The Hapana USA Midbox Industry Report 2025 is out — and while there are positive signs, there are also clear warnings for operators in the space.

The headline is an important one: The average US gym is reporting just an 11.2% profit margin, which is a slim return in an increasingly competitive and volatile market.

And what’s the go-to strategy to combat this?

51% of gyms say they’re turning to discounts and promotions to boost retention and engagement — making it the most common tactic by far.

Let’s dig into some of the report’s most telling stats:

86% of gym operators say increasing revenue is their top priority.

50% cite growing competition as one of their biggest challenges, with 47% pointing to rising costs.

Gen Z gym owners are 2.3x more likely to say that defining their brand is a challenge — highlighting a generational shift in mindset.

38% of members want discounts, but 34% want added value through additional services and perks

41% of operators are investing in personalization to boost member engagement, while 38% are running events and socials.

A case study from STRONG Pilates — a multiple award-winning brand from The Fit Guide and one of Hapana’s clients — shows the upside of taking a more strategic approach. In February 2024, Hapana launched a challenge feature within their app, which helps to drive engagement.

Six months after the rollout, STRONG Pilates reported:

+4% gross revenue per studio

–17% suspended members

+16% packages sold

+5% increase in active members

And they’ve grown their studio network by 23% since the launch.

In a market where many still reach for short-term promotions, this shows what’s possible when you invest in deeper engagement and digital tools that add value.

The average number of gym locations in the US midbox space is now 5.4, with studios seeing 1.57x higher turnover once they grow beyond 5+ locations.

Digital strategy maturity is low, with just 32% of operators saying they’re confident in their tech stack and integrations. This suggests many gyms are leaving retention and upsell potential on the table.

Branding is rising in importance, especially with younger operators. Gen Z owners are much more likely to struggle with positioning, but also more likely to recognize the power of brand identity as competition intensifies.

Gyms are clearly feeling the pressure, from costs, competition, and customer expectations.

And while discounts may drive short-term engagement, long-term profit will likely come from stronger brand positioning and delivering actual value members are willing to pay for.

If you’re spending too much time on promos and not enough on experience, personalization or brand building, the numbers suggest you may be leaving margin on the table.