Former Planet Fitness (ticker: PLNT), CEO Chris Rondeau was removed by PLNT’s Board last week. If I were PLNT’s Board I would pursue a fitness app strategy to augment the club business. There are several obvious benefits for pursuing such a strategy:
1.) Recurring revenue: Fitness app businesses would add a layer of recurring revenue. Revenue predictability is a good thing both from the perspective of investors as well as internal operators.
2.) Higher valuation multiple: Software-related revenue would command a higher valuation multiple as compared to membership and franchisee-related revenue.
3.) Member insights: Were Planet Fitness to acquire a fitness app, as members use that app to provide analytics & insight around their fitness protocol, that usage would engender member loyalty – strategic glue. Further, that member data could be monetized by Planet Fitness through partners such as health insurance carriers.