We’ve followed The Gym Group since its IPO in 2015 and have studied other discount gyms including BFIT and Planet Fitness since. Our recent research on discount gyms has focused on understanding the durability of mature gym ROIC. Most investment theses seem to estimate long-run mature units and simply multiply mature gym FCF to find a normalized long-run FCF. However, this assumes mature gym earning power is durable. 

There are little barriers to entry to start a gym or any kind of fitness class that may compete with the mature gym. We interviewed the Founder and Former CEO of The Gym Group, a UK discount gym, to explore this question. 

UK Fitness Market Structure

The UK health and fitness market is segmented by private and public clubs. LDC reports how the total percentage of the UK population that is a member of a gym has grown from ~12% in 2007 to 14-15% 2021/22.