David Willis: Yes. I would say, Dana, just to add to that, Stacie’s spot on, we feel comfortable that the average center has the requisite targeted number of wax specialists. We continue to work with our franchisees on what we call leveling up and retention. We got a solid mix in terms of our most experienced waxers for the average centers. We’re not exactly where we want to be in terms of the optimal mix, but we’re working our way towards that. And kind of back to your question on the elevated labor rates. You may recall, we did not do or recommend an across-the-board price increase in fiscal 2023 for our network. We certainly have franchisees operating in certain markets with elevated labor costs. And in many cases, those franchisees have taken pricing at the local level to protect their four-wall profitability. But we didn’t do an across-the-board, peanut better spread price increase this year.
Dana Telsey: Thank you.
Operator: Thank you. Our next question comes from Scot Ciccarelli with Truist Securities. Your line is open.
Unidentified Analyst: Hey guys, this is Joe on for Scott. Thanks for taking my question. I know you mentioned that you stayed away from broader unnatural promotional activity in the quarter. Do you have any insight into whether nearby peers are maybe getting more aggressive and drawing away those episodic guests that you might typically get?
David Willis: Joe, good question. The survey that we have completed would suggest this episodic guests, we’re not losing her to a competitor. She’s not waxing that. And in many cases, she is an event-driven waxer. So she waxes before she takes a given vacation before she makes a trip. She’s not taking that trip, so she’s not doing the other things leading up to that trip. The best intelligence we have from our guests would suggest we haven’t lost her to a competitor. She still values European Wax Center. Unlike the Wax Pass guests and the routine guests that view us as nondiscretionary, some of our episodic guests view us as more of a luxury and she’s simply pulling back given the macro environment.
Unidentified Analyst: Got it. That makes sense. And then just one quick follow-up. Can you talk about how Wax Pass sales are trending for the quarter maybe versus your expectations?
David Willis: Yes, Joe, good question. So we are in our semiannual promotional period. We launched a couple of weeks ago. We feel good about where Wax Pass sales are trending. In fact, the current transaction trends and the Wax Pass conversion rates, all of those are factored into our revised guide for the year.
Unidentified Analyst: Got it, thanks so much.
Operator: Thank you. Our next question comes from Simeon Gutman with Morgan Stanley. Your line is open.
Jacquelyn Sussman: Hey guys, this is Jackie Sussman on for Simeon. Thanks so much for taking our questions. Just in terms of the Q4 implied guide, could you talk about the assumptions within that on the transactions versus ticket side? I know you guys called out lower quarter-to-date transactions, but just any more color there in light of the environment you’re seeing. Thanks so much.
Stacie Shirley: Yes, so we didn’t break that out kind of between transactions and pricing, if that’s what you’re speaking to. But what I can tell you is that first two quarters, we certainly had that tailwind of the pricing increase that David mentioned just a minute ago that we took in Q1 of ’22, and still a little bit of that in Q3. So our comp has been heavily driven by pricing this year. So I would expect that there will still be some of that going on in Q4 as it relates to sort of the additional pricing that our centers or franchisees took on their own.
Jacquelyn Sussman: Great, thank you so much.
Stacie Shirley: Yes, thank you.
Operator: Thank you. Our next question comes from Korinne Wolfmeyer with Piper Sandler. Your line is open. Korinne, if your telephone is muted. Please unmute. [Operator Instructions]. Okay, our next question comes from John Heinbockel with Guggenheim Partners. Your line is open.
John Heinbockel: Okay. So David, I’m curious, is the idea now maybe lean more into the loyal — the more loyal consumer as opposed to episodic. And I’m curious within that, how is the bundling test going, is that showing an ability to move the needle?
David Willis: Yes, John, great question. We candidly want to do both. And apologies if I wasn’t clear in my prepared remarks, we are wanting to drive tickets in general. Part of that is reengaging episodic guests, attracting new guests to the brand, but absolutely increasing share of wallet with our existing guests is a primary focus of our commercial and marketing teams. In terms of the bundling test, we talked on this a couple of calls ago, we did kind of — started with the six inter pilot to work through the operational teams, expanded that to a 100 center pilot. And now we’ve got a couple of months of data to get a solid read on that. And we’re encouraged by our ability to drive greater ticket, the longer-term goal with bundles, near-term benefit would be to increase the average ticket.
The longer-term benefit would be to influence guest behavior. So I guess it might have only purchased one service from us per visit would commit to purchasing two or more services from us per visit. We have extended that, extended the number of centers that now have the service bundles to over 200. We’re going to continue to monitor and measure. But we’re encouraged enough that I anticipate we will further roll out bundles throughout the network.
Stacie Shirley: And one thing I’d add, John, as your question as far as leaning more into episodic, it’s really more leaning in to just attracting more guests to the center. And a lot of that is going to come with — we talked about the change to our media agency, and we feel very good about the strategies that they’re putting in place, but it’s more broad-based, I’d say.
John Heinbockel: And then maybe as a follow-up, right? So we go through a period here, right, where AUV is down because of the macro, obviously, to run these centers well, you have to invest in specialists, right? I mean I’m curious the levers you have to take some pressure off the first year to 18 months of P&L, right, for the franchisees? I mean you’re not going to touch the royalty. Could you take less margin on wax. How do you think about those levers?
David Willis: Yes, John. So we’ve got, as you said, a number of levers. If we saw AUVs not trending in a direction that was driving the reinvestment rates that we’re seeing, of course, we would look at opportunities to support our franchisees. And if we had to use our P&L, we would evaluate those. Our focus has been on operational recruitment and marketing support to ensure that these centers can ramp productively in years one and two and profitably through maturity. So I think you raised an interesting point. There’s a number of levers we could pull, we have been fortunate that the center level performance at large has performed in such a way we haven’t had to discount royalties or pull back marketing fund. But we absolutely want to make sure our franchisees can continue to grow and grow profitably so that we can continue to enjoy the reinvestment rates that we’re seeing.
