John Heinbockel: Okay, thank you.
David Willis: Sure.
Stacie Shirley: Thank you.
Operator: Thank you. Our next question comes from Korinne Wolfmeyer with Piper Sandler. Your line is open.
Korinne Wolfmeyer: Hey, good morning. Thanks for taking the question. The first one is to press on the episodic guest trends a little bit more. And I think you’ve previously talked about 5% to 10% of guests being affected by macro pressures. Is that still the case? And then is the added pressure you’re seeing just a stronger magnitude for those guests? Or has that 5% to 10% started to increase? Thank you.
David Willis: Yes, Korinne, thanks for the question. If I think about this episodic bucket, let me first start with our Wax Pass and routine guests. That part of our guest file comprises over 75% of system-wide sales. So if I kind of lump everyone else into this episodic bucket, it’s about 25% of our network sales. What you’ve got in this bucket is pretty widespread. You’ve got folks that are event-driven waxers are going to come two or three times a year that are only going to come in for their waxing before that special event. And you have some folks that this group appears to be more impacted, they view us not as a nondiscretionary part of their service like our Wax Pass and routine guests. So it’s this part of our guest file that is, we feel more pinched from the macroeconomic environment.
We feel there’s a part best demographic data we have available, which suggests more of this part of our guest file is a lower-income guest on average than our Wax Pass and our routine guests. So we speculate the macro is having a more bigger impact on this part of our guest file.
Korinne Wolfmeyer: Got it. Very helpful. Thank you. And then briefly on some of the marketing and ad spend you talked about, I believe you said you maybe increased some spend this quarter, but it proved not as effective. But then you also said some ad spend got pushed into Q4 from Q3. So can you just touch on what exactly is going on there and what we should expect for spending into Q4 and maybe even the early parts of 2024? Thank you.
David Willis: Yes. Maybe let me touch on the first part of your question, and Stacie can address kind of anticipated spend. As I had said earlier, we kind of had two things happened in the quarter. One is this less frequent guests begin to pull back late August and into September. So we did increase digital ad spend to try to drive reservations from all of our guest cohorts. The second thing that happened is we had an execution miss intermediate portfolio. This was impacted by an isolated technical error that generated fewer reservations than what we had planned for. I’ll follow up on that. So what are we doing about it? Well, we’ve engaged a new agency that was onboarded in the last couple of weeks, and we anticipate really positive impact on transactions over time, but I do want to highlight our guidance for this year does not assume a change from our current transaction trends. Stacie, if you want to touch on kind of timing of the spend, that would be great.
Stacie Shirley: Yes. So two things, right? The $1 million — or the 100 basis points that we called out in SG&A that was marketing, that’s what David just spoke to, the timing is the advertising, which is basically what we call our end fund where our centers are paying into us. It’s just a timing difference between Q3 and Q4. So it’s not that we’re changing what we’re doing or anything like that. Other than, obviously, we’ve changed media agencies and optimizing, continuing to optimize that spend. But it’s really just a timing piece on that. But there are two different buckets if that makes sense.
Korinne Wolfmeyer: Very helpful, thank you.
Operator: Thank you. [Operator Instructions]. Our next question comes from Jonathan Komp with Baird. Your line is open. Jonathan, if your telephone is muted, please unmute. If you are still having issues, please dial using the call me feature. [Operator Instructions]. There are no further questions at this time. I’d like to turn the call back over to David Willis for any further remarks.
David Willis: Hey, thanks, Michelle. Well, we really appreciate the questions and your participation on today’s call. We really appreciate your time. We look forward to speaking with you in the days and the weeks to come. Thanks so much for joining us.
Operator: Thank you for your participation. This does conclude the program, and you may now disconnect. Everyone, have a great day.
