How Planet Fitness founder Chris Rondeau created the fastest growing gym chain in the US
3 JUNE 2018 • 11:35PM
Planet Fitness is America’s fastest-growing health club company with gyms in all 50 states and a foothold in Canada, Mexico, the Dominican Republic and Panama.
Its global membership is approaching 12m, but purists have been less than impressed, with one critic scathingly dismissing it as the fitness industry’s answer to Walmart.
Heavy-duty grunting powerlifters – known locally as lunks – are not welcome and gyms are fitted with alarms which ring when somebody drops a massive barbell. Perfectly formed goddesses who make other women feel uncomfortable as they flaunt their beach-ready bodies while working out wearing the skimpiest of outfits are also out.
Its target market is not the body beautiful, but the ordinary person who wants to get fitter and is put off going to the gym by hard-core devotees. It is a formula which has been spectacularly successful. At the last count, about four per cent of the US population belongs to a Planet Fitness gym.
Go back to the early Nineties and the story was very different. Planet Fitness was started in Dover, New Hampshire, by Michael and Marc Grondahl who bought a failing Gold’s Gym in 1992. There was little to distinguish it from its rivals, with every gym playing “tug of war” for the same customers and offering the conventional array of free heavy weights, fitness classes and healthy juice bars.
One of its early members was Chris Rondeau, a student at the University of New Hampshire whose business experience had been limited to helping out at his father’s chain of New England drug stores. Chief executive since 2013, he joined the company working at the club’s front desk in 1993 and has stayed with it ever since, rising through the ranks, as Planet Fitness ripped up the industry’s rule book.
Rondeau gets up at 4.30am every day, wolfing down three cups of coffee and three egg whites before hitting the gym at 5am and then driving to work – arriving by 7.30am at the company’s headquarters in New Hampshire.
“Starting in New Hampshire was a godsend,” he says. “It’s so rural around here we had to get really good at what we did. We had to cater to the masses because there wasn’t enough population around here to cater to the powerlifters, bodybuilders and serious athletes.
“Our first town of Dover was 28,000 people and we had competition. Back then only 15pc of the population belonged to a gym. “If you think about the industry it almost started backwards. It started with Joe Gold bringing Arnold Schwarzenegger over from Austria starting Gold’s Gym, selling that and starting World Gym.
“It should have started with us and Curves gym probably, getting first-timers acclimated to fitness. Since the inception of the industry, it is almost like the majority – the vast majority – of the population was neglected.”
The challenge was to persuade the rest of the population to give fitness a go. Initially, Planet Fitness thought the easiest way to do this was to slash the price of membership to $10 a month. It worked up to a point.
“We still had the old model, we still had the bodybuilders, the powerlifters, the heavy dumbbells, Olympic benches,” Rondeau added. “The problem is that we had more of the opposition’s lunkheads coming in than we had beginners coming in trying to give it a shot.
“It was like putting all the animals in the same cage at the zoo, it wasn’t going to work.”
So in 1998, the heavy weights were removed as the company opened new premises in its native New Hampshire. But in many other ways, it was a conventional gym where the fit got fitter. Group classes remained as did the obligatory juice bar and child care facilities. The next big change came when Planet Fitness opened its fourth premises in Portsmouth, which was more of a bare-bones operation with nothing but equipment.
“We realised my pager was going off for the first three stores which had all these moving parts and pieces with things that were going wrong.
“In the day care, you would have one kid bit another kid, or they had run out of protein drinks and the blender is broken, or the aerobics instructor has not shown up and people are going mad.
“In that fourth store, our members were happier because we couldn’t disappoint them. We were open 24 hours a day, seven days a week and the product runs no matter what.”
The Portsmouth club has been the template for the company which at the last count has 1,565 outlets. Most are now franchises, but the branding is consistent across the empire.
“One thing we wanted to have with Planet Fitness is what I call the Big Mac, so it tastes the same wherever you go,” Rondeau added.
All have the same purple and yellow machinery and all are branded as a “Judgment Free Zone” – a slogan which has been registered as a trademark. The “We’re not a gym we’re Planet Fitness” message has been rammed home by a series of TV ads ridiculing folk who want to “feel the burn”. Its approach is certainly unconventional.
On the first Monday of the month, clubs dish out free pizzas and on the second Tuesday, bagels. There are sweets at the check-in desk. The pizza idea dates back 20 years, when a gym ran out of hot water – much to the annoyance of members.
“We decided on pizzas to say we were sorry and people liked it so much we decided first Monday night of every month was pizza night,” Rondeau recalled. “The reason we started bagels was because the morning crowd was upset because they didn’t have any pizzas. So we said we would give them bagels the second Tuesday of every month.”
Purists might object, but the small gift is part of the company’s philosophy that the occasional treat is not something to be frowned upon. Inevitably the rather more laid-back culture has had its critics. There is the odd YouTube video excoriating the company for its frivolous approach to fitness and complaining at the absence of massive barbells. But Rondeau remains unapologetic.
“Like every industry, you have to have a niche. The industry has been trying to be everything to everybody. No business is good at that.”
It’s a model that has worked, with the chain more than quadrupling the number of outlets since the beginning of the decade. There have been some smart sponsorships along the way including the NBC reality show The Biggest Loser, in which contestants work out on Planet Fitness’s distinctive – some might say lurid – purple equipment. It is also a major sponsor of the Times Square New Year’s Eve celebrations, ensuring its branding is seen by more than a billion people across the globe.
The relentless expansion has included the company moving into shopping malls, often taking over premises of struggling stores. Prior to the economic crash Planet Fitness was competing with big retailers for space. However, the picture has changed radically.
“We had to take the ‘C-sites’. Landlords wouldn’t even talk to us. Fast forward to today, they are on our doorstep every day.
“Every month there is a new set of stores closing – Toys R Us, Circuit City. It’s a perfect storm for us.
“The retailers themselves want us next to them, they are downsizing and putting us next to them to drive traffic.
“We are taking larger sites for cheaper rates, we are getting the A-plus sites. We are getting the cream of the crop.”
The company’s success has not been lost on market experts.
“I think Planet Fitness gyms are doing very well,” said Matthew Brook, a senior analyst at Macquarie.
“Many listed gyms in the past have made little money or even gone bankrupt. Planet Fitness has been able to carve out a niche for itself, and with high margins.
“It is a low-cost gym and its similar to other low-cost business models in Europe like Ryanair or Aldi in terms of the impact it has had on the gym industry.
“They have succeeded in building a moat for themselves due to their scale and ad spending, which gives them an advantage over their rivals.
“Planet Fitness is already expanding into Canada and now Mexico. We think it could work almost anywhere where people need to get fit and want to save money.”