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Planet Fitness (NYSE: PLNT) | Company Profile, History, Competitors

 

Planet Fitness (NYSE: PLNT) is an operator and franchisor of fitness centers/gyms in the United States. There were 1,518 locations and 10.6 million member as of 2017. The company was founded in 1992 and headquartered in Hampton, NH.

Planet Fitness was founded in 1992 in Dover, NH as low-priced consumer friendly gym. In 2003, Planet Fitness began franchising its gyms. Planet Fitness targets customers who non-traditional gym goers. It's slogan is that its gyms are a "judgment free" zone with less focus on. Their locations are "judgment free" with less focus on weight lifting and instead on cardio machines. The locations with parties including Pizza Mondays and Bagel Tuesdays.

The gyms typically are 20,000 square feet, have 75 to over 100 cardio machines, 30-minute circuit, and 12-minute abdominal self-guided workouts. The gym is usually furnished in purple and yellow gym decor.

Gym Membership Pricing

The gyms have a low nationwide pricing structure and offer two tiers of membership:
  • Standard Membership: Standard membership is $9.99 per month and allows members access to one club. The gyms offer unlimited free fitness instruction and locker room access.
  • Black Tier Membership: Planet Fitness offers a Black Card for $19.99 per month and allows members access to every club in the system, unlimited guest privileges and access to spa facilities (massage beds, tanning and spa).
There is also an initiation fee that ranges from $0 to $49 per customer.

Business Segments

Planet Fitness operates in three main segments:
  • Equipment (39% of 2017 Revenues): Sells exercise equipment to new and existing franchises.
  • Franchise (35% of 2017 Revenues): Total 1,456 franchised locations as of 2017.
  • Corporate-Owned Stores (26% of 2017 Revenues): Total 62 company-owned locations as of 2017.

Equipment Segment

Planet Fitness requires its franchisees to purchase equipment from the company both at new gym openings and over specified time periods. Planet Fitness requires franchisees to replace cardio equipment every 4-6 years and strength equipment every 6-7 years.

Equipment sales tend to be lumpy with franchisees often trying not to disrupt clubs during busy times of the year, especially in the fourth and first quarters.

Franchise Segment

As of 2017, Planet Fitness had 170 franchisee groups operating 1,456 locations. Planet Fitness earns revenues in the following ways:
  • Royalty Rates: % fee of franchise system revenues paid to Planet Fitness. The fee was 7% as of 2017.
  • Joining Fees: Fee for each member that signs up online paid to Planet Fitness
  • ADA Fees: Fee to secure a franchise location/region paid to Planet Fitness
  • Commission Fees: Fees paid by outside vendors for preferred status to sell products to franchisees.

Planet Fitness also requires franchisees to spend 7% of their monthly membership dues on local advertising.

Company-Owned Segment

Planet Fitness has 62 company-owned locations as of 2017. The locations are a testing ground for the company, where it tweaks pricing and formats before rolling out changes system wide.

Competition

Planet Fitness faces competition from high-cost clubs like Life TIme Fitness and Equinox as well as low-cost clubs like Retro Fitness and You Fit.

History

Planet Fitness was founded in 1992 in Dover, New Hampshire to develop a low-priced consumer friendly gym. In 2003, the right to begin franchising started with its first location in Orlando, Florida. The company reached 100 locations by 2006.

In 2012, private equity firm TSG Consumer Partners acquired the firm for $479 million. In 2014, it opened its first international location in Toronto, Canada. It went public in 2015.

Management

Christopher Rondeau (CEO): Christopher Rondeau serves as CEO since 2013. Prior, he served as COO of Planet Fitness.

Dorvin D. Lively (CFO): Dorvin Lively serves as CFO since 2013. Prior, he was CFO/CAO at Radioshack, CFO at Ace Hardware and CFO at Maidenform Brands.

Financials

 $ USD in millions    2013    2014 2015 2016 2017
 Revenues $211 
$280 
$331 
$378 
$430 
 Gross Profit $130 
$180 
 $217 
 $256 
 $301 
 Operating Profit $36 
$62 
 $72 
 $116 
 $147 
 Net Income$25 
$37 
$19 
 $21 
 $33 
 EPS

$0.51 
$0.50 
$0.42 

References