Planet Fitness is Buying Its Biggest Franchisee for $800 Million
It’s the dead of New Year’s Resolutions season, when eliminating flab is top of Americans’ minds. So what better time to buy a gym or, better yet, 114 of them?
On Tuesday, that’s exactly what discount exercise giant Planet Fitness did, announcing plans to acquire its largest franchisee, Sunshine Fitness, for $800 million.
Bulk Up While the Competition’s Down
The gym industry took a bigger beating than a heavy bag in George Foreman’s sights during the pandemic. Nearly a quarter, or 9,100, health and fitness clubs closed for good, according to the International Health, Racquet & Sportsclub Association, while gym usage dropped 50% at the height of public health restrictions. Some of the industry’s most famous brands — including Gold’s Gym, 24 Hour Fitness, and New York Sports Clubs owner Town Sports — filed for bankruptcy.
For those still standing, like Planet Fitness, the turmoil has created a window of opportunity to shore up business while competitors are on the ropes. Last year, the company added 1.7 million customers for a membership total of 15.2 million, opened a greater-than-expected 132 new locations, and watched its share price climb 17%. To boot, the Sunshine announcement comes just as gym traffic turned the corner:
- Visits to gyms climbed 1% above pre pandemic 2019 traffic in November and December, according to data from Placer.ai, though January could be impacted by the latest wave of Covid-19 infections.
- Planet Fitness has 2,254 locations worldwide and, pending the completion of the Sunshine transaction, it will own 10% of those outright.
Back on the Bike: As people began returning to pre pandemic gym levels in November, pandemic phenom Peloton, whose household fitness bikes were lockdown essentials, cut its annual revenue forecast by up to $1 billion. After watching its stock fall over 70% in 2020, it might be the one fitness company that wouldn’t say no to a little more stay-at-home juice.