Gym chain 24 Hour Fitness won court approval Monday to exit bankruptcy by the end of the year, surviving the coronavirus pandemic after permanently closing around 130 clubs, including 13 in the Bay Area.
The San Ramon company, founded in 1983, was battered by widespread temporary gym closures mandated by public health orders meant to slow infections. The company filed for bankruptcy protection in June and will reduce its debt by around $1.2 billion through a plan approved in the U.S. Bankruptcy Court for the District of Delaware.
“The court’s decision reinforces the strength and promise of our business strategy and our plans for the future,” CEO Tony Ueber said in a statement. The company said it would emerge from bankruptcy with a leaner balance sheet and improved real estate operations.
Other fitness companies, including Gold’s Gym and Town Sports, the operator of New York Sports Clubs, also filed for bankruptcy during the pandemic. The fitness sector had been booming in recent years in urban areas, with customers flocking to workout businesses that offered community and compelling in-person experiences.
But the pandemic shut down the industry abruptly in March, and California closed indoor gyms again after infections spiked in the past month. The fitness industry won a victory when the state declared outdoor fitness an essential business that could continue to operate during new stay-at-home orders.
The chain now has 286 locations, of which 91 are open. In California, 36 of 24 Hour Fitness’ 174 clubs are open for outdoor fitness, including in Alameda, Contra Costa, Santa Clara and Sonoma counties.
Operating outdoors increases expenses by as much as 300% per club, adding costs including moving equipment, insurance, permits and health measures. The clubs close at 5:30 p.m. as it gets dark.
“It’s not designed to make money. At best it’s a break-even operation,” said Karl Sanft, chief operating officer of 24 Hour Fitness. But the benefits include giving employees work and keeping members engaged. Sanft said the company is hoping to open for outdoor fitness in San Francisco soon.
The company declined to say how many employees lost jobs through layoffs, but said its workforce has been reduced by nearly 60% this year. In California, Hawaii and Oregon, over 400 employees were brought back to operate outdoor clubs.
Sanft said there were no coronavirus cases related to its gyms. He said gyms are better equipped to manage contact tracing compared to retailers because members have to check in by phone, making outdoor fitness a safe way to improve members’ physical and mental health.
“People are excited about fitness and well-being,” he said. “They’re getting stir-crazy being inside.”
Sanft said he expected more members to return at a higher rate next year, particularly as a vaccine is widely distributed. And the industry’s strength of building community is an advantage over home gyms, he added, beyond just the workout gear.
“Not everyone can afford home equipment,” he said. “Not everyone can replicate what we have.”
Roland Li is a San Francisco Chronicle staff writer. Email: roland.li@sfchronicle.com Twitter: @rolandlisf
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