A classic membership at Planet Fitness costs $10, a price that hasn’t changed in 30 years. “Ten dollars is not what it used to be,” said Craig Benson, interim CEO of the Hampton, New Hampshire-based fitness franchise.
Planet Fitness began testing new pricing tiers last summer, and in November during its third quarter earnings call presented changes to the franchisee model with the overall goal of reducing the capital requirements to open and operate a gym.
New pricing for that “White Card” membership, which allows customers access to a single designated gym, is being tested in 100 stores each at $12.99 and $15 per month tiers, while a third test in New York is underway at $14.99. The $12.99 and $15 test markets have the option of flexing down to $10 when the brand runs pricing specials, while the New York market stays at $14.99. The premium “Black Card” membership, meanwhile, which allows access to any Planet Fitness location and use of amenities such as massage chairs and tanning beds, increased to $24.99 in 2022.
Chief Financial Officer Tom Fitzgerald, who joined Benson this week for presentations at the ICR Conference in Orlando, said Planet Fitness is in a strong position to be able to test price increases. The company announced it grew its membership to approximately 18.7 million members at the end of 2023, up 1.7 million since the end of 2022. Full year systemwide same-store sales increased by 8.7 percent at the brand, which trades under the ticker symbol PLNT on the New York Stock Exchange.
Craig Benson was named interim CEO of Planet Fitness in September following the departure of Chris Rondeau.
Planet Fitness is ranked No. 29 on the Franchise Times Top 400, with system sales of $3.9 billion in 2022.
“We’re coming from a position where we’re not trying to fix anything, we’re trying to enhance what we have,” said Fitzgerald of the potential price changes. “If one of these tests works, we’ll roll it.”
Planet Fitness, which has 2,575 locations mainly in the United States, plus Puerto Rico, Canada, Panama, Mexico and Australia, is continuing to attracted younger members, something Fitzgerald said bodes well for the long-term outlook.
“We’re penetrating the younger generations more so that we did the boomers and Gen Xers,” he said. Nine percent of all millennials and 9 percent of all Gen Zers who are of age in the U.S. belong to Planet Fitness, and the two groups make up more than 60 percent of the Planet Fitness membership base. “It’s great that we can see that kind of traction with the younger membership.”
The brand opened 165 locations in 2023, 147 of them franchised, a number it wants to increase this year as it aims to ease some of the pressures franchisees face on the development front. Calling high inflation and rising interest rates a “double whammy” for franchisees, Benson said the company created a growth plan it hopes will accelerate new unit openings.
Key elements include: the extension of the length of the franchise agreement from 10 to 12 years and elimination of the $20,000 franchise fee, which owners will instead pay at the 12-year mark; and an extension of the timing to reequip clubs, moving to six years for cardio equipment and seven years for strength. More comprehensive club remodels will now be done every 12 years instead of 10.
“We’re the most aggressive remodeler in the industry and we’ve relaxed it a little bit,” said Benson.
The cost to open a Planet Fitness ranges from $1.49- to $3.78 million, and the company is exploring more ways to lower the capital expenditure and reduce buildout costs, including trimming the typical 20,000-square-foot gym size.
“We have an aggressive plan in place to look at the box type and also what goes in the box,” said Benson as he noted the brand already changed the mix of strength and cardio equipment to reflect the user shift to more strength training. Planet Fitness is also looking at options to repurpose a gym’s amenities area, moving to stretching and recovery areas versus the spa-type amenities it now offers.
Planet Fitness is shifting the makeup of its gym equipment from cardio to more strength training in a move executives say is in line with consumer trends.
On the marketing front, Benson and Fitzgerald said the leadership team is looking at a number of changes, including a shift away from discount promotions and toward more visibility for its “Judgement Free Zone” brand position. The company’s recent campaign with Grammy award-winning artist Megan Thee Stallion is part of that effort.
The campaign, which debuted on New Year’s Eve and features the rapper as “Mother Fitness” rescuing gym-goers from intimidating—and higher-priced—gyms is a “great tie-in” to appeal to Gen Z consumers, said Fitzgerald. He noted the company also aims to better coordinate marketing and advertising efforts with franchisees in their local territories and still drive awareness among the 80 percent of Americans who don’t have a gym membership.
Amid these and other efforts, Planet Fitness is also searching for a new chief executive after its board of directors ousted former CEO Chris Rondeau in September. Rondeau, who’s been with the company since its start and helped take the company public in 2015, was asked by the board to resign. He told Business Insider he was “blindsided” by the move.
Benson, a board member, a former governor of New Hampshire and a longtime Dunkin’ franchisee, was installed as interim CEO. A search for a permanent CEO is underway.
Planet Fitness, which is about 96 percent franchised, operates in a high-value, low-cost fitness segment that also includes the likes of Crunch Fitness, Anytime Fitness, Blink Fitness and Workout Anytime.