Planet Fitness Using AI to Reduce Membership Churn

Planet Fitness (PLNT) is installing “digital plumbing” across its fleet of stores/franchises to support the company’s AI ambitions. Over the next several months, the company will be building a “digital engine”; collecting member data from connected equipment. By 2019, PLNT intends on introducing AI supported virtual coaches; designed to motivate members to remain engaged (and to continue paying $10/mo.) by monitoring progress. Customized exercise routines and nutrition regimes, based on member performance (from an initial baseline), will be included.

Howie Long-Short: Planet Fitness has grown revenue 136% over the last 5 years; including 12.1% YOY in Q3 to $97.5 million. The company also added 31 new stores during the most recent quarter. PLNT shareholders have been on quite a roll. They got the positive earnings report in November, learned Trump’s new tax plan should boost EPS by 25% and now find out the company is investing in technology that will reduce churn rates; critical for a business that operates on a month-to-month basis with no commitments. Plus, they’ll own the valuable data.

Fan Marino: If your New Year’s Resolution is to join a gym, chances are you won’t be there for long. 50% of Americans drop their gym membership by the end of January and just 22% make it through the 3rd quarter. Gold’s Gym says most people fall off the cliff after 39 days. PLNT has found a pain point, I’m optimistic that positive reinforcement in the form of visual progress can extend that time frame.

How Planet Fitness plans to gain a competitive advantage with AI

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SPECIALTY FITNESS IS OUT, BUDGET-FRIENDLY FITNESS IS IN; PLANET FITNESS DOMINATING FITNESS MARKET

Specialty fitness is out, budget-friendly fitness is the new trend. Local intelligence company Foursquare is reporting that 1 in 5 high-end yoga & pilates studios closed between 2015-2016, visits to cycling studios were down 30% YOY during the same time period and mid-market gym chains (like CLUB) lost 5% of their visit share over the last 12 months. The one company seeing growth? Planet Fitness (PLNT). With 10 million members, 1,300 locations and plans to open another 1,000 locations, the company with memberships as low as $10/month grew its membership by 8% over the last year. 25% of gym users in the U.S. are now members.

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A budget-friendly gym is trouncing $40 boutique fitness classes and luxury gyms alike

Howie Long-Short opines: The low-cost, franchise model has enabled rapid growth. But does it have staying power? This has been a battleground stock since the 2015 IPO.

Fan Marino says: Makes sense. I’d rather spend $10/mo. to not work out, than $40+. The wife is into Orange Theory. It pains me to see $319/mo. (price for unlimited in NYC) on the credit card.