Smaller gyms show muscle

Two of the newer chains, Snap Fitness and Anytime Fitness, both with metro Atlanta locations, are among the top 10 fastest-growing franchises in the U.S., according to Entrepreneur magazine.

A Dunwoody-based chain, Workout Anytime, has also begun to expand, opening 5,000- square-foot gyms around Atlanta. It plans to open clubs across the Southeast.

Other new chains that resemble the larger, more established gyms are also growing, including L.A. Fitness.

But the popularity of the smaller, stripped-down facilities is soaring as the recession drives people to spend less. And the newer gyms have emerged against a backdrop of shifts within the industry, including bankruptcy filings by some of the larger chains.

Bally’s recently emerged from bankruptcy for the second time but not without closing locations, including two in Atlanta. Crunch has also emerged from bankruptcy with a smaller footprint. The chain closed locations in Buckhead and Vinings.

The 72,000-square-foot Peachtree Center Athletic Club downtown announced in December that it would close at the end of 2009, citing the recession as a key factor.

The newer breed of gym operator says many members never use the saunas or pools at bigger clubs such as Bally’s or World Gym and they don’t want to pay for them. Some of the newer gyms cost half as much as the older gyms and don’t insist on full-year contracts.

Workout Anytime, for example, charges $15 a month.

“The majority of people just want to go through a circuit or get on a treadmill or an elliptical machine, something maybe they couldn’t afford to have in their house,” said John Quattrocchi, a co-founder of Workout Anytime, which has locations in Alpharetta, Kennesaw, Cumming and Douglasville.

Gym-goers are putting a premium on convenience, working out when they want, often at a location that’s closer to home. Anytime Fitness and Snap Fitness typically open gyms in residential neighborhoods, drawing members from a three-mile radius.

Alan Brown, who is opening a Snap Fitness location on Atlanta’s west side, said people don’t want to waste their limited exercise time traveling to the gym. With some of the larger gyms, he said, “You have to build extra time into your schedule to park, go from the parking garage to the gym and then back from the gym to the parking garage.”

The newer gyms, called “keycard facilities” in the industry because members enter via cards that unlock the door, have had an easier time obtaining financing during the recession, said Pam Kufahl, editor of Club Industry magazine. She said many lenders are making the calculation that people no longer want to spend $50 a month on a gym membership.

“With the recession, it has been really hard for club owners to get the backing behind them to open new facilities,” she said. “It takes less financing to open these keycard clubs and that may be one reason they are expanding.”

Indeed, the larger gyms, which may span 20,000 square feet or more, are expensive to open and operate because amenities such as swimming pools require regular maintenance by on-site staff.

Some of the upstart clubs span as little as 1,500 square feet. And because members access the sites with secure cards, some of the new gyms employ just a handful of staff.

Kufahl of Club Industry said veteran club operators have noticed the upstarts. In fact, she said month-to-month contracts, which are popular at the smaller gyms, are becoming more common.

“The fear in the industry is people will ask why they have to pay so much for [a large, established gym] when they can pay so much less for something like Snap Fitness,” she said. “There’s definitely a concern in the industry that people are beginning to look at health care membership as a commodity.”

Snap Fitness recently expanded its location in Glenwood Park. This month, the chain is scheduled to open a 3,200-square-foot location on Atlanta’s west side, where new condos, coffee shops and art galleries have drawn young people to the area.

Workout Anytime recently opened in Decatur and has plans to open 10 to 12 new gyms in the next year, said Randy Trotter, director of franchising. The company has its eye on Tampa, Chattanooga and Charlotte as possible sites. Currently the chain has 18 locations.

Industry experts caution that some of the newer chains may overexpand. But the upstarts say the demand for lower-priced gyms won’t evaporate anytime soon.

“If you lose your job, one of the first things that’s going to go is your membership if it costs $50 or $100. Whereas if it costs $15 a month, it may or may not have to go,” Quattrocchi said.