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Finance of Startups: For Dummies (Part 12 – Planet Fitness S-1)


May 27, Planet Fitness, Inc. filed their S-1 for a public offering of 10,000,000 shares. The company has been listed on the New York Stock Exchange (NYSE) under the symbol “PLNT” with a recent stock price of $17.85 (May 26, 2016). 

I thought this would be an interesting S-1 to pore over as I haven’t reviewed an S-1 in a while and my interest in all things fitness-related. In fact, I have some aspirations to own a gym one day (my own, not a franchise).  

Let’s dig in…
  • “An emerging growth company” as part of the Jumpstart Our Business Startups Act of 2012
  • In addition to the “Planet Fitness’ trademark, the company owns rights to “No Lunks”, “No Gymtimidation”, Judgement Free Zone”, etc.
  • Standard membership is $10 per month includes free fitness instruction to everyone from staff trainers; $19.99 PF Black Card is available for system-wide store access + access to special amenities (i.e. tanning equipment, massage beds, other)
  • 1,171 total stores with typical stores ringing in at ~20K sq. ft. – 1,113 franchised and 58 corporate-owned. Believe in opportunity to more than triple size with 1,000 stores already committed with franchisees
  • Company focuses heavily on “judgement free zone” and creating an environment where members are not intimidated by members or high fees
  • New stores in 2015 signed up an average of 1,300 members per store before even opening their doors – reflect strong brand
  • Each store is required to spend 5-7% of monthly dues towards local advertising
  • Franchisees typically experience >25% return on initial capital investment in the second year of operations (net of advertising and royalties)… most franchisees reinvest capital into Planet Fitness with 90% of new 2015 stores opened by existing franchisees
  • Equipment have typical useful lives of 4-7 years — franchisees then provide a predictable, growing revenue model for re-equipping stores
  • Revenue growth
  • Store growth
  • PF Black Card members as a percentage of total membership from 42% 2011 to 57% 2015 with average monthly dues per member $14.24 to $15.64
  • Planet Fitness closed an IPO August 11, 2015 of 15,525,000 shares opening at $16.00 per share
  • Revenue (2013-2015): $211,009 –> $279,777 –> $330,537
  • Number of stores (system-wide, 2013-2015): 749 –> 918 –> 1,124
  • Number of members (system-wide, 2013-2015): 4.8M –> 6.1M –> 7.3M
  • Over 20% of members joined through Planet Fitness websites in 2015
  • Franchisees’ unlevered investment in 2015 for a new store ~$1.9M including fitness equipment purchases and construction (~12 weeks for new construction)
  • 756 employees across corporate owned stores and 180 employees at the company’s headquarters located at 26 Fox Run Road, Newington, New Hampshire
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