What Planet Fitness And Lifetime's Performance Tells Us About The ‘K-shaped’ economy

Key Concepts

• K-shaped Economy: The diverging economic paths of different consumer segments – those thriving and those struggling.
• Premium Gym Model (Lifetime Fitness): High-cost, amenity-rich gyms focused on destination experiences and ancillary revenue.
• Value Gym Model (Planet Fitness): Low-cost, franchised gyms focused on accessibility and basic fitness services.
• Ancillary Revenue: Revenue generated from sources other than membership dues (e.g., personal training, supplements).
• Headwind/Tailwind: Factors that negatively (headwind) or positively (tailwind) impact a business’s performance.
• “Third Space”: A location outside of home and work where consumers spend time, potentially as a budget-friendly alternative to other leisure activities.

Diverging Performance of Lifetime Fitness and Planet Fitness in 2025

The performance of Lifetime Fitness and Planet Fitness in 2025 provides insight into the “K-shaped economy” currently impacting the United States. Both companies experienced double-digit revenue growth, expanded their physical locations, and improved profitability during the year. However, their differing business models are positioning them for contrasting outcomes in 2026, reflecting the diverging spending habits of American consumers.

Lifetime Fitness: Thriving on Premiumization

Lifetime Fitness operates company-owned clubs offering high-end amenities, including pools, spas, and lounges. A crucial aspect of their revenue model is in-centre purchases, encompassing personal training sessions, food and beverage sales, supplements, and spa treatments. These centers are intentionally designed as destinations, encouraging members to spend extended periods – even a full day – at the facility.

Despite increasing membership dues in 2025, Lifetime Fitness increased its membership numbers. This counterintuitive result suggests that, for a segment of the population, membership at a premium gym like Lifetime or Equinox has become a “badge of honor,” representing an investment in their most valuable asset: their health. This demonstrates a willingness to spend on wellness even as costs rise.

Planet Fitness: Facing Headwinds in a Value-Conscious Market

Planet Fitness, in contrast, operates on a franchised, no-frills model with a low monthly membership cost. While 2025 was profitable and saw membership growth, the company’s 2026 outlook has fallen short of Wall Street expectations and risks missing its own three-year growth targets. Investors are concerned that Planet Fitness is losing resonance with its core consumer base.

Planet Fitness has attempted to mitigate this by increasing prices and experimenting with premium offerings like red light therapy and expanded fitness classes. However, these changes are proving to be headwinds rather than tailwinds. Unlike Lifetime members, Planet Fitness members do not exhibit the same propensity for in-centre spending. Price increases and premium amenities are perceived as negative factors, potentially deterring their value-conscious customer base.

The “Third Space” Potential and Consumer Spending Limits

A potential turning point for Planet Fitness lies in its ability to become consumers’ “third space” – a budget-friendly alternative to more expensive leisure activities. As the cost of other forms of entertainment and social engagement rises, price-conscious Americans might increasingly rely on gym memberships as a way to spend time outside of home. However, this relies on the initial membership cost being perceived as worthwhile.

The video emphasizes that the key question is whether investors’ fears will materialize. Planet Fitness’s performance will serve as a crucial indicator of how much the average American consumer is willing to spend, and at what point they will begin to curtail discretionary expenses. As stated in the video, “Planet Fitness is about to find out, but as a barometer for the value consumer, its performance will reveal exactly how much the average American is willing to spend or where they're starting to tap out.”

Conclusion

The contrasting trajectories of Lifetime Fitness and Planet Fitness in 2025 and projected into 2026 highlight the widening gap in the American economy. Lifetime Fitness is benefiting from a segment of consumers prioritizing health and willing to spend significantly on premium experiences. Planet Fitness, however, faces challenges in maintaining its appeal to value-conscious consumers, and its future success hinges on adapting to changing economic conditions and potentially repositioning itself as an affordable “third space” option. The performance of both chains will continue to provide valuable insights into the evolving spending habits of the American consumer.