Planet Fitness U-Turns on Marketing and Price: Testing the $10 Classic Card Again
A strategic reset—marketing to the 70% nonmember audience and a limited-time $10 promo—aims to reignite member growth.
PLNT · Earnings Call · 2026-08-06
The Pivot Back to the Core
Planet Fitness's Q2 2026 earnings call was a clear declaration of priorities. CEO Colleen Keating repeatedly emphasized the focus on re-igniting net member growth by driving acquisition and reinforcing affordability. The company is returning to its roots, targeting the approximately 70% of the U.S. population that does not currently pay for a gym membership. “we are concentrating our efforts this year on two priorities that are central to reigniting net member growth, driving acquisition and reinforcing affordability.” — Colleen Keating, Chief Executive Officer · 2026-08-06 This marks a continuation of the pivot announced in Q1, where management acknowledged that the previous marketing campaign had veered too far toward more fitness-minded consumers. As CFO Tom (actually Thomas) Fitzgerald noted earlier: “we are going to redirect what is, as you know, an outsized orders of magnitude, larger marketing spend than anyone else in the industry.” — Thomas Fitzgerald, Interim Chief Financial Officer · 2026-05-07 The company is now working with a new creative agency to develop a new campaign that emphasizes approachability and humor, with a rollout planned for the critical Q1 acquisition period. The brand's core promise—a judgment-free zone—is being refocused on the member acquisition funnel, with early results from a revamped app and an AI-powered churn model intended to improve retention and lifetime value.The $10 Classic Card Experiment
Perhaps the most striking development is the decision to test a national $10 Classic Card promotion. While management insists it's a limited-time offer, not a rollback of the $15 price increase implemented two years ago, it signals a willingness to revisit price elasticity.Colleen Keating emphasized the distinction: “it's a limited time offer, but it's not a limited time rate.” — Colleen Keating, Chief Executive Officer · 2026-08-06 Early localized tests showed no significant trade-down from $15 to $10, giving them confidence to test nationwide. The company is also evaluating results holistically: “we're going to evaluate the price elasticity in conjunction with join mix as well as total sustainable net member growth and impact on churn.” — Colleen Keating, Chief Executive Officer · 2026-08-06 This is a nuanced approach, but the shadow of the earlier price increase remains—they had previously argued that raising the Classic Card to $15 was accretive to average unit volumes. Now, they are probing whether temporary promos can drive acquired members without cannibalizing existing revenue.We have communicated with our franchisees about our intent to test that as a promo, again, a limited time promo nationally and one of the reasons it's important to test it nationally is to read the regional nuances and really understand kind of price elasticity and demand indicators around price point in different markets around the country.
Retention, Black Card Spa, and International Moves
Beyond pricing, the company is investing heavily in retention and member experience. They launched a predictive AI churn model, a 100-day onboarding program, and a mystery shop program. The Black Card spa test expanded to 100 clubs with new modalities like red light saunas, aiming to boost retention and Black Card penetration. The summer pass program has already delivered 12 million workouts, engaging the next generation of members. On the international front, they sold their ownership stake in Australia to Franchise Equity Partners, a move that underscores the asset-light strategy. They also welcomed a new franchisee on the West Coast of Florida, signaling continued interest in U.S. expansion. The company's financial discipline is evident in the aggressive buyback program. During Q2, they repurchased ~4 million shares for $200 million, contributing to a raised EPS guidance of approximately 6% growth. Repurchase of Common Stock was $51M in Q1 2026, down from $350M in Q4 2025, but the pace has been consistent. Total revenue has grown steadily over the past decade, but recent quarters show a slight deceleration. Total Revenue was $337M in Q1 2026, up 22% YoY, but down 10% QoQ. However, the stock has been under severe pressure, with a drawdown of 52% from its 2025 peak and -23% over the last 90 days. The company trades at a forward P/E of ~14x on operating income, reflecting market skepticism about membership growth. As one analyst noted, the biggest competitor remains the perception of intimidation:The pivot back to a more inclusive brand message and a potentially more aggressive pricing strategy could be the needed catalyst, but the market will be watching for evidence of sustained net member additions.I've said that before, our biggest competitor is fear of walking through the front door.