Planet Fitness South Africa: Creating a leaner model for the health club

The drive towards a healthier nation of South Africans has been made more competitive as a result of technology and the need to deliver value for money. At Planet Fitness, Rory Sweetlove, Managing Director, believes he is blending the right mixture of both to provide health clubs to suit all manner of pockets and needs.

The company mantra says that it is less important to have a thinner, faster or stronger body than the person next to you, but all about knowing there is a place where everybody is welcome.

Planet Fitness South Africa first opened its doors in 1995; the vision of Manny Rivera, an American who had previously worked with the Planet Fitness brand in the US. The entrepreneur had seen his business flourish and then enter a period of stagnation, bringing Rory Sweetlove on board 17 months ago as Chief Operating Officer, before Sweetlove became Managing Director 7 months ago.

Whilst Rivera had extensive knowledge of the health club market in the States, Sweetlove had acquired his experience in Europe with Virgin Active, over a period of 15 years and was the natural choice when Rivera wanted to shake things up:

“I was previously with Virgin Active and had a fantastic time – but the opportunity to return home to South Africa never presented itself,” he recalls.

“Manny is a great visionary and entrepreneur and had launched Planet Fitness 17 years ago making it the oldest health club chain in South Africa. The first club was opened in Benoni, Gauteng – and during the boom time that followed, Manny was able to grow the business very quickly and largely through self-funding.”

Today the business operates as the second largest health club chain in South Africa, albeit much smaller than Virgin Active. However Rivera and Sweetlove have ambitions to increase market share, with 22 clubs currently operating and plans to open a further 2 by July.

“The company hit a speed bump in 2008 with the Lehman Brothers banking fiasco and Manny took stock of the business and felt a period of consolidation was needed to steer through more challenging economic times. The business at that time lacked structure and IT back-up and became somewhat stagnant,” Sweetlove describes.

“I was brought into the fray around the end of 2011 to help implement changes to our strategy and to introduce business processes that can help us to develop into a proper number 2 company in the South African market.”

Aside from Virgin Active there are a number of foreign-owned health clubs entering the South African market at present, making it a highly competitive spot. Despite the challenges of competition and attracting new customers, Sweetlove is hugely optimistic for the year ahead, with Planet Fitness due to open its first new clubs for five years over the next few months:

“Primarily our footprint is in Johannesburg, Pretoria and the Western Cape, although we also have a club in Port Elizabeth. We have not yet entered the KwaZulu Natal market, so there is still plenty of opportunity for further expansion in South Africa.”

Sweetlove feels that much of that opportunity will be realised if Planet Fitness can meet customer expectations. At present the business has around 150,000 members and is looking to increase this number based around a pricing concept that offers value for money:

“We are a little cheaper and that 150,000 is a growing figure – we have enjoyed steady growth and we are now looking at ways to further enhance customer numbers.

“One of the new clubs we are opening is our first budget club and will be called ‘Planet Fitness – Just Gymn’ – it will offer good equipment but will not include some of the fringe benefits our exclusive packages offer.  The club will be located in Pretoria and we are very excited about this new venture – we believe this is where the fast growth will occur.

“There is a massive middle class emerging in South Africa and the ‘Just Gymn’ initiative is the perfect opportunity to tap into this market for us.”

The concept for a budget-type service arrives at a time when the spending power of the average South African has maybe reduced. Sweetlove had spent 3 years working in the UK and had seen the growth of budget clubs over there, so with Rivera’s backing, the new club is set to take South Africa by storm.

Planet Fitness currently operates a number of different tariffs for its membership, ranging from its Platinum Club – a 7 Star Club located in the plush surrounds of the Radisson Hotel in Sandton, offering health club facilities along with spa treatment and restaurants; to the Mega Club, which offers 3,500 square metre facilities including saunas, indoor swimming pool and running tracks, along with conventional health club equipment; the Normal Club offers the same facilities without a running track; while Planet Fitness also operates a series of smaller, Dry Clubs, providing fitness equipment but without the benefit of a swimming pool.

Each club has been strategically located with areas researched to ensure Planet Fitness can tap into local visitors, as Sweetlove explains:

“We don’t typically look at residential areas – we have found that a large part of the health club industry is driven by medical aid and we look to locate new clubs in upmarket shopping malls or close to business centres, where people drive to work and decide to work out either before or after work.”

Of course attracting new customers and attracting awareness are critical to Planet Fitness’s continued success. With nearly 50 per cent of the company’s customer base coming from partnerships with businesses like Discoveries and Liberties, marketing concentrates on keeping partners informed of latest offers and news, while Sweetlove says that the company has also concentrated its marketing on sports expos. The next phase of marketing for Planet Fitness will be to fully embrace the digital age through social media and SMS texting.

With Planet Fitness clubs now open 365 days a year, maintaining clean, reliable standards is of course a challenge. Sweetlove says that cleaning is outsourced, while vital equipment maintenance is now all done in-house:

“Maintaining equipment can prove a challenge as much of the stock comes from overseas, making it difficult to get it serviced. We’ve gone in-house with servicing and maintenance and we keep our own spare parts, which has given us greater control.

“We try to get upgrades done during the winter months, whilst our busiest times are generally September (when people want to get fit for the summer) and after Christmas. Things tend to quieten down a little after April and we have a big £12 million upgrade scheduled for one of our Johannesburg clubs this coming May.

“Our other big challenges are around overheads, with electricity prices in particular on the up – we have to maintain our margins without inflicting price rises on our customers. We have therefore looked at ways to streamline the business and part of that approach has been to look at our supply chain.”

The company recently signed a major deal with American supplier Precore which Sweetlove is excited about and says will help to streamline the business making it easier to deal with one supplier and to carry spare parts as required.

Streamlining helps to keep Planet Fitness on a competitive price point, something Sweetlove says it vital to the company’s future:

“People are becoming more particular about what they want and we have to juggle the price with the product and offer value for money. The leisure industry in South Africa is under pressure and we have to make sure that Planet Fitness clubs are seen as a destination, where one can work out and then have a coffee and a chat, so people are spending time here.

“In the longer term we are looking at other opportunities across the SADC region and we have already had a number of enquiries from interested parties. I think our approach will need to be through partnerships and right now there are lots of shopping centres being built across the region, with companies like Woolworths and Pick N Pay, so perhaps there might be opportunities through these ventures.

“Our more immediate future will be to accelerate the growth of the budget facilities – and we see lots of opportunities to do so. We also need to establish a footprint in KwaZulu Natal.

“Operationally we are looking to implement a new IT platform called Club centric, which from a reporting perspective will greatly improve our reporting capabilities and will also speed up the time it takes to process access tags for members – so it will improve customer service.”