Health clubs, gyms, and studios in all states were closed for at least a total of one month last year. In many states like California, Oregon, and Washington, closures persisted for most of 12 months. Mandated restrictions in most states allowed limited operations ranging from outdoor or virtual-only services to a maximum of 50% capacity.
Continued closures and restrictions curtailed club operators’ efforts to run a sustainable business and forced many to close down for good. Others are teetering on the brink.
“One has to remember that health clubs are largely fixed costs businesses. A decline in revenue to such a large degree has devastating consequences, both short- and long-term,” said Brian Smith, managing director of consumer investment banking at Piper Sandler Companies, a leading investment bank and institutional securities firm. “We are going to see lasting effects as operators look to rebuild cash flow, recapitalize their base business, rehire staff, and so forth.”
17% of Fitness Clubs & Studios Permanently Closed in the U.S.
Data from major gym and studio payment processing companies serving the industry reveals 19% of boutique fitness studios have permanently closed as of December 31, 2020. Approximately 14% of gyms and traditional health clubs have ceased operations.
No club concept was immune to the impact of COVID-19: full-service health clubs, HV/LP gyms, fitness studios, and independent clubs were all afflicted by widespread closures and ensuing restrictions.
“Compliance with mandates caused many clubs, especially single-activity studios, to close because their economic model was no longer feasible,” said Rick Caro, a 48-year veteran of the industry and president of Management Vision, Inc., a leading consulting firm specializing in the club industry. “Their subsequent lack of liquidity created the immediate need to discontinue their operations. This has caused clubs to close, costing jobs and leaving members with no alternative for needed physical activity and social interaction.”