John Heinbockel: So guys want to start with, it looks like adjusting for the extra week, right, that AUV sort of flat in ’24 versus ’23. So my guess down in the first half, up in the second. Would that be right? And when I think about the drivers of that, is that more the units that have opened in the last two years picking up or better performance from centers this year? And then I guess the last part of that, right, if I think about maybe David touch on the maturation curve, right, because I think normally you’ve opened up at maybe 450 in year 1. Can we now do you think with the playbook we can now do 500, 500 plus in year 1?
David Willis: I would tell you, John, on this most recent point on NCOs, that would be the goal. We want to ramp faster. We are not immune to the elevated construction costs. When we went public in 2021, the average build out cost was 350, that’s crept up to 400 to 450. I think our development teams have done a great job value engineering cost out of the fixtures to absorb — partially absorb some of the elevated construction costs. But when you factor that in with elevated labor costs in various markets, we want to ramp faster. And the 450 has been our historical ramp. Candidly, that’s been consistent cohort to cohort to cohort. But the purpose of the NCA playbook is to drive the average center to be north of that, so our franchise owners can get to the very attractive cash on cash returns faster.
In terms of your questions on AUVs being flat in terms of the overall drivers, I would say we’re focused on as we outlined in our prepared remarks, new guest acquisition across the brand for every center in driving greater rate and frequency throughout the system. So if I put aside the ramping centers, which you can kind of get lost in how much of that is just natural ticket growth because of the maturation. We do expect to drive our mature centers continue to drive strong four wall profitability, but the initiatives that we’ve outlined for 2024, we expect to drive both more tickets, more guests into those centers and a greater spend from the average ticket within those centers. So I don’t know if that’s directly addressing your question, John, but our goal this year with the priorities and initiatives that we’ve outlined is to drive improvement in what we think are already robust four well economics, but to drive improvement in our mature centers through both the addition of new guests and increased spend from existing guests.
John Heinbockel: Well, as a follow-up, you raised the point, right of higher CapEx, right. So I think about and I know you’ve done this in the past, like with the ancillary supplies. What else can you do to reduce the cost of operations right for a franchisee? And that kind of brings us back to I know you’ve been thinking about over the years, supply chain on wax and getting that cost down and passing that along. Is that now more urgent than it might have been or same?
David Willis: I would say we’ve always viewed that with a high priority. I mean, we recently I think Stacie touched on this in her prepared remarks as we’ve been monitoring ocean freight. A couple of years ago, we put in place this freight surcharge to cover those elevated costs. Those have dropped down to a level where we could remove that and that should generate couple of million dollars on an annualized basis of savings. If you think about all the stuff that’s not doesn’t sound that exciting, but literally the wax applicator blades, the table paper, the gloves that we use that our aestheticians use in providing the service, we are constantly monitoring the market and working with our vendor partners to drive those costs down.
On an individual service basis, it’s a few cents here and there, maybe a dollar, but that ultimately adds up for our franchisees. So our supply chain team is candidly, it’s not a new priority or an elevated priority. We’ve been doing this over the last several years, pre-COVID and post COVID, to ensure we can control what we can control to help our franchisees maximize profitability within their four wells.
John Heinbockel: Thank you, guys.
David Willis: Sure.
Operator: Thank you. [Operator Instructions]. Our next question coming from the line of Jonathan Komp with Baird. Your line is open.
Jonathan Komp: Yes. Hi, good morning. David, I wanted to just follow-up a little further on the development plans. You touched on a few markets sort of digesting the growth the last few years. And could I just ask, are you seeing any divergences in the opening performance or volumes when you look across markets? And then as you think about the plans this year, just two-thirds back weighted on openings, can you comment on the visibility since that looks quite a bit different from last year?
David Willis: Yes, I would say, Jon, thank you for the question. That overall performance as Heinbockel, I just mentioned in our question-and-answer session there. We continue to see AUBs at 4.50, but we want those to be higher to get our new centers faster to breakeven and a faster ramp to get to the very robust cash on cash returns. So we haven’t seen a degradation in opening performance, but I would say we are motivated to open with faster ramps than what our — than our brand has experienced over the last several years. I wouldn’t look too much into the timing. The demand remains incredibly robust from both our existing partners, our growth partners, and we still have a number of folks looking for entry points into our network.
So in terms of the timing and shaping of the NCOs, I think first quarter last year, we were at 34. There was no real magic to that delivering 34. And our seven that we’ve guided to this year, just given we’re so close to the end of first quarter, we wanted to be a bit more prescriptive. But I wouldn’t look too much into the one-third front half, two-thirds back half. That’s truly where just kind of the timing of what we’ve slated to open this year is expected to fall.
Jonathan Komp: Okay. That’s really helpful. And one follow-up, if I could just ask on the laser initiative. It looks like your corporate started recruiting last month for a fairly senior role to lead that effort. So David, I’m wondering if you could just comment on what we should read into maybe the multiyear aspirations as you start to line up. It looks like maybe some more corporate resources behind that division?
