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The bankruptcy filing will only affect company-owned locations -- which make up around 10 percent of the chain’s nearly 700 locations globally -- and franchisee-owned gyms will not be impacted, CEO Adam Zeitsiff said.
The news comes after the privately held company permanently shuttered around 30 of its gyms because of the COVID-19 outbreak last month and as new members flock to reopened franchises in states like Tennessee and Georgia.
"No one had a playbook for this, the virus affected us very deeply, we had to take immediate action," Zeitsiff told FOX Business on Tuesday. "Choosing to close those clubs and going through this financial restructuring is going to ensure we come out a stronger company."
Gold's Gym's bankruptcy filing follows a slew of retailers that have filed for bankruptcy in recent weeks as big-box gyms struggle to stay afloat. In April, the owner of the New York Sports Club weighed a Chapter 11 bankruptcy filing as 95 percent of the company's gyms across the country closed to curb the spread of coronavirus, according to a report by Bloomberg Law.
When the stay-at-home orders were put in place back in mid-March, Gold’s Gym made its digital personal training app, GOLD’S AMP, free to users through May 31 providing access to at-home workout content with more than 600 indoor and outdoor workouts. The Dallas-based gym is also launching on-demand streaming of video workouts that will be live before the end of the summer, Zeitsiff said. Gold's Gym members would pay between $5 to $10 more to access its virtual workouts on top of brick-and-mortar memberships, which cost around $20 a month, not including an annual and enrollment fee.
While digital workouts have proven to be essential to the evolution of fitness in the age of coronavirus, Zeitsiff says the virtual-only fitness model is not sustainable for Gold's Gym's model, which was founded on bodybuilding.
"We’re not going to replicate the Peloton or Soul Cycle experience like that -- that’s been done," Zeitsiff said. "You’re not going to see a Gold's Gym spin bike or treadmill tried to a screen."
Gold's Gyms have already started to reopen in some states like Tennessee, Georgia, Wyoming, and this Friday, Oklahoma City, however, Zeitsiff said classes will remain temporarily canceled at least for the next three to four weeks, along with its kids' clubs, to ensure safety among members.
Tennessee, in particular, has already seen an influx of new Gold's Gym members, Zeitsiff said. Each club sold an average of 40 new memberships per club in a three-day period since reopening doors amid the pandemic.
Chapter 11 bankruptcy protection lets a company continue to operate as it restructures its finances.