Planet Fitness, the popular workout chain, announced on Friday that its CEO, Chris Rondeau, has been ousted from his position in a surprising move that stunned investors and employees. The company’s stock dropped 15% following the announcement, reaching a 52-week low.
Planet Fitness is currently searching for a new CEO, both internally and externally, and in the meantime, Craig Benson, the former governor of New Hampshire and a member of the company’s board, will serve as the interim CEO. Benson is a franchisee of both Planet Fitness and Dunkin’ Donuts and has been on Planet Fitness’ board for six years.
The sudden departure of Rondeau has left many wondering what triggered the decision, especially after the company reported stronger-than-expected second-quarter earnings just last month. Some of Rondeau’s close staff members learned about his departure at the same time the news was publicly announced, leaving them shocked.
In a research note, William Blair analyst Sharon Zackfia described the news as “abrupt” and stated that it did not “appear planned” because the company canceled two planned investor conference presentations earlier this week. Zackfia also mentioned that the decision to remove Rondeau was characterized as the board’s decision, rather than Rondeau’s own choice.
Planet Fitness declined to provide further comment on the matter, and Rondeau could not be reached for comment either.
Rondeau has been a long-standing veteran of the company, having worked his way up from a front desk position nearly 30 years ago when the first Planet Fitness location opened in Dover, New Hampshire. He has served as CEO since 2013 and previously held the role of chief operating officer. Despite his departure as CEO, Rondeau will continue to be a member of the board of directors and will stay on in an advisory role to ensure a smooth transition.
Reflecting on his time at Planet Fitness, Rondeau expressed gratitude for the opportunity to lead the company and thanked the employees, franchisees, and members who contributed to its tremendous growth and success. He stated that he looks forward to supporting the management team in an advisory capacity and has confidence in the long-term potential of Planet Fitness.
During Rondeau’s tenure as CEO, he successfully led Planet Fitness through its Initial Public Offering (IPO) and tripled the number of its locations from about 700 to around 2,400. The company’s annual revenue went from approximately $200 million when Rondeau started as CEO to a projected $1 billion this year, according to Zackfia.
In a press release, Planet Fitness Chairman Stephen Spinelli Jr. highlighted the company’s ongoing efforts to enhance its competitive advantage, capitalize on its size and scale, and drive further shareholder value. He stated that the board believes now is the right time to transition leadership as the company enters its next chapter.
Currently, Planet Fitness’s stock is down around 34% this year, leading to a market value of approximately $4.47 billion. As the company presses forward with the search for a new CEO, it remains to be seen how this leadership change will impact its future strategies and performance in the highly competitive fitness industry.