LIFTS Episode 138 – ABC Fitness Mid Year Report: The Fitness Industry Has a Habit Problem

0:00The market has moved past inspiration. So when you think about the last couple of years, which has been heavily influencer-led, we as an industry were selling access and the novelty of going to the gym, the novelty of certain modalities. We're focused on new equipment, new types of formats, obviously new content and digital. And what the first half of this data in this report shows, this 2026 WANs report shows, is that consumers are ultimately choosing systems that help keep them going.

0:39We're live.

0:40Matthew Januszek:Welcome to this week's Lyfts podcast. I'm Matthew Januszek, and today we're talking about the ABC Mid-Year 2026 Wellness Watch Report, looking at behavior of millions of fitness consumers around the world. And Bill Davis, CEO of ABC Fitness, opens a report with a comment that I think frames the conversation today, which is fitness consumers are no longer looking only for access, novelty, or inspiration. They're looking for systems that help keep them going. And I think those last three words are particularly important. Keep them going. And it's something that we've talked a lot about as being a challenge for the industry.

1:21Matthew Januszek:So today, we're going to break down some of these findings from the report. And I'm here with my co-host, Mohamed Iqbal, to discuss this in more detail. So Mo, how are you doing today? I'm doing good. This kind of takes us back a couple of years, right? when um i was the guest and you would interview me i was nervous then and i have to admit i'm i'm nervous again now what are you nervous about mate i didn't put you on the spot too much then did i you put me on the spot and i and you always have you always bring these curveballs which usually i'm on the other side so i kind of know what you're about to ask but this time i'm the guests, so let's go.

2:03Look, I think generally what the report means is that the market has moved past inspiration. So when you think about the last couple of years, which has been heavily influencer-led, we as an industry were selling access and the novelty of going to the gym, the novelty of certain modalities. We're focused on new equipment, new types of formats, It's obviously new content and digital. And what the first half of this data in this report shows, this 2026 One's report shows, is that consumers are ultimately choosing systems that help keep them going. So you talked about things like accountability, consistency, community.

2:47That's the reinforcement. So the report's talking about this as being the reinforcement shift and that members aren't really looking for just access and inspiration anymore. They're really looking for systems to help them return, stay engaged and see progress. And that is a really big shift. Because if you think about even going back 10 years, even 15 years with Brionthic SoulCycle, where instructors were the rock stars, they were the superstars. They were a big reason that were driving that community building, driving people to come in. Then you had new gyms, even at the value price, the premium segment and HVLP, new equipment, new facilities.

3:27You saw the addition of things like Pickleball, that Lifetime Fitness. You saw gyms like EOS really upgrade their facilities and adding fresh new equipment, both on strength and cardio. But now consumers are saying, well, that's all well and good. But what I really want is how are you going to help me keep consistent? And you brought up a few numbers. So interesting paradoxes here, because on one hand, new gym joints are down 9 % year over year. So to me, does that mean that we've kind of hit the ceiling where in the last five years, we've seen incredible growth post pandemic, but really it's about getting those still higher intent people to join.

4:08So if new gym joins are down, it means a couple of things. And the report speaks to that. One, check-ins are flat. It means like we know that people are showing up, but people that do show up are showing up more consistently. So gym utilization is actually up. So we know that we've attracted the right people. They're showing up. For the most part, they are staying and they're putting the hard work in. One other thing on gems, the new joins that we've seen this year have been skewing younger. Gen Z is 46 % of new gem joins. Millennials are 32%. Gen X is 13%. Boomers only 7%. So nearly half of everyone walking through the drill for the first time is a Gen Z.

4:54And it's also very much gender balanced. In fact, screwing a little bit higher to women. 51 % are women, 49 % are men. So what all these numbers tell me is that we have successfully pulled in that population that is high intent on being healthy, the population that really wants to move. We've gotten them to commit to joining a gym. and the gym is no longer dominated by men, even in certain modalities. So it's really become a lot more evened out. I think the question for us is, what's next? How do we get that other 70 % of people who don't belong to any gym or maybe don't engage in the minimum standards for physical activity, how do we get them to move?

5:40Yeah.

5:40Matthew Januszek:And I think that's an interesting one because in some ways, when I look at the report, I question how much information does the gym industry really have on their members. And when I was looking, I've got a couple of case studies I wanted to go into because certainly a lot of the tech-based fitness products or companies have a huge amount of data and seem to be a lot better. you know the membership apps are a lot better at following their members and advising them and and reacting to change whereas the gyms seem to still be a little bit in the dark ages that you mentioned a few comments there that we look at these rockstar instructors obviously we look at things like equipment and new concepts but if you look at the you know the the report or bill's comment it you know the clear message is it's it's reinforcement and habit formation now if you speak to someone like Paul Bedford, he would say, well, I've been talking about this for years, like decades, and the industry has been very, very slow to react.

6:44Matthew Januszek:But do you think that could be the case that some of the technology that allows us to really have good information about who's coming through the doors and what they're interested in hasn't been there yet? And maybe that's one of the things that changes. I wanted to pull up a little bit of a case study. And it's a little bit sort of left field, but it is interesting because it's an app that has almost like similar behavior, a behavioral problem as the fitness industry does. And I want to pull up Duolingo. And, you know, one of the things a lot of people realize that learning another language would be good for them, but the problem is sticking to it and doing it consistently.

7:19Matthew Januszek:And if you look at the Duolingo business, it's, it's, it's kind of solved that problem and done a good job, really good job at it. So by the end of 2025, Duolingo had 133 million active users, 5.27 million daily active users, 12.2 million paying subscribers, and more than 1 billion in annual bookings. So almost 40 % of its monthly users, 40 % are engaging on Duolingo every single day. Now, I know there is a difference between learning and activity. However, it is interesting that Duolingo reported that more than 20 % of his daily active users had maintained a streak, as they call it, longer than a year.

8:03Matthew Januszek:And so it hasn't really done it by creating better language lessons. It seems, according to this article, that it's engineered behavior around the lesson. So you've got streaks, reminders, small commitments, rewards, visible progress, and social reinforcement. So I guess my question, and this is something that we can talk about now, is do we think the fitness industry has spent probably too much time designing workouts and maybe not enough time designing habits that get people to perform consistently? And could technology start to help there? I really love that comparison to Duolingo. And look, putting my product hat on, I'm always looking at apps like Netflix and Duolingo that have such high engagement, such high usability, and they keep people on coming back.

8:54A couple of things that Duolingo does, which I do think the fitness industry can learn about, is first, there is a lot of forgiveness built into the streaks. And what I mean by that is there's the ability to pause. So if you are currently on a winning streak and you say, hey, I am going on vacation. Maybe I don't want to engage in my second language or third language learning. I want to take a pause. You've got the ability to add a pause and come back and continue the streak again. So they've intentionally built those things into the product. The other thing that they've built into the product is this idea of -

9:29Matthew Januszek:Is that a good idea, Mo? I think it's a fantastic idea. And I want to bring a parallel here into fitness. The other thing is jumping back on when you fall off. So the parallel to the fitness industry is this. So often we come together with a program. It could be diet. It could be workup program, either strength or cardio or both. And I mean, how many times, Matthew, have you heard someone say, well, you know what? I started a program. I got injured or had to take two weeks off because I went on vacation and I just never came back into it. That happens a lot. Well, you know, and that could be on anything.

10:02It could be a challenge to drink water. It could be maybe, you know, if you're trying to cut back consumption on alcohol and any other areas. So So we started seeing this come into fitness last year. A couple of notable examples. Apple Fitness on an Apple Watch has given you the ability to pause your rigs. So if you want to say, you know what, I don't really want to meet my step goal and my move goal for a week because maybe I'm on vacation, maybe I got injured, that's okay. You could intentionally pause for a period of time or for a particular rest day. I think the second thing that we need to learn in fitness is this idea of if you fall off your program, not disencouraging you and just basically saying, number one, you can intentionally take a pause.

10:50Maybe you're burnt out. Maybe you need a week off and that's OK. And then rewarding you coming back instead of breaking the streak. So you think about apps like a Peloton or really any other digital product in fitness today. They reward you for continuous streaks. it could be, how many days you're working out straight, how many weeks you're working out straight, how many times you hit your move goal. And I think when you take a page out of Duolingo and you apply that into what we're doing and you want to increase engagement and retention, it's to say that it's okay, number one, if you want to have an intentional pause, so I'm going on vacation or I want to take two weeks off because I feel burnt out, and have people continue the streak because that truly is encouraging.

11:27And if you do end up falling off, giving people the ability to hop back on. So saying, we noticed that you fell off. In order to keep your streak alive, we're going to give you a week's grace period. Duolingo has those actions in there and it's kept people engaged instead of saying, you know, I'm just going to start again next year. So I think there's a lot that we could learn from apps like Duolingo.

11:49Matthew Januszek:So the second point that you slightly referred to, which I think was very interesting and worth spending a moment on is that within the report, it says 77 % percent of members are spending less than$25 per month on fitness. 63 % want fitness options within one mile and only 1 % use a gym or a health club. So ABC describes these consumers as lower spend, convenience driven, and often anchored in outdoor and home routines. And what's particularly interesting on the journey is that they reference this almost like a funnel where they say non-active, sorry, active non-member, low risk entry, first 30 days habit formation leads to full membership.

12:41Matthew Januszek:So it's almost more like what I seem to read by this is there's almost like this digital subscription funnel that a traditional gym should be thinking about. So I'm curious to know a little bit you know your thoughts on this 77 % of people that are what they call active but non-committed because it you know in some ways it seems as though there's a big opportunity rather than looking for new people to get off the couch there seems to be a lot of people that are already active in some form of app or outdoor workout that are not actually investing a lot in in any kind of fitness. And I suppose, you know, what, what are your thoughts about how, um, as an industry, we can become relevant enough to what they're already doing that they're prepared to enter what I guess I would call the gym ecosystem or coming in the doors of a health club?

13:35Yeah, I think that's a great question. But one thing I want to call out, when you look at ABC's report, we typically have a higher percentage of HVLP gyms on our platform. So brands like Planet Fitness, Crunch Fitness, EOS, Ant, and others. So we tend to skew a little bit towards HGLPs. When you look at that average spend and ticket price, that's one reason. But look, what I would say in terms of what we found on average spend, right? So the average spend is$17, let's just call an enterprise or large gyms a month,$27 in small boutique gyms and$69 in studio, and that's a monthly spend. overall that is actually up three percent year over year in gyms and 9.7 almost 10 percent in studios so the consumer is paying first four times more for a studio experience and increasing that spend three times faster so i think something interesting there is people typically pay for what keeps them more consistent and i want to bring in so i read this other report I just did a LinkedIn post about this this morning.

14:45But there's a company called Coefficient Capital. They put out a report, which they do twice a year, called the Consumer Trends Mid-Market Report. And I kind of looked at, in preparation for this episode, the ABC report that we put out and this report. And so this report independently surveys 3 ,000 U.S. consumers. And what they found is that same consumer from the outside in. They call this consumer that we're talking about the optimizer. So here's some interesting numbers. 36 % of Americans, and this spikes to 58 % of millennials, are earning over 100K. So that is what they call the optimizer.

15:24So within this cohort, these people exercise four or more days per week, which is nearly double the rate of everyone else. So they exercise, which is 54 % versus 28%. So four more days a week than anyone else. And then when asked where they're trading up versus trading down, they're trading up fitness and wellness products. They're spending more. That topped every single category up 37%. So what we're showing here is that this consumer, which is millennials and Gen Z, they're committed to spending more in fitness. And that spend is actually increasing. And I think if we looked at the premium segment, we would see the same as well.

16:09Matthew Januszek:So are you on just on that then? Because when I read the report, I didn't, I wasn't aware of what you said, which, you know, certainly there's definitely a skew towards more of the HVLP gyms. However, what I took away from that was that there's, there seems to be a big chunk of people that are engaging with apps or doing outdoor fitness and that, that probably weren't coming into gyms. Where, like, do you, do you think that there could be something there so if you look at things like high rocks and a lot of these races that are starting to happen where people may not necessarily do those in traditional gyms do you think any of that is also playing into this is that keeping people out of gyms or is it bringing in and again i know high rocks are partnering up with gyms to do that but do you think people are getting some kettlebells and a sled and doing stuff in their garage and working out as opposed to thinking that fitness needs to be done inside these four walls what are your thoughts on that no i agree i think it's absolutely happening and i think that events like high rocks and anything outdoor is really a creative to the industry and candidly that's one thing that as an industry we're not tracking well no so we're tracking through well it's something you know we track so many metrics as it relates to what happens in the gym and something that i've been a big proponent of and certainly what we're doing here at ABC is shifting that perspective to be also focused on outcomes.

17:30In other words, let's get invested and let's get focused on whether our member is actually improving those metrics that matter. Are they moving consistently? Are they sleeping better? So, and many other areas. So by us really shifting the focus away from check-ins, which is something that we've talked about a lot on this podcast to really being more outcome driven i think the gym just becomes a part of that story not these stories so i think the things that you're talking about matthew around things like high rocks training at home i mean as as you know i train almost exclusively at home you train mostly at at the gym um but the gym is still important for me right going to the gym is where my community is so it doesn't mean i'm going to cancel my gym membership i'm going to keep the gym memberships.

18:18I think, you know, from a gym perspective, I might show up right now in the data as a very low use member. So they might not be, but I'm active because I'm paying. But if they knew what I'm doing outside of the gym, they might say, hey, you know what? We've got a new meal that we're serving that is focused on post-workout training, or we've got a recovery facility that maybe is better for you. And you can come in and just use the sauna or a new breathwork class that we're offering. We're not doing that yet, but I do think that we are accelerating towards that.

18:52Matthew Januszek:This week's episode of the Lyfts podcast is brought to you by eGym. eGym is building the future of smart fitness. Their connected ecosystem combines intelligent equipment, AI-powered software, and the WellPass corporate wellness platform to help operators grow their business and deliver measurable health outcomes to exercises of all shapes and sizes. From powering gym floors to supporting employee wellness, eGym is redefining the workout one rep at a time. Learn more at eGym.com. One of the things I don't think we track well either is, you know, if you look at some of the, and I'm going to come on to this with my next point, but if you look at some of the big consumer brands, you know, Peloton obviously is a big one.

19:32Matthew Januszek:Their results came out, I think, this week. We could touch on that. But when we look at consumer fitness and we say, well, you know, consumer fitness isn't necessarily growing, you know, Peloton, you know, their subscriptions fell 9 % in the last 12 months. You kind of think, well, is home fitness really a thing? But then I think what people miss is the things that they can't track and they don't realize it's happening underground. And if you look at things like Coop from Garage Gym Reviews, the event, home gym com if you look at what's happening on instagram like there's this underground of community which is amazing so and i don't know whether you follow this or any other listeners follow it but i you know if it's almost like as an industry we're not recognizing what's really happening in this home fitness market because it isn't people buying a peloton now you've got two groups of people you've got the inventors where you've got guys predominantly guys that are in garages and they're whacking together different pieces of fitness equipment, attaching bands and chains and building stuff in their garage.

20:41Matthew Januszek:And then they're showing it to other people who are building it themselves. And there's this whole massive community of young, creative engineers, fitness equipment builders that are doing some amazing stuff that I think is actually leading a lot of the trends that we're seeing with some of the equipment in the gyms. And that's definitely a first in in you know in terms of you know my experience in the industry and then the second thing is you've actually got people then that are doing workouts in this home gym and again it's very much a community they're sharing workouts they're very very um engaged with each other um and it and it and it's almost like you can work at home you can feel you're as though you're part of a movement but i doubt if any of this stuff's being tracked because unless you look at a few brands that are you know people like rogue and maybe rep fitness and some of those people that are making some of the structures, a lot of the stuff that's happening are people that are building onto that themselves.

21:33Matthew Januszek:So I think it's interesting because as an industry, we've got to be careful that there are these pockets like the high rocks group of people or the people that are building this home equipment, they're going to start thinking, well, you know, do I really need a gym? I've got the community aspect. I've, you know, I'm meeting people, I'm growing, I'm learning about stuff. And, you know, I think that could be one of the big challenges to the gyms, you know, over the sort of coming decades or whatever. No, I would agree with that. I think there is an entire community and maybe it's, you know, 10 % or even higher of people who really lean in on home fitness.

22:15And look, going back 15, 20 years, we've had Carl Dekler on this podcast from Beach body. You think about the days of P90X and how many people did you know, Matthew, who were on P90X and found a lot of success. The thing is, not only are they being creative on what they're making in their home gyms, but they're actually getting fit. These people are very fit people. They're very agile people. I think what that tells you is sometimes as an industry, we go to these big events, we get so enamored with the new equipment that's out and you go for a tour of new gym you're like wow look at all of these pieces of equipment here but fitness is really almost back to first principles it's about movement it's about intentional movement but i've seen some of the workouts lately you've been posting on instagram but you know you're not using fancy equipment you're using um dumbbells um bands uh simple movements that candidly anyone can do at a home and um i think that's something we should pay attention to because as an industry how do we serve that customer?

23:18And even if you are a gym, can your product extend out to the home customer? And that's something not many people have thought about. If you are a gym, like a Planet Fitness, should you have an offering or membership for people who have a home gym and want to work at home, but still want to be part of a community, still allows them to engage with a community in gym and gives them the opportunity to come in, but priced differently, knowing that they work out at home. So an example of that, and we've seen some brands explore it, is do you offer programming? Do you offer a workout builder? Do you offer tools as a gym that could be built around what people are doing at home?

23:57We haven't seen many people do that. I know some brands in very early exploratory stages, but I think that's an incredible white space for us because if we could bring these roles together, their community, accountability, all of these things have an accretive effect. And I agree, as an industry, just because we've had such great growth over the last several decades, it's not something that we've looked into.

24:24Matthew Januszek:Well, I want to move on to Peloton. Again, the results came out just recently. I think it's definitely a great case study because they're a brand new business that came in and have been through their own, you know, they came in off the back of the pandemic, did very, very well. And now they've been through their own sort of journey, I guess, to figure out who they are and what they're going to become. But I'll just read a few highlights is in 2026, full year, the business generated 2.45 billion in annual revenue. So it's the first year that I believe where they had net profitability. And I'll get you to correct me if I'm wrong on that one.

25:03Matthew Januszek:but the customer numbers are still contracting. Paid connected fitness subscriptions fell approximately 9 % to 2.55 million. Total members declined by 8 % to 5.5 million and paid app subscriptions were also down. And in Q4, subscription revenue actually increased to 7 % to approximately 437 million with a very high gross margin of 73%. So the subscriber's base is smaller but it seems as though the retained subscription relationship remains extremely valuable. Peloton's response was interesting. The CEO says we're evolving into a connected wellness platform, combining hardware, which I guess is what you get in a gym, intelligent software, which you don't really get in the gym, and then human connection.

25:55Matthew Januszek:And so it's basically said that their business is evolving from providing a huge library of workouts, which is what we've just discussed many gyms are doing um and um and and i suppose you know what i want to draw is maybe some parallels between what peloton have done because we're you know we're if you break it down it's humans trying to create a behavior to continue to exercise it's just peloton um have started in the home although many of the workouts they do now you can take pretty much anywhere and doing what you want so i suppose what i want to ask you mo is you know you're a lot more have a lot more insight into these businesses than what I do.

26:35Matthew Januszek:But do you think this reinforces Bill's argument that the future isn't simply about acquiring more people, but creating value through this engagement? And if that is the case, where do we start in terms of figuring out how to get much better at creating this engagement and habit formation? Yeah, I think all of us, right? ABC Fitness, Peloton, gym brands, we're all trying to figure this out right now. And ultimately, this is a grasp for attention in a good way. And we're trying to fit, we all want that member to view our digital asset as the place where they come to, to improve their health and fitness and where they're looking to improve their overall health outcomes, I would argue for them and their family.

27:28Now, going to Peloton, I want to touch on one point around revenue because you wonder, well, how did they lose subscribers but increase subscription revenue? Very easy, Matthew. They increased their monthly price by$5. And by doing that, they were able to lose subscribers and churn subscribers, but also had their subscription revenue went up. The fact that their net loss in subscribers, both in connected and in digital is definitely concerning. Like that is not a win. And, you know, I wonder, right? So obviously I have, I think my Peloton streak, weekly streak is something like 418. It's kind of wild.

28:07So I'm a very, very avid Peloton user. I definitely use their content or their bike or their truck like at least once a week. And clearly I've been doing 418 weeks. However, consumers want a lot more personalization, right? And I wonder if the standard class is enough. And then you look at who that Peloton member is. It's not, if you think about the gym member we talked about, Gen Z, has been the fastest growing people coming through the door. That is not the highest growth area for Peloton. Gen Zers are not buying a Peloton. People that have families, it's that home fitness buyer that you were talking about.