Basic-Fit: Increasing Returns to Scale - [Business Breakdowns, EP. 47]

Feb 16, 2022

Jonathan Abenaim, an investor from Arlen House Capital with extensive experience in the fitness industry, dives into the success story of Basic-Fit, Europe’s leading low-cost gym operator. He discusses the rapid expansion of Basic-Fit, which boasts over 2 million members across 1,000 clubs. Abenaim contrasts the evolution of gym culture in Europe with that in the U.S., and explores how Basic-Fit has adapted profitable American strategies while maintaining low costs. The conversation also covers challenges faced during COVID-19 and the importance of operational economics in gym expansion.

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INSIGHT

Low-Cost Gym Growth

Planet Fitness's success demonstrates how low-cost gyms expand the market.
This is evident in their increased market share and penetration rates.

ANECDOTE

Basic-Fit's Origins

Rene Moose, Basic-Fit's founder, initially ran a tennis facility.
After noticing a fitness instructor's financial success, he pivoted to gyms.

INSIGHT

Economies of Scale

Basic-Fit leverages economies of scale, achieving lower CapEx and operating costs.
This allows them to offer lower prices and better value than independent gyms.

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This is Matt Reustle, and today we’re breaking down Europe’s leading low-cost gym operator, Basic-Fit. Netherlands based Basic-Fit is a story of rapid expansion. Today, they operate over a 1000 clubs across 5 countries, and have 2 million combined members in their system.

To break down the business, I’m joined by Jonathan Abenaim from Arlen House Capital, who is an investor in Basic-Fit. We cover a history of fitness clubs dating back to the late 70’s and early 80’s, how low-cost gym models have emerged as winners and created a large addressable market, and we talk about how Basic-Fit is putting its own spin on a successful playbook from the US. Please enjoy this breakdown of Basic-Fit.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Show Notes

[00:02:47] - [First question] - What it’s like to walk into a Basic-Fit gym

[00:03:50] - Their footprint today in terms of geography, members and locations

[00:04:41] - The history of gyms in the US and differences between them and European ones

[00:08:33] - Why US gym models lack influence and penetration in Europe

[00:10:58] - The key insight that led to founding Basic-Fit

[00:13:40] - Economics of building and operating a gym in general and for Basic-Fit

[00:16:47] - Typical churn for more established locations and their member demographic

[00:20:33] - When Basic-Fit breaks even on a membership and how they battle churn

[00:23:28] - Their cancellation policy and why they don’t leave for typical reasons

[00:25:10] - Basic-Fit’s fortressing strategy and clustering philosophy

[00:28:51] - Whether or not there’s data to support members using multiple gyms

[00:33:11] - The competitive landscape and whether other gyms adopt Basic-Fit’s strategy

[00:35:21] - What drives country localizations for a particular gym chain

[00:38:22] - Basic-Fit’s digital offering and at-home disruption from US brands

[00:42:31] - How they navigated the pandemic and if there’s any lasting changes

[00:44:31] - The biggest threats to Basic-Fit over the next five years

[00:46:23] - Major takeaways from studying Basic-Fit’s story