Massage Services During the Pandemic

on the phone. Todd, really nice to have you with Carol and myself. Thank you, glad to join you. So give us a little bit of size and scope, as we say here at Bloomberg about the company, because you've got uh four fifty plus units I believe across the region, right, So we're this is a national franchise chain of massage and facial spas. We have four d locations across uh thirty two states in the US and a couple of provinces in Canada as well. Okay, So and it's franchise.

So you know, we've talked to a lot of um company, especially within the hospitality industry where there's franchise and how they are dealing with the virus and how do they reopen. First off, let's ask about the impact. Were you guys, I'm assuming, shut down completely, right, So starting as as you know most businesses, we started actually voluntarily closing locations, you know, probably the first week of March, but quickly that accelerated and so by April one, all four d

and sixty five locations were closed. Um, so we were you know, really had had no services being done you know after April one, right, okay, and so were you guys able to your franchise owners, were you able to hold onto workers or did you have to let go of those workers now? So we yeah, so you know, part of our strategy was really you know, how do you preserve, um, the franchise e liquidity. That was that's one of the most important things because we want them

to be around to reopen. And so one of one of the things they had to do early on was, um, you know, layoff all of the staff except generally managers and so uh within a two week period, we uh, the system laid off about eleven thousand employees. So it was a you know, pretty big hit and um, you know, obviously to all those workers you know, very unfortunate as well. And so what's the process like of coming back, I mean from a safety perspective, from a worker perspective, walk

us through the process of that. Yeah, so you know that was my biggest concern early on. I mean, you know when we sat there, you know, kind of mid March and late March, you really have to answer first the existential question, as you said, Jason, at the outset, can you do a hands on business safe UM with COVID nineteen, without a vaccine, without a really solid cure. And so we didn't wait for you know, kind of

the government to dictate policy or determine it. We we actually went out and engaged our own panel of health experts that we had an infectious disease research or several medical UH practitioners and then a medical director of a massage school UM to really help us design the protocols necessary UH to you know, make sure that this process

could be done safely. And as we did the research into this, you know, it actually ended up and everybody learned so much over this course at the time that that our services actually relatively low risk activity because generally the disease was being transmitted through respiratory means, and so we're really more skin to skin hands on. Um, it didn't impact assume everybody wore you know, had the proper you know pp it did not. It wasn't as risky as maybe the perception would be as you sit there

from the outside. So tell us, oh, I'm sorry, please please talk finish. But we did we did have to develop a lot of new safety protocols and so that we use that time wisely, you know, the month we were closed to to develop those protocols and then go retrain you know, ten thousand staff members on on how to do this activity as they reopen. So two questions. I'm curious about what those safety protocols exactly. Will it

be like if I go in for a massage. Is it somebody that's kind of suited up in a mask and they've got you know, um, gloves on or something you know, some you know. I'm just curious how it works out. And I am curious how many of your workers are you ultimately going to be able to bring back. So as to the first question, there are a number of safety changes and you would see a different process than if you had went in, you know, prior to March first, we do require that all of the staff

members wear masks. Astheticians who these are the folks who do the facial services, have to wear both masks and face shields during the service UH customers. We are UH certainly in most states, and we've worked with states in developing these guidelines. In most states, customers are also required to wear masks while they're getting the massage. If it's not a state where it's required, then we we have a high recommend and we allow the local jurisdiction to

set that up. We now disinfect the entire room after each service, so in between any service, the room is disinfected. UM. We were fortunate that we had sinks in all of our treatment rooms and so we require handwashing by the massage therapists prior to the service. Some states they require the customer to hand wash prior to getting the service. And then a lot of things in the in just

the transactional nature of it. UM going to a contact light transaction, we really closed down a lot of the lobbies and we ask customers to wait in the car and we text them so they can walk right into the treatment room instead of sitting in a in a lobby, so you would notice a number of changes to the you know, how you get the service if you came in today. Let's get back to our conversation with Todd left.

He is the CEO of handed Stone Massage and Facial Spa national chain units across the country, and so Todd, I guess one of the things that strikes me is all the stuff you're talking about cost money. So what are the things you have to do operationally to ensure for yourself, for your franchise ese that this businesses is able to continue in this sort of new normal that

we're going to be in for some time. Right, Well, I think that in the short term we do see an increase in you know, our operational costs to meet these new safety protocols and guidelines. But UM, on the the other side of it, obviously, UM demand has has

come back very strong. We are a membership base as well, although we have you know, we also served non members and guests, so a lot of our members over our member base stayed with us and continued to actively pay their membership fees during the time that we were closed. Because those packages do roll over and they can get

those services. So, you know, from a cash flow perspective, our franchisees survived, you know, and did fairly well during the shutdown, UM, but we are going to have to absorb some of these costs and I think ultimately, UM, some of that will get passed onto the consumer. So wow, that's pretty impressive. That's of your member base. Membership base stayed with you. That that really gave you to some extent of a fairly predictable revenue stream right in a

in a period of high uncertainty. Exactly if you think about the underlying unit with you know, UM there they get about fifty of their total revenue from their membership based and that stayed on. But they also were not paying out their staff. On the the expense side, UM, a lot of them got rent deferrals and and quite frankly in our in our mind, UM, the p p

P program was a great success for our franchisees. We had probably close to two hundred of the franchisees were able to secure PPP funds and so that helped carry them through this time period as well. So from a ash flow perspective, UM, I think they will emerge from this you know, as they reopened in fairly, fairly good condition.

That's interesting that that's a that's a big endorsement for the PPP because we've heard very um, I wouldn't say, I wouldn't say mixed, but I would say uneven in terms of being And was that something that you worked on with franchise to to essentially enable them? Did you give them effectively a playbook to to do it? Yeah, exactly, And that was one of our So one of our three core objectives was during the pandemic was you know,

to preserve the franchise e liquidity. So we suspended certain payments as the franchise or we helped them arrange the p p P loans and rent deferrals from landlords and then kind of walk them through the the process of you know, laying off employees but still complying with Cares Act regulation and so um. You know this. I think the recent extension was critical, um on the p PP side for our locations because many of them, you know,

are just reopening. In fact, um, it's it's interesting that today New Jersey, we just reopened fifty eight locations today in New Jersey. This is the first day we could be open in New Jersey. Interesting, and do you have any sense of I know it's early days, but any sense of like the flows so far from from customers in terms of normal capacity versus now. Yeah, so we're obviously tracking that on that almost an hourly Pratt. And

and so are of the those locations reopened. The average days of reopening is about twenty eight days, and we're back to uh, just about eight of our comparable store sales, so eight zero, so they're about negative on a comparable basis right now and having only been opened, you know, on average twenty eight days. So we see this is a a real endorsement by the consumer that they are

coming back. And and in some of those locations. One of the challenges here is that the states have been very unequal in um, you know how this is applied, so in some states we're not allowed to perform facials yet. And even still, um, we're back at you know, of the pro So that's remarkable. I mean, we're most of your locations and forgive me for not knowing that going in here. Um, yeah, I mean we're you know, thirty

two states. We are very heavy in the Northeast, which is was not it's not a positive during this time because UM, but Florida is our number one state and so we have over sixty locations in Florida. UM. Texas is a is a very large UM you know market UM Illinois, UM, and then you know, uh, lesser in California, but we do have a presence in California as well. So are you right across? Yeah? Are you worried about

the numbers that you're seeing in Texas right now? And what what impact are you seeing all those locations at Florida as well? Yeah, yeah, we are. We are concerned about that, and I think from our perspective, we have to do what we can do to control our business and make sure it's the safe as possible. UM. But we are very strong endorsers of customers wearing masks, and I think, UM, you know, that's that's something we're insisting

upon and helps reduce the risk down. UM. But I think what we're hearing is that if there are UM at least by local authorities, if there are outbreaks, is going to be dealt with on a much more targeted basis and locally suggest exactly, and I think we could sustain that. Our big fear would be you know broader, you know, statewideowns. Yeah, all right, well this was really interesting. Thank you for being so candid and thoughtful. We really appreciate.

Todd laugh is the CEO of handed Stone Massage and Facial Spot. It's a chain. They've got four, six or five units across the country back in business in many ways, only down twenty percent, which I have to I find really pleasantly surprising. Carol, Right there, comparable stores, comparable stores, sales, sales are back. That's pretty remarkable. Um, so interesting. Alright, um yeah, I felt like the details on that was just fascinating.