Two gyms that couldn't be more different

My last two profiles looked at Planet Fitness (PLNT) and Life Time (LTH). 

Today’s report compares their scale, pricing, financials, and operating models. They both sell gym memberships, but almost everything else about their businesses is different.

Let’s compare the two.

Big Picture Differences

These companies sit on opposite ends of the gym spectrum.

• Planet Fitness is built for scale, simplicity, and low prices.

• Life Time is built for experience, density of services, and premium pricing.

Planet Fitness wants to be everywhere and cheap enough that people never bother canceling whereas Life Time wants to be more of a destination.

Number of Gyms and Physical Footprint

Planet Fitness

• ~2,600+ locations worldwide

• Majority franchised

• Smaller footprint per gym

• Highly standardized layout and equipment

• Often located in strip malls or low-cost retail space

Life Time

• ~185 locations

• All large, company-operated clubs

• Massive footprint per location

• Most clubs includes pools, classes, childcare, spa, food, and lounge space

• Often located in high-income suburban areas

What this tells you

• Planet Fitness wins on geographic coverage and convenience.

• Life Time wins on depth of experience per location.

• Planet Fitness can add dozens of new locations per year with franchise capital.

• Life Time grows slowly because each new club is a major construction project.

Pricing and Customer Target

Planet Fitness

• Core membership around $10 per month

• Black Card tier around $25 per month

• No long-term contracts

• Designed to feel “too cheap to cancel”

• Target customer is casual, price-sensitive, and non-intimidated

Life Time

• Monthly memberships often $150 to $300+

• Family memberships can be much higher

• Enrollment fees common

• Extra spending inside the club on training, spa, food, and programs

• Target customer is higher-income, routine-driven, and experience-oriented

Key takeaway

• Planet Fitness optimizes for volume.

• Life Time optimizes for lifetime value per member.

• Planet Fitness retention is driven by price.

• Life Time retention is driven by habit, community, and sunk time.

Revenue and Scale

Planet Fitness (TTM)

• Market cap: $8.1B

• Revenue: ~$1.29B

• Operates with far fewer employees

• Franchisees fund most new growth

• Corporate earns royalties, fees, and equipment sales

Life Time (TTM)

• Market cap: $6.4B

• Revenue: ~$2.9B

• Much larger employee base

• Revenue mostly from membership dues

• All growth funded on balance sheet or via real estate sale-leaseback structures

Despite having far fewer locations, Life Time generates more than double the revenue. But Planet Fitness has a materially higher market cap. Let's dig into why.

Profitability and Margins

Planet Fitness

• Gross margin: ~52%

• Operating margin: ~29%

• Very high margin franchise segment

• Corporate-owned gyms still highly profitable (35%+ EBITDA margins)

• Equipment sales add a steady, high-margin revenue stream

Life Time

• Gross margin: ~36%

• Operating margin: ~15%

• Margins expanding as utilization improves

• High fixed costs limit downside protection

• Profitability improves sharply when clubs are full

What matters here

• Planet Fitness has structurally higher margins due to their franchise model.

• Life Time relies on operating leverage to drive profits.

• Planet Fitness margins are resilient even in slower periods.

• Life Time margins are more sensitive to utilization drops.

Planet fitness's margin structure is a result of the business model they have chosen and is a reason why the company is more valuable than Life Time today.

Capital Intensity and Risk

Planet Fitness

• Lower CapEx burden at the corporate level

• Franchisees absorb most buildout risk

• Corporate CapEx mainly tied to owned clubs and systems

• Net debt around ~$1.8B

Life Time

• Very high CapEx

• New clubs cost tens of millions each

• Ongoing reinvestment required

• Uses sale-leasebacks to recycle capital

• Net debt trending down but still material

Translation

• Planet Fitness is a lighter asset model.

• Life Time looks more like a hotel or resort business.

• Planet Fitness can pause growth easily.

• Life Time must keep filling large buildings to justify sunk costs.

Growth Strategy

Planet Fitness

• Franchise-driven expansion

• Focus on increasing club density

• Modest price increases over time

• Brand refresh to stay relevant

• Digital signups reduce operating friction

Life Time

• Selective new club openings

• Focus on increasing utilization and attachment rates

• Upselling services to existing members

• Expanding digital as a support layer, not a replacement

Key difference

• Planet Fitness grows by adding dots on the map.

• Life Time grows by squeezing more value out of each dot.

Switching Costs and Retention

Planet Fitness

• Easy to cancel

• Low emotional attachment

• Retention driven by low price and convenience

• Risk of churn if price advantage erodes

Life Time

• Harder to leave emotionally

• Family routines, childcare, and community matter

• Higher perceived switching cost

• More resilient to competitors once embedded

What’s Interesting When You Compare Them

• Planet Fitness makes more money per square foot of corporate effort.

• Life Time makes more money per member.

• Planet Fitness uses franchisees as growth capital.

• Life Time uses real estate and balance sheet leverage.

• Planet Fitness is a brand and systems business.

• Life Time is an operations and utilization business.

Final Takeaways

• Low price plus scale can beat premium on margins.

• Premium works best when utilization is high.

• Franchising shifts risk but limits control.

• Owning the asset increases risk but can deepen customer lock-in.

• Fixed costs are dangerous unless demand is predictable.

• Retention can be driven by price or by habit, but habit is harder to break.

All-in-all, this comparison is a great case study in two vastly different business models within the same market. Both come with unique benefits, opportunities, and challenges.

Neither is “better”, they are simply different.

With that, I’ll see you tomorrow!

Nick