Generation Z continues to drive membership growth at Planet Fitness.
This age group now accounts for 25% of the fitness chain’s members, due in part to the company’s efforts to recruit high school students, management said during a Thursday (Feb. 22) earnings call.
“We aim to be the brand that Gen Z think of when they’re ready to join a gym [and] this program further [strengthens] our appeal,” interim CEO Craig Benson said on the call. “Our business is unique in the retail sector as the gym membership isn’t a frequently purchased item.”
The question analysts had for management: How does this affect the company going forward? For example, Joe Altobello with Raymond James wanted to know if Planet Fitness is seeing a difference in average lifetime value between younger and older member groups, given that these younger members aren’t signing up for the chain’s more lucrative Black Card.
Chief Financial Officer Tom Fitzgerald acknowledged that the Black Card mix tended to be lower among younger users.
“But you’ve heard us talk about, as we look at the different ages within Gen Z, there are step function changes in their Black Card penetration as they age in,” he said. “And once they get to their 20s, they look much more like the average of, you know, roughly 60% of them are Black Card members. So, we’ll take that trade all day long because the contract value, even with a slightly lower Black Card mix, is still many orders of magnitude above the cost of getting a new member.”
PYMNTS Intelligence found that Gen Z consumers tend to be more discerning spenders, comparing prices online, actively seeking discounts, and gravitating toward brands that offer a combination of quality and affordability.
They were also more likely to see their financial situation improve last year and see their income increase during the year.
Planet Fitness used its earnings call to announce Fitzgerald’s retirement effective this August. It also said it is continuing to look for a permanent CEO. Benson said the company’s hiring committee has narrowed its candidate pool from more than 100 to a short list, with an announcement expected soon.
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