It's been an interesting couple of years for those of us who enjoy moving our bodies and working out.
Whether you prefer to work out inside a gym or if you're fortunate enough to be able to go for a run outdoors, very few of us were spared during the covid pandemic, when most gyms shut down across the U.S. and activity outside was discouraged (at least, without a mask during the initial months).
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For folks who could afford it, many turned to at-home solutions like a Peloton PTON or lululemon's LULU mirror.
But these solutions were largely temporary, and when the country finally began reopening, many of us ditched our at-home equipment for the chance to get out there again and see the world.
Now, you'd be hard-pressed to not spot at least a couple joggers before or during work hours in most suburban or metropolitan areas. Same goes for most large gyms, many of which are now packed with both old and new clients eager to get a pump in away from home.
Business has been especially good for Planet Fitness PLNT, the national gym chain that prides itself on accessibility, brand recognition, and low prices.
Q3 earnings, which were reported on Tuesday, showed a revenue beat of 3.49%, clocking in at $277 million, and an earnings-per-share beat of 7.90%.
There's a lot of zeal for getting healthy and back into the gym scene after the pandemic and ahead of the holidays. But not everything about the gym giant's earnings call was rosy – at least from a consumer's point of view.
Planet Fitness weighs an unpopular change
Planet Fitness saw extreme growth across several of its major segments.
"The 21.6% increase in franchise segment revenue was primarily due to increases in royalties, web join fees, and national ad fund revenue. The royalty increase was primarily driven by same-store sales growth, royalties on annual fees, and new stores. For the third quarter, the average royalty rate was 6.6%, up from 6.5%," CFO Tom Fitzgerald told analysts on the call Tuesday.
Things have been good for the gym. Almost too good.
"We're proud that we haven't raised the $10 Classic Card price in 30 years," interim CEO Craig Benson said on the call.
"However, consumer expectations on price have changed in a highly inflationary world. We are exploring whether we have an opportunity to take price on our classic card without sacrificing member growth. To that end, we've been testing different price structures, messaging, and price points in several markets around the country for more than a couple of months now."
All of this might mean that membership price hikes could be a very real part of Planet Fitness's future.
"As we are a recurring revenue model, we plan to continue running these tests to understand the impact an increasing price has on membership growth," he continued.
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Subscription prices have been rising
Many other recurring subscriptions have also toyed with price hikes in recent quarters. Netflix NFLX recently hinted it would be raising membership prices again in December, and in May Peloton introduced three tiers of (pricey) app-only memberships that cost up to $44 per month (previously, the most popular plan had been $12.99 per month).
Planet Fitness hasn't officially issued notice that it will be raising prices, adding it's just in the experimental phase. As of now, a membership to the popular gym starts at just $10 per month, plus a $1 startup fee.
