Warren Cheng: Gotcha. And then my follow-up is on Lindora. It’s great to see 40 licenses signed out of the gate here. Can you help us understand what you expect normalized AUV to look like because I know those open at a pretty high AUV in year one?
Anthony Geisler: I mean, look, AUVs are close to $1 million. They’re about $980 million and change. So, we haven’t really gotten our hands around or on to tech, lead flow, closing percentages, attrition, all the things that we do really well as a sales and marketing engine. So, all that stuff is just starting to get implemented. Our teams are together, starting to work together, all that kind of type stuff. So, I don’t think we’ve really seen a lift, really, from us yet on stores.
John Meloun: Yeah. We kind of built it into the model. And to Anthony’s point, there’s a lot of — when we start nationally deploying this, there’s a lot of learning curves as you put it into different markets. Right now, the assumption we’ve built into our model is they perform very much like StretchLab, which is better on that $600,000 AUV. It’s above the $500,000 that we designed from a unit and economics perspective, but similar to StretchLab is how we’ve kind of modeled in their growth curve. We’ve always tended to lean on the conservative side, but the consumers and the franchisees kind of map very similar to our Club Pilates kind of franchisees and members. So, we’ll see how they perform. But right now, we’re just assuming they get to $600,000. The existing portfolio that joined when we acquired, as Anthony mentioned, they’re just right under $1 million. So, if they do anything north of $600,000, it’s upside for the business.
Warren Cheng: Gotcha. Thanks, guys. Good luck.
Operator: Thank you. Your next question comes from Korinne Wolfmeyer from Piper Sandler. Please go ahead.
Korinne Wolfmeyer: Hey, good afternoon, guys. Thanks for taking the question. My first one is not to harp on this pull forward of promotions too much, but I am curious when you laid out expectations a couple months ago, did you already recognize that there was this pull forward or is this kind of a new realization? And then what’s the historic — you’re talking about like a conversion of full-time members, what’s the historic conversion you’ve seen with these types of promotions and what gives you confidence that these people will end up converting? Thanks.
John Meloun: I guess, from a guidance perspective, no, I would say, we did not anticipate. It’s hard to tell because when you look at every Q4, over the last couple of years, the promotions do very well and we’ve approached them differently year to year, like we used to do more promotions in Club Pilates. We really don’t do that anymore because the demand is so high, you don’t really need to. As you’re trying to fill capacity in brands and offer different things, you get different reactions. So, in January and February, it did appear to us that things did look a little lighter. People kept talking about weather. We weren’t seeing weather as the issue, but then also in March you saw the AUVs start to climb again and we’re like, okay, so then we kind of look back at the data and these two brands just really stood out from a performance perspective.
The key there with promotions is you’re getting people into your studios, using your studios and falling in love with the product and it gives the franchisees an at-bat to convert them. So, we typically have seen Q4 and Q1 be our strongest quarters and then early on in Q2. So, the jury’s out as far as, whether or not we’ll see that same impact this year as we kind of come back into more of a normal environment since COVID. But, again, those brands have done really well, so we expect a good percentage of these consumers will either re-up their package if that’s how they approach the business or convert to a member.
Korinne Wolfmeyer: Got it. Thank you. And then on Lindora, can you just give us a little bit of color on where these licenses will end up building and, like, where you’re expecting the new units to get built up? Is it still more California or are you starting to see interest in other states? Thanks.
Sarah Luna: Yeah, we’ve sold across, I think it was six or seven ownership groups across six or seven different states, so it’s starting to spread to the Midwest and the East Coast.
Korinne Wolfmeyer: Great. Thank you.
Operator: Thank you. Your next question comes from JP Wollam from ROTH MKM. Please go ahead.
JP Wollam: Hi. Thanks for taking my questions this afternoon. If I could first start, I believe — and you correct me if I’m wrong, I believe you’re changing the online booking platform and maybe that’s already underway, but could you just elaborate a bit on sort of how big of an IT challenge that is, kind of what you’re doing to prepare for that and prepare franchisees for that, and then just what the advantages are of switching?
Sarah Luna: Yeah, I can definitely speak to that. So, we had an exclusive agreement with our point-of-sale vendor, ClubReady. We are now out of that exclusive agreement and have the opportunity to go out to market for an RFP. Really, the ClubReady system is a booking and point-of-sale management system. What we’ve done over the last couple of years is we’ve built all of our consumer-facing applications and websites on top of the ClubReady infrastructure. So, in terms of the transition, we won’t be needing our customers to learn a new booking system or new application. We’ll actually lift our entire customer ecosystem and plug a new point-of-sale system underneath it or behind it. So, we’ve done a lot of work already to ensure that we’re minimizing any sort of disruption that could occur.
I think what you’ll see is maybe some learning curves at the front desk or operationally at the studio level. But we’ve got about a minimum of 18-month runway to be able to select a good partner, put some tests in place, and then ultimately decide a go-forward pathway, and this would be for domestic operations. We are open to, of course, a global solution but this is primarily focused on our domestic operations.
JP Wollam: Great. That’s very helpful. Then maybe just stepping back in terms of kind of a high-level industry thought and maybe more geared toward you, Anthony, the Orangetheory merger a few months ago, and I think just this last week, there were some potential rumors about Barry’s considering a sale. Is there any read-through on this in terms of the boutique fitness industry and just any considerations regarding those news items?
Anthony Geisler: No, I think they’re kind of mutually exclusive. Dave and Chuck have been running Self Esteem and Orangetheory for a long time. They’re great operators, but they’ve been running that business for a long time. Roark has owned both of those for a while, and I think you can see publicly, right, they merged those together. I think it took a $480 million whole business securitization out of there. So, I think they just merged those together because it’s kind of left pocket, right pocket for Roark, but put together, it’s more compelling. Obviously, Orangetheory is an amazing brand and Dave is a great operator, and they could bring him and Chuck together — really together under one roof. I think they’re looking for somebody to kind of run both of those as well.
So I think that’s totally separate. North Castle’s owned Barry’s for a while now. They owned it pre-COVID and then kind of came through COVID and I think like any private equity firm, they’re looking to close out their fund and see some upside from their acquisition. But other than that, I think those are two separate kind of things happening, but nothing that I see really to read into those together.
JP Wollam: Okay, yeah, fair enough. Thank you and best of luck going forward.
Anthony Geisler: Thank you.
Operator: Thank you. There are no further questions at this time. I would now like to turn the floor back over to Anthony Geisler for closing remarks.
Anthony Geisler: Thank you, everyone, for joining today’s earnings call and for your support. We look forward to seeing many of you at upcoming Investor conferences in May and June, and we’ll speak to you again on our Q2 earnings call in August.
Operator: Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.