First Laundromats, Now 24-Hour Gyms. Who Is Making the Money This Time?

Walking around town lately, I keep noticing unstaffed 24-hour gyms everywhere.

Not long ago, oddly polished, upscale coin laundromats were opening one after another. Now, apparently, it is gyms.

Are there really that many people who want to lift weights at 3 a.m.?

The business model is well designed. Once you line up the training equipment, customers do their workouts on their own.

Staff is kept to a minimum. Every month, membership fees keep clinking into the till.

It certainly sounds profitable.

But whenever I hear a story like this, I can’t help asking: who is actually making the money?

Is It the Gym That Profits, or the Headquarters?

Businesses like these often involve a franchise headquarters or a company that sells “business launch support.”

“Once you make the initial investment in equipment, you can earn a stable income with almost no effort.”

That is the kind of sales pitch they use to recruit owners.

Headquarters earns money from franchise fees, equipment sales, and monthly royalties. Meanwhile, if a location’s sales fall short, the owner is still on the hook for the rent and loan repayments.

And once it becomes clear that a business looks profitable, competitors naturally jump in.

If three similar gyms open in the same neighborhood, they end up fighting over customers.

For headquarters, more locations mean growth. For existing owners, it may just mean more competitors.

I have seen this pattern somewhere before.

Yes: coin laundromat investments.

For a while, impressive-looking laundromats opened one after another. But the equipment costs were heavy, customers didn’t come as expected, and some owners began to struggle.

Line up washing machines, and you’ll make money. Now, line up workout machines, and you’ll make money.

Japanese people, it seems, love stories where money comes in just by lining up machines.

Attractive in an Era of Deflation, But…

I think one reason these investments became popular was Japan’s long period of deflation.

Bank deposits paid almost zero interest. The stock market had little energy.

In that environment, the idea of taking on debt to own a store and earn a monthly income had a certain appeal.

But things are different now.

Inflation has set in, and the stock market has changed dramatically from what it used to be.

Is it really worth investing tens of millions of yen, or hundreds of thousands of dollars, in equipment, paying rent, and running a business while living in fear of a competitor opening nearby?

If it were me, rather than getting into that kind of investment, I would buy an index fund and leave it alone.

Stock prices may fall, but at least nobody will call me in the middle of the night to say a treadmill has broken down.

What Will Multiply Next?

A 24-hour gym is convenient for its users, and I am sure some locations are doing very well.

But a convenient service and a profitable investment are two different things.

Laundromats and gyms are both great to have when you are a customer.

The problem is looking at them and thinking, “If I become an owner, I’ll make money too.”

Every time I see a brand-new gym on a street corner, I wonder what it will look like a few years from now.

By then, some other kind of unstaffed store may be in fashion.

First washing machines, then workout equipment. What will they line up next?

In the end, the thing this business trains most efficiently may be the owner’s patience.

And what headquarters trains most diligently is its ability to pull money out of the owners.