Tokyo survey company reports insolvency for record number of fitness clubs in Japan

March 26, 2024

According to private survey company Tokyo Shoko Research Ltd, a record number of fitness clubs in Japan have gone insolvent this fiscal year despite the market size growing.

While COVID has passed and with people having more opportunities to get out and about, Tokyo Shoko Research reports that the number of health club insolvency cases has reached a record high.

Tokyo Shoko Research Ltd., shared that there have been 28 fitness club insolvency cases in the 2023 fiscal year as of February, with a month left in the fiscal year. This has already surpassed the 16 cases in the 2022 fiscal year, the previously highest number since the firm began its survey in 1998.

Although the fitness market is growing in size due to increasing health consciousness, the company points out that "the shakeout of clubs that continue to perform poorly is proceeding at a rapid pace."

As reported in Japan's National Daily The Mainichi, Japan’s Ministry of Economy, Trade and Industry's Current Survey of Selected Service Industries, revealed the total number of fitness club users in Japan had been rising steadily since 2000, peaking at a total of 256 million in 2018. However, due to the COVID-19 crisis, the figure declined to 171.58 million users in 2020. As the impact of the pandemic subsided, the number of visitors to health clubs began to recover, and in 2023, it hit a total of 216.79 million users, up 3% from the previous year.

Tokyo Shoko Research analysed the management of fitness centres in recent years and notes “there are mainly two types of health clubs: major clubs that charge high membership fees but offer a full range of equipment and trainers, and others run by local companies that offer a smaller variety of training machines but are less expensive.”

More recently, ChocoZap, a new budget 24/7 storefront gym launched by Rizap, is gaining momentum. ChocoZap simple training gyms are inexpensive with members who can use the facilities anywhere in Japan.

ChocoZap opened 1000+ locations in a matter of one year offering minimum equipment such as a few treadmills and some weight machines.

The name ChocoZap is derived from chotto meaning little in Japanese and Rizap. This new concept, at the cost of a little over $15 has attracted the attention of many health conscious Japanese consumers – many who use the facility for just 10-15 min.

Tokyo Shoko Research advise that all 28 gym operators that had gone insolvent up to February this year were individual companies or small businesses with capital of less than 100 million yen (about US$670,000). Seven of them had debts of 100 million yen or more. By type of business failure, there were 27 bankruptcies and one special liquidation.

Tokyo Shoko Research notes "many of the insolvency cases are of the 'extinct' type, in which the business does not continue. The reckless upfront investment jumping on the bandwagon of the health boom has become a burden."

Furthermore, costs such as utility, labour and equipment expenses have been on the rise recently. When membership sales slump, cash flow also tends to deteriorate at once. The research firm noted that "the shakeout of unprofitable clubs is likely to continue."

In the survey, Tokyo Shoko Research compiled and analysed data on fitness clubs with debts of 10 million yen (approx. US$67,000) or more.

Image. While a number of fitness companies are reported to have become insolvent in Japan, ChocoZap, budget 24/7 storefront gym launched by Rizap, is gaining momentum and offers simple inexpensive training gyms in Japan. Credit: ChocoZap

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