What Fitness Industry “Numbers” Are Telling Club Owners
By: Michael Scott Scudder
Founder/CEO of Fitness Business Council,
Those of you who’ve attended my business seminars over the years have often heard me say: “Your numbers are the sum and substance of your business practices.” If your numbers are up, usually it reflects some solid business practices. If your numbers are down, take a look at where your systems are faltering.
One of the things I try to accomplish with my Fitness Business Council efforts is to get a clear “take” on what the business numbers are for the independent health club sector. That’s why I deploy three (3) quarterly surveys every year and an annual survey. In seven (7) years of polling the independent club sector of our business, I’ve learned a lot that I’ve shared with all of you. The initial results from my FBC 1st Quarter2014 Business Results Survey show where the industry is at present…and also reflect on some longer-term trends that can be very challenging to club operators.
Growth of New Membership Sales is a key indicator. Whenever we’ve seen a consistent 60%+ of clubs reporting growth in new memberships for 3 consecutive quarters, we’ve generally been able to predict the beginning of an uptrend. Unfortunately, new membership sales wereup in only 49% of reporting clubs…and that is a continuance of a slightly downward-slipping pattern that has been in evidence for over three (3) years. Growth in Total Sales (which includes the all-important Ancillary Sales categories) is another critical benchmark. While total sales and ancillary sales growth are higher in slightly morethan 50% of clubs, we still do not see a breakout uptrend occurring here. Alarmingly, these categories have been accompanied by a consistent downtrend in single-member-monthly dues…which presently stand at an average all-time low of slightly less than $28 per month across our industry.
The latter may well be influenced by Unbundling of Membership Prices, which 45% of clubs reportthey have done in efforts to compete with budgetclubs and HVLP (high-volume-low-price) players intheir marketplaces. One-to-One Personal Training sales growth stillpersists in a gradually-downtrend mode, with only
45% of clubs reporting sales growth. This may be in part because Small Group Training revenue growth continues in an upward pattern, though not yet definable as a “definite uptrend.” Group Exercise Class Attendance growth, which until early last year had been in a defined uptrend, is slipping into declining numbers, with only 45% of clubs reporting increases in attendance. Finally, the percentage of clubs with Increases inProfits are inching higher…but Profit Margins themselves are continuing to slowly erode, with the national average pre-tax margin at approximately9% – its lowest in several years. While the above “numbers” overall might look negative to the reader, they are not. What they are, are “benchmarks” whereby clubs can measure their own progress, or lack thereof – and gauge their business strategies accordingly. !
Michael Scott Scudder is Founder/CEO of Fitness Business Council