And we were much like that prior to the BFT acquisition. And then, we acquired BFT really set arises over international, twofold. One, the massive opportunity it is over there done properly. And then, two, if not done properly, the risk that would be there if we didn’t build a great business, exactly like it would be if you started franchising domestically, right, when you have a lot of interest. And so, we want to make sure we are able to harness all the international interest we were getting properly build the right infrastructure to make sure that we executed and rolled out franchise sales, franchise openings, equipment packages, AUVs, franchisee health, the exact same business we do here. So we are really looking for someone that would be me outside of the United States.
And we did a lot of — we’ve got a lot of really great candidates. We did a lot of interviewing over the last months, group interviews, individual interviews and person stuff with the candidates that did really well. And so, we spend a lot of time on it and then had the team interview the coach to make sure that we really built a good player coach situation there. So something that’s really sustainable, predictable and that can grow. So those are the goals that we were hiring for. So it just made a lot of sense.
JP Wollam: Got it. Yeah, that’s very helpful. And then, just one quick follow-up. As we start to think about next year and really how to continue pressing on AUVs and same-store sales growth, I’m wondering if you can maybe either kind of stack rank or give us some insight on how we should think about what will be the most impactful as we think across some of the different initiatives. So thinking about XPASS, thinking about Gympass, some of the loyalty that Sarah touched on, can you maybe just give us a sense of what you think are kind of the most meaningful of those different items? Thank you.
Sarah Luna : Yeah. So I’ll dive into one of the examples. So Pure Barre is an example. We had the opportunity to roll out a new class, which was Pure Barre defined and as we did that, we started to see that demand increased across the eyes that had rolled out and followed the program. So just overall demand was high at Pure Barre. So it back and did a pricing exercise and increased pricing at a good portion of the studios 20% or more, went up in a new pricing tier across the country. So we’re able to take advantage of pricing and drive brick-and-mortar memberships. And then, the aggregator partnerships that we have are supplemental to those direct exercises that we do at the studio level. Each day, we’re working with franchise partners to help manage their supply and demand and increase their pricing where it makes sense.
The aggregators just help us fill capacity or maximize capacity just a little bit more so that we’re ensuring that every single class is as profitable as it can be. As you know, our classes — we’ve already paid for the instructor, — the doors already open, lights are on music is going. So every incremental booking is going to be a profitable booking for the franchise partner.
JP Wollam: Got it. Best of luck moving forward. Thank you.
Sarah Luna: Thank you.
Operator: The next question comes from Alex Perry with Bank of America. Please go ahead.
Alex Perry : Hi. Thanks for taking my questions here. Just first, can you talk to us a little bit about royalty rates? Should we expect sort of average royalty rates to continue to increase as you mix shift toward club plates at StretchLabs, which are coming in at higher royalties. Thanks.
Anthony Geisler: Yeah. I mean, obviously, like any business on supply and demand, the more demand we see for — from our Pilates consumer the more demand we see for store openings and franchise sales, we were able to really obtain an 8% there and so we’re able to do that at StretchLab. We’ll most likely be doing that at our acquisition target as that comes in at 8%. And so, yes, the company is working to shift its way toward 8%.
Alex Perry : Perfect. That’s really helpful. And then, just my follow-up question. Maybe, John, how should we think about sort of equipment revenue in the outer years, sort of the mix between what similar number of openings but potentially a mix shift toward higher equipment brands. Does that mean we’ll continue to get sort of equipment revenue growth? Or how should we think about that? Thanks.
John Meloun: Yeah. I mean, as we start to open more VPs and Rumbles, as I mentioned, about 25% of the openings next year will be in those brands more equipment-intensive. You will see an average equipment package revenue increase. So you will see that in the coming years. But you got to look at when the majority of the lion’s share of openings this year and next year is still falling in StretchLab and Club Pilates. So directionally, yeah, it will go up over time, but it’s a function of Club Pilates and StretchLab slowing down, which is not the case, it continues to accelerate. So in theory, yeah, as we open more BFTs and Rumbles you will see that, but they’ve got to overcome the majority that we’re currently seeing in some of the other brands.
One thing to point out on the equipment package, you’ll notice that the margins in Q2 and Q3 have remained really strong. We’ve done a lot of work on the supply chain side to kind of optimize — use our purchasing power to drive pricing. So as we continue to open 500 to 600 cities a year, you will see very consistent margins going forward elevated above where they were previously. So yeah, overall, you should see a slightly higher ticket price given the higher equipment-intensive brands, and you should also see a higher margin driven by that higher equipment-intensive brands but also some of the work that we’re doing on the supply chain front to optimize and use our purchasing power to drive pricing.
