Sanmeet Deo

And we've seen this model work in other similar environments.

In 2018, with late cycle rising rates, Planet Fitness delivered 10.2% system-wide same-store sales, opened 230 new stores.

In 2023 to 2024, with those aggressive rate hikes and restrictions

They still posted about 8.7% and 5% system-wide, same club sales, respectively.

The pressure points to watch are franchisee-level costs, labor, rent, utilities.

If those continue to go up and it cuts their margins, and if churn with customers truly gets squeezed, then we could start getting a little worried.

With the fitness business, something I'm intimately familiar with is churn is key.

If you have high churn, it's very hard to have a sustainable fitness business.

That's one of the things I like about Planet Fitness is $10-$15 a month.

Now, their regular membership is $15.

$15 a month or $30 if you're doing the black card is relatively low.

given that the thought process is, well, that's really cheap.

I don't want to cancel and then feel like I'm never going to go.

I feel like I'll go

So let me keep it as an option.

I know that I have the membership.

I can go at any time.

So it's not enough of a burn in their pocket to say, all right, I'm going to cancel.

So if the churn creeps up, then I'd definitely be concerned.

That black card to regular membership mix is always very important to see how people are playing the Planet Fitness membership.