Total Fitness is turning its back on the South after recovering from the brink of collapse
Gym chain Total Fitness is already a well-established name in the North of England with 15 “superclubs” peppered across the region.
But despite her ambitious goal of quadrupling the Cheshire-based company’s portfolio in the next five years, CEO Sophie Lawler has zero interest in expanding into the South.
It’s a bold move as, according to a 2023 YouGov survey, the regions with the highest percentage of regular exercisers are London, the East and South East of England.
But Lawler reckons this targeted approach is exactly what will end up setting the company apart from its competitors.
She said: “The clear promise I make to my staff is that anything is possible when you work for Total Fitness – if that’s to be true then I’m not going to open a club in Bournemouth.
“We want to open them where our staff can make the most of the increased opportunities and career paths. We’re very clear that we want to expand, but we want to do it in the right way.”
The right way, according to Lawler, does not look like trying to compete with operator giants like Pure Gym or The Gym Group.
“We’re not a budget chain and that’s not what we’re trying to be. We know we’ll never be able to compete with those names in that market” she said.
Instead, Lawler said that Total Fitness had held its position in the middle of the market where it had, in recent years, been increasingly capitalising on “switchers” – people either looking to spend less than they would at a luxury club or those wanting to upgrade from a budget chain.
She said: “The amount of people switching memberships is astonishing. About 40 per cent of switchers we see are people paying for memberships in the low cost segment that are looking for more space and quality.
“But what’s been really interesting is that in the past year or so we’ve seen the number of people with high-end memberships who have switched to a mid-market offering double. Those people now represent about 10 per cent of switchers.”
Lawler was quick to point out that this didn’t mean it had been easy for the club. Despite a wave of closures among mid-market independents in the wake of the pandemic, the segment remains one of the most competitive in terms of options.
“It is hard to differentiate yourself given how huge the demographic you’re trying to serve is.
“You have to be disciplined because you can’t do it all.”
Lawler’s strategy for Total Fitness focuses on tapping into underserved segments where demand is high and competition low.
She said the company doesn’t have plans to build anymore “superclubs” to its existing portfolio of 15, but instead to focus on two alternative formats: women-only clubs and swimming facilities.
She said: “I see our 15 existing sites as the heartbeat of the business, and then we want to roll out the same number of both our women’s only gyms and ‘aquademies’. That’s 60 clubs by 2030. That would be wonderful.”
It’s an ambitious target, fuelled, Lawler confessed, by “naivety and optimism”. And yet she said she sees the hurdles to get there – running out of money, a shortage of suitable properties and trying to retain a strong workforce – as “simply “just problems to overcome”.
She added: “Yes, it is tricky. Financial firepower will always be a challenge but to an extent solving that is about being patient and waiting for the market to unlock.
“We know our gyms make fantastic anchor tenants but we do require lower rents to make our model work, so there’s an art to making that work.
“But we’re also seeing that Total Fitness punches way above its weight in terms of brand recall.
“We’re a 15 club business in the North of England in the middle market yet we’re seeing growth ahead of the industry average.
“Sometimes I have to pinch myself because our trajectory over the past few years really has been astonishing.”
Total Fitness: Back to the black
Lawler joined the business in 2018, just over a year before Covid-19 brought the industry to its knees as clubs across the country were forced to close.
The virus is estimated to have cost the sector around £90m for every week of lockdown as customers cancelled their memberships in droves.
By the end of 2020 Total Fitness had lost around 20 per cent of its members, sending it into a death spiral which resulted in it entering into a company voluntary arrangement to avoid collapse.
But less than three years later the company announced it had completed the arrangement “earlier than anticipated” thanks to a strong performance which saw it surge into the black for the first time in almost a decade.
In the 12 months ending June 30, 2023, Total Fitness saw its turnover increase from £36m to £39.9m, while its pre-tax profits went from £961,000 to £1.2m.
How are the UK’s biggest gyms performing?
Pure Gym, which is owned by Los Angeles–based Leonard Green & Partners, increased its UK membership from 1.2 million in 2022 to 1.4 million in 2023.
It also opened 40 new locations in the UK over the 12 months, with the company behind the Pure Gym brand seeing its revenue rise from £476m to just under £550m, cutting its pre-tax loss to £77.6m from £146.5m the year before.
Budget rival The Gym Group, which became a publicly-listed company on the London Stock Exchange in 2015, grew its revenue 18 per cent in 2023 with the average number of members using its facilities rising by eight per cent.
Despite this the group reported a loss before tax of £8.4m, an improvement from the £19.3m loss reported in the year before.
The Gym Group had 236 sites at the end of 2023 and in March unveiled plans to open 50 more over the next three years.
On the opposite end of the market operator David Lloyd Leisure has in recent years been focused on expanding its premium faculties.
The Hatfield-headquartered group has around 755,000 members signed up across its 133 sites.
In 2023 David Lloyd Leisure’s revenue hit £756m, up from £655m in the year before. In the same year it cut its pre-tax loss from more than £30m in 2022 to just under £26m.
Fellow high-end chain Bannatyne Fitness, founded by Scottish businessman and former Dragon’s Den investor Duncan Bannatyne, reported a pre-tax profit of £10.1m for 2023, up from £1m in 2022, according to accounts filed with Companies House in April.
The Darlington-headquartered group also revealed a revenue of £138.9m for the year, a rise from £126.9m.
In 2021, the group’s revenue totalled £75.5m while it made a pre-tax loss of £12.9m. It currently operates 69 gyms.