Planet Fitness testing new membership tier, says Stifel

Stifel analyst Chris O’Cull tells investors that the firm recently discovered that Planet Fitness has been testing changes to its membership programs at several corporate stores by offering a new membership option, a $15 per month for “no commitment” tier, and requiring a 12-month commitment for the $10 Classic membership. The firm believes many operators have been pushing for a price increase on the $10 option and surmises that this test is an effort to improve franchisees’ profits while protecting the brand equity of the $10 price point. Assuming the test shows membership growth is unaffected and the Black Card mix remains relatively stable and this test was rolled out to the broader system, the firm estimates the pricing changes could have “a material impact on new unit returns,” says Stifel, which keeps a Buy rating on Planet shares.