Thursday, June 20, 2024

Planet Fitness membership increases from $10/month for first time since 1998

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Planet Fitness, the nation’s largest gym chain, is increasing its monthly membership fee for the first time since 1998 after the company faced declines in membership in the first quarter of 2024, according to the company’s executives.

This summer, a “classic” membership fee for Planet Fitness will go up from $10 to $15 per month for new customers, Craig Benson, the interim CEO of the gym, said during a conference call with several business analysts about the company’s first-quarter earnings. The meeting was transcribed by The Motley Fool, a private financial and investing advice company.

Under the “classic” membership, customers have access to only one gym, according to Planet Fitness’ website.

Planet Fitness will also experiment with new prices for its $25-a-month Black Card membership, which gives customers access to all Planet Fitness gyms, Benson said, according to the transcript collected by The Motley Fool.

“It is not going to come as a shock to anybody that we are moving a price that’s been in effect for a long, long time, 25 years,” the interim CEO said.

“We think it is the right time to do it,” he added.

There is no official date set for when the prices will increase. Current “classic” members will not experience an increase in their gym membership fees, only new members will be subject to the increase, Benson stated.

Planet Fitness will increase its prices to minimize the loss of membership it faced at the beginning of the first quarter, Benson stated.

The first quarter of 2024, was below the company’s expectations for a historically high net-growth quarter, Benson said. The interim CEO believes that the high cases of viruses like RSV and COVID-19 in January may have made people weary of going to the gym.

Benson also said he believes that Planet Fitness’ advertising campaign also contributed to lower first-quarter gains.

“We believe that this was due in part to the messaging not resonating as broadly as we anticipated as well as our strategic decision to not include price pointed offers as part of our nationally funded portion of the advertising,” he added.

Also affecting the company’s gains was an isolated incident where Planet Fitness terminated an Alaska woman’s membership after she complained about a man shaving in the woman’s restroom on March 11. The incident, which was first reported by The Washington Post, contributed to some of the “softness” and cancellations Planet Fitness saw in Q1, Benson stated.

Benson said the company’s nondiscriminatory policy — which has been in place for years — allows for members to use the restroom of their choice.

To find the best balance between the more expensive dues while minimizing loss of customers, Planet Fitness created a price test for the “classic” membership, Benson stated. Last fall, the company tested two price points for the Classic Card, a $15 and a $12.99 in nearly 100 stores each. The stores eventually reverted back to the normal $10-per-month fee during the national sales period. The company also included one more test in the New York market where they kept the price at $14.99 regardless of the national sale.

“Based on our learnings, we decided to change the price of the Classic Card to $15. It drove the most significant increase to average unit volumes with the least impact to the rate of joins,” Benson said.

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