After experiencing 40 percent increases in January traffic each of the past two years, traffic at major gyms was flat from January 2023 to January 2024, according to mobile phone location data for 10 chains tracked by Placer.ai.
As reported by Fortune, citing Bloomberg, the largest publicly listed chain in the industry, Planet Fitness, usually adds about 400,000 members in January, about a quarter of its 1.7 million yearly sign-ups, chief financial officer Tom Fitzgerald said at a conference last month, but the chain is on track for its second-worst quarterly sales growth since 2021. Xponential is expected to report its slowest revenue growth for the first quarter since going public in 2021.
Analysts are largely blaming a harsh winter in much of the United States, alongside stiffening competition, but aren’t ruling out other factors. Attempts to raise prices may also be hurting sign-ups, Cameron Baker of Fortune reported.
Planet Fitness planned a temporary pause of its testing of higher prices in a small number of markets to bring back its regular, widely advertised $10-per-month promotion over January. “We believe this was an indication the advertising campaign was not producing the desired results,” Stifel analyst Chris O’Cull said Feb. 5.
That may signal the industry will be hamstrung by low prices in the future. Investment is flowing primarily into cheaper gyms, and O’Cull sees Planet Fitness potentially being reliant on its promotional offers to drive growth.
“A $10 price point is really where investors and the industry is gravitating toward,” TD Cowen director of retail and fitness Max Rakhlenko said in an interview.
Some gyms did see an increase in traffic in January. Visits to the more closely held Equinox were up 12 percent year on year, according to a company spokesperson.
