BSFFF - Basic-Fit: A Risky Bet On An Unexpected Beneficiary From COVID-19
- Basic-Fit is a founder-led best in class gym operator with market-leading positions. They have developed a club format model, which they successfully duplicated in five markets.
- Despite the low-barriers to entry, Basic-Fit’s scale provides them with competitive advantages over their smaller competitors, resulting in superior unit costs and in the mature gyms generating 40% EBITDA margins.
- Basic-Fit has attractive unit economics, earning 17% ROIC on new club openings, with a long runway to grow their current 902 clubs by +150 clubs per year for 7 years+.
- Long-term growth drivers include further consolidation in the market, acceleration of health awareness trends, and a continuation of people trading down from premium to low-cost gyms.
- In the short term, COVID is a big negative; but in the long term, Basic-Fit may be a surprising beneficiary of the pandemic, with an acceleration in the above long-term trends.
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Basic-Fit: A Risky Bet On An Unexpected Beneficiary From COVID-19