SAN FRANCISCO—24 Hour Fitness filed for Chapter 11 bankruptcy today, June 15, and has further announced the closure of 130 locations nationwide, including four in San Francisco.
The fitness clubs that will close in San Francisco are Alemany Sport, Market Street, Noe Valley FitLite, and North Point.
In the time of coronavirus lockdown orders and temporary facility closures, fitness centers across the country have seen revenue decrease. A consumer survey conducted by Harrison Co. and released on May 26 reported that of 1,000 participants, 34% of gym exercisers reported that they had already canceled or had planned to cancel their gym memberships.
Regarding these survey results, Harrison Co. said, “The proprietary data reflects that $10 billion annually could leave the club sector, much of it for home fitness options, reflecting changing consumer sentiment surrounding health club safety and cleanliness.”
24 Hour Fitness CEO Tony Ueber confirmed COVID-19’s harm to 24 Hour Fitness: “If it were not for COVID-19 and its devastating effects, we would not be filing for Chapter 11.”
The fitness company’s bankruptcy filing and club closures come just as California’s Department of Public Health starts to allow fitness centers in some counties to reopen as the state enters Phase 3 of lifting lockdown restrictions. On June 12, certain counties announced that fitness centers would be allowed to resume in-person operation, granted they follow specific health guidelines. San Francisco has projected that its gyms will reopen sometime in mid-August.
Despite shutting down 130 of its locations permanently, 24 Hour Fitness wants to keep up with reopening its remaining clubs. The company explained its decision to file for bankruptcy as a part of a larger financial restructuring plan.
In tandem with the petition 24 Hour Fitness filed to obtain Chapter 11 financial relief, the company also aims to pull together $250 million in debtor-in-possession financing.
“Eliminating debt and closing clubs that were either out-of-date or in close proximity with other 24 Hour Fitness clubs,” 24 Hour Fitness explained in a statement, “allows us to focus entirely on transforming our business and the club experience for the better.”
24 Hour Fitness added that by liquidating enough of the company, it will be able to keep its remaining clubs operating as they begin to reopen.
On Tuesday, June 16, the company is scheduled to appear via video call before Judge Karen Owens of the U.S. Bankruptcy Court for the District of Delaware at around 9:15 a.m. (PT) to review their petition for Chapter 11 relief.