A notable fitness conglomerate announced that it will shutter some of its locations amid financial turbulence. The fitness industry has yet to get back to its strength prior to the pandemic-fueled lockdowns of 2020.
As the pandemic-induced lockdowns paralyzed enterprises across the country, the domain of fitness suffered a debilitating blow; according to data from the Health & Fitness Association, a staggering 25% of all U.S. gyms were forced to shut their doors permanently. One of the fallen is an affordable gym chain still reeling from the aftershocks of the pandemic.
A subsidiary of Equinox Fitness, Blink Fitness, filed August 12 for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware, located in Wilmington. The move is a strategic effort at restructuring its obligations following a period of financial stress that had already been heightened during the pandemic.
Bankruptcy filings reveal that Blink Fitness blames its financial issues on the pandemic-forced closure of all its gyms. The chain told the court that the closure resulted in a nine-month pause in membership payments, and it had been dealing with “liquidity constraints” from the pandemic. It’s now weighted by a heap of unpaid rent that piled up while the gyms were closed. It is also admitted by Blink Fitness that the poor performance of some subset locations has hurt its profitability badly during the past year. The company’s filing lists assets and liabilities between $100 million and $500 million, with $280 million outstanding in debt.
“Over the past several months, we’ve worked tirelessly to improve Blink’s financial foundation and position the business for long-term sustainability,” CEO of Blink Fitness Guy Harkless said in a statement announcing the bankruptcy. “After careful and thorough consideration, the Board and management team determined that the best course of action for Blink is to utilize a court-supervised process to optimize the Company’s operational footprint and facilitate a sale. This process will allow Blink to continue being the warm, welcoming and community-oriented gym for all.
How this will affect you as a Blink Fitness member
On the heels of this news, Blink Fitness will start closing some of its more than 100 locations across the country as part of the bankruptcy proceedings.
“We have decided to shut down some of our locations, around 10% of them,” a representative for Blink told Newsday. “The locations planned for closure are not integral to Blink’s core business and are almost entirely outside the New York City metropolitan area. Sadly, we must do this, but we have already informed the members and staff at the gyms that will be closed and are working on ways to make it less painful for both the employees and the membership base.”
Against this backdrop of closures, the gym chain has sought to reassure its members in an email that the company will “operate as usual,” and it does not anticipate any disruption to their gym experience. “We know how important our services are to our members. Our commitment to our members remains our number one priority,” the email reads. “We will continue running our operations and ensure that our members and our communities come first in all the decisions we take.
This article was originally published on thestreet. Read the original article.
FAQs
1. What is Chapter 11 bankruptcy?
Chapter 11 bankruptcy allows restructuring of debts by an operating company. It gives a business the opportunity to reorganize itself with the hope of returning to profitability in business.
2. Will my gym membership still be valid?
The gym network said it would be honoring all current memberships. Members at closing locations, however, may be required to transfer to another location or take other options offered by the company.
3. Why is the gym network closing locations?
The closures are part of a bigger restructuring effort aimed at focusing resources on the most profitable locations. This move is one of the things that will help the company trim its costs and exit bankruptcy in a stronger position.
4. What if my gym is closing?
If your local gym is closing, the company should let you know about alternative locations or another way to pursue. Keep yourself updated, and reach out for customer care in case of need.
5. What does this mean for the future of the gym business?
It serves to show just how much of a wake-up call this filing is for traditional gyms operating in a changing market. Embracing digital trends and shifting consumer preferences will likely be needed for the sector to continue staying ahead in the future.