Driven Brands Q2 2025 Earnings Report

Driven Brands EPS Results

• Actual EPS: $0.36
• Consensus EPS: $0.34
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: $0.35

Driven Brands Revenue Results

• Actual Revenue: $550.99 million
• Expected Revenue: $540.12 million
• Beat/Miss: Beat by +$10.87 million
• YoY Revenue Growth: +6.20%

Driven Brands Announcement Details

• Quarter: Q2 2025
• Date: 8/5/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, August 5, 2025
• Conference Call Time: 8:30AM ET

Driven Brands (NASDAQ:DRVN), together with its subsidiaries, provides automotive services to retail and commercial customers in the United States, Canada, and internationally. It offers various services, such as paint, collision, glass, repair, car wash, oil change, and maintenance services. The company also distributes automotive parts, including radiators, air conditioning components, and exhaust products to automotive repair shops, auto parts stores, body shops, and other auto repair outlets; windshields and glass accessories through a network of distribution centers; and consumable products, such as oil filters and wiper blades, as well as training services to repair and maintenance, and paint and collision shops. It sells its products and services under the CARSTAR, IMO, MAACO, Meineke Car Care Centers, PH Vitres D'Autos, Take 5 Oil Change, Take 5 Car Wash, Auto Glass Now, Fix Auto USA, and 1-800-Radiator & A/C, Spire Supply, and Automotive Training Institute brands. The company was founded in 1972 and is headquartered in Charlotte, North Carolina.

Driven Brands Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Driven Brands posted 6% revenue growth, $143 million in adjusted EBITDA and a 1.7% same‐store sales increase in Q2—its eighteenth consecutive quarter of positive comps.
• Positive Sentiment: Take Five Oil Change led growth with 10% adjusted EBITDA uplift, 169 net new stores over 12 months, and a 7% same‐store sales gain, while non‐oil‐change revenue topped 20% and a new differential service rolled out system-wide.
• Negative Sentiment: Franchise Brands delivered $45 million in adjusted EBITDA at a 61% margin but continues to face ongoing softness in Collision and Mako, with limited discretionary spending among lower-income consumers expected to persist.
• Positive Sentiment: International Car Wash (IMO) achieved a 19% same‐store sales increase and $27 million in adjusted EBITDA at a 37% margin, though management anticipates a moderation in H2 results due to weather and lapping.
• Positive Sentiment: Deleveraging remains on track after monetizing the $113 million seller note, fully retiring the term loan, and reducing pro forma net leverage to 3.9x, with a target of 3x by 2026.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to the Driven Brands Second Quarter twenty twenty five Earnings Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Tuesday, 08/05/2025. I would now like to turn the call over to Joel Arneo. Please go ahead.

[Joel Arnao, SVP - FP & A, Treasury & IR at Driven Brands]

Good morning, and welcome to Driven Brands' second quarter twenty twenty five earnings conference call. The earnings release and the net leverage ratio reconciliation are available for download on our website at investors. Drivenbrands dot com. On the call today with me are Danny Rivera, President and Chief Executive Officer and Mike Diamond, Executive Vice President and Chief Financial Officer. In a moment, Danny and Mike will walk you through our financial and operating performance for the quarter.

[Joel Arnao, SVP - FP & A, Treasury & IR at Driven Brands]

Before we begin our remarks, I'd like to remind you that management will refer to certain non GAAP financial measures. You can find the reconciliations to 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, we may also make forward looking statements in regards to our current plans, beliefs and expectations. These statements are not guarantees of future performance and are subject to a number of risks and uncertainties and other factors that could cause actual results and events to differ materially from the results and events contemplated by these forward looking statements. Please find the earnings release and our filings with the Securities and Exchange Commission for more information.

[Joel Arnao, SVP - FP & A, Treasury & IR at Driven Brands]

Today's prepared remarks will be followed by a question and answer session. We ask you to limit yourself to one question and one follow-up. Now I'll turn it over to my partner, Danny.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Good morning. Thank you for joining us today to discuss Driven Brands' second quarter twenty twenty five financial results. I want to begin by thanking the more than 7,500 Driven Brands team members and franchise partners whose hard work and execution continue to drive results in a dynamic macro environment. One of my first actions as CEO was to hit the road on a listening tour, visiting many of our offices and shops across the country to hear directly from our team. I wanted to solidify what's working, where we can improve and how we shape the next chapter of Driven Brands together.

[Daniel Rivera, Director, President & CEO at Driven Brands]

That effort continued with our annual Talent Week, where Driven senior leaders came together to review key roles, invest in leadership development and hold open conversations about Driven, our talent, and our future. What came through loud and clear in every location and every conversation is that we have an incredible team. I left both the tour and Talent Week more energized than ever about our future. We have the right people, the right model and the right momentum to win. Shifting gears to our second quarter results.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Driven Brands grew revenue by 6% and delivered adjusted EBITDA of $143,000,000 System wide sales increased 3% supported by 184 net new stores over the last twelve months and 52 additions this quarter alone. Same store sales rose 1.7%, marking our eighteenth consecutive quarter of positive same store sales. We remain focused on our key priorities, delivering consistent growth fueled by Take five, generating strong free cash flow from our Franchise Brands and executing on our deleveraging plan to create long term shareholder value. Take Five Oil Change once again led the way with industry leading growth, inclusive of 10% adjusted EBITDA growth year over year, 169 net new stores over the past twelve months and 41 for the quarter, and same store sales of seven percent, marking our twentieth consecutive quarter of same store sales growth. Take Five is the home of the stay in your car ten minute oil change.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Our unique operating model paired with the passion and consistency of our team members and franchisees continues to deliver Net Promoter Scores in the high 70s, resulting in strong customer loyalty. As we continue to open over 150 new locations annually, many in new markets, brand awareness and customer trial continues to grow and those first time visitors become repeat customers. We're also seeing meaningful contribution from our non oil change revenue, which accounted for more than 20% of Take five sales for the quarter, driven by continued strong attachment rates. As part of our strategy to grow non oil change revenue and expand our service offerings, we began piloting differential service, the replacement of a vehicle's differential fluid last year. Today, that service is fully rolled out across all company owned locations and roughly half of our franchise locations with full rollout expected by the end of Q3.

[Daniel Rivera, Director, President & CEO at Driven Brands]

This brings our total number of non oil services to six, all designed to fit seamlessly within our fast, friendly, simple, stay in your car model. Importantly, our attachment rates and Net Promoter Scores remain strong, underscoring the trust customers place in us to deliver more in every visit. As we continue to execute, we're unlocking greater value for our customers and greater productivity from every lane. Our Franchise and International Car Wash segments, home to iconic brands like Meineke, Mako and Carstar, continue to be high margin, strong free cash flow generators, allowing us to reinvest in the growth engine that is Take Five. Our Franchise segment generated $45,000,000 in adjusted EBITDA for the quarter with adjusted EBITDA margins of 61%.

[Daniel Rivera, Director, President & CEO at Driven Brands]

We continue to see year over year softness in both our Collision business and Mako. In Collision, the broader industry remains under pressure, but we're encouraged by Driven's continued market share gains. Mako showed sequential improvement this quarter, though it remains down versus prior year, due primarily to a pullback in discretionary spending among lower income consumers. While we're pleased with our market share gains in Collision and Mako's quarter over quarter progress, we anticipate ongoing softness in both for the remainder of the year. Meanwhile, IMO, our international car wash business, continues to deliver strong top and bottom line performance with same store sales for the quarter of 19%, adjusted EBITDA of $27,000,000 and adjusted EBITDA margins of 37%.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Similar to our comments in Q1, we are thrilled with the performance of our Car Wash segment, but expect the performance to moderate in the back half of the year. We remain committed and laser focused on reducing leverage to three times by the 2026. Importantly, we recently monetized the seller note from our U. S. Car Wash transaction for $113,000,000 While Mike will provide the details shortly, this move allowed us to fully retire our term loan and pay down our revolver, reducing net leverage to 3.9 times on a pro form a basis.

[Daniel Rivera, Director, President & CEO at Driven Brands]

We first outlined our deleveraging goal at our Investor Day in late twenty twenty three. And since the end of that year, we've paid down just under $700,000,000 of debt, reducing net leverage from five times to 3.9 times. I'm pleased with the steady progress we're making and remain fully committed to reaching three times by the 2026. While the tariff environment remains fluid, we've seen no material change to our tariff posture since our Q1 update. Driven remains well positioned and we continue to believe that our diversified sourcing strategy and pricing power supported by the non discretionary low frequency nature of our services will enable us to manage any foreseeable risk.

[Daniel Rivera, Director, President & CEO at Driven Brands]

I'd summarize my remarks today as follows. First, we delivered a strong second quarter across same store sales, revenue, adjusted EBITDA and adjusted EPS. Second, Take Five continues to deliver industry leading growth. Third, our Franchise and Car Wash segments remain reliable sources of strong free cash flow. And finally, we remain on track and committed to reducing leverage to three times by the 2026.

[Daniel Rivera, Director, President & CEO at Driven Brands]

I want to sincerely thank our thousands of employees and franchise partners for their continued dedication and hard work. Despite a dynamic environment, I remain confident in our team and ability to execute. With that, I'll turn it over to my partner and Driven CFO, Mike.

[Mike Diamond, EVP & CFO at Driven Brands]

Thank you, Danny, and good morning, everyone. Q2 twenty twenty five was yet another strong quarter for Driven marked by consistent execution, strong sales growth in our Take five oil change business and continued debt paydown helped in part by the completion of the sale of our U. S. Carwash business. As a reminder, with the divestiture of our U.

[Mike Diamond, EVP & CFO at Driven Brands]

S. Carwash business, the results for that business are included in discontinued operations and are not included in financial details provided today unless otherwise noted. Driven recorded its eighteenth consecutive quarter of same store sales growth, increasing 1.7% in Q2. We added 52 net units in Q2 as continued strength in our Take five segment was supplemented by unit growth in our Franchise Brands segment. System wide sales for the company grew 3.1% in Q2 to $1,600,000,000 Total revenue for Q2 was $551,000,000 an increase of 6.2% year over year.

[Mike Diamond, EVP & CFO at Driven Brands]

Q2 operating expenses increased 84,200,000 year over year. Key drivers of this increase include an increase in company and independently operated store expenses of $17,800,000 driven by higher sales volumes and more stores in 2025 versus 2024 an increase in SG and A of $63,300,000 Approximately $49,700,000 of this increase is excluded from adjusted EBITDA, driven by a loss from the seller note receivable, increases in cloud computing amortization and losses from the sale or disposal of fixed assets. The remaining $14,000,000 increase in SG and A is driven primarily by ongoing investments and growth initiatives and the normalization of certain reserves. Operating income for Q2 was $38,100,000 Adjusted EBITDA for Q2 was $143,200,000 roughly $200,000 below Q2 last year. As a reminder, Q2 of this year comes without the benefit of PHB Tru, which we divested in August 2024, but the results of which are still included in Q2 twenty twenty four results.

[Mike Diamond, EVP & CFO at Driven Brands]

Adjusted EBITDA margin for Q2 was 26%, a decrease of roughly 160 basis points versus Q2 last year as sales growth was offset by the aforementioned increases in store expenses and SG and A. Net interest expense for Q2 was $31,400,000 down 500,000 from Q2 last year. Income tax expense for the quarter was $7,100,000 Net income from continuing operations for the quarter was $11,800,000 Adjusted net income from continuing operations for the quarter was $59,100,000 Adjusted diluted EPS from continuing operations for Q2 was $0.36 a decrease of $01 versus Q2 last year driven by lapping Q2 twenty twenty four earnings from PH VITRA. Q2 performance for each of our segments include Take five Oil Change, which represents approximately 75% of Driven's overall adjusted EBITDA, had another strong quarter with same store sales increasing 6.6% and revenue growth of 14.7%. Danny mentioned earlier the rollout of our differential fluid service system wide and this expanded service offering was one of several contributors to the continued strong sales performance.

[Mike Diamond, EVP & CFO at Driven Brands]

Revenue from our non oil change services continues to grow now comprising over 20% of Take five's total system wide sales. And we continue to see expansion in the penetration of premium oils, which account for approximately 90% of our oil changes. Adjusted EBITDA for the quarter was $108,200,000 reflecting growth of 9.9% compared to Q2 twenty twenty four. Adjusted EBITDA margin was 35.6%. We opened 41 net new units in the quarter, of which 24 were company operated stores and 17 were franchise operated.

[Mike Diamond, EVP & CFO at Driven Brands]

Franchise Brands reported a 1.5% decline in same store sales, representing a sequential improvement from Q1 of this year despite continued pressure in our most discretionary business Mako and ongoing softness in the broader collision industry. Segment revenue decreased 6,400,000 or 7.9% driven by same store sales and lapping one time fees from last year. The segment maintained its strong position as a key cash generator in our portfolio delivering a Q2 adjusted EBITDA margin of 60.9%. Adjusted EBITDA was $45,400,000 down $8,800,000 from the prior year, reflecting both the revenue decrease and higher G and A costs. We continue to grow our footprint, adding 13 net new units in the quarter.

[Mike Diamond, EVP & CFO at Driven Brands]

Our Car Wash segment, representing our international Car Wash business had another record quarter with same store sales growth of 19.4%. Similar to trends we experienced last quarter, this performance was driven by improved operations, expanded service offerings and more favorable weather relative to a year ago. Adjusted EBITDA increased $5,100,000 to $27,300,000 Adjusted EBITDA margin increased 120 basis points to 37 As we discussed last quarter, on April 10, we closed the sale of our U. S. Car Wash business for gross cash proceeds of $255,000,000 and a seller note of $130,000,000 On July 25, we monetized the seller note for $113,000,000 We applied these net proceeds to fully retire our term loan and pay down our revolving credit facility by approximately $65,000,000 This transaction closed after the quarter closed and therefore our Q2 balance sheet reflects a note receivable for $113,000,000 Turning to the remainder of our liquidity, leverage and cash flow performance for Q2.

[Mike Diamond, EVP & CFO at Driven Brands]

Our cash flow statement shows a consolidated view of cash flows for Q2 inclusive of our discontinued operations. Net capital expenditures for the quarter were $48,500,000 consisting of $62,600,000 in gross CapEx offset by $14,100,000 in sale leaseback proceeds. Proceeds from assets held for sale in Q2 generated an additional $4,100,000 of cash. As a reminder, we have now sold through a majority of our assets held for sale and would expect to generate a modest amount of proceeds through the rest of 2025. Free cash flow for the quarter, defined as operating cash flow less net capital expenditures, was $31,900,000 driven by strong operating performance.

[Mike Diamond, EVP & CFO at Driven Brands]

Strong cash generation combined with the sale of our U. S. Car wash business enabled us to advance our deleveraging priorities reducing debt by approximately $265,000,000 during the quarter. Our net leverage stood at 4.1 times net debt to adjusted EBITDA at quarter end. When adjusting for the seller note sale and subsequent debt reduction, our pro form a net leverage improves to 3.9 times.

[Mike Diamond, EVP & CFO at Driven Brands]

As of today, our revolving credit facility has a balance of $110,000,000 and represents the only non securitized debt we have outstanding. Year to date, we have repaid approximately $445,000,000 of debt. Our debt is now 94% fixed rate with a weighted average rate of 4.6. One final note on debt. You will see on our balance sheet an increase in current portion of long term debt related to our Class 20 nineteen-one seconduritized notes that have an anticipated repayment date of April 2026.

[Mike Diamond, EVP & CFO at Driven Brands]

Given the nature of the securitized debt markets, is common to refinance these notes closer to the repayment date, and we are confident in our ability to refinance. As a reminder, we also have revolving credit facility and variable funding approximately $700,000,000 which is available to us in the unlikely event we are unable to refinance the twenty nineteen notes. Our Q2 performance demonstrates meaningful progress on our key financial priorities, generating solid free cash flow, systematically reducing leverage and further strengthening our balance sheet. With the successful monetization of the seller note and subsequent debt reduction, we've simplified our capital structure and enhanced our financial flexibility for the remainder of the year. I'd now like to spend a little bit of time on the current operating environment and provide an update on our full year outlook.

[Mike Diamond, EVP & CFO at Driven Brands]

As Danny mentioned earlier, the Driven portfolio benefits from providing generally nondiscretionary services for an asset, a person's transportation that is essential for their livelihood. While declining consumer sentiment has the potential to adversely impact our performance, our business model remains resilient overall. We saw this resilience play out in Q2 with strong albeit moderated growth in Take five and sequential improvement in our Franchise Brands segment despite some limited pullback from our lowest income consumers and ongoing challenges in the end markets of our Franchise Brands segment. As mentioned, last quarter we believe we are well positioned for any potential tariff impacts, thanks to our strong supply chain team and geographically diversified supply chain. As we enter the back half of the year, we reiterate our fiscal twenty twenty five outlook as follows: revenue of $2,050,000,000 to $2,150,000,000 adjusted EBITDA of $520,000,000 to $550,000,000 adjusted diluted EPS from continuing operations of $1.15 to $1.25 same store sales of 1% to 3%.

[Mike Diamond, EVP & CFO at Driven Brands]

We believe we are appropriately cautious for the remainder of the year. We expect Take five growth to continue to moderate as it grows over a larger base, our Car Wash segment to face pressure from July's significantly unsettled weather conditions and ongoing headwinds in the end markets of our Franchise Brands segment. This caution now leads us to anticipate the second half will represent approximately 50% of our full year revenue and adjusted EBITDA. We expect a more tempered third quarter weighting given the timing and nature of the headwinds we've described leading to a more balanced second half distribution. As for other important operating metrics, we reiterate net store growth between one hundred and seventy five and two hundred units, net capital expenditures between six point five percent and seven point five percent of revenue.

[Mike Diamond, EVP & CFO at Driven Brands]

For taxes, we now estimate an effective annual tax rate of 28% to 30% driven by earnings in our higher tax jurisdiction Car Wash segment. For interest expense, the sale of The U. S. Car Wash seller note will remove the benefit of non cash PIK interest in the back half of the year, offset in part by cash interest savings from additional debt paydown. We now expect full year interest expense between 130,000,000 to $135,000,000 We believe the strength of the Driven platform was on full display during the 2025, demonstrating the resilience and earnings power of our business model.

[Mike Diamond, EVP & CFO at Driven Brands]

Looking ahead, we remain focused on achieving our net leverage target of three times by the 2026 with the majority of our free cash flow earmarked for reducing outstanding debt on the revolver. With that, I will turn it over to the operator and we are happy to take your questions.

[Operator]

Thank you so much. Ladies and gentlemen, we will now begin the question and answer session. And your first question comes from Simeon Gutman with Morgan Stanley. Please go ahead.

[Analyst]

Hi, this is Zach on for Simeon. Thanks for taking our question. Can you dive a little deeper into the traffic versus ticket side within Take five specifically? And are you seeing anything to call out with respect to deferrals or anything of that nature?

[Daniel Rivera, Director, President & CEO at Driven Brands]

Yes. Hey, Zach. This is Danny. Thanks for the question. Look, we don't really disaggregate traffic versus ticket.

[Daniel Rivera, Director, President & CEO at Driven Brands]

What I would say is first and foremost we're really happy with the comps we saw with Take five, right? 7% comps for the quarter on top of last quarter we had really nice comps as well. So really happy there. We're happy to see both sides of the equation are doing what we want them to do in terms of traffic and check. Non oil change revenue continues to be a nice driver of the business for us.

[Daniel Rivera, Director, President & CEO at Driven Brands]

We continue to see attachment rates in the mid to high 40s. Obviously, we just introduced our differential service which we like what we're seeing there. It's very early innings. But at the end of the day, we continue to see good attachment rates. We continue to see our NPS scores quite high.

[Daniel Rivera, Director, President & CEO at Driven Brands]

And we're able to continue to deliver on the promise to our consumers of a stay in your car ten minute oil change. So overall, again, we don't disaggregate the numbers, but I'd say we're very happy with the comps for the quarter.

[Analyst]

Got it. And then just a quick follow-up on the profitability side of that segment. Is there anything you can give us in terms of puts and takes for the Take five margin in the back half of the year?

[Mike Diamond, EVP & CFO at Driven Brands]

Yes, Zach. I mean, I think stepping back for a second, in general, we feel very pleased with the mid-30s margin that we saw in Q2. If you look at the history of this, even back to '24, there's always going to be some quarter over quarter variability that's natural and expected. Similar to what we saw in the past quarter, there was some increase in repair and maintenance and new store opening costs as we continue to invest behind this fleet and make sure that we're putting the best foot forward for our customers. But if you take a step back and think just overall on an annual basis, mid-30s for the full year, feel positive about that.

[Mike Diamond, EVP & CFO at Driven Brands]

We feel that's a realistic number and feel really good with where overall the margin is coming in.

[Analyst]

Thanks. Good luck.

[Mike Diamond, EVP & CFO at Driven Brands]

Thank you.

[Operator]

Your next question comes from Justin Klipber with Baird. Please go ahead.

[Justin Kleber, Senior Research Analyst at Baird]

Hey, good morning everyone. Thanks for taking the questions. Just a follow-up there Mike on the mid-30s margin for Take five on a full year basis. Do you guys think that's effectively the ceiling for the business as you're in aggressive unit growth mode? Or is there still upward migration over time as the mix of unit shifts to more franchise?

[Justin Kleber, Senior Research Analyst at Baird]

And then obviously, have this immature store base that will begin to kind of ramp up the profitability curve?

[Mike Diamond, EVP & CFO at Driven Brands]

Yes. No, I get the question Justin. Good to talk to you. I'm not sure I want to prognosticate more than kind of what we're looking at for the current quarter. Obviously, there's some movements in the model as you think about shifting to franchise, which is definitely a higher flow through on the royalty, but has a little bit different economics as you think through the oil charges there.

[Mike Diamond, EVP & CFO at Driven Brands]

I would just reiterate in general, we feel really good with the mid-30s. We think we've got a sustainable economic model for Take five. Danny mentioned the strength of the overall same store sales. We still have a long pipeline of unit growth both corporate and franchise that over time should shift to a more franchise waiting. And if we can continue to print these out at anywhere near the comps we were looking at with good unit growth, we feel like this business has a really good long runway for growth.

[Justin Kleber, Senior Research Analyst at Baird]

Got it. Okay. That makes sense. And then on the car wash business, I know the competitive landscape is much less intense relative to what you faced in The U. S.

[Justin Kleber, Senior Research Analyst at Baird]

And we've had some favorable weather trends. But how much of the strength the past four quarters has been, in your opinion, internal initiatives? And just how are you thinking about comping these comps in the back half of the year? I think you're cycling like a plus 27 in 4Q. Do you expect to be able to grow on top of that?

[Justin Kleber, Senior Research Analyst at Baird]

Or should we be thinking that you give some back as you cycle over this strong performance?

[Mike Diamond, EVP & CFO at Driven Brands]

Yes, absolutely. There's a little bit to unpack there. So let me try to tick through them. I think, one, in general, the dynamics are different in that market, right? We are the market leader in both The U.

[Mike Diamond, EVP & CFO at Driven Brands]

K. And Germany. At least in The U. K. There really aren't tunnel car washes that exist and so it does give us a strong competitive advantage.

[Mike Diamond, EVP & CFO at Driven Brands]

I believe the answer to your other question is both. The team is doing a really good job operating on the ground, highlighting the benefits that the IMO system brings to customers, strong relationships with our independent operators and we have benefited from weather over the last four quarters. And so it will be challenging to grow on the strong growth rates we had in Q3 and Q4 of last year. Some of that is influenced even by what we've seen in July as we mentioned in the prepared remarks. July was quite rainy in Northern Europe and even the best operated car wash struggles a little bit with rain.

[Mike Diamond, EVP & CFO at Driven Brands]

So I do think we will see a meaningful moderation in that business in the back half of the year just given some of the weather we've seen as well as some of the laps we have.

[Justin Kleber, Senior Research Analyst at Baird]

All right. Thanks for the color guys. Best of luck.

[Mike Diamond, EVP & CFO at Driven Brands]

Thanks, Jeff.

[Operator]

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

[Seth Sigman, MD & Senior Equity Research Analyst at Barclays Corporate & Investment Bank]

Great. Thanks. Hey, everybody. Nice quarter. I wanted to focus on the non oil change services that accounted for over 20% of sales.

[Seth Sigman, MD & Senior Equity Research Analyst at Barclays Corporate & Investment Bank]

Do you have a view on where that can go? And how do you think about the profitability implications from that?

[Daniel Rivera, Director, President & CEO at Driven Brands]

Yes. Hey Seth, this is Danny. It's a great question. Look, so non oil change revenue for us to your point has been a nice growth driver for the recent past. As we think about the ceiling, I would say look, we don't think that we have a near term ceiling.

[Daniel Rivera, Director, President & CEO at Driven Brands]

We've got company operated stores and franchise stores with attachment rates well into the 60s. Our average if you look across the entire system is mid to high 40s and growing. So not only do we think that we attachment rates just in terms of the existing mix that we have. We're also introducing new products. Obviously, we just talked about a differential service which we just introduced and we've rolled out.

[Daniel Rivera, Director, President & CEO at Driven Brands]

That's obviously going to help us grow non oil change revenue here into the foreseeable future. And that's not we're not limited in terms of that's not the only new service that we can provide over time. When we acquired the business back in 2016, we had four ancillary services that we sold. We called them big four sitting here today. We've now got big six and we'll continue to grow that over time.

[Daniel Rivera, Director, President & CEO at Driven Brands]

So I don't see a near term ceiling in terms of where non oil change revenue can go. As far as the margin profile, I'll answer that question vis a vis the new service that we introduced the differentials. Whenever we look at a new service, we're basically looking to check kind of two boxes, right? It has to fit the model both from an operating perspective and from a financial perspective. From an operations perspective, what we're looking for is our commitment to our customers and what has made Take5 successful is we deliver an amazing stay in your car ten minute experience.

[Daniel Rivera, Director, President & CEO at Driven Brands]

And so any new service we introduce has to check that box with differentials. It does and we're able to continue to generate or to finish all changes within the ten minute window and we continue to have really nice NPS scores at least in the early innings here that we're in. And then the second piece financially it has to make sense vis a vis our gross margins in that business. When it comes to differentials, the nice thing there is that that product from a gross margin perspective is accretive to the basket that we have. So all in all, we feel good about the very high ceiling, let's say, with non oil change revenue.

[Seth Sigman, MD & Senior Equity Research Analyst at Barclays Corporate & Investment Bank]

Okay. Great. That's very helpful.

[Seth Sigman, MD & Senior Equity Research Analyst at Barclays Corporate & Investment Bank]

And then my follow-up question is on the Glass business. It's sort of tucked in there. It's hard to see, but it did seem to accelerate a lot this quarter. Can you maybe just update us on that? And I'm curious, does it face the same headwinds as Collision and Paint?

[Seth Sigman, MD & Senior Equity Research Analyst at Barclays Corporate & Investment Bank]

Or do you feel like you can grow through that just given that it's so early and you have a market share opportunity? Thanks so much.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Yes. Look, when it comes to the Glass business, I think we have to remind ourselves, we've put that business into our corporate and other segment, very intentional move on our part obviously as we're incubating that business. I would say look we got into that space because we really like the industry. Nothing has changed in that underlying thesis. We think it's a great industry.

[Daniel Rivera, Director, President & CEO at Driven Brands]

It's got great white space. It's fragmented, great unit level economics, margins are good. So that industry continues to make a lot of sense for us. As far as the progress we're seeing with the business, I'm happy with the progress. But again, it's early innings.

[Daniel Rivera, Director, President & CEO at Driven Brands]

That business was always a multiyear strategy for us. We remain focused on growing the top line like we've said in past quarters. And as it continues to improve, we'll share more with it. But right now, we're incubating that business.

[Seth Sigman, MD & Senior Equity Research Analyst at Barclays Corporate & Investment Bank]

Okay, great. Thanks, Danny.

[Operator]

Your next question comes from Brian McNamara with Canaccord. Please go ahead.

[Madison Callinan, Equity Research Associate at Canaccord Genuity - Global Capital Markets]

Good morning. This is Madison Callonan on for Brian. Thanks for taking our question. You already mentioned industry softness in collision. But given that industry is pretty need based, could you provide any additional color on that? Thanks.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Yeah. Hey, Madison. So to your point, I mean, the collision industry has been down for a few quarters now that where there's other public competitors out there that have talked about that. If you look at estimates, they're down in the high single digits. There's two main reasons for that.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Number one is just claim avoidance. So at the end of the day, the consumer in that space has been hit pretty hard with inflation, premiums are up, deductibles are up and so there's a lot of claim avoidance going on right now. The second one that drives that industry is total loss rates. So total loss rates are pretty high mark right now. Both of those things in the blender is going to lead to high single digit estimates being down year over year.

[Daniel Rivera, Director, President & CEO at Driven Brands]

We're not immune to that. We're obviously in the industry. The really nice thing from our perspective is while the industry overall is down, we continue to take market share. We've been taking market share the entire year based on all the industry reporting that we see. So we think our model is unique.

[Daniel Rivera, Director, President & CEO at Driven Brands]

We have a franchise business there. Our franchisees are fantastic. They're doing a great job taking care of our carriers and the end consumer. And we think we're very well positioned whenever the industry normalizes. Think we're in a good spot.

[Madison Callinan, Equity Research Associate at Canaccord Genuity - Global Capital Markets]

Great. And not to beat a dead horse, know somebody asked earlier about ticket, but how much upside do you think could still remain there or until you need to lean more on increasing car service per day? And have you seen any evidence of like material oil change deferrals by stretched consumers? Thanks.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Sure. Wouldn't say we've seen a material change in terms of frequency. As far as the ceiling, maybe the better way to answer this question is, if you look at the space generally, we offer six ancillary service sitting here today. One of those is brand new. We just started rolling out differentials.

[Daniel Rivera, Director, President & CEO at Driven Brands]

If you look at the space folks offer a lot more services than we do. So there's plenty of room for us to continue to add services over time. And we will add services over time. As I mentioned, when I started with the business we had four services. Today we have six.

[Daniel Rivera, Director, President & CEO at Driven Brands]

So not only can we grow the services and there's a marketplace out there where you can kind of see what other folks have done. But just if you look at our attachment rates with the existing services again we're in the mid to high 40s and growing. We've got stores that are in the mid to high 60s. So we think that there's plenty of ceiling to go here.

[Madison Callinan, Equity Research Associate at Canaccord Genuity - Global Capital Markets]

Thanks so much.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Sure.

[Operator]

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

[Chris O'cull, MD - Restaurants & Franchised Businesses at Stifel Financial Corp]

Thanks. Good morning, guys. Danny, can you describe some of the findings you learned on your listening tour regarding the Take Five business? I'm just wondering if there's any opportunities to either provide new support or systems to help kind of fuel that growth for franchisees?

[Daniel Rivera, Director, President & CEO at Driven Brands]

Yes. Hey, Chris. Thank you. Great question. Look, would say, honestly, not so much in terms of findings.

[Daniel Rivera, Director, President & CEO at Driven Brands]

I mean, again, I'm not new to the business. I'm new CEO, but I've been with Take Five for twelve years now. So for me, the road tour was more about being out there, meeting folks. Obviously, my title is different, so there's a different slant to the questions that I get and there's a different slant to the conversation. It was more about solidifying what I thought I knew and making sure that I was as CEO, I'm the face of the company and it's really important that I get out there.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Whenever I go to the field, Chris, it really crystallizes for me what the priorities are and what's important, right? And at the end of the day, the important thing is our employees are super important, making sure that we're taking care of them and the commitments we've made to our customers and our franchisees is very important. In terms of continued growth with Take5, I mean look Take5 is a juggernaut as Mike has called it historically. It continues to grow extremely well. And honestly, it doesn't matter how you want to slice that business.

[Daniel Rivera, Director, President & CEO at Driven Brands]

It's kind of growing across the board. You can slice it franchise or corporate. Both are doing really nicely. If you look at vintages and we don't divulge the vintages, but internally the mature vintages are doing great, new vintages are doing great. So we'll continue to lean in there.

[Daniel Rivera, Director, President & CEO at Driven Brands]

We are committed to continuing to grow 150 plus units per year and we see no reason that that can continue for the foreseeable future. So we feel really good about the business.

[Chris O'cull, MD - Restaurants & Franchised Businesses at Stifel Financial Corp]

And then Mike, can you describe the financial condition of the franchisees that operate Moneke, Mako and Carstar? I'm just wondering is the average franchisee seeing a decline in their profits year over year given the comp performance? And it's hard for us to see, but are you seeing a meaningful number of closures in any of those brands?

[Mike Diamond, EVP & CFO at Driven Brands]

Yes, sure Chris. I think in general we feel really good with the overall health of franchise system. Like any franchise system there are some who are performing better than others. But in general, we stay close to each of the brands and each of the franchisees in there. And so think in general, despite some of the top line pressures we've seen in a couple of our brands, we feel pretty good overall.

[Mike Diamond, EVP & CFO at Driven Brands]

We'll continue to keep an eye on that and operate as we need to. I think obviously there are there have been some closures. We have one big closure in one big exit in the system in Q1 of this year but we obviously came back and we're net positive in Q2. So I think in general it's full speed ahead and just continue to work on that brand and keep working through any challenges we may see.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Hey, Chris. And just I'll double down on something here. I mean, just by way of reminder for folks, I mean, if you look at these businesses, these are really mature iconic businesses. I mean, Meineke and Mako have been around for more than fifty years. These businesses have seen all sorts of economics ups and downs.

[Daniel Rivera, Director, President & CEO at Driven Brands]

So they are great businesses, very mature and they're going to be around here for a long time to come.

[Chris O'cull, MD - Restaurants & Franchised Businesses at Stifel Financial Corp]

Okay. Great. Thanks guys.

[Operator]

Your next question comes from Peter Keith with Piper Sandler. Please go ahead.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Peter, if you're speaking, you're on mute.

[Peter Keith, MD & Senior Research Analyst at Piper Sandler Companies]

I am on mute. Sorry about that, everyone. There you are. Good morning.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Good morning.

[Peter Keith, MD & Senior Research Analyst at Piper Sandler Companies]

I'm just looking at the full company EBITDA. So it was flat to just slightly down on a year on year basis. And I was wondering if you could just kind of highlight the headwinds to EBITDA. And then looking forward, it looks like the guidance implies for the back half some EBITDA growth. So maybe what changes in the back half versus those Q2 pressures?

[Mike Diamond, EVP & CFO at Driven Brands]

Yes. I mean, I think the first and foremost is PH VITRA. So PH VITRA was in our results for 2024 and not in 2025. We sold that business in mid August. And so Q1, Q2, we have a little bit of a headwind there as it relates to EBITDA.

[Mike Diamond, EVP & CFO at Driven Brands]

I think in addition, we talked about some of the quarter over quarter variability on margins, particularly as it relates to Take five and that obviously moved against us a little bit in Q1 and Q2. But we feel really good about where that business is trending overall. But on a pure dollars basis, the answer is PH Vitra. But other than that, we feel good about our guidance and where we see the rest of the year coming in relative to that range.

[Peter Keith, MD & Senior Research Analyst at Piper Sandler Companies]

Okay. And maybe a hone in on the Franchise Brands EBITDA where total EBITDA dollars did come down by a decent amount. And I think you had flagged some G and A investments. Maybe could you expand upon what that is within the Franchise business? And then is that an investment activity that's going to now continue for the next couple of quarters?

[Mike Diamond, EVP & CFO at Driven Brands]

Yes. Let me take a step back because I think one of the drivers of that is the delta between the same store sales and the revenue growth. And that I think honestly explains more of the overall G and A hit. And like any franchise business, while same store sales is the top line, you're always going to have some onetime fees that come in either development fees or termination. And this quarter just happened to be one of these quarters where we didn't have any of those fees and we were lapping a quarter last year where we had a lot of those.

[Mike Diamond, EVP & CFO at Driven Brands]

And so that actually is part of the big gap between the same store sales performance and the EBITDA performance. The secondary as I mentioned was some G and A investments. As you run a franchise system with several different brands, there are needs to invest in things like technology improvements and etcetera to make sure we are a good franchisor for our franchisees. We've had some of those investments so far this year. I would expect those to wane as we move through the rest of the year, but we will continue to do what we need to do to be a good franchisor for our franchisees.

[Peter Keith, MD & Senior Research Analyst at Piper Sandler Companies]

Okay. Thank you.

[Operator]

Your next question comes from Robbie Omez with Bank of America. Please go ahead.

[Robert Ohmes, Senior Research Analyst at Bank of America]

Hey, Danny and Mike. Actually, just a quick follow-up on the last question. Should we expect franchise brand comps to remain negative in the back half?

[Mike Diamond, EVP & CFO at Driven Brands]

Yes. I mean, I think we haven't given obviously a specific number.

[Mike Diamond, EVP & CFO at Driven Brands]

We were pleased with the performance in Q2 and that it was better Q1. As you probably heard from both Danny and me, the end markets of several of the brands in that segment both Mako and Collision are under some pressure. And we'll continue to work hard and fight hard, but we acknowledge that the discretionary component of Mako is under some pressure. And then as I think Danny even gave some more detail earlier in the Q and A, there are some factors related to the collision industry that are going to continue to weigh on that part of the business for the foreseeable future. So we're going to continue to fight the good fight.

[Mike Diamond, EVP & CFO at Driven Brands]

We were obviously pleased with the sequential improvement we saw in Q2 relative to Q1. Our overall one to three reiteration of the guide incorporates a multitude of ranges of things that could happen in the back half of the year And we'll continue to keep our eye on what we can do to help drive that segment forward.

[Robert Ohmes, Senior Research Analyst at Bank of America]

Thanks. And just is there anything competitively going on in that segment that is new or different than competition in the past?

[Daniel Rivera, Director, President & CEO at Driven Brands]

I wouldn't say there's anything tremendously new, Robbie. I mean, at the end of the day, collision, that industry has been that industry for a while. Obviously, there's some headwinds right now. If you went back a few years ago, the industry was in a better place. Right now, there's some headwinds.

[Daniel Rivera, Director, President & CEO at Driven Brands]

I wouldn't say there's new competitive dynamics per se. Same thing with Mako. The predominant service that we provide there is we pay folks car. There's some new technology in that space. But I'd say overall the services are the same.

[Daniel Rivera, Director, President & CEO at Driven Brands]

And then the other big business in that segment is Meineke. Meineke is doing quite well. It's repair and maintenance. So you're talking about bigger services on the repair and sorry, the mechanical side, so brakes, shocks, struts, AC, stuff like that. But the short answer is I wouldn't say there's tremendously new dynamics going on in these industries.

[Robert Ohmes, Senior Research Analyst at Bank of America]

Got it. Thanks so much.

[Operator]

Your next question comes from Mark Jordan with Goldman Sachs. Please go ahead.

[Mark Jordan, Vice President at Goldman Sachs]

Hey, thank you for taking my question. Just looking at Take Five store growth year to date only slightly below the prior year, but the mix is much more towards company operated. I guess what's driving the slower franchise growth year to date? And how should we think about growth and mix for the second half of the year?

[Mike Diamond, EVP & CFO at Driven Brands]

Yes. I would say if you look within the year that's pretty typical, which is the corporate stores we're able to get those open and operating pretty early in the year. Franchise stores and I'm not now speaking just driven, but all of my experience in franchise systems both now and before that franchise stores tend to come near the back in the later half of the year. So I think if you look at the breakdown right now, it skews more corporate. When you look at the end of the year, the end of the year will skew more franchisee.

[Mike Diamond, EVP & CFO at Driven Brands]

Overall this year, it's going to be roughly kind of a fifty-fifty mix ballpark we're looking at. Over time, we expect that mix to shift more towards franchisees given the robustness of the pipeline we have there. But I wouldn't read too much into the fact that so far this year we've opened more corporate than franchise. That's just the nature of the calendar in a franchise system.

[Mark Jordan, Vice President at Goldman Sachs]

Okay, perfect. Thank you. And then just staying on Take five. Can you talk about how comps kind of progressed through the quarter? And I know you might not get into month to month detail, but was performance fairly consistent there?

[Mark Jordan, Vice President at Goldman Sachs]

And then maybe quarter to date, you seeing any changes?

[Mike Diamond, EVP & CFO at Driven Brands]

Yes. I mean, would say, in general, fairly consistent. We don't break down quarter to quarter trends. Obviously, there was a little bit of weather late May early June in Texas where we have a meaningful presence. So Texas weather can have a little bit of an influence.

[Mike Diamond, EVP & CFO at Driven Brands]

But I would say in general for Q2, it fairly consistent across the quarter. Look, don't know if I want to say anything in addition to what we've already said in the prepared remarks as it relates to we continue to think that business moderates over time as it grows over a larger base. There is some softness in general across all of our industries on the lower income consumer. We feel good about the 1% to 3% that we reiterated and take five percent is honestly an important part of that.

[Mark Jordan, Vice President at Goldman Sachs]

Great. Thank you very much.

[Operator]

Your next question comes from Mike Albanese with Benchmark. Please go ahead.

[Michael Albanese, Equity Research Analyst at The Benchmark Company LLC]

Yes. Hey, good morning guys. Thanks for taking my question. Could you just comment on what your franchisees are seeing in the labor market? I'm just thinking, right, any wage pressures, what you're seeing on retention, and then, you know, ability to hire, I guess, particularly in in in take five where you're expecting to grow unit count pretty significantly? Thanks.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Yes. Hey, Mike. This is Danny. Look, I'll start with Take five. I'd say the labor market there.

[Daniel Rivera, Director, President & CEO at Driven Brands]

The important thing, first and foremost, is when you look at Take five in that industry, we're not hiring certified technicians, right? So this isn't a skilled labor force, right? These folks don't come with certifications ahead of time. We're hiring from a pretty broad base of folks and we're training them on how to do the oil changes to take five way and that model works really well for us. So I'd say there haven't been any structural changes to that or any industry wide changes to that here recently.

[Daniel Rivera, Director, President & CEO at Driven Brands]

If you look at the franchise businesses, all the franchise businesses there you're talking about certified technicians whether it's body technicians on the Mako side or whether it's techs repair and maintenance techs on the Meineke side. That's a different labor pool for sure. But the beautiful thing and part of the reason why we're in the franchise business in those industries is that our franchisees know how to manage that population, right? So these are owner operators, boots on the ground. They take care of their employees.

[Daniel Rivera, Director, President & CEO at Driven Brands]

A lot of those employees have been with their owners with the owners of the businesses for many, many years. So our franchisees are quite adept at managing that labor force, and they do a fantastic job. I don't know that recently there's been any material changes to that.

[Michael Albanese, Equity Research Analyst at The Benchmark Company LLC]

That's helpful. I guess just one follow-up to that. And I'm thinking on the Take Five side here. Could you give us a sense of what retention typically looks like?

[Daniel Rivera, Director, President & CEO at Driven Brands]

We don't publicly divulge retention numbers.

[Michael Albanese, Equity Research Analyst at The Benchmark Company LLC]

All right. Thanks guys.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Thank you.

[Operator]

Your next question comes from William Stoutinger with BMO Capital Markets. Please go ahead.

[William Staudinger, Equity Research Senior Associate at BMO Capital Markets]

Hey, good morning guys. Another strong quarter for Take Five. So can you maybe just talk about the competitive dynamic for that business and any market share gains you've observed?

[Daniel Rivera, Director, President & CEO at Driven Brands]

Sure. I mean, look, Take five is it just continues to do a great job. So as far as the competitive dynamic, I mean, we are I talk about it all the time, we're the home of the stay in your car ten minute oil change. What we've seen with that business is that the consumer just loves the service that we provide, right? They want to go get their car taken care of.

[Daniel Rivera, Director, President & CEO at Driven Brands]

They want to stay in their car. They want it to be a ten minute fast simple experience and we're able to deliver that pretty consistently. It's a very lucrative business from a financial perspective, hence all the support and all the interest that we have from our franchisees. And our franchisees have a ton of interest in growing and they continue to grow across the country. So we feel really good about the business.

[Daniel Rivera, Director, President & CEO at Driven Brands]

We feel good about how we go to market in that business both from an operational perspective and then also just marketing and how we're talking to the consumer. So, yeah, just a great business for us.

[William Staudinger, Equity Research Senior Associate at BMO Capital Markets]

Okay. And then with the 150 annual store opening target, I think you mentioned for Take Five, just what new markets are you targeting for those openings? Thanks.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Sure. So we talk about 150 plus. And as far as new markets, mean, we've so if you pulled up a map, we've basically sold most of the licenses across the entire country with some spots here and there where we still have some licenses up for sale. So as far as growth, I wouldn't say so much that we're targeting specific locations. We're growing across the country.

[Daniel Rivera, Director, President & CEO at Driven Brands]

We've got franchisees throughout the country that are growing most if not all of the markets. From a company owned perspective, there we're much more disciplined in terms of we hand selected a handful of markets back in 2016, 2017 kind of timeframe, markets like Texas and Florida just to name two. There from a company owned perspective, we are very disciplined about growing within those markets. We go very deep in those markets. We've got a great leadership team and structure and so we're pretty disciplined about our growth on the corporate owned side.

[Daniel Rivera, Director, President & CEO at Driven Brands]

And then like I said on the franchise side, we're growing across the country with a great group of partners.

[William Staudinger, Equity Research Senior Associate at BMO Capital Markets]

Okay. Thanks guys.

[Operator]

Your next question comes from Christian Carlino with JPMorgan. Please go ahead.

[Christian Carlino, Equity Research Associate at J.P. Morgan]

Hi, good morning. Thanks for taking our question. To follow-up on an earlier question, could you talk about what you're seeing in terms of consumer behavior? And I know you mentioned Quick Lubes frequency hasn't changed and collision softness isn't new, but has there been any notable change in the second quarter just given all the tariff news and general uncertainty? And just given the full impact of tariffs hasn't hit the consumer's wallet does the guide assume any further softening in the consumer backdrop?

[Daniel Rivera, Director, President & CEO at Driven Brands]

So I'll answer the first half of that and I'll hand it over to Mike for the guidance question. I mean, look, outside of the comments that we've already made, I'm not sure that there's anything material happening within the industry, right? So on the Quick Lubes side, we're not seeing any material changes to frequencies. That business, like we said, we're very happy with the 7% comp in Q2. We're happy generally with the comps that we've been seeing in that business for a long time now, twentieth consecutive quarter of positive same store sales.

[Daniel Rivera, Director, President & CEO at Driven Brands]

So I'd say the Take five business continues to grow and is a solid growth engine for us. As far as the other markets that we operate in, I mean I've already mentioned some of the comments on collision and what's happening in that industry. That industry has been around a long time. So sitting here today, it's a little bit soft. I'm sure that that will change over time.

[Daniel Rivera, Director, President & CEO at Driven Brands]

And again, I believe that we're well positioned in that space and we continue to take share. When it comes to Mako, I've mentioned a little bit of the softness there. The fact that that business is more discretionary in nature and maybe a little bit more exposed to the low income consumer cohort. But again Mako is over 50 years old, a very mature business and so that business has also seen many economic cycles. So outside of what we've already mentioned Christian, I'm not sure that there's anything material to talk about. Mike?

[Mike Diamond, EVP & CFO at Driven Brands]

I would just add that I think the reiteration of the guide does reflect some of that uncertainty we see in the broader macroeconomic economy, right? I think to the extent the low income consumer comes back and we see some of those end markets start to perform a little bit better, we start to approach the top end of the range to the extent that the lower income consumer softens even more and those end markets become a little more compressed, we're down near the low end of the range. But in general, we think we've captured those possibilities with the range we reiterated today.

[Christian Carlino, Equity Research Associate at J.P. Morgan]

Got it. That's helpful. And could you talk about the competitive landscape in Take Five? Just given the attractive business model, have you started to see more private equity money flow into the space? And if not, how would you diagnose why not?

[Christian Carlino, Equity Research Associate at J.P. Morgan]

And I guess, similarly, to the extent this occurred over the past few years, are you seeing maybe some platforms starting to bring some assets to market?

[Daniel Rivera, Director, President & CEO at Driven Brands]

This is Danny. So Christian, I'd say in the Quickloop space, that space has been pretty steady in terms of entrants for some time now. We're not seeing a remarkable change in that. The reasons why not, I mean, there's probably a bunch of reasons, but I'd simplify it as to say it is not easy to run hundreds, if not thousands of locations across the country with the kinds of manual processes that you have to put in place at the kind of margins that we do, right? So it's easy to rattle off some of the numbers that we rattle off.

[Daniel Rivera, Director, President & CEO at Driven Brands]

But in terms of being able to do that at scale, that's actually quite difficult and it's harder than it looks maybe. So again there's a bunch of reasons, but I'd say generally speaking that industry from an entrant perspective has been pretty stable.

[Christian Carlino, Equity Research Associate at J.P. Morgan]

Got it. Thank you very much.

[Daniel Rivera, Director, President & CEO at Driven Brands]

Thanks, Christian.

[Operator]

Ladies and gentlemen, as there are no further questions at this time, this marks the conclusion of today's conference call. Thank you so much for your participation. You may now disconnect.

Participants

Executives

• Joel Arnao, SVP - FP & A, Treasury & IR
• Daniel Rivera, Director, President & CEO
• Mike Diamond, EVP & CFO

Analysts

• Analyst
• Justin Kleber, Senior Research Analyst at Baird
• Seth Sigman, MD & Senior Equity Research Analyst at Barclays Corporate & Investment Bank
• Madison Callinan, Equity Research Associate at Canaccord Genuity - Global Capital Markets
• Chris O'cull, MD - Restaurants & Franchised Businesses at Stifel Financial Corp
• Peter Keith, MD & Senior Research Analyst at Piper Sandler Companies
• Robert Ohmes, Senior Research Analyst at Bank of America
• Mark Jordan, Vice President at Goldman Sachs
• Michael Albanese, Equity Research Analyst at The Benchmark Company LLC
• William Staudinger, Equity Research Senior Associate at BMO Capital Markets
• Christian Carlino, Equity Research Associate at J.P. Morgan