The gym industry is still in good shape

Mitchell Hartman Jan 25, 2010

The gym industry is still in good shape

Mitchell Hartman Jan 25, 2010


Bill Radke: If you are a long-time member of your local gym, don’t worry, it’s almost over. Most of those New Years Resolutionaries will drop away and you’ll be able to get machine again. Marketplace’s Jeremy Hobson says when this recession finally drops away, the gym industry should come out in pretty decent shape.

Jeremy Hobson: Back in May, gym owners saw a scary headline. Crunch Fitness, a national gym operator with 73,000 members, filed for bankruptcy.

But George Van Horn says that was more of a red herring than a canary in a coal mine. He’s a senior analyst with IBIS World, which recently released a report on the state of the gym industry.

George Van Horn: There have been notable bankruptcies. But when we look at total revenues, when we look at total number of establishments in business, the industry is actually showing positive growth.

In fact, he says, the bankruptcies had more to do with debt loads and real estate costs than falling memberships. Crunch, for instance, signed expensive multi-year leases during the boom. So when memberships fell off slightly, the leases became too heavy to lift.

Van Horn: But you have seen new, smaller niche operators come in, and they certainly can take advantage of much smaller spaces at much more reasonable prices. So they have a lower overhead to have to meet every month.

One of those smaller operators is Ludlow Fitness on Manhattan’s lower east side. Mason Goldberg started the gym four years ago. It’s cheaper to join than the big guys, and Goldberg says that’s helping him attract new members, even in a recession.

Mason Goldberg: I’m growing actually. I’m under construction for another location out in Chicago. So I think it’s a good time for small business to leverage leases, and if you can manage to operate on, you know, with affordable pricing, it seems to be the right formula.

It is for hairdresser Michele Rutter. She says she’s spending more time at the gym these days.

Michele Rutter: It’s not always easy getting myself here, but once I’m here and I’m done, I feel so much better. Absolutely, it’s a total stress reliever.

And that, says George Van Horn, is the trend we should focus on: an inclination towards healthy living that has only increased as the economy has suffered.

Van Horn: More people have placed their health club spending in a higher priority during the recession, just because it not only is good for their mental health and physical health, but it’s also in many cases a social outlet as well.

Even for the recently laid-off. Mason Goldberg says he’s got many customers who no longer work, but they still work out.

In New York, I’m Jeremy Hobson for Marketplace.

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