Chris Rondeau, CEO of Planet Fitness
Adam Jeffery | CNBC
In a surprising move, the fitness franchise Planet Fitness announced the removal of its long-time CEO, Chris Rondeau, on Friday. The stock plummeted 15% following the announcement, reaching a new low for the year.
Planet Fitness stated that it is currently conducting a search for its new CEO, both internally and externally. In the meantime, Craig Benson, a member of the company’s board and a franchisee of Planet Fitness and Dunkin’ Donuts, will serve as the interim CEO.
Rondeau’s unexpected departure has left many puzzled as to the reasons behind the decision, particularly after the company reported better-than-expected earnings last month. Some staff members close to Rondeau were shocked to learn about his departure at the same time as the public announcement.
Analysts have described the news as abrupt and unplanned, noting that the company canceled two investor conference presentations. Planet Fitness Chairman Stephen Spinelli Jr. stated that the decision to transition leadership was made by the board and not by Rondeau himself.
Planet Fitness declined to provide further comment on the matter. Rondeau could not be reached for comment either.
Rondeau has been part of Planet Fitness for nearly 30 years, starting from a front desk position at the gym’s first location in Dover, New Hampshire. He has been CEO since 2013, leading the company through its IPO and expanding its club base from around 700 to approximately 2,400 locations. Under his leadership, the company’s annual revenue grew from $200 million to a projected $1 billion this year.
Scaled-back goals
Planet Fitness CEO Chris Rondeau at the New York Stock Exchange, May 17, 2022.
Source: NYSE
While Planet Fitness has recently experienced strong sales and profit growth, investors have expressed concerns about the company’s plans for equipment and new franchises, which are crucial sources of revenue.
Rondeau announced in August that the company was revising its 2023 outlook for equipment placements in new franchisee stores, citing higher construction costs and increased interest rates. Planet Fitness generates approximately 25% of its revenue from selling branded fitness equipment to franchisees.
The company’s goal of opening 600 new stores by 2025 may also face challenges. Thomas Fitzgerald, the company’s finance chief, stated that while the goal is still achievable, it may take longer than the initially planned three years. Higher construction costs and a decrease in suitable locations due to the pandemic have contributed to the slower pace of store openings.
These factors, along with the company’s failure to provide clear growth rate projections, have led to a decline in stock performance. DA Davidson, a research firm, noted that investors lack confidence in the company’s growth potential. As a result, the company’s stock has dropped approximately 33% this year, reducing its market value to around $4.6 billion.
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