Can the Fitness Industry Sustain HVLP? Putting Planet Fitness, TSI to an Investing Legend’s “Durable Competitive Advantage” Test.


  • Katie Slizewski
  • Erika Dibrell


A current boom in the fitness industry shows no signs of slowing down, with consistent growth in facilities, memberships, and revenues logged annually for the past several years. A segment of the industry known as the HVLP (“high value, low price”) health club emerged during the boom and continues to contribute significantly to this growth. We apply Warren Buffett’s method for analyzing financial statements to test the durable competitive advantage of two large competitors in the fitness industry that have implemented the HVLP model: Planet Fitness (PLNT) and Town Sports International Holdings (CLUB). PLNT’s business model targets new and/or occasional club users. At $10 a month for a basic membership, PLNT reduced gym prices in order to compete with bigger gyms. Up until 2015, CLUB operated under a traditional business model that included higher membership fees. In 2015 CLUB converted most of its fitness center brands across the United States and Switzerland to the HVLP model. “Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage” by Mary Buffett and David Clark outlines Warren Buffett’s step-by-step technique for analyzing the income statement, balance sheet, and statement of cash flows to determine durability. His method evaluates the historical consistency in key ratios and trends as indicators of sustainable financial success. We analyzed PLNT and CLUB using these methods. The data suggest that neither PLNT nor CLUB pass Buffet’s “Durable Competitive Advantage” test.