🔒Planet Fitness eyes growth in fragmented fitness industry

Q&A talks about competition in the gym/fitness industry with David Humphrey, CEO of ECP-PF Holdings Group, the largest franchisee of Planet Fitness.

Q: You were recently appointed CEO of ECP-PF Holdings Group, the largest franchisee of Planet Fitness. It has 52 locations, some in Connecticut. What are your future expansion plans?

A: We're constantly looking for opportunities for expansion in all of our current markets and potentially in other areas across North America, too. Expanding in Connecticut is challenging, as there are already 28 Planet Fitness locations across the state, but we've opened new clubs in Danbury, Newington, Derby, Norwichtown, Wethersfield, and Dayville just in the past two years. Now we're primarily concentrating on renewing and improving our current clubs, but we do have our eyes on several towns where we think people would welcome a Planet Fitness.

In late 2014, we acquired 17 clubs located in and around Albany, Buffalo, and Rochester in New York state, and we see great potential for growth in upstate New York.

Q: How are you getting people to sign up? One gets the sense with increasing obesity rates that fitness just isn't a priority for a lot of people.

A: It's true that many Americans don't make fitness a priority, but one of the reasons is that a lot of people are put off by their perceptions of the stereotypical gym environment.

Traditional gyms are often either cheaply built facilities full of power-lifting “lunks” who intimidate less-fit people, or fancy storefronts that offer a lot of frills but charge a small fortune for their classes and training sessions. We often see local competitors advertise low monthly fees but push their members to sign up for extra-cost training and classes totaling $100 per year or more. That's where the Planet Fitness model differs greatly from traditional fitness offerings.

The Planet Fitness brand is centered on welcoming the first-time or sporadic gym user, no matter what their fitness goals may be. For people just beginning to work out, walking into a traditional gym can feel very intimidating, so we have created a “Judgment Free” environment, where everyone can feel at ease in our clubs, no matter what his or her workout goals are.

Q: Where is competition coming from in the gym/physical fitness industry? Do mobile apps take the place of physical trainers? Do people just work out on their own?

A: The fitness industry is very fragmented, ranging from large chains like Planet Fitness to small mom-and-pop gyms. It's not unlike the massage industry, where Massage Envy emerged as a strong national brand in an industry that had been dominated by thousands of local day spas and independent massage therapists — all of widely varying quality. Consumers appreciate the quality, consistency, and value provided by proven national brands. Most Americans no longer stay in local roadside inns when they travel — they trust brands like Marriott, Sheraton, and Hilton.

As for apps replacing face-to-face fitness training, to me it's similar to 20 years ago, when many people thought the Internet would completely kill the traditional retail store. Clearly, that hasn't happened, both because there's a social component to shopping that people enjoy and because good personal service adds value to the shopping experience.

Sure, there are people who enjoy working out on their own, but others enjoy working out with their friends. Plus, group fitness programs really make a big difference for many members.

And don't forget, we put roughly half a million dollars of high-quality fitness equipment into each of our clubs — it's definitely cheaper to pay us $10 per month than to buy all those machines for your basement.

Q: You come to ECP-PF with experience at Massage Envy Spa. What can you apply from that business to grow Planet Fitness?

A: Both are value-based business models in categories historically dominated by high-end/high-cost players.

Planet Fitness has democratized fitness much like Massage Envy democratized massage, taking the risk, discomfort, and uncertainty out of the industry for the everyday consumer by supplying a high quality, professional, clean, convenient, and low-cost product. 

Q: Why does the franchise model work for fitness centers? Local gyms seem to come and go but the larger franchises persevere.

A: According to the Small Business and Entrepreneurship Council (SBEC), about 50 percent of independent small businesses fail within the first five years. This is typically due to limited resources and the fact that very few small operators are great at all aspects of running a business.

Many talented and passionate personal trainers try to start their own small gyms, but they usually haven't got enough capital to buy all the equipment their customers would like, and they often don't have the marketing or management skills to build a successful company.

Running a company is not simple, and it sure helps to have someone give you an instruction manual. A franchise model with a respected brand and proven operating formula greatly increases the likelihood of a franchisees' success.