Gymco
Practice this intermediate profitability case interview question in the Media & Entertainment sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
This case requires candidates to diagnose a profitability problem by analyzing the revenue impact of a strategic partnership that backfired. The key insight is recognizing that the HealthCo discount led to existing members churning and rejoining at lower rates, creating a negative economic outcome despite increased member acquisition. The case tests financial modeling skills and strategic business judgment.
Your client is an international chain of fitness centers, operating in Sub-Saharan Africa, Europe and Southeast Asia
GymCo missed its 2013 growth target of ZAR600M
The CEO would like you to investigate what is going on
Clarifying Information
- There are 2 major gym chains, GymCo has 60% market share, FitnessCo has 30%, and a few small chains the remaining 10%
- GymCo members pay a monthly membership fee of ~ZAR700 pm
- Market trends are in favour of gyms – consumers are switching to have more healthy habits
- There are a few smaller competitors that have recently entered the market – these are smaller gyms offering more classes, with less focus on free weights and cardio sections
- No other competitors have noticed any decline in revenues; in fact, they have had strong increases over the past 12 months