For brick and mortar destinations temporarily shuttered by the coronavirus pandemic, balance sheet health is everything. It's anyone's best guess as to when the U.S. economy will move from chaos to normalcy. But by studying liquidity and cash position, we can forecast which beaten up brick & mortar chains will overcome most of the pain.
Planet Fitness (NYSE: PLNT) fits this description. While most competition directly owns locations and bears all the associated expenses, Planet Fitness does not. Instead they operate a franchise business model, enabling enhanced flexibility. The company makes money by collecting fees from Planet Fitness gym franchises while directly owning under 5% of their branches. The national fitness chain's asset-light business model fosters a low fixed-cost approach built to survive when revenues rapidly evaporate to zero.
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