The Quiet Ascension of LA Fitness

Description

In 2016, LA Fitness was the largest chain of non-franchised fitness clubs in North America, operating 676 clubs, serving 4.9 million members, and generating revenues of over $1.9 billion. Founded by Chinyol Yi, Louis Welch, and Paul Norris in 1984, the privately held company revealed little about its future plans or its operations, leading one journalist to write of "the quiet ascension of LA Fitness." However, it continued to expand aggressively, focusing on a full-service model, often including swimming pools and racquetball courts at moderate prices. Rumors of an IPO had circulated for over a decade, triggered by the fact that several private-equity houses had invested in the business and might be looking for an exit. In 2014, the company had arranged up to $1.6 billion in debt to fund expansion and buy out some investors. Whether this would be sufficient to appease its owners and support future growth was not clear. Nor was it clear how much more expansion LA Fitness could expect with its full-service model in the highly competitive fitness-club industry.

Keywords

Acquisition Age groups Business history Business Models Capital structure Competition Competitive advantage Competitive Strategy Contracts Corporate strategy Customer relationship management Customer satisfaction Customers Debts Demographics Employee problems Employees Expansion Facilities Financing Gender Geographic analysis Goals Growth Growth strategy Human capital Information technology Leasing Liquidity Loans Management by objectives Market entry Mobile devices Multinational corporations Operations and processes Prices Private equity Recruitment Revenues Sales force management Technology Work environments