I consider this to be my most important learning for my 10 years in the restaurant industry.
Today, we reported, on a consolidated basis, first-quarter revenues of $111 million which represented a 55% decrease from the prior year.
We estimate that we lost roughly $44 million of revenue in the first quarter due to the reduced traffic in-store closures associated with COVID-19.
As of today, approximately 95% of our solon systemwide are open, and management is evaluating the future of unopened corporate salons which may include keeping some salons permanently closed.
We reported an operating loss of $31 million during the quarter.
First-quarter consolidated adjusted EBITDA loss of $19 million was $48 million unfavorable to the same period last year.
And was driven primarily by the decrease in the gain associated with the sale of company-owned salon of $27 million and the planned elimination of the EBITDA that had been generated in the prior period from the net 1,056 company-owned salons that has since been sold and converted to the franchise portfolio over the past 12 months.
Looking at the segment-specific performance and starting with our franchise segment, first-quarter franchise royalties and fees of $18 million decreased $10 million or 36% versus the same quarter last year.
A substantial part of the year-over-year decline was due to a $6 million reduction in cooperative advertising funds which we would have typically charged to and collected from franchisees, but which the company temporarily reduced as part of the COVID-19 pandemic relief effort to help ease the financial burden, the pandemic placed on our franchisees.
Royalties also declined approximately $7 million primarily due to COVID-19, certain state mandatory salon closures, state-mandated operating restrictions and pandemic-related customer behavior changes which we believe to be temporary.
Offsetting these declines with the growth in our franchise fees which now represents 80% of our portfolio.
Product sales to franchisees increased $1 million year over year to $14 million driven by the increase in the franchise fees.
First-quarter franchise adjusted EBITDA of $7 million declined approximately $5 million year over year driven primarily by reduced royalties as a result of the COVID-19 pandemic and the associated activities, as previously noted partially offset by a decline in G&A.
First-quarter revenue was $47 million, a decrease of $127 million or 73% versus the prior year.
The multifaceted reach and the impact of COVID-19 including increased governmental regulations, along with the year-over-year decrease of 1,243 company-owned salons over the past 12 months were the drivers of the decline.
The decrease in the company-owned salons can be bucketed into three main categories: First, the successful conversion of 1,067 company-owned salons to our asset-light franchise platform over the course of the past 12 months, of which 137 were sold during the first quarter; second, the holder of approximately 400 company-owned salons over the course of the last 12 months, most of which were underperforming salons at lease expiration and not essential to our future strategy nor did we believe would be well suited within the current franchisee portfolio; and third, these net company-owned salon reductions were partially offset by 218 salons that were taken back from franchisees over the last year and six new company-owned organic salon openings during the last 12 months which we expect to transition to our franchise portfolio in the months ahead.
First-quarter company-owned salon segment adjusted EBITDA decreased $22 million year-over-year to a loss of $11 million.
Consistent with the total company consolidated results, the unfavorable year-over-year variance was driven primarily by the elimination of the adjusted EBITDA that had been generated in the prior-year period from the company-owned salons that were sold and converted into the franchise platform over the past 12 months.
As it relates to corporate overhead, first-quarter adjusted EBITDA decreased $21 million to a loss of $15 million and is driven primarily by the $27 million decline in net gains excluding noncash goodwill derecognition in the prior year from the sale and conversion of company-owned salon partially offset by the net impact of management initiatives to eliminate non-core, non-essential G&A expense.
In addition, cash proceeds during the first quarter were $3.7 million or approximately $27,000 per salon.
As of September 30, we have liquidity of $184 million.
This includes $99 million of availability under our revolver and $85 million of cash.
In the first quarter, we used $29 million of cash, operating the business.
Additionally, we used $2.5 million in the first quarter to buy out of underperforming salons early at a discount that will improve future cash flows.
So I thought it would be worth mentioning that these lease liabilities on our balance sheet represent liabilities for both our corporate and franchise locations, of which approximately 80% of our liability is service and personally guaranteed by our franchisees.
Excluding the option period, the lease liability would be approximately $460 million which is $300 million, less than the $760 million on our balance sheet.
So to take that one step further, only 20% of the $460 million or $92 million is release exposure on the company-owned salon.
The West Coast, specifically California, where we have over 500 locations was largely impacted by reclosures mandated in mid-July, lasting through most of August.

Summary:
We estimate that we lost roughly $44 million of revenue in the first quarter due to the reduced traffic in-store closures associated with COVID-19.