Anytime’s ability to win in small markets gives it an edge over other gym brands, some investors and operators believe
Private equity money has flooded into big-box gyms since the pandemic, but the smart money could be headed to clubs that occupy a smaller physical footprint.
Rainier Partners, a Seattle-based private equity firm that invests in lower middle-market services businesses, has identified 24/7 gym brand Anytime Fitness as a prime target for investment and expansion.
“There are a lot of towns (in the United States) that deserve an Anytime Fitness but don’t have one,” Rainier vice president Jonathan Lo tells Athletech News.
Size Matters: The Case for Anytime Expansion
While Anytime Fitness already has over 2,000 gym locations in the U.S., Lo believes there’s significantly more room for growth, particularly in smaller towns and cities across America.
According to Lo, Anytime is better positioned to succeed in small markets than big-box gym brands like Planet Fitness, Crunch Fitness and LA Fitness, which typically require anywhere from 20,000 to 40,000 square feet to operate.
An Anytime Fitness gym, by contrast, typically takes up between 4,000 and 6,500 square feet. Smaller size translates to lower upfront and overhead costs, meaning franchise owners don’t need to sign up as many members to make their location profitable.
“We’ve found that Anytime can do quite well in smaller markets,” Lo says, defining those markets as towns with trade areas as low as 20,000 to 30,000 people. “To support a Planet Fitness, you need anywhere from 5,000 to 10,000 members to make the math work right to support the rent and build-out costs. Our typical gym has 500 to 1,000 members.”
In November 2023, Rainier acquired Omega Fitness Holdings, one of the largest Anytime franchise groups in the U.S., announcing plans to grow Omega’s portfolio of gyms. In September, the Rainier-backed Omega acquired 21 Anytime gyms in Wisconsin amid steady expansion.
In the 12 months since the acquisition, Omega has grown its Anytime Fitness portfolio from 64 gyms to over 120, establishing a presence in California, Florida, Illinois, Minnesota and Wisconsin.
Rainier and Omega are eyeing even more growth in the years to come.
“We feel confident in getting to at least a couple hundred gyms over the next few years,” Lo says, adding that that expansion will include opening new clubs from the ground up and strategic acquisitions.
A System That’s Ripe for Consolidation
While opening new gyms is enticing – and profitable – the Rainier and Omega teams also see plenty of opportunity to acquire existing Anytime locations and bring them under the Omega portfolio.
Pedro Belmontes, the chief operating officer at Omega, notes that around 70% of Anytime Fitness locations in the U.S. are single-unit operated, meaning the owner of that gym owns only one location. As of 2023, around 90% of Anytime franchisees owned three locations or less.
That makes the system “deeply fragmented,” Belmontes says, meaning there’s plenty of opportunity for large franchise groups like Omega to come in, acquire gyms and streamline business practices.
“When you have a deeply fragmented system, you get Taco Bell in the ‘90s,” Belmontes says, alluding to the fast-food chain’s growth trajectory. “As an investor, you have a unique opportunity to roll up those single unit operators and standardize operations.”
For Omega and Rainier, standardizing operations also means injecting new capital into older Anytime Fitness gyms to make them more appealing to modern consumers, particularly Gen Z.
“We’re buying a lot of gyms that could use a refresh or an improvement,” Lo notes. “We think it’s an interesting opportunity to reinvest in our gyms, making them better and providing a better experience to the consumer. In return, we get a stickier customer base that loves to come into the gym.”
Investors being interested in franchised gym brands isn’t anything new. Private equity money has flooded into fitness franchises since the pandemic, but much of it has gone to high-value, low-price (HVLP) gym concepts like Planet Fitness and Crunch.
Lo and Belmontes believe smaller-sized gym brands like Anytime Fitness are a better bet, at least in 2024. They point to Anytime’s competitive advantage as the dominant player in the “mid-market, small-box” gym space, giving it a buffer from high levels of competition in the big-box world, which includes brands like Planet and Crunch on the HVLP side and LA Fitness, 24 Hour Fitness and Gold’s Gym on the slightly more expensive end of the spectrum.
Anytime Fitness might be a true diamond in the rough – dispute being seemingly underappreciated by investors, it’s one of the biggest fitness brands in the world with over 5,000 locations worldwide, and it figures to have access to even more resources following a merger with Orangetheory Fitness.
“It almost feels like Planet Fitness a decade ago before private equity got (there),” Lo says of Anytime Fitness, noting the relative lack of gyms in the system owned by private equity. “There’s 2,000-plus gyms that aren’t private equity-owned that we could potentially go after in the United States and over 5,000 globally.”
