight of
them a year, mostly in the Northeast. Planet Fitness did disclose that it had opened 12
new corporate-owned gyms since Jan. 1, 2020.
Executives also declined to offer specifics about anticipated openings by franchisees,
adding that the pipeline was growing again but that the market for retail real estate,
particularly for big-box sites, was not as soft as anticipated, which would have benefited
potential tenants.
"We'll have obviously more info as we get throughout the year," Planet Fitness President
Dorvin Lively said. While the company didn't provide guidance on the number of clubs it expects to open in 2022, officials did say they plan to have new equipment installed in roughly 170 franchisee-owned locations.
Younger Club Members Come Aboard
With the Sunshine deal, Planet Fitness will own more than 200 clubs, or roughly 10% of
all its locations, "allowing us to retain our asset-light business model, which is an
important part of our shareholder value proposition," Rondeau said when the
acquisition was announced.
Last year, Planet Fitness's total revenue increased by 44.4% to $587 million from the
prior year.
"We exceeded our expectations for both members and new store growth in 2021, which
we believe demonstrates that our message of fitness being essential to both physical and mental health is resonating with consumers," Rondeau said in a statement. "To date in the first quarter of 2022, we ended January with 15.6 million members surpassing our
pre-pandemic first quarter 2020 membership peak. We also recently acquired Sunshine
Fitness, a high-performing operator of more than 100 Planet Fitness locations, and we
completed a successful debt refinancing."
The company reported that it got a positive response to its first Super Bowl TV spot,
which featured celebrities such as Lindsay Lohan, William Shatner, Dennis Rodman and
Danny Trejo.
On the earnings call, officials said Planet Fitness is attracting much younger members
amid the pandemic.
"We are investing in growing as the industry is contracting," Rondeau said on the call.
"Second, Generation Z is the fastest-growing demographic group in our [2020-2021]
membership who, along with millennials, prioritize an active lifestyle more so than their previous generations. And the silver lining of the pandemic is that it opened people's
eyes to the importance of fitness in their overall health."