Basic-Fit: Why the Market Is Mispricing Europe’s Largest Low-Cost Gym Operator

Basic Fit Investment Thesis

Investment Overview

Basic Fit represents a compelling opportunity where current market pricing does not reflect the company’s medium term earnings potential. The stock currently trades at approximately 5.3 times forward EBITDA, which is close to trough valuation levels despite the fact that the business is likely to deliver a significant improvement in profitability over the next several years.

At present valuation levels the market appears to be pricing Basic Fit as if its growth model has structurally weakened. However, the evidence suggests the opposite. The company remains the largest low cost gym operator in Western Europe, with more than 1,600 locations across six countries, and its core model continues to demonstrate strong returns on capital.

If the company were valued at 10 times 2027 EBITDA, which is estimated to reach roughly €529 million, the implied equity value would approach €65 per share. This represents more than 2.5 times the current share price and implies an internal rate of return above 100 per cent over roughly eighteen months. A 10 times multiple appears reasonable given that prior to the pandemic Basic Fit generally traded within a 9 to 13 times EBITDA range.

A Temporary Post Pandemic Disruption Has Distorted Perception

The primary reason for the depressed valuation is investor scepticism following several years of disrupted operations, particularly in France, which is Basic Fit’s most important geography.

During the pandemic French gyms were closed for approximately eleven months. When gyms reopened the introduction of health pass policies in early 2022 created further friction for customers. This was followed by supply chain delays affecting equipment installation and then a period of civil unrest during pension reform protests in early 2023.

As a consequence, a number of club cohorts opened between 2020 and 2022 did not ramp up membership levels according to the typical maturation curve. At the same time, even mature French clubs temporarily underperformed relative to other countries in the network.

These issues created three consecutive cohorts of gyms whose growth trajectory was disrupted by external factors rather than underlying demand. The result has been an extended period where financial performance fell short of expectations, causing investors to question whether the company’s growth model had weakened.

Evidence now suggests these concerns are overstated. New gyms opened in 2023 and 2024 are performing more normally, although they tend to be slightly smaller facilities outside major urban areas and therefore are targeting 2,500 to 2,600 members at maturity rather than the 3,000 members typically achieved in large city locations.

As these more recent cohorts mature and the earlier COVID affected locations normalise, the underlying economics of the business should become clearer again.

Near Term Operational Catalysts

A key operational initiative currently underway involves expanding twenty four hour access across the French network.

Historically gyms in France operated similar hours to traditional retail businesses, with limited evening and weekend access. Basic Fit identified that extending operating hours could significantly increase utilisation of existing facilities.

In markets such as the Netherlands and Belgium the concept is already well established, with approximately 75 per cent of clubs operating twenty four hours without staff present.

In France, however, regulations historically required gyms to have staff on site while open. To test the opportunity Basic Fit conducted a pilot programme during the second half of 2024, operating 70 locations with extended hours.

The results were encouraging and the programme has since expanded. As of January 2025, 333 French gyms already offer twenty four hour access.

Analysis of these locations suggests that extended access leads to a measurable increase in membership growth. On average, gyms with twenty four hour access are adding roughly 30 additional members per month compared with comparable gyms that maintain traditional operating hours.

Financial Impact of Extended Operating Hours

The financial implications of this change are significant.

Across the 333 clubs already operating twenty four hours, the incremental membership growth of 30 members per month per gym translates into approximately 360 additional members per year per location. Across the network this represents about 119,880 incremental members annually.

With an average monthly membership price of €24.25, this produces roughly €35 million in additional annual revenue.

Because gym operating costs are largely fixed, the incremental contribution margin on this revenue is estimated to be about 80 per cent. As a result, the additional members generate approximately €28 million in incremental EBITDA.

Expansion of the Twenty Four Hour Model

Beyond the 333 clubs currently operating extended hours, there is potential to expand the model across much more of the French network.

France currently has 875 Basic Fit gyms, meaning there are still more than 500 locations that could eventually adopt the same operating structure.

Assuming that 500 additional gyms transition to twenty four hour access during 2026 and each gains 10 additional members per month, this would translate into roughly 60,000 incremental members annually.

Under the same pricing assumptions this would add around €8.7 million in additional revenue, which after applying the expected 80 per cent contribution margin equates to approximately €7 million in EBITDA, assuming a weighted contribution for the partial year rollout.

Labour Cost Efficiency Opportunities

The transition to twenty four hour operations currently carries additional labour costs because French regulations require gyms to remain staffed while open.

Basic Fit has therefore relied on outsourced contractors to staff reception desks overnight. This has resulted in an incremental operating expense of approximately €35 million annually.

Even without regulatory change the company expects to reduce these costs by bringing more of the staffing function in house. If these outsourced costs are reduced by around 50 per cent, the company would generate approximately €17.5 million in additional EBITDA.

In the event that French labour law is modified to allow fully staffless operations, Basic Fit could eliminate the majority of the remaining costs associated with extended hours. If around 80 per cent of the remaining labour costs were removed, the company would capture approximately €14 million in incremental EBITDA.

Total EBITDA Impact From Operational Improvements

Combining these drivers results in four distinct sources of EBITDA growth.

Additional members at the 333 existing twenty four hour gyms Expansion of the twenty four hour model across additional French clubs Labour cost savings from insourcing front desk roles Further savings if regulations permit fully staffless gyms

Together these factors could generate roughly €66 million of incremental EBITDA by 2026.

Consensus forecasts currently assume approximately €404 million of EBITDA for 2026, which suggests the market is not incorporating these operational improvements.

Earnings Expectations And Valuation

Before the company announced the €35 million staffing investment required to support extended hours, analyst expectations were meaningfully higher. Consensus EBITDA estimates previously stood around €385 million for 2025 and €450 million for 2026.

Once the temporary staffing costs associated with the twenty four hour transition fade, those earlier expectations effectively represent the baseline for future profitability.

A probability weighted framework suggests approximately €477 million of EBITDA next year, with a reasonable range between €455 million and €500 million depending on the speed of operational improvements.

From a cash flow perspective the company could generate roughly €4 to €4.50 per share in free cash flow before growth investment during 2026.

A business capable of compounding free cash flow at around 15 per cent annually could reasonably trade near 15 times free cash flow, which again implies a share price close to €65.

Market Leadership And Brand Strength

Basic Fit’s modern expansion strategy began in 2013, when CEO René Moos repositioned the company as a scalable pan European low cost gym concept. The company listed publicly in 2016, at which point it had just over 350 clubs.

Since then the network has expanded rapidly. As of the first quarter of 2025, Basic Fit operates 1,616 gyms across Europe.

The geographic distribution is as follows.

France: 875 gyms representing 54 per cent of the network Netherlands: 243 gyms Belgium: 231 gyms Spain: 220 gyms Germany: 37 gyms Luxembourg: 10 gyms

The typical Basic Fit facility covers approximately 1,300 square metres and includes cardio equipment, strength machines, free weights and stretching areas. This standardised format allows the company to replicate gyms efficiently across multiple markets.

Competitive Pricing Advantage

Basic Fit competes primarily through affordability. Its membership prices are typically 15 to 20 per cent lower than competing gyms in the same markets.

The company currently offers three main subscription options.

Comfort membership priced around €25 per month providing access to all gyms within a country.

Premium membership priced around €30 per month providing access to all gyms across Europe and allowing members to bring a friend once per week.

Ultimate membership priced around €35 per month introduced in December 2024 allowing unlimited guest access and the ability to pause membership when needed.

More than 95 per cent of company revenue comes from these recurring subscription fees.

Additional revenue is generated through partnerships with personal trainers and physiotherapists, day passes, food and beverage sales, advertising within gym facilities and e commerce sales through Basic Fit’s nutrition brand.

Durable Competitive Advantages

Basic Fit’s economic moat is driven primarily by cost leadership and scale.

For most gym members the two most important considerations are price and convenience. Basic Fit focuses directly on these factors by offering the lowest price in its markets while maintaining a large network of accessible locations.

The gym industry in Western Europe remains fragmented with many independent operators. Basic Fit typically offers newer facilities, better equipment and more convenient locations while still maintaining significantly lower prices.

Structural Cost Advantages

Rent and labour represent the largest cost categories for gym operators. Both costs are largely fixed at the club level.

Basic Fit maintains a specialised internal team dedicated to site selection and real estate negotiations. As a publicly listed tenant with a strong credit profile the company is a highly desirable tenant for landlords, which allows it to secure favourable lease terms.

In addition, the company has invested heavily in technology that reduces labour requirements. Most gyms operate with roughly 2.5 full time equivalent employees, which is significantly lower than other low cost gym chains such as Planet Fitness or PureGym and far lower than independent gyms.

Basic Fit also operates a centralised surveillance system that allows multiple gyms to be monitored remotely.

Procurement And Build Cost Advantages

Gym equipment is one of the largest components of the capital required to open a new location.

Because Basic Fit is the largest purchaser of gym equipment in Europe, it benefits from substantial purchasing power. Research suggests the company can acquire equipment 30 to 40 per cent cheaper than small independent gyms and 15 to 20 per cent cheaper than boutique chains.

In 2023 Basic Fit also moved to a single supplier model with Matrix as its exclusive equipment provider, which further reduces costs and simplifies maintenance.

As a result, the typical investment required to open a new gym is approximately €1.3 million. Comparable gyms operated by competitors often require roughly 30 per cent higher capital investment.

These cost advantages allow Basic Fit gyms to reach breakeven profitability within about seven months once membership passes roughly 1,500 members. New gyms typically achieve payback within three to four years and deliver returns on invested capital of around 30 per cent.

Scale Driven Profitability

The economics of the model improve as the network expands.

Lower membership prices attract more customers per location, which increases revenue while fixed costs remain largely unchanged. Higher member density improves profitability and allows the company to reinvest cash flow into additional locations.

Amsterdam illustrates this dynamic particularly well. It is one of Basic Fit’s most mature markets and demonstrates the earnings potential once the company achieves full market penetration.

In this city mature gyms can generate more than €600,000 in EBITDA each year compared with roughly €399,000 for the average mature club across the network.

Cluster Based Expansion Strategy

Basic Fit typically enters new markets using a clustering approach.

Instead of opening isolated locations the company launches several gyms within close proximity of one another. This strategy temporarily reduces the profitability of individual clubs because of some internal competition, but it allows Basic Fit to rapidly dominate the local market.

Once a dense network of gyms exists within a city, it becomes extremely difficult for competitors to enter because they cannot match Basic Fit’s pricing or convenience.

This strategy has similarities to the expansion approach historically used by Domino’s Pizza.

Long Term Growth Opportunity

Basic Fit still has a substantial runway for expansion.

Since the IPO in 2016 the company has grown from about 350 gyms to more than 1,600, representing approximately 18 per cent compound annual growth in club count. Revenue has grown even faster and reached about €1.22 billion in 2024, representing a compound annual growth rate of roughly 21 per cent.

Management believes the network could eventually expand to between 3,000 and 3,500 gyms.

Regional Growth Outlook

France remains the company’s largest market with 875 gyms as of the first quarter of 2025.

The French fitness industry includes roughly 5,500 gyms, meaning Basic Fit has achieved around 16 per cent market share and is more than twice the size of its nearest competitors such as Fitness Park and L Orange Bleue.

Fitness penetration remains relatively low at around 11 per cent of the population. With a national population of around 65 million people, even a one percentage point increase in participation would represent roughly 650,000 additional gym members.

Germany represents the largest long term opportunity because of its population approaching 90 million people. Basic Fit currently operates only 37 gyms in the country but believes the market could eventually support between 650 and 900 locations.

Spain has grown rapidly from just 36 gyms in 2019 to 220 gyms today and could still more than double in size over time.

The Benelux region, which includes the Netherlands, Belgium and Luxembourg, currently represents 484 gyms and demonstrates the profitability potential of the model. In 2024 the region generated EBITDA margins of roughly 47 per cent.

Conclusion

Basic Fit appears to be a situation where temporary operational disruptions have obscured the underlying strength of the business.

The company retains clear competitive advantages through its scale, cost structure and network density. As French clubs mature, extended operating hours increase utilisation and labour costs decline, profitability should improve and earnings expectations are likely to move higher.

At the current valuation of roughly 5.3 times forward EBITDA, the market appears to be assuming these improvements will not occur. If earnings normalise and valuation multiples move closer to historical levels, the potential upside for shareholders is significant!