Fitness Centers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 32,000 fitness centers in the US provide exercise equipment, classes, and services that allow members to improve their physical fitness. The main source of fitness center revenue is membership fees. Fitness centers also generate revenue by providing athletic instruction, admission fees for non-member usage, and food and beverage. The industry includes independently-owned centers, chains, and franchises.

Seasonality of Demand

Most fitness centers experience higher membership growth right after the winter holidays, when many people resolve to lose weight or exercise more.

Membership Attrition

Maintaining a strong membership base can be a challenge for fitness centers.

Industry size & Structure

A typical fitness center operates out of a single location, employs about 12 workers, and generates about $1 million annually.

    • The fitness center industry consists of 32,000 companies that employ about 464,000 workers and generate $32 billion annually.
    • The industry includes independently-owned centers, chains, and franchises.
    • Large companies include 24 Hour Fitness, Gold's Gym (TRT Holdings), Life Time Fitness, and New York Sports Clubs.
    • There were around 66.5 million members of health clubs in the US in 2021, according to the IHSRA.
                                Industry Forecast
                                Fitness Centers Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Feb 16, 2024 - Producer Prices, Wages Up
                                • According to the Bureau of Labor Statistics (BLS), fitness centers are facing higher employment costs and lower employment levels than before the pandemic. However, the industry has been slowly recovering, with a 7.3% increase in employment levels from December 2022 to December 2023. Wages have also risen, with a 3.2% increase in December 2023 compared to the previous year and a 25.5% increase from 2019, per the BLS. Additionally, producer prices for fitness centers were mostly consistent in 2023, with a slight increase in the last quarter. The BLS also reported that producer prices were up nearly 6% in December 2023 compared to the previous year and by 13.3% from 2019.
                                • Consumer confidence levels rose in January 2024 for the third month in a row, following three consecutive months of declines, according to data from The Conference Board. The Conference Board’s consumer confidence index increased to 114.8 in January 2024 from 108 in December 2023. According to Dana Peterson, Chief Economist at The Conference Board, “January’s increase in consumer confidence likely reflected slower inflation, anticipation of lower interest rates ahead, and generally favorable employment conditions as companies continue to hoard labor.” Peterson added that the gains in consumer confidence were largest in householders aged over 55. Plans to purchase homes, autos, and large appliances declined slightly on a monthly and six-month basis.
                                • A new panel conducted by Gallup shows that key physical health metrics have worsened post pandemic, remaining at record and near record high levels for obesity and diabetes. The percentage of US adults classified as obese (above 30 BMI) was 38.4% in 2023, slightly less than the record high of 39.9% set in 2022 but 6 percentage points higher than in 2019. Older adults classified as obese increased in 2023, with the 30 to 44 age category up 6.1 points and the 45 to 64 age category up 8.2% since 2019. Eating habits have worsened since 2019, with the number of adults reporting eating healthy the day prior falling 5 points. The number of respondents who say a medical professional diagnosed them with diabetes reached a new high of 13.6% in 2023, up 1.1 points since 2019. Opportunities increase for fitness centers when national obesity levels rise.
                                • Fitness centers will have to monitor minimum wage changes, as 22 states increased their minimum wages in January 2024, according to USA Today. About half of the increases are automatic adjustments linked to inflation. States that raised their minimum wages in January 2024 include Hawaii ($14), Maryland ($15), Nebraska ($12), and Washington ($16.28). Several states are set to boost their minimum wage levels later this year, including Florida (up to $13 in September) and Nevada (up to $12 in July). According to the Economic Policy Institute, nearly 40 US cities and counties will increase their minimum wage rates above state levels at the start of the new year. The federal minimum wage is $7.25 an hour, and more than 20 states, primarily located in the South and the Midwest, use the federal minimum as their wage floor.
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