At first glance, with the Covid-19 pandemic, resulting in a major recession, one would think that the weight loss center market might be devastated last year. First impressions can be deceiving. In fact, Marketdata analysts estimate a 21% decline in the value of the total U.S. weight loss market in 2020, from $78.38 billion in 2019 to $61.85 billion in 2020.
However, most of this decline can be attributed to the sharply lower revenues of health clubs and gyms, which suffered the most under state mandated lockdowns. Health club revenues were $35 billion in 2019, accounting for 44% of the total market’s value.
The “core” weight loss market held much better. Revenues of the large commercial chains actually rose 6.8% to just over $4 billion, largely on the strength of a 31% gain in Medifast The total amount in dollars made in the business before expenses are deducted. See also Gross Revenue.. Other MLM companies such as Herbalife did very well too.
Sales of low-calorie frozen dinners ($2.1 billion) also benefited from the pandemic, as homebound consumers stocked up on frozen and shelf stable foods.
Meal replacements (shakes, nutrition bars) fared well also, growing by 2.6% to a $5 billion segment of the market. Meal replacements growth outpaced that of retail diet pills/appetite suppressants.
The other major losers were the medical weight loss programs, including bariatric surgery. These programs represent a large portion of the U.S. weight loss market, and this segment was hit hard, as physicians scrambled to shift from in-person visits to virtual ones. Hospitals and clinics, focused on treating Covid-19 patients, cancelled elective surgeries such as weight loss procedures. Consequently, this segment of the market fell 20% from $8.8 billion to $7.1 billion in 2020. Revenues of the regional weight loss chains and franchises, hospital-based programs, and clinic-based programs, all contracted by an estimated 27%.
Revenues of the major commercial weight loss chains such as WW, NutriSystem, Jenny Craig, Medifast and others actually held up well last year, growing by 6.8% in 2020 to $4.07 billion. WW had a very moderate dip in sales as it shifted from in-person studio business to virtual meetings. And, Medifast, with its Optavia MLM model, posted very strong 31% growth to a record $934 million.
The value of total medical weight loss programs and services is estimated to have declined 19% in 2020 to $7.78 billion.
This segment of the weight loss market was hit hard, due to 8-10 week closures of programs based in hospitals, clinics, and physician offices. Hospitals were scrambling to service Covid-19 patients, not weight loss patients. MDs (incl. bariatricians/obesity medicine specialists) and medical weight loss chains and franchises were serving existing patients only, not new ones, and scrambled to shift to virtual services and curb-side pickup of food, meal replacements and supplements.
The U.S. weight loss market or “industry” is comprised of a variety of sub-markets. There is no Census Bureau code covering all segments, just one for commercial weight loss center (NAICS code 812191).
The weight loss industry doesn’t even have its own formal trade association, or a trade journal. Instead, the various segments of this market are classified within broader industry groups. For example, Marketdata has divided the weight loss and diet control market into the following nine market segments:
For persons interested in franchising, there are only two segments of the market that would be of A payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off…, where franchises are sold. Franchising is more prevalent in the medically supervised segment of the market.
Note: Weight Watchers has a closed franchise system, wherein franchises are bought and sold to family members or heirs. Not available to the general public.
Following are Marketdata’s estimates for the major weight loss market segments.
|Diet soft drinks||$21.82||$19.75||$19.34||$18.63||$20.88||$19.42|
|Health clubs’ revenues||22.0||25.8||27.60||32.2||35.0||22.0|
|Commercial weight-loss centers||3.42||2.65||2.77||3.74||3.81||4.07|
|Low cal/diet foods||2.16||1.82||1.78||1.91||2.00||2.13|
|Retail & MLM meal replacements, diet pills||3.44||3.99||4.16||4.70||4.95||5.08|
|All Medical Plans total:||6.36||7.38||7.85||8.70||8.85||7.16|
|Prescription diet drugs||.521||.596||.615||.655||.694||.764|
|Hospital, clinic, MD plans*||.959||1.05||1.00||.950||.950||.689|
|Diet books, exercise videos, DVDs||1.13||1.04||.884||.797||.797||.477|
* includes low and moderate-cost hospital programs, treatment by RDs, MDs, etc.
The U.S. obesity rate is not improving, and it’s likely that Americans overall have grown heavier during the Covid-19 pandemic.
The traditional “diet season” lasts from the last week of December until Memorial Day. If dieters have not reached their goal weight by the Summer, they usually take a break and pick it up in the Fall, or quit altogether.
Last year, with the coronavirus pandemic in full swing, dieting activity shifted until later in the year. Consumers were following the bad news daily, getting stressed out about the stock market’s wild swings, and are thinking about how they will maintain their income and employment as businesses shut down. Dieting was not top of mind.
Digital tools to monitor diet are becoming an increasingly helpful and convenient tool for weight loss. Applications like MyFitnessPal, for example, are enjoying a surge in popularity among consumers.
More dieters, forced to stay at home, are using live streaming services, YouTube workout videos, and weight loss and fitness apps such as Noom and many others.
Do-it-yourself dieters now represent an estimated 84% of the total, up from 70% ten years ago. Most still use OTC diet pills, diet websites, meal replacements and buy popular diet books.
Marketdata analysts estimate that there are 112 million dieters in the United States, that is, 112 million people who take some action to lose weight in a given year, by purchasing weight loss products or joining a structured weight loss program.
This is up from the 97 million Marketdata estimated in 2019.
Several important eating trends are present now:
Clean Eating – not eating foods with preservatives, artificial sweeteners, dyes, colors, flavors or GMOs, or even frozen foods.
There is no doubt that the Millennials are becoming an important group for the future of weight loss companies. To ignore them is to ensure a slow but steady decline in business for diet companies that are still chasing aging Baby Boomers. Most Baby Boomers are now in their 60s and 70s, and will not be dieting at all. Millennials, whom we define as those ages 18-34 in 2015, now number 75.4 million, surpassing the 74.9 million Baby Boomers (ages 51-69).
Marketdata analysts expect a mixed/weak first quarter and “diet season” for the commercial companies, at least through March. Business should pick up in the 2nd quarter from April to June. Sales comparisons to the first quarter of 2020 will be difficult, since the pandemic and recession did not take hold until mid-March 2020.
The first quarter of 2021 should see strong sales of retail meal replacements, frozen diet dinner entrees, diet apps such as Noom, and exercise streaming services.
Commercial weight loss chains probably receive the most publicity, due to the large amounts they spend on advertising — $200+ million each for NutriSystem and Weight Watchers. They are the most well-known of weight loss options available. They also come under the greatest criticism.
This segment of the weight loss market, however, does NOT represent the bulk of the industry’s sales volume. Systemwide revenues of the leading chains accounted for only an estimated $3.74 billion of the total weight loss “industry” in 2018 – a small share. This elite group is estimated to have had 2020 revenues of $4.07 billion.
Looking at 2020 as a very difficult year characterized by a national pandemic and recession, this segment of the weight loss market has held up very well. Weight Watchers pulled off a major shift from in-person meetings at its studios to digital services, resulting in only a 2.8% sales drop. NutriSystem maintained 2019 revenue levels, benefiting from its non-contact model of shipping foods directly to customers’ homes. And Medifast used the MLM model to grow revenues by a very strong 30%. Profile by Sanford continues to grow, although at a slower pace than pre-pandemic. Overall, this was a very good showing by the industry’s leaders.
Marketdata estimates that revenues of the commercial weight loss centers segment of the market grew by 6.8% in 2020.
|Jenny Craig (estd.)||$316||$334||$400||$420||$400|
|Add 20% for all other firms|
* Revenues in the Nutrition segment of Tivity Health were $498.1 million for the fiscal year since acquisition, and revenues for NS in Q1 2019, prior to the acquisition were $134 million.
Marketdata estimates that that the “average” commercial weight loss center in 2020 had annual revenues of $549,000, but it’s a high overhead, low profit model.
The long-term historical Growth Rate The Growth Rate is the percentage change of total franchise units from one year to the next. A higher Growth Rate signifies an expanding franchise system. More for this segment’s revenues, with all the expansions and contractions, from 1988 to 2018, comes out to 3.3%.
Note: 2017 Census data for this industry is available, classified under NAICS code 812191. Additional national data is scheduled to be released through 2021. See www.census.gov for information.
The Census data reflects only the operations of “brick and mortar” commercial weight loss center with physical locations. It does NOT cover Internet-based or mail order weight loss services, and not medical clinics.
|Number of Companies||1,519||1,298||1,260||1,296|
|Number of Establishments||3,088||3,217||3,181||2,982|
|Industry Receipts (millions)||$1,689||$1,838||$1,919||$1,780|
|Avg. Receipts per Estab.||$547,101||$571,471||$603,000||$597,013|
|Number of Industry Employees||35,706||29,132||34,094||25,273|
|Avg. Employees per Estab.||9.8||9.1||10.7||8.5|
|Payroll as a % of Sales||22.9||24.9||24.5||24.9|
|AVG. Receipts per Employee||$55,490||$63,107||$56,000||$70,443|
|Avg. Payroll per Employee||$12,727||$15,093||$13,791||$17,517|
|Single-unit Firms as % total||94.1||94.6||94.2||94.0|
|% Corporations as % estabs.||87.4||86.4||86.5||83.8|
|% Sole Proprietor as % estabs.||7.0||4.7||3.7||5.8|
|% Partnerships as % estabs.||5.6||9.0||9.9||10.3|
|% Estabs. Operated Part-time||12.6||23.9||9.5||21.0|
|Top 4 Company Market-share||60%||61%||61.1||55.8|
|Top 8 Company Market-share||65%||64%||64.4||59.1|
|Top 20 Company Market-share||72%||71%||70.6||65.0|
|Top 50 Company Market-share||80%||78%||77.8||72.0|
Based on Business Listings, Vetted Biz requires Businesses for Sale to share financial information on sales and earnings through credible sources, including but not limited to Tax Returns, Accounting Software, Point of Sale Software, etc.: U.S. Census of Service Industries, Marketdata calculations
Medical weight loss programs constitute a significant $7.1 billion share of the total market, comprised of the following:
Following is the mix and value of various medical weight loss markets:
|All Medical Plans total:||$6,360||$7,380||$7,850||$8,700||$8,850||$7,160|
|Hospital, clinic, MD plans, franchises||$959||$1,050||$1,000||$950||$950||$689|
Source: Marketdata estimates and forecasts
## Bariatrician’s total income is about $180,000, but not all of it comes from weight loss patients
Due to the pandemic, the number of medical weight loss center sites has declined for most companies. For example, in 2019, Marketdata estimated that there were 3,917 sites operating. Today, as of March 2021, we estimate that this figure has fallen to 3,623.
|Weight Loss Organization||Number: 2021|
|Centers for Medical Weight Loss||150 (licensees, not franchise)|
|HMR (Health Management Resources)||90 (not a franchise)|
|Optifast||150 (not a franchise)|
|Medi-Weight Loss Clinics||95|
|Physicians Weight Loss Centers||23|
|Lindora Medical Clinics||34 (not a franchise)|
|Medical Weight Loss of Michigan||30 (not a franchise)|
|Dr. G’s Weight Loss||19|
|Nuviva Medical Weight Loss||9|
|Let’s Lose Advanced Weight Loss||10|
|Ideal Protein providers/clinics/MDs||3,000 (not a franchise)|
2020 was a tough year for most weight loss providers, and medical weight loss programs were no exception. The pandemic has changed how these programs serve their members and continue to operate, with the accelerated use of technology via services such as Zoom and virtual meetings.
Based on Marketdata’s research over the past few decades, only about 3.4% of dieters prefer to visit a physician’s office, hospital or medical clinic for a weight loss program.
Medical weight loss programs of all kinds suffered last year – programs based in hospitals and clinics, those provided by independent physicians, and programs by franchised chains of brick & mortar clinics.
Hospitals and clinics were basically closed to non-essential patients (those looking to lose weight) as they scrambled to care for rising numbers of Covid-19 patients. This situation lasted for about 8 weeks, from mid-March to mid-May. That’s a full 15% of the year. An 8-week loss of business was the BEST case scenario, assuming that no second wave of infections later in the year.
During this time period, the medical franchises and chains were also largely shut down to NEW patients, although many continued to serve EXISTING customers via Zoom and Skype “telemedicine” meetings and check-ups, and online and curbside pickup of supplements and company brand diet foods.
Based upon interviews with management at leading medical weight loss chains, coupled with basic information from their websites and other sources, Marketdata analysts believe that medical weight loss center chains and franchises, and independent MDs, were significantly hurt by the pandemic and recession last year. We estimate that revenues were down by 27% from 2019 levels.
Marketdata analysts estimated that weight loss programs provided by hospitals, medical clinics, and MDs combined (excluding bariatricians, prescription drugs, VLCD programs, and surgery) generated about $950 million in revenues in 2018.
However, we think that in 2020 this medical segment of the market has fallen, due to the pandemic and recession, to an estimated $689 million – down 27% from 2019 levels.
This segment had been around the $1 billion level for the previous five years, in our opinion, before the pandemic of 2020, as follows:
Most of the medical center management we spoke to expect this year to return to 2019 levels of business. However, Marketdata doesn’t think we’ll see a 27% bounce-back. The ranks of medical franchises are thinner, and the first half of this year is not likely to be a “normal” year yet, since most Americans are still not full vaccinated.
With the year likely to be divided into two halves, economically, we think patient volumes will still be depressed until June or July. New stimulus payments will not go out until mid-March. Consumers may still be wary of going to a physician’s office for weight loss, or a hospital-based program. And medical weight loss chains that closed a few centers last year may be reluctant to sell or open more of them.
Consequently, Marketdata analysts forecast a 13% gain in medical weight loss program revenues by hospitals, clinics and MDs (excl. bariatricians), to $787 million.
The complete 46-page Marketdata Overview contains information about all nine weight loss market segments (status reports for each), including: commercial & medical weight loss centers, franchises and chains, historical revenue/trend data, diet foods, retail diet products, books, prescription drugs, health clubs, as well as dieter demographics and effects of the pandemic on operations, a Reference Directory of industry trade associations, reports and other sources.