European Budget Gyms See Mixed Results

While UK budget gym operators cautiously pull back, Europe’s largest gym chain is ramping up.

Tale of Two Clubs

Reporting full-year earnings, a stark contrast has emerged between the recent fortunes of the UK’s The Gym Group (TGG) and the Netherlands’ Basic-Fit.

The Gym Group. Hampered by the high cost of energy and tightening consumer budgets, both the no-contract gym’s pandemic recovery and near-term outlook remain sluggish, despite noted gains from FY22.

• 2022 revenue gained 63% YoY, from £106M to £172.9M.
• Statutory loss was £19.3M, a 16.1% improvement.
• It added 28 new sites, reaching 229 locations and 821K members (+14.3%).

But, the brand reported an “uneven start” to 2023, with membership growth falling and projected revenues to be “broadly offset by cost increases”.

Seeking a change of pace, CEO Richard Darwin stepped down from his post last Friday. While TGG searches for his successor, it’s pushing forward with an anticipated 12 gym openings this year.

Basic-Fit. Europe’s largest gym chain is thriving, with 2022 setting the tone for what CEO René Moos thinks will be an even bigger 2023.

• 2022 revenue was €794.6M, up 133% from 2021.
• The chain reported a net operating loss of €3.7M, a 98% YoY improvement.
• It opened 185 new locations (including its first in Germany), reaching 1,200 total.
• Total membership grew 1.1M (+51%), pushing beyond 3.3M systemwide.

Not slowing down, Basic-Fit has added 225K members since January. In the year ahead, it expects revenue of at least €1B and the opening of 200+ new locations.

Between the lines: It’s difficult to compare the two chains head to head, but Basic-Fit is trying (and generally succeeding) to extract more revenue per member while attracting new spenders with elevated add-ons — like its ALL-IN hybrid smart bike membership.

In 2022, The Gym Group had 29.6% (+2.5% YoY) of its members paying premium dues. Basic-Fit, meanwhile, reached 34% (+11% YoY) penetration rate, and take-up rate for its premium offering from new members in France and Benelux countries was over 50%.

Looking ahead: Taking a page from US chain Planet Fitness, European budget operators will shrink overhead (like energy) as much as possible while bolstering its premium—but still cheap—memberships with value-added deals that feel like steals.