Charting the rise of discount gyms in Canada

Aggressive fitness clubs with prices as low as $10 a month are pressuring mid-range incumbents

 
People jogging on treadmills

(E+/Getty)

Mounting competition is giving Canadian fitness club operators a reason to sweat. Planet Fitness, one of the fastest-growing American franchises, made its Canadian debut this past December, opening its first club in Toronto. Even with daily free pizza and bagels, it’s the $10-a-month price tag that has attracted more than five million members across North America.

“We are starting to see an emergence of low-cost chains in Canada,” says Graham Longwell, editor of Fitness Business Canada magazine. “The market is currently saturated in the middle, and the low-cost, high-volume model is one way to crack into the competition.”Another way is to crank up the price and become the Ritz-Carlton of gyms. Luxury clubs like Equinox thrive by offering a sophisticated fitness experience.

Losing stamina is the middle market, pinned between ridiculously cheap prices and eucalyptus-scented towels. “If they’re charging roughly $50 a month, they need to bring in new services similar to high-end clubs or slash their prices,” says Longwell. Here’s a look at how the fitness market is getting crunched.

Infographic showing how many gyms have opened and closed in Canada in the 12 months to January 2015


The High End ($100–$250 per month)

Equinox

$168–$225 per month
73 Locations

Offering rainfall showers and organic beet juice, this chain caters to a clientele looking for the velvet rope treatment with their workouts. In 2013, the New York outfit took in $740 million in revenues and broke into the Canadian market with a stunning 40,000-square-foot club on Toronto’s Bay Street. Still, the luxury gym is acutely aware of its yuppie factor, which is why it opened the budget-friendly Blink Fitness in 2011, offering Americans monthly memberships as low as $15.

Life Time Fitness

$130 per month
113 Locations (in North America)

Life Time’s first Canadian location opened in Mississauga, Ont., in 2012; members basked in three glorious storeys of amenities, including a combined gym, spa and family recreation centre. Although membership cost is in the triple digits, it pays to go big. Life Time Fitness took in $1.2 billion in revenue in 2013, making it the third most profitable health club according to Club Industry, a trade journal that tracks the fitness market.

Cambridge Group of Clubs

$60–$190 per month
3 locations

Exclusivity is serious business at this luxury chain—one its clubs, a men’s only mecca for 1,200 members that include Gordon Lightfoot, charges an initiation fee of $1,500. To justify, Clive Caldwell’s 42 year-old chain believes “living well is an art—a balance between work and play.” Its three locations, all in Toronto’s financial district, is a hub where business elites can do some squats, but also talk stocks over scotch with likeminded execs. According to an IHRSA report, the company’s projected 2013 revenue was $32 million.


Mid-Range Gyms ($40–$60 per month)

GoodLife Fitness

$30–$60 per month
234 Locations

Although its membership prices hover in the middle of the pack, GoodLife has maintained its grip as the Goliath of fitness clubs in Canada. The London, Ont., company became No. 1 by sinking and swallowing up its rivals. The list of notable acquisitions is long, including Sports Clubs of Canada, Bally Total Fitness, Nubody’s and Extreme Fitness, plus a merger with Quebec’s Énergie Cardio. Lately, GoodLife has juiced up its marketing strategy by collaborating with celebrity trainer Jillian Michaels on a new exercise class. Thirsty for more, the company lunged into the low-cost industry with the 2014 launch of Fit4Less.

Steve Nash Fitness World and Sports Club

$40–$50 per month
19 Locations

Name-dropping an all-time great Canadian athlete is one way to spice up a fitness company. In 2009, Fitness World got a celebrity-branded makeover, after it was acquired by Steve Nash Sports Club as well as two American private-equity firms. Located within the Greater Vancouver area, the mid- to large-size chain took in $52 million in revenue at the end of 2013, up 8% from the previous year. Despite promising expansion into the rest of the country, however, the business is still coasting on the West Coast.

Curves International

$49–$59 per month
2,500 Locations (in North America)

Once a sensation among women who wanted a no-nonsense 30-minute calorie-blasting workout, the fitness franchise has since shed 65% of its North American membership since 2007. “Club operators weren’t putting in the work to give members the attention they needed,” says Stuart Goldman of Club Industry, which gauges Curves’ 2013 revenue at $52 million, down from $128.7 million in 2008. New leadership came in 2012 from private-equity firm North Castle Partners. Reinvigoration plans include working with two of the biggest names in fitness—Michaels and Jenny Craig.



Low-Cost Gyms ($40–$60 per month)

Anytime Fitness

$40 per month
2,098 Locations (in North America) 

Since 2002, this chain of discount gyms has been sweeping up members with its decent prices, convenience and a ban on intimidation. The Minnesota-based company opened its first Canadian location in Halifax in 2005 and launched its 100th this past New Year’s Eve in Alliston, Ont. It has 65 more Canadian sites planned this year. Many members sport a tattoo of the company’s purple running man logo.

LA Fitness

$30-$35 per month
600+ Locations

Ranked No. 1 by trade publication Club Industry, LA Fitness grossed $1.7 billion in 2013. The privately owned California-based company has more than 20 clubs in Canada. LA Fitness flourishes by acquiring faltering clubs, including a deal in 2011 to buy 171 Bally Total Fitness centres.

Fit4Less by GoodLife

$10 per month
57 Locations (including Econofitness clubs in Quebec)

Despite heading the largest fitness chain in Canada, GoodLife’s chief David Patchell-Evans launched this low-cost club last year, recognizing the market in no-frills fitness. Gone are the group exercise classes, child-care centres and towel service. Some outlets even forgo showers, locker-rooms and water fountains (members fill up at the tap). GoodLife plans to open 500 locations nationwide, targeting the exercisers who don’t much care for extras like Zumba or a post-workout rinse.

Planet Fitness

$10 per month
850 Locations

Judgment-free, grunt-free, and the pizza is free. This is the winning strategy behind one of the most successful gym franchises in North America, boasting annual revenues of about $200 million. Found in 1992, the high-volume, low-price company tripled its locations in the past five years and plans to aggressively expand into Canada with 150 spots in eight provinces. What’s missing? Amenities like child care, exercise classes and dumbbells over 75 pounds.

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