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Planet Fitness Inc (PLNT) Q4 2020 Earnings Call Transcript



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Planet Fitness Inc (PLNT) Q4 2020 Earnings Call Transcript



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© The Motley Fool
Logo of jester cap with thought bubble.

Planet Fitness Inc (NYSE: PLNT)

Q4 2020 Earnings Call

Feb 18, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

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Ladies and gentlemen, thank you for standing by, and welcome to the Planet Fitness Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] [Operator Instructions] [Operator Instructions]

I would now like to hand the conference over to your speaker today, Brendon Frey from ICR. Thank you. Please go ahead.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company’s SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

Motley Fool Transcribers has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Planet Fitness. The Motley Fool has a disclosure policy.

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Brendon FreyInvestor Relation

Thank you for joining us today to discuss Planet Fitness’ Fourth Quarter 2020 Earnings Results. On today’s call are Chris Rondeau, Chief Executive Officer; Dorvin Lively, President; and Tom Fitzgerald, Chief Financial Officer. Following Chris and Tom’s prepared remarks, we’ll open the call up for questions. I would like to remind you that certain statements we will make in this presentation are forward-looking statements. These forward-looking statements reflect Planet Fitness’ judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting Planet Fitness’ business. Accordingly, you should not place undue reliance on these forward-looking statements.

For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made in this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements included in our fourth quarter 2020 earnings release, which was furnished to the SEC today on Form 8-K as well as our filings with the SEC referenced in that disclaimer. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, the company may refer to certain adjusted non-GAAP metrics on this call. Explanation of these metrics can be found in the earnings release filed earlier today.

With that, I’ll turn the call over to Chris Rondeau, Chief Executive Officer of Planet Fitness. Chris?

Chris RondeauChief Executive Officer

Thank you, Brendon, and thank you, everyone, for joining us today for Planet Fitness’ Q4 earnings call. 2020 has certainly been an unprecedented year for the fitness industry and our business. With our members’ health, safety and best interest at the forefront of our decisions, combined with the strong foundation we’ve built with our franchisees over nearly two decades, Planet Fitness continues to face the ongoing challenges created by COVID-19 head on. I am extremely proud of how our franchisees, headquarter staff and clubs staff continue to be agile through this ever-changing environment and rally together to provide a clean and safe fitness experience for our members. Fitness is a key component of strong physical and mental health, which is more important now than ever before in the wake of a pandemic that disproportionately impacts those with health-related risk factors.

While the operating environment remains fluid, we are pleased that as of today, 90% of our stores are open. The vast majority of our closed stores are in California, with statewide restrictions on reopening remain in place, as well as parts of Canada and Panama. We are hopeful that the entire system will be open soon as we believe that the robust safety protocols we put in place allows our stores to operate safely. These include enhanced cleaning and sanitization, touchless check-in, COVID-19 wellness screening questions via the Planet Fitness mobile app, our Crowd Meter app, mandatory mask requirements and physical distancing measures. We remain committed to keeping our members and staff safe and healthy in all our stores.

Our ability to successfully operate our stores and service our members relies largely on the financial health of our system. Given the historical strength of our business model and franchisees, we have had zero stores permanently closed due to COVID and zero franchisee bankruptcies. While we have weathered the storm well relative to the overall gym industry, we have provided franchisees with relief in the form of a 12-month extension on all development requirements and an 18-month extension on their replacement equipment commitments. We believe this will allow franchisees to rebuild their balance sheets while continuing to invest in marketing to drive membership growth, which is our number one priority. As we discussed on our Q3 call in November, we resumed our national sales acquisition marketing efforts in September after pausing national promotions in mid-March when our stores temporary closed.

Consumers responded positively to our message, reinforcing that fitness is essential. The pandemic has negatively impacted people’s physical and mental health, and we have the right environment in place to keep people motivated and robust protocols in place to keep them safe. This helped slow the decline in total members we’ve experienced as a result of pent-up cancellations after our stores reopened and resumed billing. Looking back on the year, our biggest challenge in 2020 wasn’t the increased cancellations due to COVID, as cancellations were essentially flat to 2019 levels on a per-store basis. Our challenge was the lack of gross new joins as we paused our national sales acquisition marketing for the first time ever, including during certain key sign-up periods last spring and early summer. On the heels of a successful national sale in September, we conducted two more national sales in October and November in addition to the flash sale in December.

Overall, we’re pleased with the results, especially given the holiday season, a slower time in terms of sign-ups for the industry. We ended 2020 with approximately 13.5 million members compared with 14.4 million members at the end of 2019. Building off the momentum from our successful New Year’s Eve sponsorship, we kicked off 2021 with our usual January promotions. Our target audience are casual first-time gym goers continued to respond favorably to our messaging and value proposition. We were unsure of what to expect for this key industry sign-up period under these circumstances, and we were pleased with the results. We ended January with 13.8 million members, up from approximately 13.5 million members at the end of December, representing our first month of overall net member growth before the pandemic. The recent uptick in membership is very encouraging and reinforces our belief that people want to return to bricks-and-mortar fitness.

In fact, to date, 5% of our members who canceled during COVID have already rejoined, and 28% of joins overall since COVID are prior Planet Fitness members. In addition to driving members back into our stores, we continue to accelerate our digital efforts to further engage with our members wherever they are and enhance their overall experience with our brand. In fact, Planet Fitness mobile app is currently one of the top rank three apps in the health and fitness category for both Apple and Android, reinforcing that Planet Fitness remains a trusted source for health and wellness. Currently, 40% of our total member base has adopted the app and new joins’ app adoption rate continues to climb, reaching 70%. In addition, we continue to add value to the app with new features like the Crowd Meter, which enables members to check the capacity before coming to the gym. Building upon our partnership with iFit in April, we continue to provide streaming and virtual fitness content in our mobile app. These workouts are some of the most popular workout content to date.

We also continue to test PF+, our $5.99 per month digital-only subscription membership via the mobile app, and remain encouraged by the trends we’re seeing. For example, testing results so far have shown that more than 20% of PF+ subscribers are non-Planet Fitness members and more than 20% of them have since become bricks-and-mortar members in addition to their PF+ subscription. Additionally, of our members who have subscribed, nearly 60% of them have visited their store to work out since subscribing to PF+. So the majority of subscribers are still engaging with our bricks-and-mortar offering and see PF+ as a complement to their membership. These trends reinforce our view that a stand-alone digital membership can serve as a gateway to traditional bricks-and-mortar membership, not a replacement for it. It provides us with an opportunity to further engage members and prospects wherever they are. We will continue to assess content, engagement and usability feedback to inform broader rollout plans down the road.

While consumers’ adoption of digital fitness has accelerated, given the pandemic, I truly believe that the future of fitness industry is about bricks with clicks, the powerful combination of providing a high-quality in-person fitness experience coupled with the complementary digital experience where consumers can experience the brand in the club and at home. Given everything we’ve faced in 2020, I am very pleased with how our system has weathered the storm. We opened 130 new stores in line with most recent expectations, while at the same time, IHRSA, fitness industry’s trade or association, has predicted that about 25% of U.S. gyms and studios will permanently close as a result of the pandemic. While we have strengthened our leadership position during pandemic, we anticipate the near-term operating environment to remain volatile. Longer term, however, we are more optimistic about our prospects for growth than we were prior to COVID-19 for several reasons.

This includes capitalizing on the industry consolidation and favorable real estate conditions, we believe, will emerge over the next several years to grow membership and expand our physical footprint, evolving our technological capabilities to enhance our digital engagement and utilizing our powerful marketing machine to increase demand for our nonintimidating accessible fitness offering. I’m confident that Planet Fitness is well positioned to resume the growth trajectory the business was on at the start of 2020 prior to the outbreak once the pandemic is behind us. COVID-19 has widened the moat around our bricks-and-mortar business and accelerated our digital strategy, positioning us well to serve the casual first-time gym goer, whichever way they want to engage with the brand.

Thank you. And I’ll turn the call over to Tom.

Tom FitzgeraldChief Financial Officer

Thanks, Chris, and good afternoon, everyone. We opened 41 stores during Q4, bringing our full year total to 130. This compares to 102 in Q4 last year, which resulted in 2019 being a record year for us with 261 new stores opened. Our primary focus over the last several quarters has been reopening stores, restarting our national acquisition marketing efforts, which we did in September. And as a reminder, as Chris said, we provided our franchisees a 12-month extension on all new store development requirements and an 18-month extension on their equipment replacement commitments. For the fourth quarter, total revenue was $133.8 million, down $57.7 million or 30.1% compared to $191.5 million in Q4 last year. Of the $57.7 million decline, $49.0 million or 85% was attributable to lower equipment revenue, which was the result of the development and replacement equipment dynamics I just mentioned. The remainder of the year-over-year change in total revenue was primarily due to the impact from temporary store closures due to COVID-19 and the lower membership levels.

We ended December with approximately 13.5 million members, down 0.9 million from where we ended 2019. This compares to the 15.5 million members at the end of Q1, 15.2 million at the end of Q2 and 14.1 million at the end of Q3. The decline in memberships was primarily a function of lower gross new joins as we paused our national acquisition marketing efforts between March and September, while the majority of stores were temporarily closed. In fact, the average number of cancels per store in 2020 was consistent with 2019. With the decline in net membership we experienced starting in March when the pandemic forced the temporary closure of all of our stores, systemwide same-store sales turned negative in the third quarter and declined further in Q4. Now for some context, we reported 53 consecutive quarters of positive systemwide same-store sales growth before COVID hit in March and shut down all of our stores.

The simple average of our quarterly systemwide same-store sales growth over those 53 quarters was 12%, followed by negative systemwide same-store sales growth once we resumed reporting the metric in Q3 and Q4, primarily driven by the impact of the pandemic. Our model and historically strong same-store sales results depend on the ability to continually grow net membership levels across our store base month-over-month, quarter-over-quarter and year-over-year. Additionally, in our recurring revenue model, our same-store sales performance at any point in time is a function of what happened to our membership levels over the trailing 12 months. For the fourth quarter, systemwide same-store sales were down 10.6% with franchise down 10.6% and corporate-owned down 11.7%. The 10.6% decline in systemwide same-store sales was largely due to a decline in membership levels, slightly offset by an increase in average rate.

Black Card penetration declined 40 basis points year-over-year to 60.5%, with the decrease attributable to the cumulative effect of not having any Black Card national sales in 2020 versus the four we had in 2019. Additionally, the impact of multiple national sales in Q4 of 2020 versus one in Q4 of 2019 increased the rate of $10 joins. Black Card penetration in Q4 of 2020 was down 20 basis points compared with the third quarter. Now we incorrectly disclosed back in November that Q3 Black Card penetration was 62.7%, up 120 basis points versus Q3 of 2019. The corrected Q3 Black Card penetration is 60.7%, down 50 basis points versus the prior year period. The calculated metric we have in our system for monthly EFT member count was erroneously factoring out frozen members, which never had a material impact in the past. But when we began to see a modest increase in frozen numbers in Q3, the field understated our EFT member balance enough to skew the Black Card percentage.

To be clear, it was a formula error that we did not detect and is not a fundamental shift in the perceived value of the Black Card. Given the change in Black Card promotional cadence versus the prior year and the prolonged pandemic, we are pleased with the fact that the majority of our new members choose the Black Card option, even though it is more than twice the $10 membership fee we predominantly advertise in our marketing. Looking ahead, the way our recurring revenue model works, our same-store sales growth will improve once the quarter-to-quarter growth in membership levels in our comp stores exceeds the quarter-to-quarter member growth in the same prior year period. Therefore, we expect same-store sales to decline further in Q1 compared with Q4. We would expect to see improvement during Q3 of 2021 when we cycle the prior year’s most significant membership declines depending on COVID-related developments. Note that we will not report a same-store sales metric for Q2 due to the majority of our store base being closed during the prior year period.

Moving on to a review of our segment revenue results. Franchise segment revenue was $66.9 million, down $6.4 million or 8.8% compared to the $73.3 million in the prior year period. Now let me break down the components. First, royalty revenue, which consists of royalties on monthly membership dues and annual membership fees, was $43.8 million compared to $48.4 million in the same quarter of last year. The $43.8 million of revenue includes $3.3 million attributable to catch-up billing of annual membership fees that were not billed on their normal schedule due to COVID-related store closures. The average royalty rate for the fourth quarter for the stores that drafted was 6.3%, consistent with the same period last year. Next, our franchise and other fees were $3.4 million compared to $4.5 million in the prior year period. These are fees received from online new member sign-ups, the recognition of fees paid to us for franchise agreements, area development agreements and the transfer of existing stores.

The decrease was primarily driven by lower ADA and FA fees during the quarter. Also within franchise segment revenue is our placement revenue, which was $2.6 million in the fourth quarter compared to $5.6 million a year ago. These are fees we received for the assembly and placement of equipment sales to our franchisee-owned stores within the U.S. and Canada. The decrease reflects fewer new store and reequip placements executed in the quarter compared with a year ago. I’ll discuss the number of new equipment placements later when I discuss equipment revenues. Finally, national advertising fund revenue was $16.8 million compared to $13.2 million last year. The year-over-year increase was driven by a higher NAF contribution rate of 3.25% that our franchisees approved as a temporary rate increase and was in effect from the start of September through the end of 2020. Our corporate-owned stores segment revenue was $38.9 million compared with $41.2 million in the prior year period.

The $2.3 million decrease was due to lower membership fees from temporary COVID-related store closures and lower membership levels, but partially offset by revenue from nine new stores that opened since the beginning of Q4 2019 and 12 stores that were acquired in December of 2019. Turning to our equipment segment. Revenue decreased $49.0 million or 63.7% to $28.0 million from $77.0 million. The decrease was driven by both the reduced new store openings versus last year that I mentioned earlier in the call, along with lower replacement equipment sales to existing franchisee-owned stores. Replacement equipment sales in Q4 were $8.4 million compared to $20.6 million in Q4 last year. In the fourth quarter, we had 45 new store equipment placements, which was down 63 from the prior year period. An additional driver of the decline was the 15% discount offer we launched beginning in Q2 on all equipment orders to support our new store development and replacement orders. This offer applied to all equipment purchased and placed by the end of 2020.

Our cost of revenue, which primarily relates to direct cost of equipment sales to new and existing franchisee-owned stores amounted to $25.3 million compared to $59.4 million a year ago, a decrease of 57.3%, similar to the equipment segment revenue decrease I previously discussed. Store operation expenses, which are associated with our corporate-owned stores, increased to $25.6 million compared to $22.7 million a year ago. The increase was primarily driven by higher rent and occupancy expense associated with nine new stores opened since the beginning of Q4 2019 and the 12 stores that were acquired in December of 2019. SG&A for the quarter was $17.4 million compared to $20.9 million a year ago. The decrease was primarily driven by lower compensation and travel expenses, partially offset by higher marketing expense. National advertising fund expense was $15.0 million compared to $13.1 million in the prior year period. The higher expense reflects the portion of the $10 million incremental investment we made in national advertising from October through December, and that was recognized in the fourth quarter.

Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation and amortization, adjusted for the impact of certain noncash and other items that are not considered in the evaluation of ongoing operating performance, was $51.1 million compared to $76.6 million in the prior year period. A reconciliation of adjusted EBITDA to GAAP net income or loss can be found in the earnings release. I’ll now summarize Q4 adjusted EBITDA by segment. Franchise adjusted EBITDA was $43.6 million, down $7.3 million or 14.3%. Corporate store adjusted EBITDA was $12.7 million, down $5.1 million or 28.9%. And equipment adjusted EBITDA was $3.1 million, down $15.5 million or 83.2%. Adjusted net income was $15.1 million and adjusted net income per diluted share was $0.17, down from $0.44 per diluted share in the year-ago period. Now let me turn to the balance sheet. As of December 31, 2020, we had $515.8 million in total cash with cash and cash equivalents of $439.5 million compared to $419.7 million on September 30, 2020.

In addition, we ended the quarter with $76.3 million of restricted cash compared to $81.9 million at the end of Q3. We took some aggressive measures in 2020 to bolster our liquidity and are pleased with our cash position at the end of 2020, which should allow us to weather continued uncertainty related to COVID, but to also be able to invest in growth opportunities where appropriate. Total long-term debt, excluding deferred financing cost, was $1.8 billion as of December 31, 2020, consisting of our three tranches of securitized debt and $75.0 million of variable funding notes. Our securitized debt structure is covenant-light. We have two maintenance covenants, a debt service coverage ratio and a total systemwide sales threshold. Both of these are tested quarterly, calculated on a trailing 12-month basis and reported on roughly a two month lag. In our most recent debt covenant reporting period of December 5, 2020, we had a 32% and a 98% cushion to the first triggering event for our debt service coverage ratio and our systemwide sales covenant, respectively. We believe we have sufficient headroom for our two maintenance covenants.

While we are refraining from providing guidance due to the uncertainty surrounding the evolving nature of the pandemic, we do want to share current thoughts on development for 2021. As we announced last May, we provided franchisees with a 12-month extension on all their development requirements. With 130 stores opening in 2020, the vast majority of which signed leases prior to the outbreak of COVID, there are very few stores required to open in 2021. Until there is more certainty that there will not be further large-scale COVID-related temporary gym closures, franchisees are proceeding cautiously on development. Once conditions normalize, we expect franchisees to capitalize on the industry consolidation and more favorable real estate trends that are starting to emerge. Based on ADA schedules and a number of leases currently signed, combined with the fact that it takes between six to nine months to open a store once a lease is signed, our current view is that the new store openings will likely be in the range of 75 to 100 for 2021.

Near-term development is still a very fluid situation due to the pandemic, so we will update this view as the year progresses. While new development will be modest this year based on what we have heard regarding vaccines, we believe we will get back to 200-plus new store openings per year that we experienced for the last few years pre-COVID. We think it’s just a question of when, not if. While the near-term is difficult to predict, we believe that we are well positioned financially and strategically compared to the rest of the industry to capitalize on the many value-creating opportunities we believe will emerge over the mid to long term as the country comes out of the pandemic. And as the country collectively navigates toward a new normal, we believe that eventually, the post-pandemic future will be similar and possibly better compared to the pre-pandemic levels as it relates to the strong margins and the returns on investment our model produces.

I’ll now turn the call back to the operator for questions.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from Oliver Chen from Cowen.

Oliver ChenCowen — Analyst

All right, thank you very much. Regarding the look-forward for new member adds, the membership compares are still fairly tough in Q1, Q2. And what are the dynamics you see happening with new member adds and how that may interplay with your decisions around marketing investments? I would also just love your take on the Black Card view ahead and how we should think about year-over-year Black Card changes in terms of how that may impact modeling as we go forward?

Chris RondeauChief Executive Officer

Sure. Thanks, Oliver. This is Chris. Yes, as you seen here, as I mentioned in January and as I talked about on our Q3 call, we anticipated a slowdown in the decrease in member base here in Q4, which we saw. So we had the 1.2 million negative in Q3 and then a 600,000 negative here in Q4. And as I mentioned now, we’re starting to see first turnaround, I guess, if you will, hitting that trough of cancels, it seems like. And we’ve added 300,000 net members in January and continuing to see some net growth here in February as well. So some good news there. And naturally, January wasn’t as strong as we normally would see in January, but I think the fact that we’re finally turning the corner is a good sign. The NAF in marketing budget for the local advertising fund too, as the plan is set for the year, pretty similar to what we’d normally see from sale days for the rest of this year set today.

So — but it does beg the question, do we think we should add extra dollars to it, like we did here in Q4, to help bolster the marketing efforts? So no plan yet to do so. But there’s — depending on what we see here, the big question, Oliver, is as the vaccine is broadly distributed here for the next, call it, next few months, do we begin to see more demand in the summer and fall than we typically would see just because people are feeling less anxious out there? So that would definitely probably make us feel more confident in maybe putting extra dollars to work if we start to see that trend. But we’re really just laser-focused right now on sequential member growth month-to-month. Hopefully, this is the beginning here we’re seeing of that turnaround. As far as the Black Card percentage, actually we had no Black Card sales. And in the fourth quarter, we had a Black Card sale in December of 2019, which we did not have.

So some of it is the decrease of the stall of the growth in the Black Card, just because of the lack of Black Card sales as well as an increase in regular $10 a month sales. Because every time we average our $10 a month, we compressed the Black Card acquisition some during those periods. So we had more White Card sale days in the fourth quarter we typically had. So that kind of didn’t help as well. But we’re not seeing any increase in cancel rate of the Black Card, that’s for sure. So that’s some good news.

Oliver ChenCowen — Analyst

Okay. Finally, Chris, on usage, would just love your take on what you’ve been noticing with usage trends and if it’s relevant to know about how that’s been trending by different vintages of the gym base and any usage thoughts around different states having different vaccination ramps, if there are any insights there.

Chris RondeauChief Executive Officer

Sure. Thanks, Oliver. Yes, the usage, we ended December with about 75% of last year’s workouts, which was up from about — I think it was mid-60s here at the end of Q3. So it did continue to climb in Q4. The January usage is about 70% of last year’s workouts, but that was mostly impacted by the decrease in new joins, which typically use a club a lot more when they first joined us. So we didn’t really see it — and that was a number of really an impact of just what’s going on in the world is more just the new join volume was down, so the usage came back some.

But we are — we did see in the fourth quarter continue to go up as time goes. We haven’t seen anything that I can call out that is vaccination related that the usage is picking up. But the vintage stores, like the first main cohort that opened up, which has been opened the longest, which we’ve talked a lot about the last couple of quarters here, the more — the longer the stores are open, the more normal they act in almost all aspects. And those stores are accomplishing north of 80% of last year’s workouts. So the longer they’re open, the more normal they act.

Oliver ChenCowen — Analyst

Thank you very much.

Chris RondeauChief Executive Officer

Thank you.

Operator

Your next question comes from Jonathan Komp from Baird.

Jonathan KompBaird — Analyst

Yeah, hi. Thank you. Maybe just one question going back, when you look at the member trends in November and December, I think you had previously said October was down like 100,000. So implies a few more cancellations in November, December. So I just wanted to ask about that if there’s anything unique to those months. And then when you look forward in your — curious if there’s any observations from the demographics within the sign-ups that you’re seeing that — and any thoughts going forward once the vaccine rolls out?

Chris RondeauChief Executive Officer

Yes. On the cancels, you’re right, yes, October was about a little bit over 100,000 I think we saw when we reported last time. No big call-outs in what was the big increase. Like it wasn’t breakouts in different states or anything like that. But one thing that was attributed to the increase in cancels from like that Q1 report — or October report would have been the billing cancellations, meaning like involuntary cancels, Jon, where if somebody’s checking account doesn’t go through for a number of months, we give it six months, and then we involuntary just cancel the member, because we’re not going to keep trying the bank account. So because of the May — summertime openings, we began to circle that process. So then November, December, we had to clean those out. So that was really the only thing that caused that one there. For the vaccine, I think hopefully — I mean time will tell, but it probably stands to reason that as it becomes more broadly distributed and more people of all ages are getting at that, like I said with Oliver.

I think we could feel or see better trends from a joining perspective in months that we typically wouldn’t come summer or fall, because people are now just getting on with normal life. So — but time will tell. And I think that will also, like I said earlier, probably be more determining factor if we put more marketing dollars to work to capitalize on that and also capitalize on more gym closures. The industry has reported roughly about 17% of the gyms have permanently closed already. And as I mentioned in my opening remarks that the industry trade organization is saying about 25% they think will close when this is all said and done. So we’re seeing right now about 4% of our new joins are coming from a gym that they’re reporting that their old gym closed permanently and they’re coming to us. So we’re starting to barely see the — reap the benefits of the gym consolidation.

Jonathan KompBaird — Analyst

Okay, great. And then just one follow-up on the unit development comments. Any thoughts on how we should think about the year progressing? And then just with the return to net member growth here, how much of a role do you think that plays in the franchisees’ overall morale and then really makes to start to think about that reacceleration forward-looking on the development side?

Dorvin LivelyPresident

Yes. Jon, it’s Dorvin. One of the things I think we’ve talked about at this point is as we were going into the pandemic and stores were closing, we still had a lot of stores in our pipeline at various stages of construction. And so we ended up opening the 130 in 2020. But toward the summertime period, when most of our stores were closed, we weren’t putting a lot of new projects or sites into the pipeline. And a lot of that’s still going out toward the end of the year. There’s a handful of franchisees that are out there doing deals now in markets where real estate is very attractive, and they’re getting some good deals. But by and large, a lot of the franchisees have been kind of waiting to see, with all of the concerns around potential reclosures that we had in kind of the back half of 2020 and the anticipation of the vaccine and when that might get to a point of where more and more of the population are just kind of getting out and doing normal things, including wanting to join a gym. So that pipeline period of development from beginning to end, about a 6- to nine month process by the time that you start looking for real estate deal and negotiating and permitting.

And a lot of those kinds of things are, quite frankly, just taking longer now than they did pre-pandemic all the way from fewer people the towns and municipalities were permitting to, you name it, tradesmen, skills, etc. So I think where we stand now and the comments that Tom made, somewhere between, say, 75 to 100 stores for ’21, is kind of how we see it at the moment. Obviously, there’s a lot of months to go over the balance of the year, and we’ll certainly provide updates as we do our quarterly calls. I think maybe just tying that in to Chris’ comment, which I think was part of your question was that, obviously, as — if we start to see more and more people joining the gyms and people feeling more comfortable because of what’s going on in their everyday lives and then to the extent that we also believe the competition is again — has had a more severe impact than we had, I think that all of those are the kinds of things that will allow the franchisees to really start filling up the pipeline. But the deals that are being done now are certainly very attractive, and there’s quite a bit that will stay out there. So it gives us a lot of confidence, and it’s just a matter of when, it’s not if.

Operator

Your next question comes from Sharon Zackfia from William Blair.

Sharon ZackfiaWilliam Blair — Analyst

Hi, good afternoon. I’d actually like to talk about PF+ and kind of understanding is so and test, really what the gating factors are as you look at that toward a broader rollout. And then how would you anticipate the revenue share there to really break out between yourselves, iFit and your franchisees?

Chris RondeauChief Executive Officer

Sure, Sharon. This is Chris. Yes, that question there, we’re not releasing any subscription numbers just yet. But what we’re seeing in some trends there, as I mentioned in my opening remarks, is seeing about the same trend we saw from the free content consumption is that the PF+ subscription at $5.99, about 20% of those are non-Planet Fitness members, and about 25% of those have gone on to join bricks-and-mortar and keep their PF+ even after that, which is a great sign, as we talk about our gateway to bricks-and-mortar. Also, we’re seeing about 75% of all the subscriptions to date are actually current Black Card members. And many of them have been members for two, three, four years and actually opting to pay more for something else, which is a great sign, I think, for us, especially when we talk about the passes there, a situation where you wrap in the PF+ and a bundle for the Black Card and maybe get a little bit more price or acquisition for the Black Card.

So just a lot of learnings around that piece of it. As far as the broader, more marketing push around the PF+, we’ve taken this time to really just figure out what content people are consuming the most, what trainers they like the most, what’s really driving the consumption and who people are really taking to, so we know who to market to and what to market. So real-time learning going on with it, but I like the trends that we’re seeing with it as we continue to evolve the content and release more stuff in the app real-time.

Sharon ZackfiaWilliam Blair — Analyst

I guess one follow-up question too. I don’t recall you guys having given January number as before. So I appreciate you doing so. But having said that, I mean, what percent of typical first quarter adds come in January?

Chris RondeauChief Executive Officer

Yes. We usually do — we actually generated a big part of it. About 10% of the annual add, I believe, were in the month of January. But we have — and usually the following quarters — excuse me, the following quarter is usually in a single — low single digits for adds. So January and the first quarter is big for us. But we do add generally throughout the year, but first quarter is the largest. Real quick too on the revenue share for the app. Right now, we haven’t nailed exactly down how we’re going to revenue share with the franchisees.

But in everything we’ve done and have done in the past, we always look to do it in the best interest of the franchisees and is a win-win for both of us, because we want them to push the app as well. So there’d definitely be a revenue share, all or a portion, for sure. And then drive their ultimate profitability at the store level will then always lead to the fact — and the question we get all the time is, could you ever raise royalty again in the future? And no plans now to do so, but even more profitable, we can make the franchisees and the ability we have in the future to do something like that.

Sharon ZackfiaWilliam Blair — Analyst

Thank you so much.

Chris RondeauChief Executive Officer

Thank you.

Operator

Our next question comes from Peter Keith from Piper Jaffray.

Peter KeithPiper Jaffray — Analyst

Hi, thanks. Good afternoon, everyone. I wanted to just ask about the equipment sales. And I believe you’re saying there’s an 18-month grace period. I was wondering if that was extended for six months. Recently, I seem to remember or recall, previously I think it was at 12 months. And then furthermore, it sounds like the 15% discount has expired here as we got into the new year. So is it possible that the equipment sales actually get a little bit worse on a year-on-year basis before they get better, as potentially some sales have pulled forward into Q4?

Tom FitzgeraldChief Financial Officer

Yes. Peter, it’s Tom. I’ll take that and Dorvin may add to it. Yes. So the 15% discount that we offered expired at the end of the year, as we talked about. And I think it was at ICR that we disclosed that we had extended the initial 12-month extension on the equipment reequips essentially to 18 months. And again, it was just more of a reflection of our discussions — ongoing discussions with franchisees. We kept the 12-month extension in place for the new stores and the ADA development agreements, but we did elect to add that six months on. And I’m pretty sure that’s where we disclosed, it was at ICR. And I don’t think that — we typically have a couple of periods during the year where we do offer a slight discount on the equipment, that’s kind of pre-COVID, we’ve been doing it for a long time that way.

And we’ll continue to do that. We sort of stopped the 15% at the end of the year and kind of more back on our normal cadence. And we’ll talk more about where that equipment business goes on our first quarter call. But clearly, there are still franchisees who are going to reequip their stores, because they want to take care of their current member base and make sure, especially in stores that have a lot of members, that the equipment gets pretty beat up over five, six years that they give those members a great experience. So they’re going to protect their asset and make the investment where it makes sense.

Peter KeithPiper Jaffray — Analyst

Okay. That’s helpful, Tom. And then maybe a competitive question for Chris. You’ve talked about 25% of gyms closing. I think you said 17%, you think, has closed thus far. Do you have any perspective on timing? We’ve heard that there’s maybe a lot of closures as of late as gyms didn’t get the normal January sign-up. So I guess, broadly speaking, could we see an acceleration of closures in ’21? And do you see that continuing?

Chris RondeauChief Executive Officer

I mean anecdotal, I think what we’re going to see is probably over the next 12 months. I believe as stores have reopened, probably waiting to see what happens with the summer join — I mean the winter join period, right? It’s kind of to your point. But I think also what’s going to happen here is as stores reopen, a lot of this deferred rent that the landlords were accommodating through this close period and now you’re opening up with less revenue and you’re opening up with more expense, right, now your rent is rent plus 50% or something like that to make up for your months of black math and maybe also with your lenders as well. So I think that’s when you — you’ll make a go of it, you’ll have a weak winter and then your expenses are higher.

And into of the summer months, we’ll probably see more closures coming, I would imagine. Time will tell. I think the other side of that too is, as I mentioned, our usage now is at 70% here for the month of January and we ended December with 75% of last year’s workouts. Most of this industry survives — part of the revenue, about 30% roughly, is from ancillary services. So each member visit coming in, they’re banking on people buying personal training and buying a juice bar drink and buying day care hours and so on. So not only is their membership down, but now the usage is down, so they’re not selling. Ancillary profits isn’t either. So their revenue model is even much worse.

Peter KeithPiper Jaffray — Analyst

Okay, thanks so much and good luck guys.

Chris RondeauChief Executive Officer

Thank you.

Tom FitzgeraldChief Financial Officer

Thanks.

Operator

Your next question comes from Randy Konik from Jefferies.

Randy KonikJefferies — Analyst

Yeah. Thanks a lot. Good evening, everybody. Chris, I want to focus my questions around the bricks with clicks kind of commentary. What’s — how do you think about the ultimate long-term vision on how that would look? Obviously, you’ve got the stores. You’ve got the PF+ in beta and the free content. Just how are you — what’s your vision? I mean like how it all kind of comes together down the line? What would you see as the ultimate scenario of how this would kind of look in your eyes for the industry?

Chris RondeauChief Executive Officer

Sure. Yes. I think — in fact, you may heard me talk about how we — right now, we’re top five in the iOS store as well as the Android as far as app — fitness app. So we think about with our — now with 13.5 million members, we have about 40 — 41% of our total member base as we have today. New joins, though, we’re getting about a 70% app adoption of new joins. So we’re just driving people to the app constantly because of the bricks-and-mortar part of our component to this. So we’re not trying to compete with necessarily other apps in the app store. We’re actually driving usage just because they’re as part of their membership. Longer term, we think we have a platform now where we have the content, which is exercise content, and we have live classes as well, and we continue to grow that library. But the platform is built now that now you start going into offering things around yoga and meditation and diet, nutrition and cooking and all kind of other stuff that you can now build off of.

So that hopefully, now we can start not only to service the members inside the facility, but also at home and also their full circle wellness journey, right? If you think about the gyms or bricks-and-mortar, for example, I mean, all we really were was, hopefully, they run to the — they come to the front door to us, so we can service them, but that’s the extent of it. Then they walk from the facility, we can’t service the members. And then if they’re looking for other components of their wellness journey, they’re having to go search for themselves, right? And they have four different apps or what have you to close that circle on their wellness journey, whether it’s meditation or outdoor running with their bricks-and-mortar and diet nutrition. And I think we can close the circle and just be a one-stop shop. Coupled with the fact is, most of the industry, especially in the digital space, it was — is about the fit getting fitter, which is just like the bricks-and-mortar.

The Gold’s Gyms, the LA Fitnesses, the CrossFits, the Orangetheory, they’re not catering to the 80% of the population that didn’t have a gym membership. Over to our fact, the 40% of the members that joined that never went to gym in their life. So we’re really getting people off the couch for the first time, and the content is geared toward them too. So I think we can really be — not only the nutrition component for the first timers, people are really trying to get healthy for the first time, we can close that circle to them and make it easy for them, because they don’t really know where to go, quite honestly. So we want to ease the burden of trying to figure out on their own and do that. And then with the PF+ subscription, we can leverage that piece. And also we haven’t gotten into merchandise and nutrition as far as the nutrition drinks at home, rubber band, the things that the trainers are using at home that we could sell product through the app. I mean it’s just — there’s a boatload of things we can do within the app itself. And acquisition is always a key component of the app.

And right now, between — the referrals we’re seeing are great. I mean every time we have big joins coming through, the members are referring — the friends who join, they’re seeing the referral joins come through with a great conversion rate. We’ve seen Black Card upgrades come through the app. The Black Card guests are now logging their — Black Card guests come to the app, and we can market to them. So a lot of low-hanging fruit now that didn’t really exist even a year ago that we’re able to leverage to continue to grow members. And from a competitive advantage, you think about back to talking about the competition with Peter a minute ago, I mean they’re just trying to keep their lights on at this point. And our digital acceleration is so much further ahead of what everybody else is doing in bricks-and-mortar that would just, again, build a stronger moat and we’ll get wider moat from our competition once they finally are able to determine how to keep the lights on it or not.

Randy KonikJefferies — Analyst

Right. And so it’s clear that the membership is obviously inflected and you’re building this member base of having the app that’s under — over 40% have the app. How do you think about basically the next leg of — the card you have with digital capabilities, changing the type of equipment you have in gym, I think I was — I went to the one gym or one of the two gyms that had the equipment where it kind of tracks what I’m doing on the treadmill and then throws it into my plan of fitness app. Can you kind of elaborate on that? And then I’ve always seen clear opportunity for you guys to attack the insurance companies or employers directly for more B2B relationship and drive that value-add to everyone wanting to get more fit and well. How do you guys think about attacking those different angles going forward?

Chris RondeauChief Executive Officer

Sure. Good question. So yes. So even from the cardio standpoint in the app and then the visits and check-in, in the front desk of your business are also in the app, which you then can export and PDF to your insurance companies for reimbursement. And on top of that, you may have noticed, Randy, the QR codes on the equipment, the strength equipment. So now that QR code reader that’s in the app so that members can learn how to use different apparatus within the store were now able to track what people are doing by age and gender, what machines they’re skinning the most, what people like the most so that we can — one is make sure we have the right makeup of equipment in the store, but also now begin to see what journeys different people are taking of different market segments and what’s driving results and what’s driving tenure based on what they’re doing. So they’re getting a better exercise or they’re more — they have more fun in the gym, because they’re teaching and learning more things.

So now the next time somebody joins, we know exactly the journey that put them on and what to recommend in the app, because we know what people like of certain ages and genders, for example. So it’s going to be really interesting to be able to now coast people the right way on what people are doing to just see members using the equipment now and what we know they like, so we know how to get people on a journey. Because in this industry, if somebody joins, we don’t know what makes people stay necessarily or leave. We don’t know what they’re doing in the facility. Now we can see what they’re doing in the facility, to see what’s driving tenure longer term. So that’s going to be interesting thing that will happen over the future, but it’s really interesting to see. Terms of your insurance question, we reimburse for insurance just like most other clubs in the industry, but all we are able to tell insurance companies is that somebody checked in.

We have no idea how long you were there. We don’t know what equipment you use. We don’t know how many calories you burn. We don’t know what your heart rate was and so on. So cashing all that data, we might be the only — at this point probably the only gym company in the country that can actually supply insurance companies with the data that really matters, right? Not that they get checked in, but we know all the other stats for you that could get to the point where reimbursement comes from insurance, you have to go to Planet, because no one else can really supply us the data that we really want. And no one has the money to put resources to put together to develop it from the other gym companies. So more to come on that, but it could be interesting that we’re able to give insurance companies true data that shows true results for their subscribers.

Operator

Your next question comes from Simeon Siegel from BMO Capital Markets.

John IvankoeJPMorgan — Analyst

Thank you. Hey guys, hope you’re all doing well. Chris, just given that Black Card conversation, any change around your thoughts around how you’re going to approach Black Card sales? And any view on where the penetration should trend over the year? And then, Tom, just to your point, can you help us — what percent of members are on frozen memberships now versus previously?

Chris RondeauChief Executive Officer

Yes. I think in the BC percentage — we weren’t pushing Black Card sales, mainly because we wanted to try to drive more volumes. So we were doing just $10 sales through the second half of last year. We’ll begin probably to start testing some Black Card sales flash sale that we have in previous years here coming up. So I don’t think — and I think it should — I’m not sure it’s going to surge forward, but I think we should probably hold our own here for 2021.

Tom FitzgeraldChief Financial Officer

Yes, Simeon. On the frozen side, and I think we talked about this before, but we typically would only allow people to freeze for medical reasons or if they were deployed in the military. And with all the pandemic, we were much more forgiving, if you will, on — if people weren’t comfortable coming back to the gym to freeze their membership once their store reopened. And really, it’s still an insignificant component of our membership base. It’s just that the way the math works in that particular calculation, it moved enough to throw it off. But it’s still — and it certainly climbed in Q3 and then into Q4 as a percentage of the member base as the virus resurged.

And thankfully, all the numbers are going in the right direction now, but back then, they were going in the wrong direction in terms of cases and deaths across the country. So while they were up, they were still a low single-digit percentage of our member base. And yes, we’re encouraged to see now in January that the percent of frozen members — the percent of memberships that’s frozen is declining. So — but still, it’s relatively insignificant, low single digit. It just spiked up from what was — what it had been historically.

Simeon SiegelBMO Capital Markets — Analyst

Perfect. And then appreciate the unit color. You might just want to pass on this. But just given a lot of the moving pieces and the cost to run the gym is different than it was pre-COVID, any help at all how you’re thinking about any of the different expense line items over the next year or anything we should keep in mind?

Tom FitzgeraldChief Financial Officer

In terms of us as a franchisor, or you mean for the franchisees and their units?

Simeon SiegelBMO Capital Markets — Analyst

Whichever way you want to approach it, I guess. I’m just trying to think through as we think about the way the 4-wall and as we run flow-through in the business, has any of the COVID — what sticks and what goes away? What are the actual savings? What are the extra costs? Just anything to keep in mind as we…

Tom FitzgeraldChief Financial Officer

Got it. Yes. Thanks for clarifying. Yes, the incremental cost, I think way back when, when we were first in this, we talked about what the impact could be in sort of 100 bps on 4-wall profit. I think we might have said 100, 150 bps. And we were still at that point not really fully reopened by any means, or there was a small percentage of clubs — stores that were reopened. So we were kind of estimating at the time. Now that we’ve got 90% of the system reopened for a while now and — 80%, 90%, we’ve got much more of a usage pattern, and those costs are really pretty de minimis, thankfully, in part because the costs have come down for some of those things that we were buying early and paying high prices when everyone was trying to buy them and we were doing all that we could to just make sure we could secure it, so we could reopen the club and implement our playbook that we established. So thankfully, it’s pretty de minimis.

Operator

Your next question comes from John Ivankoe from JPMorgan.

John IvankoeJPMorgan — Analyst

Hi, thank you. I wanted to talk about the 75 to 100 stores that were guided to open this year. If you, I guess, were to add that store growth to ’20, you would have something actually pretty close to a normal Planet Fitness development year, just kind of adding ’20 and ’21. So first, I mean, is there a reason I shouldn’t think about it like that? I mean in other words, the units that were being opened in ’21 or the units that were basically planned to be opened in 2020. And really, the context of the question is, do you see a meaningful pipeline beyond that 75 to 100? Or after that, is it possible that, that’s where the relatively short-term pause might come whether from the franchisees’ intentions or perhaps even the lenders that have recently given some waivers?

Dorvin LivelyPresident

No, John, I don’t see a correlation to, let’s say, deferred stores that maybe would have opened earlier got pushed out. It could be a little bit of that, but it wouldn’t be obviously spread out all throughout 2021. So maybe we had some stores open in January that would have opened — without COVID, could have opened in November, December, something like that. So there could be a handful of that. But if you go back to the comments we’ve been making at least for the last two quarters and some of the comments I made earlier, what franchisees, they just didn’t go out and kept putting new sites into the pipeline. And so what we saw in 2020 was a slowdown in adding more sites into the development pipeline, and then ultimately — obviously, not opening, and slowing down a little bit on some of the development. They weren’t going to open stores in June or July if their fleet were closed, and they couldn’t have any members come into a gym.

So naturally, things just got kind of pushed out and pushed out or deferred aways. But in general, most all of the sites that were in development — or most all of the sites that got opened were in development or certainly on the drawing boards pre-COVID. So that’s why I wouldn’t correlate these together. But what I would say, though, in terms of — you obviously did the math and it does get back close to what maybe a normal year would have been, is that it’s just that there’s a handful of franchisees out there that are looking at sites. There’s some leases already signed. So commitments are being made. It’s not like every single franchisee and every single market where they could put a potential location that they’ve already identified as a potential Planet site, it’s not like that they’re working them all, but they’re also looking at some of them. And so we just see it as a — here we are in — with one month, 1.5 months into the year versus where we may have been in historical years when there was a full pipeline of activity going on.

Let’s say, right now that would be for September, October, November kind of time frame, we don’t have the same level of insight and the same level of activity going on by franchisees. Now one thing I didn’t say earlier, if we get into — let’s just say we get into the summer months and all of a sudden the majority of the people that are going to be vaccinated with the medications out there and they’re immunized, will franchisees then — and things are looking normal as normal can be an everyday life, if they really started working sites really hard, the risk we have, when you get past June, July, August is it’s going to be very difficult to get those open by the end of December. So if the pipeline really starts to fill up later in the year, a lot of those sites then will fall into 2022. So that’s — I think — hopefully, I answered your question, John.

John IvankoeJPMorgan — Analyst

You did. Thank you, Dorvin. We previously talked about new unit volumes. That’s not an easy calculation anymore for, obviously, things like store closures, memberships being frozen, just the difficulty, as you’ve said, of attracting new members, which is something different than your cancellations, which are in line. So can you comment either qualitatively or quantitatively just kind of how the fiscal ’20 development class has been? I mean I know gyms are at 70% of previous use that’s systemwide, and 80% or 65% or 70%, whatever you want to say, 80% for the markets that opened mid-May, how are those new unit volumes trending in, I guess, as the past breakeven for those stores? Has it materially changed based on where the new unit volumes might be?

Dorvin LivelyPresident

Yes. I’ll take stab at this first, and then maybe Tom can add to it. If you go back and look at the sites we opened in majority of all of Q1 last year, because COVID really didn’t happen until right around the middle of March or so, our stores we opened late Q4 of ’19 and the majority of Q1 of ’20 were following very similar patterns to what it had been historically. So no change in the model. And then when we got into shutdown and all the clubs were closed, and you very well know the rolling opening schedules that we had throughout the year and still now with California still closed, the stores that we opened throughout the year, they certainly opened up with fewer members than what they had historically, because in a lot of cases, we didn’t even do presales.

And that’s a key marketing tactics that you — we have used in the past, where you would typically get into a virtual presale anywhere from 60, 75 days preopening and you continue that virtual presale all the way to opening, but you typically roll into a physical presale about 30 days to opening. And we didn’t do that in very many cases at all last year just because of COVID and what was going on and the execution and ability to be able to do that. Now what — from the conversations that we have with franchisees and the data we look at, we still believe that there is a significant return to the investment. But if you look at the commentary that we’ve been making and some of the comments that Chris had made earlier in his remarks and some of the ones Tom made is that the amount of usage in the club and the amount of member growth is certainly different than it had been historically.

January is a great example or even if you go back and look at the last half of 2020. But from conversations that we have with franchisees of deploying capital, this is not a situation of not opening stores to get the return. It’s a matter of when at the right time, given we’re still in the middle of COVID.

Operator

Your next question comes from Paul Golding from Macquarie Capital.

Paul GoldingMacquarie Capital — Analyst

Thanks so much for taking my question. I guess the first one goes back to the cadence of any cancellations. I know in the past, you’ve talked about how there may be a pop from California reopening, and we’re still seeing closures in California. Should we expect anything around that as far as just to continue to be vigilant for a pop in cancellations when California reopens? And then I have a follow-up along the same lines.

Chris RondeauChief Executive Officer

Yes. Based on all of the different opening cohorts we saw throughout 2020, we would expect that California is finally allowed to — would probably see the same when the billing resumes. The question is if it’s the middle of February or March, for example, or April, is it still — because it’s more of the winter months and not — before we were opening the clubs in the middle of July, right? So maybe some seasonality could help them a little bit. But I would imagine, once the billing resumes, we would see that spike there. Granted, it’s the 150-or-so stores, that’s not a big 500 club pop like we saw when the other cohorts were opened by chunks.

Tom FitzgeraldChief Financial Officer

Yes. And maybe I would just add one thing on that one is we have seen more cancellations during the closure period in California than we saw in the other states during their closure period. I think part of that is because unfortunately, in our scanning of the market, most of our competitors are not following the guidelines to remain closed. We are. And so we’ve seen — we believe some of our cancellations are probably going to gyms where they’re running and operating, even though they are against the local guidelines, which is unfortunate that the state can’t enforce the mandates they put out.

Paul GoldingMacquarie Capital — Analyst

Interesting. I appreciate that color. And then my second question is around, I guess, in part the expectation of maybe 75 to 100 stores, but also just the financial impact of maybe a pause in new adds from the extreme weather we’ve seen lately. Have you modeled that into some of these expectations? Is there anything that we should be considering when we look at that as far as weather being inclement and giving some sort of difficulty to net adds in the period?

Chris RondeauChief Executive Officer

Yes. I don’t — we haven’t seen — I mean it’s actually Texas that’s had some clubs closed down there because of the weather, less or no power or perhaps frozen, but we haven’t seen any big number changes that’s drastic at this point from Jones.

Tom FitzgeraldChief Financial Officer

And Paul, if your question goes to, does that affect our outlook on the 75 to 100, the answer would be no.

Operator

And your last question comes from Joe Altobello from Raymond James.

Joe AltobelloRaymond James — Analyst

Thanks. Hey guys, good afternoon. So first question, I just wanted to clarify something that I think you said earlier, Chris. I think you said 10% of annual net adds are typically occurring in January. Is that the right number?

Chris RondeauChief Executive Officer

There is…

Tom FitzgeraldChief Financial Officer

It’s about 1/3 for the year in Q1, and the highest month of the quarter is January, for sure.

Joe AltobelloRaymond James — Analyst

Okay. Okay. And then in terms of overall membership, I think you guys have said in the past that the hope was to get back to year-end ’19 levels, call it, the 14.4 million sometime in early ’21. And I’m curious if that’s still the case? Or does the 75 to 100 new stores this year impacted at all, the timing of that?

Chris RondeauChief Executive Officer

I mean that would be the hope, but I think it’s probably still too early in the year to figure out where things all pan out to definitely get there. We are finally adding members for stores, as I mentioned, and finally going in the right direction. I think as long as we have sequential member growth, which is the ultimate goal, that — we’d really like to get back there as soon as we can. I don’t know if we’ll make it this year, but that’s going to be our goal. But I don’t think — it depends. Again, it depends what happens when California opens and adds to it or if we get reshutdown. But I think being here in just February, it’s hard to really predict it just yet.

Joe AltobelloRaymond James — Analyst

Great, thank you.

Operator

And I will now turn the call over to Chris Rondeau for closing comments.

Chris RondeauChief Executive Officer

Well, thanks, everybody, for dialing in today. And 2020 was definitely a trying year for the industry, for sure, but extremely happy with our franchisees and club staff and our corporate staff for staying strong and getting us through it. And couldn’t be happier that the strength of this model has gotten us to — through that year and into Q1 here without any closures because of COVID, which is a testament to the strength of our franchisees and the business model at hand. And I think that question is not a matter of if, but when in our competitive advantage coming out of this with more closures in the industry and plans in the industry here of a lot of different players out there will just give us more runway and more room to clearly grow to that 4,000 unit potential and possibly more in done.

So I do believe that COVID will definitely — people will walk out of this with definitely a more appreciation for health and wellness and taking better care of themselves in the future. And the fact that only 20% of the U.S. even has a gym membership, and that’s only moved 5% in 25 years, I think there’s a good chance this could all pan out and moved us 5% in the next five or 10 years. So I think we could accelerate that greatly. So thanks again for dialing in, and look forward to our next call. Thank you.

Operator

[Operator Closing Remarks]

Duration: 70 minutes

Call participants:

Brendon FreyInvestor Relation

Chris RondeauChief Executive Officer

Tom FitzgeraldChief Financial Officer

Dorvin LivelyPresident

Oliver ChenCowen — Analyst

Jonathan KompBaird — Analyst

Sharon ZackfiaWilliam Blair — Analyst

Peter KeithPiper Jaffray — Analyst

Randy KonikJefferies — Analyst

John IvankoeJPMorgan — Analyst

Simeon SiegelBMO Capital Markets — Analyst

Paul GoldingMacquarie Capital — Analyst

Joe AltobelloRaymond James — Analyst

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