And again, all profits. There’s about 10% cost of goods sold on the arcade card. So it doesn’t all flow, but you can view the arcade card as a seed card that gets them in the arcade and then they have the opportunity to refill that card. We instituted this. And consistently across hundreds of centers that were doing it, we found a 60% sell-through rate, which is phenomenal. And that was a result of the front desk associates selling the special, which had never heard before. We never had really a selling impetus in the center. So it’s been a success, much better success than any of us previously thought it could be. 60% sell-through rate of all retail customers coming in throughout the week over hundreds of centers was very validating. Had we not eliminated the low-cost promotions during the week, I think you would have seen a very different result, but we’ve added those back.
And now we’ve got the muscle memory to sell. And so, we’ve increased the offering to the pizza and pitcher special, which is either a one topping pizza and a pitcher of soda or one topping pizza and a pitcher of beer, both for about a 20% reduced price over normal retail, and we’re seeing initially good results from that as well.
Operator: Our next question comes from Ian Zaffino with Oppenheimer.
Ian Zaffino: I just hopped on a little bit late, so sorry if you have to repeat yourself. But on the new builds, it seems like you’re obviously accelerating this. You’re seeing much more opportunities or much more excitement. What is basically driving that? Is the ability to do a sale-leaseback now? Are there just more new builds? Are you seeing less competition from others vying for that space? What exactly is kind of going on that’s driving that?
Thomas Shannon: Well, we don’t do sale leasebacks on the new builds. Those are all leased, mostly in malls. What happened is, about two years ago, we made a change in terms of how we go out and source these deals. We hired a Miami-based firm that has national contacts that’s really increased our deal flow, and so we’ve seen a lot more. And as a consequence, we’ve been able to make a lot more deals. I think being public has helped. From a landlord’s perspective, we’re a bankable tenant. We are the 800-pound gorilla in space. We have a 27-year track record. So if you’re a landlord and you’re looking to add an experiential offering to your mall, we are the logical choice and landlords are acting that way. And consequently, we’re seeing a lot more opportunities than we ever have.
Some of these deals have stretched out for a long period of time, whether it took extended period of time for the landlord to deliver or they got held up in permitting or whatever. So you’re seeing a flurry of activity here, but we’ve been working on this deal set now for a longer time period than you might imagine. So it’s a little bit of sort of the poodle going through the boa constrictor. We’re seeing this bulge of deals that are happening right now, but they didn’t all happen. They weren’t all sourced at the same time. It’s just that there was a lag to get them built. But fortunately now, we are in the throes of a pretty aggressive construction cycle, opened one, about to open two more, four more should open next year. And then, I would think four or five in the year after that.
Ian Zaffino: Maybe a question for Bobby. As far as just the guidance, help us understand the philosophy there of giving that guidance? Is this just sort of what you’re used to as a CFO? And should we be expecting this going forward? And maybe any other type of holistic conversation around that?
Bobby Lavan: Yes. I’m going to follow my sword. I would tell you our internal model had EBITDA of $52 million for the first quarter. So we just didn’t signal that to the Street. So building credibility and partnering with investors is giving them clarity on where our numbers are going to go and what we think our numbers are going to be. I just didn’t do that at the fourth quarter earnings call, which was only, I guess, month-and-a-half ago, is we probably should have signaled a little bit more about the higher highs and lower lows that are going to happen on our EBITDA. And so, I’m just giving more clarity. So I’m telling you what my model looks at, what we’re seeing transparency is key. And we think as we hit these numbers, investors will reward us for such.
Operator: The next question comes from Jeremy Hamblin with Craig-Hallum.
Jeremy Hamblin: I wanted to follow up on the last point here about cost of operations, COGS, and just make sure I understood. In terms of thinking about COGS going forward, I think you indicated that you would expect that to be somewhat flat sequentially. And I just want to make sure, even with the addition of the 14 units with the Lucky Strike deal and some of the other acquisitions, typically, you’ve seen a little bit of a skew up in these higher revenue quarters, just the cost of operations, but it sounds like you’re thinking that that sequential cost on COGS is only going to be up maybe slightly or flattish as we move through these next few quarters? Any color?
Bobby Lavan: Yes. The sequential was a comp basis. Like, obviously, as Lucky, Mavrix, Octane, the three other acquisitions we did in the quarter flow through, those are going to take COGS up, but you have to model those out as inorganic growth. We balance comp, COGS and M&A add-ons. Like, as the new builds come on, those will come in – you flow those through as EBITDA. They all have very similar cost structures, the bigger are better, the smaller are going to be a little bit worse. We did put in our investor deck sort of a quarterly, what we call, center EBITDA and center gross profit. So it’s very transparent about what the cost structure is for the comp in the total company, and so you can model that forward. But as deals come in, you have to layer those into the cost structure.
