[Gym Industry Review ③] "80% Closure Within 5 Years?"... The 'Truth of Survival' for Gyms Seen Through Statistics

Recently, "gym ghost stories" such as "80% of gym startups close within 5 years" and "hit-and-run gym scams are exploding" have been spreading, centered around YouTube and some media outlets. However, an analysis of actual licensing data from the Ministry of the Interior and Safety showed that these claims are far from the truth. Rather, it was confirmed that gyms have a lower closure rate and a higher survival rate compared to other industries.

◇ "80% closure within 5 years" is a fiction... Actual survival rate nears 70%

The rumor spreading in the industry of an "80% closure rate within 5 years of startup" is confirmed to be a figure resulting from the citation of incorrect statistics. According to the 'Survival Rate After Gym Startup' data analyzed by the Ministry of the Interior and Safety and Pitchdeck, the survival rate of gyms in their 5th year was tallied at approximately 69.91%.

This means that even 5 years after starting a business, 7 out of 10 locations are still operating. This is a result that directly contradicts reports by some media that "less than 20~30% of gyms last for more than 5 years." In fact, the average operating period of gyms was found to be 8.0 years, showing considerable long-term viability.

◇ Relatively healthy based on cumulative closure rate as well

The management stability of gyms stands out even more in comparison with other industries. While the cumulative closure rate depending on the period is at the level of 68~70% for adult arcades, 54~59% for billiard halls, 54~57% for kids cafes, and 44~50% for singing rooms, gyms are at the level of 26~30%.

This is lower than the 35~38% of martial arts studios (Taekwondo, etc.), which are evaluated as relatively stable, proving that the perception of gyms being a 'graveyard of business closures' is a statistical illusion.

◇ The trap of distorted statistics... The 'population' was different

Then where did the provocative figure of a "70~80% closure rate" come from? Experts point to the citation of incorrect statistics and errors in the population parameters as the causes.

First, it was found that the figures cited in some reports uncritically applied the broad major category statistics of 'arts, sports, and leisure-related service industries' rather than the gym industry as a single sector. This major category is mixed with industries of completely different characteristics, such as casinos, horse racing tracks, and theme parks, and therefore does not represent the reality of gyms.

Second, it is a case of mistaking the 'cumulative closures against cumulative openings' figure for a simple closure rate. It is pointed out that the closure rate can be overestimated if the number of closure reports accumulated from the past is confused with the number of currently operating stores in the calculation. Based on actual on-site licensing data, the annual closure rate has consistently remained at a low level since 2016.

In conclusion, the gym industry is not a crisis industry where "8 out of 10 go under," but belongs to a relatively healthy industry group that operates for an average of over 8 years and shows a 5-year survival rate of nearly 70%. As fostering a sentiment of fear based on incorrect statistics can cause confusion for both founders and consumers, this is a time when an accurate understanding of the market based on the Ministry of the Interior and Safety's licensing data, a state-approved statistic, is necessary.