Planet Fitness Says It’s Still Flexing Expansion Muscles

Fast-Growing Gym Chain Demurs When Asked About Club Openings This Year


Photo Courtesy of TerryLeeWhite.

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."


Source: 2022 CoStar News.

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