The post-pandemic growth spurt for U.S. gyms came to an abrupt halt in January, typically the busiest month of the year.
Foot traffic at major gyms has leveled off since January 2023, according to mobile location data from 10 chains tracked by Placer.ai. January visitors to clubs, including both privately held clubs like Equinox Holdings and publicly traded clubs like Planet Fitness and Exponential Fitness, have increased by 40% in each of the past two years. It has increased by more than 20%.
Unless traffic increases, the slow start could signal a tough year ahead. Planet Fitness, the largest listed chain and considered an industry agent, typically adds about 400,000 members in January, about a quarter of its 1.7 million annual member registrations. Chief Financial Officer Tom Fitzgerald said in a press conference last month.
Xponential is expected to have its slowest first-quarter sales growth since going public in 2021, while Planet Fitness is expected to post its second-worst quarterly sales growth since 2021.
Some gyms saw an increase in traffic in January. The number of visitors to Equinox increased 12% year over year, according to a company spokesperson.
Analysts primarily blame a harsh winter in much of the U.S. and increased competition, but they haven’t ruled out other factors. “I’m not sure, so I try to be soft.” [in our note]” said Max Lakulenko, TD Cowen director of retail and fitness, in an interview.
Attempts to increase prices may also adversely affect registration. Planet Fitness plans to pause high-price testing in a small number of markets in order to reinstate its widely touted $10 per month recurring promotion in January. “We believe this is a sign that the advertising campaign is not producing the desired results,” Stifel analyst Chris Okal said in a Feb. 5 note.
This could suggest that the industry will be held back by low prices in the future. Investment has mostly gone to cheaper gyms, and Stifel’s Okal sees Planet Fitness potentially relying on promotions to drive growth.
“The $10 price point is exactly where investors and the industry are drawn to,” TD Cowen’s Rakulenko said.
