In an environment where consumers are particularly cautious about spending money, some gym chains that focus on low prices have seen an incredible increase in customer traffic and continue to expand nationwide.
According to Placer.ai, a platform that measures mobile phone location data, gym traffic increased 6% from the second quarter of 2023 to 2024, while total store visits increased 4.2%. EoS Fitness and Crunch Fitness saw the most traffic increases: 23.4% and 21.4%, respectively, after also seeing big gains in the first quarter. Both chains are in the midst of expansion: Crunch plans to open at least one new location every week this year and plans to exceed that number next year, while EoS has opened about 25 new locations since April 2023.
Crunch and EoS are among the gym chains known for their affordable prices, offering memberships starting at $9.99 per month and offering additional benefits such as classes and unlimited guest access at higher price levels.
“People are obviously looking for ways to get more for their money,” Crunch President Chequan Lewis told Modern Retail. “This is a real relief and a real breath of fresh air for people who are seeing the cost of everything else go up, but not the same increase in quality that we offer at Crunch.” Lewis, previously chief operating officer and chief equity officer at Pizza Hut, joined Crunch in February. “One of the aspects of the Crunch story that attracted me was the direction that growth was going,” he said.
Crunch serves more than 2.7 million members in over 460 gyms worldwide. Lewis declined to provide specific numbers, but said unit and membership numbers have been steadily increasing since 2010, even during Covid. “People go to Crunch and get an experience they can only get at Crunch, at a price they can only get at Crunch,” Lewis said. “And they say, ‘Hey, we want more of this,’ and that allows us to continue to replicate our model. And so you see people not only honoring their development agreements with respect to our franchisees, but you also see a lot of institutional capital coming in to support those franchisees because it’s such an investment-worthy proposition.”
According to the Health & Fitness Association’s latest report, overall fitness facility memberships increased 4% from 2021 to 2022, to 68.9 million people, surpassing pre-pandemic levels. The most popular fitness activities were yoga, swimming and high-intensity interval training.
“I think the motivation to go to (fitness) clubs now, post-Covid, is partly driven by the sense of community; in some cases, they want things they can’t do at home and activities or equipment or classes or services they can’t do at home,” said Rick Caro of Management Vision, a fitness industry consultant. “We have more customer loyalty and more traffic than ever before.”
But the higher costs of building out gyms could make it difficult for the “high-quality, low-price” chains, as they are known in the industry, to deliver on that promise. Planet Fitness raised its base membership from $10 to $15 a month for the first time in more than two decades, first announced in May, while Crunch is sticking with the lower price point.
One analyst noted on a conference call with executives how odd it was that Planet Fitness was raising prices when consumers were watching their money. In response, Craig Benson, Planet Fitness’ interim CEO at the time, said companies in every industry change their prices. “It’s not going to shock anyone that we’re changing a price that’s been in place for a very, very long time, 25 years,” he said, adding that the new price had been tested and successful in several markets.
Many gyms have struggled since the pandemic-related lockdowns, even after they were allowed to reopen. About 25% of all facilities that were open in March 2020 were permanently closed by the end of 2021, according to Caro, who conducted a study using data from payment processing companies. He said some had promised their landlords they would be able to pay normal rent after reopening and had been unable to do so.
Blink Fitness, a low-cost gym chain owned by Equinox, just filed for Chapter 11 bankruptcy and said it had received a commitment from existing lenders for $21 million in new financing. Another gym chain, New York Sports Club, filed for bankruptcy in 2020, reporting debts of up to $1 billion and stopping rent payments.
Caro said clubs that relied on their employees coming out of offices to the gym, particularly in central business districts, have not fully or significantly returned to operation as many have shifted to three days a week in the office. This may have been a problem for Blink, for example, which has many branches in Manhattan.
“Some of them literally had great locations but were paying high rents because they were in prime central business districts,” Caro said. “Many of them were in danger of extinction and are still having problems working things out with landlords, etc.”
Lewis said to succeed in this space, chains need to exceed people’s expectations, and Crunch does that through offerings like turf zones for high-intensity interval training, personal trainers and group fitness classes.
“In this low-price segment, a lot of people play the game based on price alone,” he said. “I think we’ve redefined and are continuing to redefine the value-price relationship, and when you do it right, people really respond well.”
