Anthony Geisler: Yes. In regards to retail equipment margins, we did kind of back — coming out of COVID, we spent some time with our equipment manufacturers and made sure that as there were supply chain issues that we had the sufficient equipment packages available to meet the demand of the number of studios we’re opening. So we — in lieu of negotiating, them kind of passing on price increases, what we did is we did more firm commitments on volume to manage price increases. So we’ve done a good job of stabilizing prices across our equipment, roughly, again, 30% margin. When you look at retail, we use a mix of both branded and nonbranded vendors. The branded vendors like Allo as an example, franchisees could order directly from the vendor.
In return, we get rebates for volume associated with the purchases and facilitating that relationship. We have an entire warehouse here in Tustin, California, where we actually inventory both branded and unbranded as well that our franchisees have the ability to buy at a lower cost than they could if they went to certain vendors directly because we have pre-negotiated costs with them. And then they in return, our franchisees could turn around and sell the wholesale inventory they purchased for us at a retail price and make margin. Typically, we recommend somewhere closer to 40% to 50% retail margins if they follow the recommendations we provide. So our margins, equipment, retail combined is 30%. I largely believe that will remain unchanged.
And that’s really intended — the margins we make are really intended to manage the supply chain, which is everything from vendor negotiations to the cost of warehouse to the cost of the staff doing the packing and shipping and all — a lot of the inbound freight from getting it from our suppliers. So largely margins will remain unchanged into the future.
Julio Marquez: Awesome. Thanks. And just very quickly on the weekly KPIs. Any changes that you’re seeing?
Anthony Geisler: Weekly KPIs, yes, following up on that now. As I mentioned, visitation is, I would say, seasonally flat due to the summer months. We haven’t seen any like increases in cancellations. You do typically see in the month of July more freezes on your memberships because people are out of town. So rather than getting charged their monthly membership, they could avoid paying it while they’re on vacation. You typically see August and September, that ramps back up. Year-on-year, when you look at July of 2023 versus July of 2022, our freezers are actually less than they were prior year. So it does show that members are still staying somewhat engaged more so than they were last year in the same month of July, but it is more of a seasonal impact, but nothing indicates any sort of shift or change in our member behavior.
It’s just more seasonal. So August and September, we’ll be able to have a better indication of how people have come back and return back to the studios. But classes, system-wide sales, same-store sales continue to show really strong momentum into Q3.
Julio Marquez: Awesome, thank you.
Operator: Thank you. The next question is from Warren Cheng of Evercore. Please go ahead.
Warren Cheng: Hey, good evening, John and Anthony. I was wondering what kind of cost inflation franchisees are seeing in their cost to rebuild. So one of your publicly traded competitors talked about some pretty significant increases in the cost of rebuild. Obviously, you reiterated your studio opening, guys. But I’m just curious what level your franchisees are seeing as they build new stores compared to year?
