Fitness clubs

Meet the world's fastest-growing fitness chain

July 31, 2013: 12:55 PM ET

Anytime Fitness lacks many of the traditional trappings of your local gym, and yet it is growing by leaps and bounds. A look at its recipe for success.

By Brandon Southward

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FORTUNE -- Step inside an Anytime Fitness gym and you'll likely notice more of what it lacks than what is there. No massive machinery, mobs of people, or grunting bodybuilders trying to outdo one another.

You'll also take note of the club's particularly small size -- only 4,000-6,000 square feet, nearly eight times smaller than full-service gyms like Equinox. It's clean and tidy, and there are no employees shoving papers in your face convincing you to sign up for the gym's new weight loss plan, "how to lose 50 pounds in five days."

There is none of that in this decidedly unintimidating environment, and that's exactly how Anytime Fitness CEO Chuck Runyon wants it. "We are Cheers without the beers."

Cheers, of course, the place where everybody knows your name. But this spot doesn't have any Sam-and-Diane-relationship-tensions, and Norm or Cliff won't be dropping by anytime soon.

It's that vibe that has helped make Anytime Fitness the fastest growing fitness club in the world, according to a report released this year by The International Health Racquet and Sportsclub Association, a title the company has held for the last six years. In 11 years, the Minneapolis-based chain has expanded to more than 2,200 clubs worldwide, in all 50 U.S. states and 14 countries. By comparison, it took Subway 23 years to reach 2,000 restaurants and McDonald's (MCD) 32 years to reach 2,000 restaurants.

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Anytime lacks some of the traditional trappings of a gym, but it does have plenty of classes. Walk in, and you will find a kiosk holding more than 100 different video classes that are accessible at all times. Want muscle conditioning? Got it. Want to take a turbo kicking class? They have that too. You pick your class, head into a multi-purpose room, and you're off and running. If the classes don't intrigue you, Anytime Fitness has cardio equipment like treadmills and ellipticals along with resistance workout equipment and free weights.

The relationship between the gym and its members is special, as evidenced by the Anytime Fitness tattoos sported by its passionate members and employees. "It started with a St. Paul franchise owner at a conference in 2005. Since then, over 1,000 people have gotten the Anytime Fitness purple running man tattoo," Runyon said.

He should know. Anytime Fitness foots the bill for the body art; all the tattoo recipients have to do is share why they're getting it. The reasons vary, including some crediting the chain with dramatic weight loss or boosting their self-esteem.

To be sure, Anytime Fitness' ascendance coincides with a boom in the fitness club industry as a whole, with membership expected to reach an all-time high of 52 million in 2013, according to research from IBISWorld. Revenues for gym, health, and fitness clubs in 2013 are estimated to reach a record high of $25.9 billion. Anytime Fitness has seen revenues grow by 80% in the last five years to more than $484 million at the end of 2012, and Runyon anticipates system-wide revenue exceeding $600 million at the end of this year.

So what has fueled Anytime's impressive growth? Pete Moore, founder and managing director of consulting firm and market research firm Integrity Square, thinks it's not just the relaxed atmosphere, pointing instead to its monthly membership costs and 24/7 operating hours model. "Anytime came in charging an inexpensive $35-$55 a month and stripped down labor costs by having the gyms staffed for a certain number of hours, but allowing members to come and go when they like."

Future issues for Anytime Fitness are the same that have plagued the fitness industry as a whole: stagnation and diversification. The industry's memberships and revenue have flat-lined since 2011, and while growth is expected within the next few years, it will be at a slower rate than before. This, along with the growth of competition from yoga studios, Zumba classes, and the convenience of home workouts threatens the future of bigger gyms.

Yet Runyon doesn't feel threatened; he seems to relish the challenge.

"Blockbuster got beat by a better business model in Redbox and Netflix, so we must be prepared to see what's around the corner ... Our focus going forward will be on outside club activities than inside activities," he said.

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To extend their reach, Anytime Fitness has created an online health guide, anytimehealth.com, focusing on meal planning, tracking workouts, and sharing members' fitness successes with others. The website also calculates how many calories and pounds members have lost using its nutritional programs.

To be sure, Anytime Fitness isn't abandoning its brick-and-mortar foundation; the company recently acquired Waxing the City, a Denver-based hair removal salon franchise that Runyon says is the kind of "personal improvement brand" he wants to promote with his company.

There are plans for 250 to 300 new clubs over the next four years, and 25-35% of those clubs will be outside the U.S.

If Anytime Fitness continues to grow at that rate, it won't be long before the entire world knows its name.

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