Latest thoughts on PLNT, SG, and WEN

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Latest thoughts on PLNT, SG, and WEN

national pricing to a more market-based pricing strategy (majority of marketing spend is local)

or promo based pricing in some markets ($10/month for first 3 months as an example). We

anticipate the early learnings of these price tests will be a key topic on the Q2 earnings call.

Ad campaign timing & member growth. We think the company plans to roll out their new ad

campaign ahead of the critical Q1 peak join season. In 2024 and 2025, Q1 represented 90.0% and

81.8%, respectively, of the year's total net adds. The campaign will likely be tested and iterated

in late Q3 to be ready for national deployment in late 4Q. The company appears to be taking a

measured approach to the speed at which they roll out the new campaign as Q2-4 are relatively

low demand periods for new joins compared to Q1. That said, the company churns about 3-4%

of members per month (likely at high end of range this year given click-to-cancel and higher

mix of younger consumers), which translates to ~2.3m members/quarter. Given the model's

high underlying churn, we think Q2-4 are still important from a membership perspective as new

member growth is required to at least offset cancelations through the year. We think minor

marketing tweaks using existing assets could potentially improve brand perception with their

core consumers, which are the 70% of Americans who don't currently have a gym membership.

Tweaking estimates. Overall estimates are largely unchanged. We lower our member growth

estimates for both '26 and '27, though that metric does not drive our model. We also raise Q2

SSS where we were previously modeling too conservatively, as the vast majority of SSS growth

is driven by rate. And despite somewhat limited franchisee flexibility on slowing pace of unit