Accounting

Planet Fitness bulks up membership and store count, but sheds leadership.

Gym franchise canned 9% of HQ employees.
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· 3 min read

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Bodybuilders often adhere to periods of cutting and bulking, where a “cut” signifies a cycle of eating at a calorie deficit to lose weight, and a “bulk” refers to eating in excess in order to get swole.

Planet Fitness seems to be doing both.

In its Q4 earnings announcement, the gym franchise known for its low membership fees and lunk alarms flexed its 1.7 million new members and 165 new locations in 2023. Planet Fitness also reported revenue gains of 14.4% over the prior year, to $1.1 billion, and a $36 million increase in profit from 2022, to $147 million.

But recent events show a loss of muscle mass elsewhere, including a decrease in employee headcount and turnover in the C-suite.

It seems this new workout regimen started in September, when the company’s board of directors asked then-CEO Chris Rondeau to resign. Shortly after, Rondeau told Business Insider he was “seriously blindsided” by the move.

But Rondeau remained on the board of directors…until about a week ago. Planet Fitness revealed in a recent SEC filing that Rondeau resigned from the board. The company offered that his resignation was likely due to disagreements over “decisions made by the Company since Mr. Rondeau’s separation” as CEO last year.

He reportedly disagreed with the decision to lay off about 9% of Planet Fitness headquarters employees this month.

Today, company CFO Tom Fitzgerald announced he’s leaving in August. In a news release, Fitzgerald said he first notified the company last August that he was considering retirement.

“I believe now is the right time to transition finance leadership as Planet Fitness enters its next phase of growth," Fitzgerald said in the release. He added during an earnings call that he plans to “focus on some of my interests outside of work.”

Planet Fitness noted in the release that it’s working with an executive search firm to help find its next CFO. Interim CEO Craig Benson said on the earnings call that the company has identified 13 finalists for a new permanent CEO. The search committee will send a shortlist to meet with the full board.

New Year, new me. Benson told investors that Planet Fitness has a “new growth model” for 2024 that consists of “enhancing our already strong new store economics” and lowering the capital requirements for opening new locations, by changing the franchise agreement, replacing equipment less frequently,, and reducing costs for new construction and remodel projects. Benson said the company believes this new model “balances improving store returns without significantly impacting our P&L.”

“We expect 2024 to be a transition year because it will take time to see the results on our new store pipeline,” Benson said.

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.