Chain Puts More ‘Boots on the Ground’ to Locate Sites
Planet Fitness has broken out in the health and wellness sector to become a highly sought-after tenant. And now, the New Hampshire-based chain plans to deliver more locations this year than originally planned.
In its latest earnings report, the company said it planned to open 250 to 260 new locations this year. That’s up from the 225 locations leadership had projected earlier this year. It opened 230 locations last year.
“Planet Fitness continues to leverage a size and scale to capitalize on current real estate trends and dominate the market where we operate,” Chris Rondeau, Planet Fitness CEO, said on the company’s earnings call.
Planet Fitness opened 53 new franchise locations in the second quarter alone, putting the total count at 1,859. Locations typically occupy about 20,000 square feet.
New locations have helped increase the company’s revenue. It reported $181.7 million in the second quarter, a more than 29% increase from last year. A key figure is same-store sales, which increased 8.8%. Through the first six months of the year, net income climbed from nearly $54 million to more than $71 million.
Rondeau said the new guidance on store locations reflects strong financial backing of franchisees and their growing sophistication in expanding within their territories.
But it’s also in how Planet Fitness has approached finding real estate for new locations. Over the past year, “we put more boots on the ground where we’re working with the commercial real estate brokers for the landlords,” said Dorvin Lively, the company’s president.
Three or four years ago, “we were basically letting franchisees bring sites to us” for approval, Lively said. “And in many cases, we would decline the sites.”
In addition to the real estate move, Lively noted the chain is now a highly sought-after tenant, unlike four or five years ago. “We weren’t No. 1 on the calling list when something was coming up,” he said.
Though founded in 1992, the chain didn’t start selling franchises until 2003, and it took a while for the business to take hold as a franchise. It helps that consumers are increasingly seeking new health and wellness options. It also helps that, as more and more traditional retailers close, the owners of shopping centers have become more receptive to leasing space to gyms, salons and other ventures that can generate regular foot traffic and face little competition online.
A prime example is Planet Fitness’ recent deal with discount department store chain Kohl’s. Kohl’s announced earlier this year that it would lease space next to its department stores to Planet Fitness. The goal is to generate more traffic for the retailer.
If successful, Kohl’s, which has more than 1,100 stores around the country, said the program could expand.
Rondeau said the company is on track to open five by the end of the year, four franchises and one corporate-owned, with more to come next year.
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