Fitness First

Under investment. Competition from 24‑hour budget gyms. Falling profits. Fitness First Australia looked decidedly unhealthy. Worse, there was a real chance it couldn’t pay its bills.

Background

Like many businesses, Fitness First had grown fast. Too fast.

Since opening in 2000, it had chased revenue and hadn’t kept a close eye on expenses. Labour and marketing costs had blown out. Some gyms were losing money.

Adding to its woes were membership fees that were too complex for people to grasp and club managers unable to restore earnings to previous levels.

By 2012, problems plagued the business. It was struggling to reduce $900 million of debt from its UK parent company.

As part of a global turnaround and restructure of the business, new owners turned to us for help. Engaging us to analyse Fitness First and then to develop and implement a turnaround plan.

How we helped

Our senior team developed and implemented a turnaround plan over a 12 month period to restructure and reposition the business. We worked closely with management, focusing on high‑value CBD and other central
locations to increase profit.

One of our Partners became Interim Chief Financial Officer.

Under the plan we:

• developed a three-to-five-year business plan to keep and attract new members and simplify membership fees (approved by the global board)
• sold or exited over 20 underperforming sites
• renegotiated remaining leases
• reviewed and reduced financial and working capital needs
• worked with the HR team to replace one-in-four club managers
• cut labour and marketing costs by 20%
• held staff accountable to meet lower costs
• stabilised financial performance
• appointed a new Chief Financial Officer.

Result

Part of the largest privately owned health club group in the world, Fitness First today is a leading health and fitness centre operator. A great example of how we helped rescue a business and returned it to profit.

We were awarded the Turnaround Management Association of Australia’s ‘Large Turnaround of the Year’ for our work with Fitness First.