“Gyms face tough year as key January growth screeches to a halt”—that was a BNN Bloomberg headline on Feb. 11.
The article stated that January 2024 gym traffic was flat vs. traffic in January 2023. This indicates an abrupt plateau after a few years of dramatic post-pandemic growth: The article stated January club visits had increased by 40 percent in 2022 and 2023.
The Bloomberg piece was light on sales stats, and we all know “visits” don’t really mean a lot when you’re dealing with access gyms such as Planet Fitness. In big boxes, you can have a lot of members and very few visits.
Nevertheless, both Xponential and Planet Fitness are not experiencing great first-quarter growth, according to Bloomberg.
So what does that mean for microgyms?
Almost nothing.
The Race to the Bottom
Author Cameron Baker and quoted TD Cowen analyst Max Rakhlenko suggest the poor January stats might be partially attributed to Planet Fitness’ attempt to increase membership fees above its standard $10-a-month rate in some markets.
This increase always seemed like a tough play for a struggling company that’s been the flagship for rock-bottom rates for years. (I wrote about this in September 2023.)
It’s just really hard for a company based on “cheap” to become more expensive, and $10 a month is a nice, round number consumers are tied to.
With all that said, this line from Baker is suspect: “That may signal the industry will be hamstrung by low prices in the future.”
So is this one from Rakhlenko: “A $10 price point is really where investors and the industry is gravitating toward.”
All that might apply to big-box gyms looking to acquire members at the lowest rate possible—Planet Fitness, etc.
But it doesn’t apply to microgyms and premium gyms.
Selling Value
Later in the article—which you can read here—Baker reported that some gyms are posting improved numbers:
“Visits to Equinox were up 12 percent year on year, according to a company spokesperson.”
Recall that Equinox memberships are relatively costly: Popsugar.com prices the Equinox Select tier at $220-$252 a month, with an annual commitment.
And Two-Brain’s microgym data suggests the right consumers are still very willing to pay more for high-value services.
Around the beginning of 2023, only the top five gyms on our average revenue per member (ARM) leaderboard were over $400.
In July 2023, every single gym in the Top 10 was over $427, and the Top 10 average was $533.
In December 2023, every gym was once again over $427, and the Top 10 average increased to $537.
So is the industry really hamstrung by low prices?
No—access gyms that promote themselves as the cheapest option are hamstrung by low prices.
Gyms that market coaching and focus on value are not tied to low prices.
If you run an access-only model and pursue high-volume signups at bargain-basement rates, the Bloomberg stats might give you something to think about as 2024’s second quarter begins.
But if you sell coaching, I wouldn’t pay much attention to the big-box traffic data from the first quarter.
If you want real microgym data that will help you improve your business, you’re reading the right blog.
Two-Brain publishes hard, verified microgym data every single month, and we interview the top gym owners so you can find out how they posted their incredible stats. To see our most recent leaderboard (number of clients), click here.
We’ll release sales and marketing data (set, show and close rates) on April 22. In late May you’ll find out exactly what top gym owners pay themselves.
Keep following along so you get the best microgym data available.
And if you ever want to know exactly how to improve your own key performance indicators with the help of an experienced mentor, click here.
