We’ve moved guidance around in regards to revenue and adjusted EBITDA and systemwide sales. We’ve raised those as we’ve continued to perform in Q1 and Q2, but we haven’t moved the studios because the visibility we have is pretty strong. I mean, it’s pretty structured in the sense that when somebody signs a franchise agreement, they go out, they acquire a lease, and there is that six to eight months where they’re building up a studio and getting open. So you’re always kind of looking at things a couple of quarters ahead of time. So once we sign the lease, we already know in about two quarters when that studio is going to open. So it’s pretty static from that perspective. So a short answer to your question, I feel really strong and really good about the guidance that we put out there for new studio openings this year.
Alexander Perry: Perfect. That’s really helpful. Best of luck going forward.
John Meloun: Thank you.
Operator: Thank you. The next question is from Brian Harbour of Morgan Stanley. Please go ahead.
Brian Harbour: Yes, thanks. Good afternoon. John, could you just comment on SG&A expense given where you’re running year-to-date and then any impact of the kind of the transition studio strategy?
John Meloun: Yes. Great question. So SG&A in Q2 was higher than it was in Q1. That has to do with the number of transition studios that we had on the books. Looking forward into Q3 and Q4, as we’ve made this shift in strategy as we start lowering SG&A costs because we don’t have the operating cost of rent and labor in our SG&A. You’ll expect SG&A to start coming down over time. So in the second half, you’ll see that apparent pretty quickly. So the way you can kind of think about it is we were — I think it was close to high 50% range in Q2. I would expect to see as we ramp down these studios that the SG&A as a percent of total revenue will hit below 30%. So it is a function of how quickly we kind of ramp down these studios. As Anthony mentioned, the goal — loose goal that we kind of talked about is it’d be great to have them all done by the end of the year, but you will see it get into the low 30% range as we kind of refranchise these studios back out.
Brian Harbour: Okay. Yes, makes sense. And just with that, are you — how will it change going forward in the sense that are you just going to take a more active role in kind of brokering franchisee to franchisee deals? Do you think that there might be occasional closures if you can’t kind of find a suitable buyer? Like how might we see the impact of that?
John Meloun: Yes. As we said in the earnings script, we will be triaging, I guess, studios differently in the sense that if we feel that we can in a reasonable amount of time, get the studio either refranchised or turned around, we will invest resources and the time to do that. If the studio — there are situations where studios just no longer make sense if they were in a large grocery anchor that the inquiry moved or the center just kind of for whatever reason, doesn’t really have a lot of foot traffic, it would be in the best interest of the franchisee to relocate that to a better location. But in situations where it’s just not a viable studio anymore, I think you will start seeing the company look to closures as a path. But in the short term, we’re going to go ahead and focus on getting the studios ramp down on our side, and then we’ll work with franchisees to assess what’s the best option for them in operating their studio going forward.
But yes, we will be assisting obviously, with tools and resources from a sales perspective, make sure they’re following the model, look at relocations, if it’s more of a center issue to kind of address studios on a case-by-case basis.
