Yup. Too many gyms and too many "child care" businesses. Worse than Starbucks. Seems like there was one every 5 blocks in and around my neighborhood. Most are out of business now.
I agree, you're right, the market is smaller then the demand. Economics 101.
More mainstream fitness became the marketing dogma and gyms evolved into health clubs.
These modern health clubs featured gym equipment along with pools, juice bars, cycling classes and kiddy day care.
Personal trainers knew that the biggest client base was "frumpy housewives" wanting to shape up for the beach.
The Covid pandemic has been the main factor in more gyms closing down this year.
BUT , Covid just accelerated the inevitable crash due a glut of gyms that wasn't sustainable .