Let’s cut to the chase. Are gyms profitable?
Data says that less than 50% of gyms are expected to last longer than 5 years.
According to Ashley Selman, the owner of Evolution Trainers in Mountain View, CA, 81% of fitness studios end up failing or closing within their first few years.
But, everyone will tell you the same success stories—how gyms can be incredibly profitable and the potential for growth.
You will also hear that in 2023, the fitness industry generated over $40 billion in the U.S. alone. Meanwhile, the global health & fitness club market size is expected to hit $202.78 billion by 2030.
But what you don’t often hear is the other side: the failures, the missteps, and the common reasons why so many gyms end up closing their doors.
So, what are the fatal mistakes gyms make that put them on a path to failure? And more importantly, how can gym owners avoid them?
Mike Alpert, the COO of SHC and an industry veteran with over 34 years of experience helping high-profile health clubs like the Claremont Club thrive, believes the problem lies in a few critical yet overlooked areas.
“Success in the gym industry isn’t just about the bottom line—it’s about the member experience, the people, and the tools you use to create a thriving community,” Alpert says.
With insights from Mike, we’re breaking down the four biggest reasons gyms fail—and how you can make sure yours doesn’t become another one that is part of the 81%.
Whether you’re a gym owner or aspiring entrepreneur, understanding these factors is key to understanding are gyms profitabile, keeping your doors open, and your members happy. Let’s dive in.
4 Key Reasons Why Gyms Fail
1. No Company Culture & Community
A gym is more than just a place to work out—it’s a community. The culture you build within your gym, from the front desk to the instructors, plays a pivotal role in how members feel and engage. According to Forbes:
“Community Needs To Be Part Of The Company’s DNA”
And we strongly agree. When the culture is strong, staff members are motivated, and members feel welcomed, contributing to a loyal customer base. On the flip side, when the culture is lacking, it can lead to high staff turnover, low morale, and a decline in member retention—all of which can threaten profitability.
Many gym owners underestimate the impact of company culture on their bottom line.
As Mike points out, “Your culture defines your success—when your employees are engaged, your members feel it, and that translates into loyalty and profitability.”
When the atmosphere within a gym is disengaged, even the best facilities and programs can fail to keep members coming back.
So, are gyms profitable when they have no internal culture? The answer is often no. Gyms that neglect their culture tend to see a direct correlation between unhappy staff and declining membership rates. If employees don’t feel valued or supported, their discontent often reflects in member interactions, leading to subpar customer service and a disengaged community. This creates a cycle where members leave, staff morale plummets further, and the gym’s profitability takes a hit.
CrossFit gyms, for instance, have built a fiercely loyal following—and it’s not just because of their workouts. CrossFit has mastered the art of community culture. Members are more than just customers—they’re part of a tribe.
At the end of the day, are gyms profitable if they focus on fostering a strong, positive company culture? Absolutely. A motivated staff means happier members, better customer service, and ultimately, higher retention rates.
2. Lack of a Member-Facing Software
It’s 2024, and if your gym isn’t fully leveraging member-facing software, you’re falling behind—and fast.
The member experience is no longer limited to what happens inside the gym. Many gym owners, however, prioritize back-end operational software—tools that handle payroll, inventory, and scheduling—over member-facing software that directly enhances the member experience.
This oversight is one of the key reasons gyms fail to retain members and, ultimately, struggle to stay profitable.
Mike, who is also a staunch advocate for member-centric approaches, highlights this issue:
“Member-facing software is more than just a tool—it’s a game-changer. When used properly, it can streamline operations, enhance member experience, and significantly reduce staff pressure.”
But Why Are Gym Owners Getting It Wrong?
The biggest misconception? Gym owners believe member-facing software is just about bookings or payments, leading them to patch together multiple systems that fail to deliver a seamless experience. Instead of adopting a comprehensive solution, many opt for cheaper, fragmented tools that barely scratch the surface of what’s needed.
The number of digital fitness customers skyrocketed to 130% in just five years in the US alone. And more than 50% of Americans now use virtual workouts and other digital solutions.
Your gym members expect modern digital conveniences—if your gym fails to deliver, they’ll take their business elsewhere.
“Owners often underestimate how much frustration members face when they have to navigate multiple platforms just to manage their memberships,” Alpert warns. “The easier you make it for members to engage with your gym, the more likely they are to stick around.”
So, how does Member-Facing Software help increase gym profitability?
Improved Member Experience: Modern software provides members with a user-friendly interface to book classes, manage their memberships, and communicate with staff—all in real time. This seamless experience can significantly boost member satisfaction and retention.
Increased Efficiency: With integrated features, such as online booking, waitlist management, and automated notifications, staff can spend less time handling administrative tasks and more time engaging with members.
Enhanced Member Retention: A smooth, hassle-free digital experience encourages members to stay longer and engage more with your gym, reducing churn rates and fostering loyalty.
Take Vida Fitness, for instance. They decided to integrate a comprehensive member-facing software solution with SHC, and the results speak for themselves. Their member satisfaction and operational efficiency have been through the roof lately. ⬇️
So, why are so many gyms still missing the mark? The root cause is a stark lack of understanding about the impact of member-facing software. As Alpert states, “Many owners don’t understand the return on investment. When you show them how member-facing software can save time, reduce overhead costs, and even generate revenue, their eyes open.”
3. Failure to Implement Preventative Maintenance Programs
50% of gym members quit within the first 6 months.
One reason for this alarming statistic is the lack of preventative maintenance. It’s easy to dismiss routine upkeep as an unnecessary expense, but in reality, it’s the linchpin of gym profitability. Neglecting this critical area can spell disaster for your gym’s bottom line.
In an industry where customer experience is key, even small inconveniences like a broken treadmill or malfunctioning weight machine can drive members away.
According to industry reports, the cost of equipment repairs and replacements can significantly impact your bottom line. The IHRSA reports that maintenance costs can consume up to 5% of a gym’s total revenue. This expense, if not managed properly, can erode profitability and hinder growth.
Mike hits the nail on the head: “Neglecting maintenance is like ignoring a ticking time bomb—eventually, it will cost you far more than routine care would have.”
The lack of a structured maintenance plan not only jeopardizes equipment longevity but also leaves gym owners with larger repair bills down the line. So, are gyms profitable when maintenance is left on the back burner? The answer is a clear no.
Gym-goers expect everything from weight machines to HVAC systems to function perfectly. When those expectations aren’t met, member retention drops, which poses the question once again: are gyms profitable if their members leave due to poor facility management?
Take, for example, a gym that invests heavily in marketing to draw in new members but fails to budget for regular equipment checks and facility upkeep. No amount of new sign-ups will compensate for the churn caused by a poorly maintained environment.
This is why a proactive approach to maintenance is key to long-term success. Preventative care ensures that issues are dealt with before they escalate, keeping both your equipment and your members in great shape.
4. Taking Too Much Too Soon
One of the biggest mistakes gym owners make is pulling too much money out of their business too soon, bleeding it dry before it even has a chance to thrive.
It’s tempting to cash in on the early success of a new gym, but the reality is stark: Are gyms profitable when the owner prioritizes personal profit over building a sustainable business? The answer is clear—no.
Gyms, like any other business, require continual reinvestment to maintain profitability. Whether it’s updating equipment, expanding facilities, or launching new programs, reinvesting earnings is crucial to keeping the gym competitive.
When owners do not prioritize reinvestment, they limit the gym’s potential to grow and adapt to market demands.
Take Flywheel Sports, for example. Flywheel was known for its high-energy indoor cycling classes and fiercely loyal member base. At its peak, Flywheel operated 42 studios across the country, yet in 2020, the company filed for bankruptcy and closed its doors. Why? Some industry insiders say one of the major factors was financial mismanagement, where profits were not being adequately reinvested into the business.
In fact, the rise and fall of several gyms across the U.S. highlights this issue. On the other hand, gyms that focus on reinvesting their earnings into upgrades, technology, and member services are more likely to thrive.
As Mike notes, “When owners prioritize immediate financial gain over the health of the business, they risk stunting their club’s potential. Long-term profitability comes from reinvesting in both the member experience and operational efficiency.”
Too many gym owners miss this point, thinking they can maintain success without putting money back into the business. This highlights a critical issue for gym owners everywhere: are gyms profitable when they aren’t constantly evolving? The answer is no.
In contrast, gyms that reinvest in better technology, improved facilities, and innovative programs see higher member retention and profitability.
A great example of this is Peloton, which aggressively reinvested in digital platforms and member experiences.
The fitness industry is competitive and ever-changing. A failure to reinvest in your business is a failure to secure its future. The question are gyms profitable becomes irrelevant when owners cripple their operations by taking excessive distributions.
Why Member-Facing Software is the Missing Link to Your Gym’s Success?
Member-facing software offers a powerful solution that bridges the gap between gym operations and member engagement.
The fitness industry is filled with businesses that struggle, not because they lack members or great facilities, but because they fail to adapt. One of the most critical factors in turning a struggling gym into a profitable one is member-facing software.
If you’re not using it, you’re leaving money on the table. Period.
It’s time to ask yourself: are gyms profitable when they neglect member-facing technology? Not nearly as profitable as they could be.
Increased Operational Efficiency
Let’s talk about your staff. Are they wasting time on repetitive, mind-numbing tasks like checking people in or manually booking sessions or marking attendance in charts?
Every minute they spend on an admin task is a minute they could be spending helping members and creating real value.
Member-facing software automates all that, freeing up your team to focus on what truly matters—member engagement. That’s where real operational efficiency kicks in, and guess what?
Efficient operations = profits.
If you’re still asking if are gyms profitable without using member-facing software, take a hard look at how much time your staff is wasting. The longer you wait to streamline your operations, the more revenue you’re losing.
Enhanced Member Retention
You can throw all the marketing dollars in the world at getting new members, but if you can’t keep them, you’re stuck in a revolving door of constant churn.
Member-facing software saves your gym business against member attrition. When you offer a seamless, user-friendly digital experience, members feel valued and stay engaged. They have more control over their schedules, easier access to classes, and an all-around better experience.
Retention is where the real money is. If your members feel frustrated by outdated systems or lack of communication, they’ll leave—and fast.
Improved Member Experience
How long are you going to make your members suffer through clunky, manual processes?
We’re talking about your clients—the very people paying for your services—having to jump through hoops just to book a class or reserve equipment. If you’re wondering, are gyms profitable when members can’t even book a class easily? The answer is no.
Member-facing software puts the power in their hands, allowing them to manage bookings, memberships, and schedules instantly, with the swipe of a finger. If you’re still relying on front desk staff to handle all this, you’re not just behind—you’re losing.
The reality is that member-facing software directly impacts member satisfaction. When you make life easier for your clients, they’ll stick around.
Revenue-Generating Opportunities
Want to increase revenue without adding more members? Member-facing software like SHC opens the door to upselling. You can push exclusive offers, personal training packages, and premium memberships directly to your clients through the app.
Make it easy for them to spend more money, and they will.
It’s that simple.
Are Gyms Profitable: What it Takes to Thrive in the Gym Industry?
The harsh reality is that many gyms fail not because of a lack of passion or effort, but because of fundamental missteps that could have been avoided. Mike Alpert’s insight is a wake-up call:
“Are gyms profitable? Well, success in the gym industry isn’t just about the bottom line—it’s about the member experience, the people, and the tools you use to create a thriving community.”
So, are gyms profitable? The answer lies not just in the potential for earnings, but in how well you manage critical aspects of your business. If you’re still not reinvesting your profits, neglecting maintenance, neglecting culture, or ignoring the power of member-facing software, you’re setting yourself up for failure.
But here’s the silver lining: You have the power to write the answer to: Are gyms profitable? By taking a hard look at these critical areas and making the necessary adjustments, you can turn your gym’s fortunes around.
Take these lessons to heart, and invest in the right practices to make sure your gym is thriving.
