Basic Fit Has a Significant Competitive Moat

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Written By Jackson Hartwell

Basic-Fit presents a compelling investment opportunity primarily due to its significant competitive moat: the ability to operate clubs at extraordinarily low costs. This cost-efficiency is driven by their scale and strategic use of technology.

High Profitability Business Model

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Basic-Fit’s fitness club breakeven point is notably lower than competitors, allowing them to maintain profitability with far fewer members. Their advanced technological solutions, such as automated entrance systems and remote monitoring, drastically reduce staffing needs and operational expenses.

This unique cost structure not only enables Basic-Fit to outcompete other fitness chains but also supports aggressive expansion. Given these factors, Basic-Fit is well-positioned for sustained growth and increased market share.

Basic Fit: Company Overview

Basic-Fit is a leading European fitness chain that operates over 1,500 clubs across multiple countries, including the Netherlands, Belgium, France, Spain, and Germany. Renowned for its budget-friendly approach, Basic-Fit has rapidly expanded its membership base, leveraging a standardized and scalable model.

Basic-Fit’s Moat

Basic-Fit boasts a wide and quantifiable moat, evidenced by its ability to achieve cash flow breakeven with just 1,400 members per club. According to Basic-Fit, their US competitor Planet Fitness (PLNT) requires between 5,000 and 6,000 members to reach cash flow breakeven. As Basic-Fit’s CEO René Moos stated during the Q4 2023 earnings call:

“If you talk about Planet Fitness in Spain and you look at the Spanish market, I would say that there is still a lot of growth possible in Spain. I think competition is good. We can still double the penetration in Spain. It’s around 11%. So less than half what it is in the U.S. We think there is room for competition. It cannot only be orange in Spain where people work out, but we’re very comfortable that with our model, we will compete with them. I think the model is similar, both low cost. The only big difference, we are cash flow breakeven on 1,400 members and they are cash flow breakeven on 5,000 or 6,000 members.”

This comparison highlights the significant cost advantage Basic-Fit has over its competitors. Although comparing these numbers isn’t entirely fair since Planet Fitness operates a franchise model, it underscores Basic-Fit’s ability to run profitable clubs with fewer members.

Operational Efficiency

Basic-Fit’s cost-effectiveness is rooted in two critical factors: scale and technology. With over 1,500 clubs and expanding by 200+ clubs in the last two years, Basic-Fit commands significant bargaining power.

This leverage allows them to secure favorable terms for setting up new clubs, ongoing maintenance, and rent leases. For example, PureGym paid £108 million in rental costs for 581 clubs in 2023, averaging £168,000 per club per year. In contrast, Basic-Fit paid €223 million for 1,402 clubs, averaging €159,000 per club per year, translating to a 20% lower rent per club.

Moreover, Basic-Fit’s technological advancements, such as automated gym attendance processes and remote security monitoring with smart cameras, significantly reduce staffing needs. Basic-Fit operates its clubs with minimal staff, typically hiring 1 to 1.5 FTE per club, while other chains require a significantly higher number of staff.

This level of automation and efficiency is a crucial differentiator, allowing Basic-Fit to maintain lower operational costs.


As of January 31, 2023, Basic-Fit had over €850 million in long-term debt. With a current market cap of approximately €1.4 billion (as of May 23) and €70 million in cash, the enterprise value stands at €2.18 billion.

The company expects to generate between €305 million and €330 million in EBITDA for 2024, implying a current EV/EBITDA multiple below 7. This valuation appears extremely low for a company with significant growth potential.

Comparatively, Planet Fitness trades at an EV/EBITDA of nearly 16, while PureGym’s estimated EV/EBITDA is just above 10. Although these comparisons are imperfect due to differing business models and geographic focuses, they suggest that Basic-Fit is undervalued, particularly given its considerable moat.


One reason for Basic-Fit’s low valuation could be the recent slowdown in membership growth, particularly in France. During the last quarter, the number of clubs grew at a higher pace than memberships (19% and 13% respectively).

Management attributed this to social unrest affecting consumer behavior in France/

Given that France is their largest market, comprising 54% of their open clubs at the end of Q1 2024, any difficulties in that region will significantly impact the company’s numbers.

Management has implemented changes to address these issues, separating the responsibilities for the expansion of new clubs from the management of the existing club network. It is essential to monitor membership growth in the following quarters to determine if these actions are effective.

Risks Highlighted

In addition to the slowdown in membership growth and concerns about rising debt levels, there are broader risks associated with Basic-Fit’s moat and the budget fitness chain model as a whole.

One risk is that competitors could catch up with Basic-Fit’s low operating costs, potentially eroding its cost leadership. Additionally, if technological advancements that currently allow Basic-Fit to operate clubs with minimal staff become outdated, or if competitors adopt similar or better technologies, Basic-Fit’s cost advantage could diminish.

Another broader risk is the trend of people opting not to go to gyms altogether. With the rise of home fitness technology, virtual trainers, and on-demand workout programs, more individuals might choose the convenience of exercising at home.

This shift in consumer behavior could lead to a significant decline in gym memberships and foot traffic, ultimately impacting Basic-Fit’s business model and profitability.

Basic-Fit is an Attractive Investment Opportunity

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Basic-Fit has established a significant competitive advantage through its operational efficiency. With their scale and smart use of technology, Basic-Fit manages to keep per club operating costs lower than its competitors, making it difficult for them to compete in the same regions.

Despite challenges such as the recent slowdown in membership growth in France and concerns about rising debt levels, Basic-Fit’s management appears capable of navigating these issues. They are confident in their ability to fund future growth through cash flows starting in 2025, which is a positive indicator.

While there are risks associated with increased competition and changes in consumer behavior, Basic-Fit’s extreme focus on keeping operational costs low and its scalable business model put it in a strong position for continued growth and market leadership in the European fitness industry.

With a current valuation that appears undervalued compared to its competitors, Basic-Fit presents a promising investment opportunity.


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