Go Lunks

Planet Fitness has an interesting business model.  It actively excludes serious weight lifters from its gyms.

You might think this is crazy, however, since gyms charge monthly memberships rather than a pay for use model it all makes perfect sense.  Planet Fitness has figured out how to increase the maximum amount of its memberships by targeting people who are less likely to ever use their gyms.  The result, plenty of monthly membership dues flowing to the bottom line and uncrowded gyms.

Planet Fitness prides itself on providing a judgement free zone even though it goes out of its way to profile against "lunks".  That's right, Planet Fitness has created a new word to describe people who have a "hard-core, look-at-me attitude".  Their gyms are even equipped with "Lunk™ Alarms".

Now lets look at the numbers.  In January 2010, one franchise in Irondequoit, NY sold 4,795 memberships in one month.  The Irondequoit club offers two membership options.  Option 1 does not charge a startup fee with membership only $19.99 per month. Alternatively, Option B charges a $29 start up fee and a monthly fee of only $15.00 per month.

Annual membership revenue for the average Planet Fitness is $1.7 million versus an industry average of $1.2 million.  At $15 per month the average Planet Fitness member pays $180 per year for their membership which means the average club has approximately 8,000 members.

The largest club in the Planet Fitness empire of 42 corporate locations measures 20,000 square feet implying that if every club was 20,000 square feet and the average membership roster was 9,000 members than each member would only have 2.5 square feet of workout space versus general fire marshall maximum occupancy requirements restricted to 36 square feet per person.

This sounds like a ponzi scheme to me.  Go lunks!