Good morning. My name is Joelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Driven Brands Q2 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I will now turn the call over to Joel Arne (ph), SVP of Finance. Joel, you may begin your conference.

Thank you very much, and welcome to Driven Brands second quarter 2023 earnings conference call. The earnings release and the leverage ratio reconciliation are available for download on our website at investors.drivenbrands.com. On the call today with me are Jonathan Fitzpatrick, President and Chief Executive Officer; and Gary Ferrera, Executive Vice President and Chief Financial Officer. In a moment, Jonathan and Gary will walk you through our financial and operating performance for the quarter. Before we begin our remarks, I'd like to remind you that management will refer to certain non-GAAP financial measures. You can find reconciliations of the most directly comparable GAAP financial measures on the company's Investor Relations website and in its filings with the Securities and Exchange Commission. During the course of this call, management may also make forward-looking statements in regards to our current plans, beliefs and expectations. These statements are not guarantees for future performance and are subject to a number of risks and uncertainties and other factors that can cause actual results and events to differ materially from the results and the events contemplated by these forward-looking statements. Please see our earnings release and our filings with the Securities and Exchange Commission for more information. Today's prepared remarks will be followed by a question-and-answer session. We kindly ask you to limit yourself to one question and one follow-up. With that, I'll now turn it over to Jonathan.

Thank you for joining us to discuss our second quarter 2023 financial results. I want to start by welcoming Gary Ferrera, our new Chief Financial Officer to the Driven Brands team. We are excited to have Gary on board and have already seen the added value, his extensive financial experience and expertise brings to the team since joining in May. I'll start this morning with a review of our second quarter highlights, then touch on our objectives for the remainder of 2023 before turning it over to Gary to discuss our second quarter results and full year 2023 outlook in more detail. As always, I want to acknowledge the hard work and strong execution by our more than 11,000 Driven Brands team members and our amazing franchisees for how they have navigated an extremely dynamic macroeconomic environment. Now let's discuss our second quarter results. Compared to Q2 of 2022, we delivered 19% revenue growth, supported by 8% same-store sales growth and 7% unit growth, achieving adjusted diluted EPS of $0.29 per share. We are pleased by the performance of our Quick Lube and our franchise businesses across all metrics, both being key contributors to our overall success this quarter. The platform that we've intentionally built had positive same-store sales in a climate that many consumer businesses did not. Over the course of ever-changing economic cycles, some of our businesses may be challenged and some strengthened, the benefit of the platform is that it provides diversification. Car wash and U.S. glass are challenged currently, while all other categories are neutral to up. The core macro dynamics of our industry, including aging car park, fragmentation, importance of scale, digital and technology penetration remain tailwinds for Driven Brands. We remain bullish on the needs-based $350 billion auto aftermarket service industry, where we have…

Thanks, Jonathan and welcome, everyone. I've been on board for just under three months now and have been busy getting to know the teams in our businesses. I want to take a moment to thank the entire Driven team for their support and especially the Charlotte-based team for helping me settle into my new home city. As Jonathan mentioned previously, we've experienced some recent headwinds in parts of the business, but based on what I've witnessed so far, I'm optimistic that these results focused, and action oriented team will deliver on our long-term plan. Now I will discuss our second quarter results before moving on to full year guidance. On a consolidated basis, we had another strong quarter of growth versus Q2 2022. Our system-wide sales reached $1.7 billion, representing an 18% increase from the previous year. This growth was driven by an 8% increase in same-store sales and by 7% net store growth. This translated into reported revenue for the quarter of $606.9 million, a 19% increase. Adjusted EBITDA of $151 million increased 12% versus the same quarter last year. Adjusted EBITDA margin for the quarter was 24.9%, a decrease of approximately 170 basis points versus the same quarter last year. This decrease is primarily related to a margin decline in the Car Wash segment and the Paint, Collision & Glass segment, partially offset by increases in both the larger Maintenance segment as well as the Platform segment. I'll now focus on our performance by segment. We are pleased with the positive same-store sales growth of 10.2% in the Maintenance segment, our largest segment. This was primarily driven by the success of our Take 5 Quick Lube locations. These locations have continued to deliver remarkable performance by increasing car count and average ticket during the quarter, as they have…

Thanks, Gary. And in closing, we remain confident in driven strategy and see this earnings update as a short-term adjustment caused by specific macroeconomic conditions and slower integration that should improve over time. Most importantly, our long-term adjusted EBITDA target of at least $850 million by the end of 2026, remains fully intact. We look forward to sharing more details at our upcoming Investor Day in Charlotte on September 20.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Simeon Gutman with Morgan Stanley. Please go ahead.

Good morning. It's Simeon Gutman. My first question is on the profit rebounding in these two businesses that caused the issue. First, in Glass, which I think there may be a -- like more, I'll call it, reasonable path to improving. Jonathan, I don't think we heard exactly what steps or what caused some of the integrations in that field (ph)? And then I guess I'll follow-up on the Car Wash business.

Yeah. And thanks, Simeon. Just to make sure everyone gets that right. I appreciate the question. On Glass, I think, Simeon, look, what I said in my prepared remarks is that we love this industry. We've been in it since 2019. We made a conscious decision to go fast in acquiring these 12 acquisitions and knew that there was potential sort of complexity of integration. Nothing has changed whatsoever in terms of our long-term conviction and outlook for this business the capital-light investment, the opportunity to grow in three consumer segments, retail, commercial and insurance. So it's simply just a couple of quarters or several quarters behind where we want to be. We will get that fixed. And our goal is to make sure that we're in as good a shape as possible by the end of this calendar year. So I would say nothing has changed there on the Glass. And I'm sure you have a follow-up on Car Wash.

Yeah. And so on -- also on Glass, it sounds like then the underlying economic model when this process is complete, should be as lucrative as either the way you drew it up or even better because of the synergy or scale that you have?

Yeah. Exactly right, Simeon. Nothing has changed in our sort of underwriting thesis of the business. And again, if you think about 12 acquisitions, different business models, some more in-store base, some more mobile-based, 12 different operating systems, a lot of entrepreneurial backed businesses. So consolidating all those people, process and systems and technology onto one standard platform and one national brand, again, is simply taking several quarters longer than we thought. But nothing has changed in our long-term conviction around the returns in this business and the profitability over time.

Okay. And then, on Car Wash, the question is, how do you think about long-term profitability? Because you mentioned there's more competitors, there's competitors that are overlapping you in a high percentage of stores. You mentioned promotions, you're also doing membership, I guess, that could help offset some of the profit hit. But why should there were profit here be fully recoverable? Why isn't the incremental margin of this business lower? And then how should we think about it?

Yeah. I think there's a couple of things there. One, we talked about sort of three contributing factors to this year and our revised guidance for this year. Competitive intrusion is definitely one. And I mentioned that, that is over-indexed towards some of our older stores. And some of those older stores had, I would say, sub-optimal real estate because they were built 10, 12, 15 years ago. So one of the things that we're doing, Simeon, is sort of assessing the bottom 10% of our system, like every large scale multiunit business, there's a bottom 10%. So we're assessing, is there an opportunity there to clean up the portfolio in terms of underperforming stores. So that's number one. Number two is the brand positioning, the marketing, the promotional activity. We have to make sure that we get that right, given sort of the consumer slowdown and spending and obviously, the competitive intrusion. So we think there's probably some tweaks to both brand positioning, pricing, promotion activities in the balance of this year and as we look into next, do not infer that as incremental discounting, but that could be brand positioning and how we attract new customers. The third element that we have, Simeon, which I don't think anyone else in this space has, is we sort of have this X factor of the Take 5 brand. And the customers from our Take 5 Quick Lube business that, as I mentioned, in Q2, we marketed to 2.5 million of those and saw some nice uptake in terms of shifting them from Quick Lube to Car Wash. We're also excited about sort of integrating the Take 5 brand on a digital platform, which I talked about, which will be out end of this year. And that's pretty exciting around creating a loyalty and membership platform for both Car Wash and Quick Lube coming through the Take 5 brands. So look, I think Car Wash is still a phenomenal business. If we look at the net capital invested after we do a sale and leaseback, we're at about $500,000. And we still feel very good about sort of the long-term prospects and cash generation from this business. So nothing has changed in our thesis there. I think we're just going through some challenging times sort of first half, second half of this year.

Thank you.

Your next question comes from Peter Benedict with Baird. Please go ahead.

All right, guys. Thanks for the question. Just a follow-up a little bit, just on the Glass sorry, integration delays. When did you realize this? It's just you're saying your kind of several quarters behind that would suggest that, that's kind of been emerging here. Just trying to understand the timing of when this kind of became clear. And what is it preventing you from doing in these businesses? That's my first question.

Yeah. I think, Peter, having spent 10 plus years doing multiple acquisitions, there's no cliff moment where you suddenly realize, oh my god, we're behind. I think it's a series of things that build. Obviously, we made a change in leadership about 100 days ago with Nick Lament in there, who is a fabulous leader and great success from the Take 5 Oil Change business. And I think when Gary came on Board 60 or so days ago, it was a chance for Gary with a fresh set of eyes to look at the business, to look at the assumptions. So I think it was those -- no cliff moment, but I think really Gary coming on board and having a look at the business and the assumption sort of said, okay, we're probably a little bit behind where we want to be. I would just reiterate that it is a temporary sort of slowdown in that business. It doesn't change any of our views around the long-term profitability and prospects for that business. When you think about -- Peter, the second part of your question, which is what specifically was it impacting. When you think about integrating 12 businesses with different operating models, different cultures, it really is all the pieces around creating uniformity from a people, process and systems perspective is just taking a little bit longer. So when you're implementing all these programs, again around people, process and systems, it does take away from sort of the focus on growing new stores and driving incremental revenue, which again is just a couple -- several quarters behind.

Sure. Thanks, Jonathan. It’s helpful. And then I guess my follow-up would be just maybe a broader view of systems throughout the business, what's the view there? I mean, Gary's now had a chance to take a look at things, how do you feel about just the systems underlying the broader business? And then, Gary, just if you could give us a little more detail on maybe what you're assuming for D&A and interest expense this year, that would be helpful. Thanks, guys.

Yeah, Peter. I'll answer the first question, and then Gary will jump in. On the broader systems, I think we have very solid sort of tech stack across the rest of our mature businesses. So I would say that's not an issue in any of the other business segments. Again, this is 12 acquisitions in a relatively short period of time, which is driving this integration delay. And then, I'll pass it over to Gary to answer your second question.

Hi, Peter. Yeah. No. So on D&A and interest expense, we think in interest expense is going to be around $160 million, maybe a little bit higher than that. I think that's a little bit higher than obviously when the guidance was first given. And then on depreciation, it's probably about $183 million or D&A, the depreciation part being like around $150 million, $151 million.

Okay.

Your next question comes from Christopher Horvers with JPMorgan. Please go ahead.

Thanks. Good morning, guys. So maybe I think it would be helpful if you could diagnose that $50 million cut to EBITDA a little bit closer. I mean you mentioned rent expense, but also it seems like you're expecting the EBITDA of the Car Wash post transition to Take 5, and then the integration of the Glass business to lead to some improved EBITDA margins. So can you take that $50 million apart? And secondly, as you think about the Car Wash growth opportunity long-term, is it more that you want to just look at the existing base and you're not changing the long-term growth potential for new units or do you also -- are you also concerned about revisiting how many new units you can actually open there?

Yeah. I'll go ahead and start on the $50 million. So it's $55 million on EBITDA, $50 million on revenue. Obviously, a big flow through on the $50 million revenue part, the remainder is things, as you mentioned, like sale leasebacks, we accelerated those. So there's just under $150 million done in the first half. Obviously, we're expecting to do even more than that hopefully in the second half. So that drives up that and there are some other rent factors that went in there. So that's close to $10 million right there. And then when you think of margins and where things are going from -- at least from how we looked at it internally, was -- on the full year basis, Car Wash, obviously is underperforming. And if you think about Glass, and when we talked about Glass, that's more underperforming in the second half of the year and it's underperforming for all the reasons Jonathan mentioned, but also because we're investing in that business, right? I mean we want that business to come out of the blocks going really well. So we're making investments in personnel, et cetera. So that brings the margins down. So when you look at it purely for the rest of the year, the underperformance is probably a little bit more weighted to that side of the business versus Car Wash. If that's helpful, hopefully.

And Chris, just to follow-up on the Car Wash growth question you had. No, we're not changing our long-term view in terms of store growth or same-store sales growth within the Car Wash segment. I think the -- we're still on track to open about 65 greenfield locations this year. We've got a very robust pipeline for the out years. I think the only difference we have now is making sure that we continue to build stores in markets where we have a defensible position and density and obviously leveraging the Take 5 Quick Lube. But in terms of our long-term plans for unit store growth for Car Wash, nothing has changed.

And then just a follow-up on the first point with Gary. So just -- so we're clear here. So $55 million cut, $10 million is rent as you do accelerate the sale-leaseback side in relative to existing plan, your -- I guess, how much of that $55 million in totality is Car Wash versus Glass?

Well, on a full year basis, I'd say it's 50-50, give or take, a couple of million on the rest. That was my point, but if you just looking at the second half, it's a little bit more weighted to Glass.

Got it. And then my last one is just in terms of, I guess, where did the EBITDA shake out relative to internal plans, just to get a sense of again, how much -- how that $55 million breaks down in the second quarter, the EBITDA dollars?

Yeah. I mean I don't think it's appropriate for us to comment versus our internal plans. Again, I wasn't here when the internal plans were made.

But Chris, safe to say that it's obviously disappointing from an internal plan perspective as well.

Understood. Thank you.

Thanks.

Your next question comes from Liz Suzuki with Bank of America. Please go ahead.

Great. Thank you. So I just wanted to clarify a bit on the future store count expansion plans because I think previously, and outside of Car Wash, you talked about 170 net new stores in maintenance. Is that -- are you still on track for that? And then same with the Paint, Collision & Glass that was 130 before, we now slowing that down a bit to kind of get the integration stuff in check?

Yeah, Liz. Good morning. No change on Quick Lube. No change on Car Wash, like I just mentioned. Glass will come down a little bit, Liz, as we slow down to sort of get the integration completed there. I think our new number in Glass has gone from 130 to about 90 on Glass for this year. But that's the only change to the net store growth.

Yeah. We kept what was originally provided. I mentioned in my script, it's basically in line when you look at total PC&G and things like that. They shouldn't change all that much nor the same-store growth number.

Great. And then just a quick follow-up on the Platform Services business. I mean you had mentioned a headwind from 1-800-Radiator. Can you just give a little bit more detail on that, and then when that's expected to taper off?

Yeah. I think a couple of things, Liz. Gary mentioned it, but the same-store sales number just relates to 1-800, which is less than 50% of that segment. Obviously, year-on-year revenue and profits are up for that entire segment. The dynamic with 1-800, Liz, was we did an exceptional job during COVID when there was supply chain constraints. So we had sort of preordered, pre-stocked up on parts and so had availability. And then obviously, we're able to take price, given the supply chain pressures. That supply chain has essentially cleared up right now. So we've seen demand and pricing come back in line to pre-COVID levels. So I think that business is sort of back to what I would say was normal pre-COVID levels. But again, when we look at the overall segment, revenue and profits are up year-over-year.

All right. Thanks very much.

Your next question comes from Kate McShane with Goldman Sachs. Please go ahead.

Hi. Good morning. Thanks for taking our question. Jonathan, I think you said that the long-term guide through fiscal year '26 remains intact despite the guide down for the year this year. But just how do you envision recovering some of this EBITDA over the next couple of years?

Yeah. Thanks, Kate. Good morning. I did reiterate that multiple times and I'm glad you picked up on it. I think a couple of things to think about. One is, we do see this as a short-term revision. Number two is that we are significantly ahead of our long-term plan. And we'll get into sort of -- we'll bridge that long-term plan from where we estimate this year to be through the end of 2026 on September 20 with all the details. So I think, again, we've remained very bullish, and Gary has sort of gone through the long-range plan and we're excited to talk about what those numbers look like in a couple of weeks in Charlotte.

Okay. Thank you. And then just a second follow-up question for us. Is there a business in which you are accelerating your sale leaseback activity or is it really across the board? And is there a plan to reduce the amount of company-owned Auto Glass locations that's changed?

Yeah. I think primarily, Kate, the sale leaseback is coming from our Car Wash new stores. We are -- this year, we've done more owned property with our Quick Lube businesses, but still pretty de minimis. So the majority of those sale leasebacks are coming from the Car Wash side. And I think as we look forward to the 65 stores that will open this year, I would say the majority of those stores include underlying real estate, obviously, depending on when they open will drive sort of the sale and leaseback proceeds, but nothing has really changed there. In terms of the Auto Glass Now and franchise, right now, that is a company store platform. Obviously, we're busy integrating that and building out one national brand. So no plans to franchise that business in the U.S. in the foreseeable future. The focus is obviously completing the integration and building that base to where we want it to be over time. So no plans to franchise that for now.

Thank you.

Your next question comes from Kate McShane with Goldman Sachs. Please go ahead.

I think we just had Kate.

I'm sorry, your next question comes from Karen Short with Credit Suisse. Please go ahead.

Hi. Thank you. A couple of questions. I just want to go back to the overall algorithm as it relates to top line versus growth versus the EBIT growth. So if you look at what your second half implied sales growth is, it's kind of 9.6% and your EBITDA growth is 0.19% (ph), will barely a percent. So I understand there are some things that are factoring in Car Wash specific and others, but maybe you can talk about that relationship. And then wondering if you can talk about how you think about inflation going forward? And then the third question would just be about consumer sensitivity on discretionary in general?

Okay. Three questions. Thank you, Karen. First one, I would just remind people that our long-term growth algorithm, which has not changed since we went public is organic low double-digit revenue growth, flat margins and low double-digit EBITDA growth. And then that's supplemented by M&A over time. So nothing has changed with our long-term growth algorithm. And obviously, if you look at where we've been since we went public, I think if you look at the full body of work, you'll see that we are absolutely hitting that long-term growth algorithm. As I also mentioned, we are very comfortable with the 850 target -- at least 850 by the end of 2026 and we'll bridge all that at the Investor Day coming up on September 20. So that's, I would just say, on the long-term algo question. In terms of inflation, we're still seeing inflation across our businesses. It's definitely moderated from a labor perspective, but it's not gone away. And I think generally, our supply chain has, I would say, some puts and takes, but we're still seeing sort of nominal inflation in sort of the supply chain. Again, given the needs-based services of our businesses and the effect of pricing power, we're still able to pass on a lot of those inflationary costs to our end consumer. Remember that our franchisees determine their own pricing and our franchisees are exceptional entrepreneurs, who understand sort of the cash implications of inflation pressure. So they are very good at managing sort of price. In terms of consumer spending or consumer slowdown, which I think was the third part of your question, we've definitely seen that show up in our most discretionary business, which is our Car Wash business. And if you think about the rest of our businesses, they are very much needs-based. So I think Gary mentioned that we're seeing very strong demand in our Collision space. Obviously, our Quick Lube business, which is needs-based. Take 5 Oil Change delivered, I think, 17% same-store sales in this quarter. So I think right now, what we're saying is that we're seeing the consumer slowdown show up in our most discretionary business in Car Wash, the rest of the businesses are performing very well.

Okay. Thank you. I’ll take it up on follow-up. Thank you.

Your next question comes from Chris O'Cull with Stifel. Please go ahead.

Yeah. Thanks. Jonathan, part of the attractiveness of the driven business is the durability of the cash flows and the growth prospects. But it sounds like the Car Wash segment is dealing with saturation in several markets. It's a high company ownership segment with high fixed cost business structure, which means changes in the comp sales can obviously have an impact on EBITDA and cash flows we're seeing this quarter. So I'm just wondering if the Car Wash segment, how it fits in the driven portfolio and whether or not it's still an area that deserves a lot of capital allocation?

Yeah, Chris. Great question and easy to sort of second guess ourselves based on, I would call, sort of short-term challenges with the business. I would go back to a comment I made in my earnings -- in my prepared remarks, which is strategically, when we looked at the business three, four, five years ago, we were very conscious that this car park, the overall car park globally and domestically is going to change and is slowly changing and strategically adding Car Wash and Glass were both sort of EV neutral businesses. And I think it's important for people to understand that, that's still a very rational strategic imperative to have those other businesses, which are going to perform for many, many years despite a likely change in the car park. So that's number one. Strategically, I still believe absolutely the Car Wash or Glass are the right businesses for us to be in. In terms of your second question, which is deployment of capital into the Car Wash space, I think a couple of things that I would say, and arguably, you could have this for Glass as well. We have deployed capital into both of these segments. We have opened thus far between last year and this year, about 60 new Car Wash locations. Those are still ramping. Those will generate significant returns over the next three to five to seven years. So we have not seen the fruits of that investment yet. And the same on the Glass business. I mean, obviously, we're -- we've got some bumps in terms of the integration, but the capital that we've invested there will continue to generate really significant cash flow returns for many, many years to come. So I think we've got some short-term challenges with Car Wash. We still have massive conviction long term about the profitability and growth prospects for that business. Will it determine capital into that Car Wash space? Obviously, we will remain very disciplined in any and all capital deployment at Driven Brands. And again, when you think about the net cash flow from Car Wash, after a sale and leaseback, which 90% of our stores have underlying real estate, the net invested capital is about $500,000. So the returns are very attractive on that.

Okay. And then just one last one. Gary, I believe you mentioned the incremental rent was $10 million from the sale-leaseback transactions. Was that driven by the amount of transactions that you expect to complete this year, or cap rate going higher? And then I'm also curious why there's a need to complete a large number of sale-leasebacks this year to pay down funded debt?

So a couple of things there. It wasn't a full $10 million, but it's pretty close to $10 million. And that is just having those brought forward a little bit. So it wasn't a matter of it being higher cap rates or something like that. And then I believe that was part of the plan. The entire time was to do this in order to get the cash flows back in and so you can reinvest again. I mean that's part of the capital-light strategy.

Yeah, Chris. I think just following up on that, the ability to recycle this capital from those Car Wash locations versus sitting on total deployed capital of whatever it is $4 million to $5 million, we think there's a more efficient use of that by putting it back into the growth levers of the business. So that was really the primary driver on the accelerated sale and leasebacks.

Okay. Thanks, guys.

Your next question comes from Seth Sigman with Barclays. Please go ahead.

Hey. Good morning, everyone. I wanted to follow-up on the revenue guidance and the change for this year. It sounds like it's pretty isolated, but maybe you could just give us a little bit more context about what you're seeing so far in Q3 across the different businesses? And then just back on that consumer question, more specifically, I'm curious if you're seeing any signs of trading down within the business. I think there was a comment about attachments earlier being healthy, but maybe if you can just elaborate on what you are actually seeing in terms of ticket, attachments, services per trip any metrics like that, that could be helpful. Thank you.

Seth, I'll start with your second question and then let Gary talk about the revenue question. As I mentioned before, the rest of our businesses are performing well. Outside of the Car Wash, which is very discretionary in the U.S., we're not seeing any indications of trade down or delay. If you look at our Quick Lube business, 17% same-store sales in Q2 and attachment rates have held very firm at sort of north of 40%. So we're not seeing it at this point, Seth, outside of the Car Wash space.

And Seth, I don't really have any more detail to give you on the revenue side. I mean we're not really commenting on Q3 at this point in time.

Okay. Fair enough. And then maybe for you, Gary, I'm just curious, over the last couple of months, any incremental insights or learnings from your experience so far. I'm thinking more from a cost perspective, how you think about cost or operating efficiency opportunities? And then also sort of the investment strategy here, more P&L related investments thinking about customer acquisition or anything else to drive the platform, how do you think about balancing those factors? Thank you.

Yeah, Seth. So I mean, one of the things I get great comfort from was -- on the cost side, one of the reasons I joined was the team were just great operators, right? So it's not like I'm coming in saying that costs are out of control or something like that. We'll always look at all that. And now that we're sort of getting through this, I plan on spending more time focused on cash flow and driving efficiencies where we find that there's opportunities there. So that's the main part. On systems, I mean, there are a lot of acquisitions. So that's something we need to focus on also this year is just getting all the systems under one banner over time. That's not a quick fix, but that's something we'll be focused on.

[Operator Instructions] Thank you. Your next question comes from Sharon Zackfia with William Blair. Please go ahead.

Hi. Good morning. I just wanted to follow-up on the competitive intrusion for Car Wash. In those markets that you said at the older markets where you're seeing all the growth of competitors, I think it was 30% odd has had new entrants in the past year. Have you had any strategies that have yielded kind of recovery that would point to kind of what to do from here? And then, I'm curious of Take 5 cross branding initiatives that you referenced. Did you use any discounts to get those customers to come in and try Car Wash for the first time?

Yeah. Thanks for the questions, Sharon. I think as I mentioned in my prepared remarks, about 32% of our stores have had a competitor open up in the last couple of years and that over indexes towards some of the older sites in our portfolio. Obviously, we're not sitting back and just allowing these competitors to come in and take market share. However, there is a sort of a bright shiny newness to some of these locations and people are certainly trying them out. One of the things that we have to focus on is continue to grow our overall membership count, which obviously drives improvement in weather volatility because you've got that sort of guaranteed revenue stream. And then secondly, that drives brand loyalty and stickiness to our consumer base. So that's one thing that we're heavily focused on. The second thing, Sharon, is actually I talked about is leveraging this Take 5 brand platform that we're building between both Car Wash and Quick Lube and using that to drive incremental Quick Lube customers to our Car Wash business and vice versa, Car Wash customers to our Quick Lube business. So those are some of the things that we're working on very quickly. In terms of the cross-branded promotion that I talked about earlier with 2.5 million Quick Lube customers, yes, there was some promotional activity there, which would be very normal when you're looking for customer acquisition. I think we're still very pleased that we drove 125,000 customers and north of 10,000 new members. But initial customer acquisition offers are very normal in, quite frankly, any multi-unit retail business.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.