Bally Total Fitness Corporation Operates Fitness Centers

An Analysis of the U.S. Health Club Industry in 2004 and the Role of Bally Total Fitness

"LA Fitness grew out of three clubs, each owned by one of the founders. In 1990 Fred Turock, Jeremy Taylor and David Turner decided to get together to jointly manage these clubs, with the aim of building up a network of gyms with first class facilities. In 1996 they created the LA Fitness brand and the following year they joined the top ten health and fitness club operators, catering to a wide variety of people of all shapes and sizes and with a huge range of goals. In 1999 the growth and success of the LA Fitness group led to a listing on the London Stock Exchange. In 2005 the team decided they needed more control - they wanted to make sure LA Fitness could continue to provide affordable membership and a fun environment for its growing

Councilman Rick Hanlon asked how a membership drive did last year, and Rec Center Director Garrick DiSalvo said it brought in about $2,700 in the month of December. A Planet Fitness is opening up in Wooster, and the $10 a month fee with $1 down could have an impact on Rittman’s membership numbers. While Rittman has added a 24-hour access option to appeal to more members, the price for Planet Fitness is a good one, DiSalvo said.

The Cost-Volume-Profit analysis (CVP) for Snap Fitness provides an evaluation of its profits as costs and volume changes. As the owner of a Snap Fitness franchise, decisions about selling prices, product mix, and maximizing the use of the fitness center depends on CVP. A CVP analysis classifies cost as variable and fixed, and calculates a contribution margin. Relevant information identified in the analysis is the total monthly fixed costs of Snap Fitness, which are $6,000. Monthly fixed operating costs are $4,000 and monthly lease equipment costs are $2,000. The fitness

Nationally, Orangetheory Fitness is the fastest growing fitness franchise, at least partially due to the innovative ideas it brings to fitness. In detail, Orangetheory Fitness locations in Ann Arbor and nationally are effective in communicating the brand to community members using social media among other tactics. The reason that this brand strategy works is because of the niche industry that Orangetheory Fitness is in: a specialized fitness development program that is beyond just a gym. While there are other fitness centers out there that follow a similar strategy, none of them have established a sense of community, that’s Orangetheory’s competitive advantage.

Cost of membership depends on the level of the membership options purchased. The first step is to choose the access level of membership for either “one club” or “multiple clubs”. Choosing the “multiple clubs” option allows members to access a network of over 400 clubs nationwide. Next step is to select a payment plan option of either “monthly” or “pre-paid”. A 12-month membership commitment is required with the “pre-paid” option. The final step involves selecting a club level: Active, Sport, Super-Sport or Ultra-Sport. Depending on the options selected, the monthly dues can range from $29.99 up to $59.99. In addition to the membership dues, there is a club fee of $49.99 charged annually. Members can upgrade and downgrade their membership at any given time without penalties or restrictions.

Bally Total Fitness is a public firm in the U.S. health club industry. Since 1962, the company had developed into a large and nationwide commercial operator of fitness centers in the Unite States. But with the increasingly fierce market competition and the internal management problems such as poor accounting standards, the stock price of the company collapsed. Some shareholders had lost faith in the company. A major shareholder of the company was urging the CEO to sell the company. So the company faced two alternatives, one alternative was to sell the company to meet the demand of shareholders; the other alternative was to strengthen its internal control system to remedy the management fault. In this way to restore the

Snap Fitness, a fitness business based in Minnesota, offers franchise opportunities. The opportunity comes with a start-up fee ranging from $60,000 to $184,000. The following items are included in the start-up fee:

Looking at the figures by sales revenue, we can see that the Corpus Christi Athletic Club is number one as it relates to annual revenues. Gold’s Gym is fourth among key competitors with annual revenues of $66,000. Although Gold’s Gym is last in this table, looking at the top U.S. Cities and Franchises in the Health Industry Market, they are ranked number two with average revenues of $96 million.

Starting your own business is a big decision. As you consider options, here are four factors that make us a proven business model with a history of success:

While providing memberships to the community. This facility will provide a variety of fitness machines that are self-applicable to meet the requirements to experience a total body workout and provide services that maintain customer interest and spark customer loyalty.

The company has paid health club memberships for all employees, including buses run regular routes to transport employees to and from the campus to the gym (Benefits).

In addition to variable labor costs, there are some facility and equipment expenses that are variable. The major expenses in this category are the utilities. Additionally, equipment is depreciated, retired, and purchased on a continual basis. According to data from the health/fitness facility industry, startup fitness equipment costs range between $20 and $25 per square foot. Club owners also invest in equipment upgrades or replacement machines to stay current with equipment trends. According to the International Health, Racquet & Sports Club 2010 Profiles of Success, the median reinvestment allocation in 2010 for fitness equipment was 1.3% of revenues with some operations investing as much as 4.7% of revenues (American College of Sports Medicine, 2011).

Costco’s business model is to generate high-volume sales and rapid inventory turnover by offering low prices on a limited set selection of brands and a few selected privately labeled products. This model does not turn a profit on its own with the company operating slightly below its break-even cost. However, to make up for this Costco charges a membership fee and this is a simple way of padding their profit but also enabling them to provide a customer experience that emphasizes value.

I moved through the process of selecting the right gym to join quite quickly as I was very motivated to get started. I took into consideration that this purchase posed physical and social problems and considered those when making my decision.