Randal Konik: Super helpful. Again, thanks for all the data guys. Appreciate it.
Operator: Thank you. The next question is from Joe Altobello of Raymond James. Please go ahead.
Joseph Altobello: Thanks guys. Good afternoon. First question, I want to dig a little deeper into studio economics. What percentage of your studios that are open more than a year or longer than a year are profitable on a four-wall basis?
Anthony Geisler: Yes. So when we talk about studio economics, you’ll typically see in the first 12 months, studios ramp to about $380,000-ish, which is above the breakeven level, and we’ve provided that information before. So the majority of our studios arrive at that in the first year. And then they typically comp in the mid- to high single-digits after that, we saw 8% on average pre-COVID. The model largely reflects that, that studios get to — studios get to, like I said, $380,000 in their first year, and then they typically comp around 8% after that per year.
Joseph Altobello: Okay. Helpful. And then maybe a second question. You mentioned that you do expect to get transition studios down to zero at some point. What time frame are you thinking about?
Anthony Geisler: Yes. Well, Joe, as we said, the studios or the actual unit count of the studios are down about half from what they were in Q1 and recently in Q2. So the remaining balance in the portfolio doesn’t lose any material money. So we’ve never looked at the unit count of studios as an indication of franchisee health, the unit number itself. It’s always what are the NOLs and what is the headwind to SG&A that we’re concerned with. We’re not concerned with the actual number. And so the stores that we have now, the 30-plus stores that are kind of our four-wall brick-and-mortar stores don’t lose a lot of money for us. And so there’s not a lot of pressure to offload those right away, but we will be doing that in balance and making sure that the winners and the losers that are left in that portfolio are giving us the least amount of headwind, and that’s what we’re focused on, right, is SG&A and NOLs. So in other words, we don’t want to sell the winners to be left with all the losers and that’s been the strategy from the beginning.
And so if I had to throw a guess out there, we’re targeting by the end of the year or kind of Q1 of next year. But we want to do good deals that are accretive to the company. Some of these stores, we’ve bought for a lot less than what they’re actually worth. And so we’ll be going out making sure that we do the best deals possible for the company. But given that there’s not a lot of leakage, we’re not trying to necessarily offload them real quickly. And then the nine LA Fitness’s we’re operating, eight of which are Club Pilates and one of which is a StretchLab. We’ll continue to probably operate those a little bit longer as we’re just proving out that concept because franchisees want to see that the concept works. We do have several franchisees that are operating LA Fitness’s and doing very well with them, but we want to be operating them here locally in Southern California.
Joseph Altobello: Okay, thanks guys.
Operator: Thank you. The next question is from Alex Perry of Bank of America. Please go ahead.
Alexander Perry: Hi, thanks for taking my questions here. I guess just first to follow-up on some of the earlier questions. Can you talk about sort of franchisee profitability and cash-on-cash returns sort of by concept versus pre-COVID? Is it fair to say sort of like the clubs that have the concepts with the most tenure like Club Pilates have better cash-on-cash returns and maybe like a Row House or some of the more nascent concepts. Just any more color you can give us on sort of the economics by concept would be really helpful. Thanks.
