Across the UK, The Gym Group Plc operates a network of low-cost gyms, making fitness accessible to a broad audience. Operating in the fitness and leisure industry, as a budget gym operator, the company competes with PureGym and local independents, focusing on 24/7 access and flexible memberships to attract cost-conscious customers.
The Gym Group generates revenue through membership subscriptions and ancillary services at its 241 gyms as of December 2024. Members pay monthly fees, typically £15–£25 depending on location and contract type, with options for no-commitment plans driving high retention; averaging 906,000 members in 2024, up 4% from 2023. Additional income comes from personal training, vending machines, and partnerships, though these form a smaller portion. In 2024, revenue rose 11% to £226.3 million from £204 million in 2023, with like-for-like revenue growing 7%, reflecting strong demand despite economic pressures. Profitability improved, with operating profit up 24% to £47.7 million, and free cash flow increased 39% to £37.5 million, supporting expansion.
Strategically, The Gym Group opened 12 new sites in 2024, reaching the upper end of its 8–12 target, and plans further growth in 2025, targeting 10–12 new gyms. It’s also investing in digital enhancements, like app-based booking, to boost member engagement. However, challenges arise – the 2025 forecast of 8.3% revenue growth (versus a 6.1% industry average) assumes stable consumer spending, which is shaky amid high interest rates and inflation. Expansion costs, including £37.5 million in capital expenditure, strain finances, while the budget gym sector’s competitiveness risks oversaturation. Employing around 1,500 people, the company reduced net debt by £5.1 million in 2024, but its reliance on discretionary spending leaves it vulnerable to economic downturns.
The Gym Group’s scalable model and focus on affordability position it for growth, particularly as health trends rise. Yet, its aggressive expansion and sensitivity to economic cycles could undermine profitability if consumer confidence wanes or competition intensifies. Really, the company is a classic roll out story that has largely played out. Gyms are notoriously poor businesses as the moat is low, the barriers to entry are low and pricing power is negligible. Additionally, it operates using a heavy number of leaseholds. These keep the balance sheet ‘efficient’ but it can be a source of serious pain when things go bad.
Its best days are behind it and they weren’t great anyway. Best avoided.
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