Bowlero Q1 2025 Earnings Report

Bowlero EPS Results

• Actual EPS: $0.13
• Consensus EPS: -$0.17
• Beat/Miss: Beat by +$0.30
• One Year Ago EPS: -$0.10

Bowlero Revenue Results

• Actual Revenue: $260.20 million
• Expected Revenue: $249.42 million
• Beat/Miss: Beat by +$10.78 million
• YoY Revenue Growth: N/A

Bowlero Announcement Details

• Quarter: Q1 2025
• Date: 11/4/2024
• Time: After Market Closes
• Conference Call Date: Monday, November 4, 2024
• Conference Call Time: 4:30PM ET

Bowlero (NYSE:BOWL) Corporation operates one of the largest bowling center networks in North America, offering an array of bowling and entertainment experiences under its Bowlero, Bowlmor Lanes and AMF Bowling brands. The company’s venues combine traditional ten-pin bowling with modern amenities such as full-service bars, food and beverage offerings, premium bowling lanes, and private event spaces. Bowlero also enhances guest experiences through live entertainment, arcade games, billiards tables and league-play programs tailored for casual bowlers and competitive enthusiasts alike.

Since its origins in the mid-20th century as AMF Bowling, the business underwent a series of strategic transformations, including a merger with boutique operator Bowlmor Lanes and a subsequent rebranding initiative that introduced the Bowlero concept in the late 2010s. This next-generation bowling model focuses on contemporary design, high-tech scoring systems, immersive lighting effects and signature menu items aimed at attracting a broader demographic and extending customer dwell time.

Bowlero’s centers host a diverse range of activities beyond open‐play bowling, such as corporate outings, birthday parties, college and adult leagues, charity fundraisers and special-event nights featuring themed décor and promotions. The company leverages proprietary mobile and online platforms to facilitate lane reservations, league registrations and marketing campaigns designed to drive repeat visits and deepen customer engagement across its footprint.

Today, Bowlero Corporation serves tens of millions of guests annually through more than 300 locations in the United States and Canada. The company’s management team comprises seasoned professionals with backgrounds in hospitality, entertainment and consumer marketing, guiding ongoing expansion initiatives and the continuous evolution of its guest-centric bowling and entertainment offerings. Bowlero is publicly traded on the New York Stock Exchange under the ticker symbol BOWL.

Bowlero Q1 2025 Earnings Call Transcript

Key Takeaways

• Adjusted EBITDA was $62.9 million in Q1, up 21% year-over-year with margin expanding 130 bps to 24.2%.
• Total location revenue grew 17.5% in the quarter, with same-store comps up 0.4% despite weather headwinds.
• Completed three acquisitions—Raging Waves, Boomers, and Spectrum Entertainment—deploying $58 million at attractive multiples to drive future EBITDA growth.
• Food & beverage initiatives drove an 18% sales increase, lifting F&B spend per bowl to $0.80 network-wide and over $1.10 in the top 50 locations with new menus and mobile ordering.
• Raised the bottom end of FY25 revenue guidance by $10 million, while reiterating low-to-mid single-digit same-store comp targets and expecting strongest margin expansion in Q3.

Presentation

[Operator]

Thank you for standing by. My name is John and I'll be your conference operator for today. At this time, I would like to welcome everyone to the Bowlero first quarter 2025 earnings conference call. All lines have been placed in mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again.

[Operator]

Thank you.

[Operator]

I would now like to turn the call over to Bobby Lavan, Chief Financial Officer. Please go ahead.

[Bobby Lavan, CFO at Bowlero Corporation]

Good afternoon to everyone on the call. This is Bobby Lavan, Bowlero's Chief Financial Officer. Welcome to our conference call to discuss Bowlero's first quarter 2025 earnings. Today we issued a press release announcing our financial results for the period ended September 29, 2024. A copy of the press release is available in the Investor Relations section of our website. Joining me on the call today are Thomas Shannon, our Founder and Chief Executive Officer, and Lev Ekster, our President. I would like to remind you that during today's conference call you may make certain forward looking statements about the Company's performance. Such forward looking statements are not guarantees of future performance and therefore one should not place undue reliance on them. Forward looking statements are also subject to inherent risks and uncertainties and that could cause actual results to differ materially from those expressed.

[Bobby Lavan, CFO at Bowlero Corporation]

For additional information concerning factors that could cause actual results to differ from those discussed in our forward-looking statements, you should refer to the cautionary statements contained in our press release as well as the risk factors contained in the Company's filings with the Securities and Exchange Commission. Bowlero Corporation undertakes no obligation to revise or update any forward-looking statements that reflect events or circumstances that occur after today's call. Also during today's call, the Company may discuss certain non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measures most directly comparable to each non-GAAP financial measure discussed and the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on the Company's website. I will now turn the call over to Tom.

[Thomas Shannon, CEO at Bowlero Corporation]

Good afternoon.

[Thomas Shannon, CEO at Bowlero Corporation]

Thank you for joining us today. I am Thomas Shannon, founder and CEO of Bowlero Corp. Total location revenue grew 17.5% year-over-year in the quarter. Our company's share of customer wallets continues to increase. Our locations get better every day through operational excellence and investments. After our superb quarter with 20% plus EBITDA growth and strong cash flow conversion, let me elaborate on our secret sauce. Almost 28 years ago I founded this company focusing on superior returns. We underwrite all decisions for relative financial returns and steadily focus on the highest returns. Since inception, I have focused the team on what generates the most significant impact on the business. From M&A decisions to capital investments to using data to drive labor, pricing and supplier decisions, the team is held accountable for results and cash flow as we grow.

[Thomas Shannon, CEO at Bowlero Corporation]

The results speak for themselves and our ability to deploy capital and utilize data-driven processes is accelerating. The current macro environment has provided increasing opportunities to deploy capital beyond bowling. This spring we acquired Raging Waves, the largest water park in Illinois for $49 million which included 52 acres of land. Through our early efforts, the business had double-digit revenue growth and will have $8 million of EBITDAR in its first year under our ownership. At 6x EBITDAR, this deal is already a home run and we have opportunities to expand the park and if we choose so monetize the land. Last month we acquired Boomers, an underappreciated business with six family entertainment locations and two water parks. Within the first few weeks we had begun shuttering unprofitable parts of the portfolio and introducing our labor model.

[Thomas Shannon, CEO at Bowlero Corporation]

We bought that business with $9 million of Four-Wall EBITDA and expect meaningful upside in the short term from operations and longer term once we deploy capital. Today we closed on the acquisition of Spectrum Entertainment Complex in Grand Rapids, Michigan. This asset has revenue significantly above our center average and will be our sixth location in Michigan as we continue to drive scale. The market for M&A is the most opportunistic we have ever seen and we look forward to continuing to deploy capital accretively, bringing attractive locations with significant upside into our portfolio. In October, we opened two Lucky Strike locations in Denver.

[Thomas Shannon, CEO at Bowlero Corporation]

In the coming months, Lucky Strike Beverly Hills will open as the first bowling alley in Beverly Hills in nearly a century, and it will be followed by Lucky Strike Ladera Ranch in Orange County, California, which will have 42 lanes and a very attractive demographic. Our new build pipeline is very robust for the next few years. Our focus is a balance of internal optimization and high return capital deployment. To discuss recent organic performance and our internal initiatives, let me hand it over to the company's President, Lev Ekster.

[Lev Ekster, President at Bowlero Corporation]

Thanks Tom. Our food and beverage initiatives continue to bear fruit with F&B sales up 18% year-over-year in the quarter and our key KPI of retail F&B to bowling crossed $0.80 across the portfolio. Four new menu segments rolled out across all properties, from traditional all the way up to our new experiential craft menu. Most notable is that in our top 50 Bowlero locations, which recently instituted the upgraded Premium Plus menu segment trended close to $1.10 F&B per bowl this recent month, the highest we have ever seen and up over $0.18 versus prior year. So we are obviously highly encouraged by that. A brand new events menu launches in November, just in time for the start of the holiday season. We've also enabled mobile ordering across all properties to help with labor efficiencies and guest satisfaction.

[Lev Ekster, President at Bowlero Corporation]

I'd also like to provide an update on the PBA. Last season we achieved the record results with cumulative reach up 46% year-over-year and linear viewership numbers that even rivaled Major League Baseball levels. Despite starting off the season by losing a headline sponsor going into the 2025 season, we've restructured the schedule and production strategy resulting in meaningful savings. That coupled with bringing on new sponsors and the utilization of our newly acquired Thunderbowl Lanes in Michigan which features an arena as a host center on the tour, we will ensure a successful season with thrilling televised experiences for our fans. I will now turn it over to Bobby Lavan. Thanks, Lev.

[Bobby Lavan, CFO at Bowlero Corporation]

In the first quarter of 2025 we generated total revenue ex service fee of $260 million and an Adjusted EBITDA of $62.9 million compared to the last year of $226 million and Adjusted EBITDA of $52.1 million. Our total location revenue growth in the quarter was positive 17.5% and same store comp was positive 0.4%. Adjusted EBITDA was $62.9 million up 21%.

[Bobby Lavan, CFO at Bowlero Corporation]

Year-over-year with a margin of.

[Bobby Lavan, CFO at Bowlero Corporation]

24.2% expanding 130 basis points. We have found a good balance of investing in payroll managing costs that are same-store comp payroll better by $1 million year-over-year. Food costs are a headwind in the quarter

[Bobby Lavan, CFO at Bowlero Corporation]

but it took a turn recently. The end of September was severely impacted by weather, including two hurricanes across the country. In our press release today, we updated our FY 2025 guidance. Our confidence in the business continues and we are increasing the bottom end of our revenue range by $10 million. Boomers, which we acquired on September 30, will add revenue but at a negative EBITDA until peak season, which starts in June. We spent $41 million in capital expenditures in the first quarter. Growth CapEx was $16 million, new build CapEx was $17 million, maintenance was $8 million. We continue to optimize capital spend and recently hired a Chief Procurement Officer to drive efficiencies. Our liquidity at the end of the quarter was $355 million, nothing drawn on a revolver and $38 million of cash.

[Bobby Lavan, CFO at Bowlero Corporation]

Net debt was $1.1 billion and the.

[Bobby Lavan, CFO at Bowlero Corporation]

Bank credit facility Net Leverage Ratio was 2.6x. Thank you for your time today and we look forward to seeing you on the road in the coming months.

[Operator]

Ladies and gentlemen, we will now begin our question and answer session. If you have dialed in and would like to ask a question, please press star followed by the number one on your telephone keypad. If you would like to withdraw your questions, simply press star one again. In order to accommodate everyone, we would like to ask you to please limit yourself to one question and one follow up only. If you are called upon to ask your question and are listening via a loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Our first question comes from the line of Matthew Boss with J.P. Morgan. Please go ahead.

[Jason Tilchin, Analyst at Canaccord Genuity]

Great, thanks. So Tom, maybe to start off, could you elaborate on the cadence of same-store comps in the first quarter and trends you've seen in October maybe between walk-in and events?

[Bobby Lavan, CFO at Bowlero Corporation]

Hey Matt, it's Bobby. So end of September we got hit with two hurricanes and that cost us about $2 million on the comp in the first quarter. You know we'll see the equivalent of that into October. You know October, the weather has not been great, but right now event is tracking +10% for P6, which is really where we make a bulk of our revenue and EBITDA for the quarter. So we're more focused on that right now.

[Jason Tilchin, Analyst at Canaccord Genuity]

Great. And then maybe just a follow-up on the EBITDA margin expansion. So maybe just drivers of first quarter and then any notable call-outs in terms of the cadence for margin expansion as we think about the second quarter relative to the back half?

[Bobby Lavan, CFO at Bowlero Corporation]

Yeah, I mean we're going to have the greatest margin expansion in the third quarter.

[Bobby Lavan, CFO at Bowlero Corporation]

Right.

[Bobby Lavan, CFO at Bowlero Corporation]

This third quarter has sort of two benefits. One is New Year's has shifted from second quarter to third quarter and that's a $5 million-$7 million swing in the comp between second quarter and third quarter, which is also going to have sort of the highest incrementals. You also remember last year, January really started off rough with minus double digits for the first three weeks. So you'll see the greatest margin expansion in the third quarter, but you'll see margin expansion in the second quarter as well. Other than Boomers and Raging Waves will run through the income statement as negative EBITDA.

[Jason Tilchin, Analyst at Canaccord Genuity]

Great.

[Jason Tilchin, Analyst at Canaccord Genuity]

Best of luck.

[Operator]

Your next question comes from the line of Steven Wieczynski with Stifel. Please go ahead.

[Jason Tilchin, Analyst at Canaccord Genuity]

Hey guys, good afternoon. So Bobby, just to kind of think about the rest of the fiscal year, you obviously took up your top line here a little bit in terms of guidance. But as we do think about that low- to mid-single-digit same-store sales comparison that you called out, I guess that was back in September when you gave your initial guidance for 2025. Does that same-store sales outlook still hold true? And you know, if so, maybe how we should be thinking about the cadence of same-store sales over the next, you know, over the next three quarters or so.

[Bobby Lavan, CFO at Bowlero Corporation]

Yeah, I mean we haven't changed anything as it relates to our expectation on the comp. You know, as we sort of went through last earnings call, 1Q and 2Q are going to be, you know, low comps versus 3Q and 4Q will be much stronger comps. You have two major things happening in the third quarter. So you've got New Year's, which is a very big night for us. Does move from last year being in second quarter to this year being in the third quarter. I can't emphasize enough how important that is to sort of comp cadence. I mean that's a $5 million-$7 million move in comp, you know, on a $300+ million-dollar sales base.

[Bobby Lavan, CFO at Bowlero Corporation]

From 2Q to 3Q.

[Bobby Lavan, CFO at Bowlero Corporation]

On top of that, you're going to have this catch-up that happened last year where the weather was atrocious in January and we had down double-digit weeks on the comp. So you'll catch all that up in the third quarter versus this quarter. The weather has been great in October, but, really, December events will continue to be strong. But we'll miss that retail element of New Year's in the second quarter and that will push the third quarter.

[Jason Tilchin, Analyst at Canaccord Genuity]

Okay, gotcha. Makes sense. Maybe one for Tom or, you know, even you, Bobby. You know, you guys kind of talked about how the, you know, the acquisition environment just remains extremely robust. You're just maybe wondering from a high level perspective, I mean, how you guys are spending your time today in terms of looking at potential assets. Meaning, you know, how much time is spent on your core bowling assets versus some of the other assets that you've started to take a look at.

[Jason Tilchin, Analyst at Canaccord Genuity]

Thanks.

[Thomas Shannon, CEO at Bowlero Corporation]

It's a division of labor. This is Tom speaking. Lev spends 100% of his time on our existing operations. Bobby spends most of his time on our existing operations and I spend most of my time on M&A.

[Jason Tilchin, Analyst at Canaccord Genuity]

Okay, fair enough. Thanks guys.

[Jason Tilchin, Analyst at Canaccord Genuity]

Appreciate it.

[Operator]

Your next question comes from the line of Randal Konik with Jefferies. Please go ahead.

[Randy Konik, Analyst at Jefferies]

Hey guys, how are you? I guess I want to ask about, you mentioned the increased utilization of data and you talked about some of the things you're doing there, and I think you mentioned that you hired a chief procurement officer, so it sounds like there's obviously, you know, you have a well-run organization and it sounds like you see some opportunities to continue to further make more efficiencies or drive more efficiencies through the portfolio, but can you guys basically unpack that a little bit more and give us some perspective on how you're utilizing data a little bit differently now versus maybe six-12 months ago and then your hopes for that chief procurement officer, what he or she will be focused on in terms of driving more efficiency through and cost reduction through the business.

[Randy Konik, Analyst at Jefferies]

Thanks guys.

[Bobby Lavan, CFO at Bowlero Corporation]

Yeah, we're becoming a data driven organization. So at the end of the day we're holding. We started off with three Power BI subscriptions. So Tom, Lev and myself, we're using Power BI to just look at daily sales. We just pushed out 350 Power BI subscriptions. So now we have GMs, we have every department leader holding themselves accountable to day to day data as it relates to chief procurement officer. Managing inflation is kind of a core responsibility of the organization. Last year, chicken prices alone was a $6 million headwind. And having a chief procurement officer whose sole focus is to not necessarily reduce costs, but to at least, you know, keep costs flat is sort of core. And then Lev and I will focus on, you know, how do we drive efficiencies in the organization on payroll, on things like supplies, things like that.

[Bobby Lavan, CFO at Bowlero Corporation]

Ultimately, when we go back into a normal inflationary environment, you know, we can use our scale to drive procurement synergies. I will say Boomers, you know, we've owned a month, we already put sort of their purchasing organization into our purchasing organization. There's just, you know, there's scale that comes in these acquisitions that, you know, we can underwrite EBITDA up without even a revenue growth just because of cost savings on the acquisitions.

[Randy Konik, Analyst at Jefferies]

Super helpful.

[Randy Konik, Analyst at Jefferies]

And then I guess just to round out and lastly, maybe give us some perspective on Fall Pass. What's kind of different about it versus summer pass, any kind of metrics you want to kind of share with us in terms of that program and then just backing out a little bit more and thinking a little bit more strategic and long term. How do you guys think about different pass programs? As we think through, you know, going forward throughout the next few years, are you going to look to maybe.

[Randy Konik, Analyst at Jefferies]

Do a little bit more of an annual pass? Just.

[Randy Konik, Analyst at Jefferies]

Just how should we think about the pass program and the benefits it's driving towards your business in terms of increased utilization, et cetera?

[Lev Ekster, President at Bowlero Corporation]

Yeah, this is Lev.

[Lev Ekster, President at Bowlero Corporation]

How are you?

[Lev Ekster, President at Bowlero Corporation]

Just to connect this question to your prior question on data. When we see revenue softness ahead, it gives us an opportunity to quickly deploy a pass, and seeing, you know, September, October gave us the push to launch the first ever Fall Season Pass. Much shorter cycle for first of all, sales, but also utilization of the pass for our customers, so that's actually coming to an end in about two weeks, but we've been encouraged by the results and we were super successful with the Summer Season Pass, not just in the sales, but also the number of redemptions we saw by the consumer and the NPS score and how favorable it was perceived by the consumer in terms of future passes.

[Lev Ekster, President at Bowlero Corporation]

I think we're going to probably lean in more into that Summer Season Pass launch a little earlier in the calendar year to have a larger window of sales. But it's really resonated with the consumer. I don't know that we really need to change too much. We might want to focus on the price and making sure we get, you know, maximum revenue, but still give a really good value to our consumer. I think the Fall Pass is going to relaunch again next year. Aside from that, I think the bigger opportunity is we have Boomers now, we have the water parks now. Can we make it a bigger pass to connect all of these businesses and give an even more desirable product to consumer? And that's something we're focused on right now.

[Randy Konik, Analyst at Jefferies]

Super helpful.

[Randy Konik, Analyst at Jefferies]

Thanks, guys.

[Bobby Lavan, CFO at Bowlero Corporation]

Thanks, Randy.

[Operator]

Our next question comes from the line of Ian Zaffino with Oppenheimer. Please go ahead. Great.

[Ian Zaffino, Analyst at Oppenheimer]

Thank you very much.

[Ian Zaffino, Analyst at Oppenheimer]

Question on price versus volume. You know, what are you kind of thinking going forward? Ability to continue to push price or, you know, versus volumes and just kind of overall and what you really saw in the last quarter, that kind of gives you confidence in going forward.

[Ian Zaffino, Analyst at Oppenheimer]

Thanks.

[Bobby Lavan, CFO at Bowlero Corporation]

Yeah, we've been able to take price on food, so that has been a positive surprise as we kind of lean into the core second and third quarter. You know, ultimately that is a good opportunity for us, you know, where we can augment the price that's been taken on bowling the past few years and augment.

[Bobby Lavan, CFO at Bowlero Corporation]

It with food.

[Ian Zaffino, Analyst at Oppenheimer]

Okay.

[Ian Zaffino, Analyst at Oppenheimer]

And then on, you know, capital allocation, I guess buybacks kind of slowed a little bit. But you know, how are we thinking about buybacks versus acquisitions? And you know, on the acquisition front, I guess you also mentioned scale as a component. Are you talking about maybe, you know, adding, you know, additional kind of like minded concepts? Meaning like the more water parks you.

[Ian Zaffino, Analyst at Oppenheimer]

Build, the more scale you're going to get.

[Ian Zaffino, Analyst at Oppenheimer]

Is that kind of like what you meant there, and is that a factor in kind of any of your M&A?

[Ian Zaffino, Analyst at Oppenheimer]

Thanks.

[Bobby Lavan, CFO at Bowlero Corporation]

Yeah, I mean we, you know, the acquisitions we closed on Spectrum today. Spectrum, you know, is a sizable entertainment bowling complex in Michigan. You know, we closed on Boomers September 30th, which came with five FECs and one water park. You know, we're going to continue deploying capital where we can get superior returns, you know, and it's, you know, we like this slow and steady approach, you know, but there's a lot out there and we'll look at everything and that's how we kind of move forward.

[Ian Zaffino, Analyst at Oppenheimer]

Okay.

[Ian Zaffino, Analyst at Oppenheimer]

And then, just on buyback quickly.

[Bobby Lavan, CFO at Bowlero Corporation]

Yeah, I mean, on buybacks, you know, we'll continue to be dynamic with how we buy back our stock. You know, we're very price sensitive and, you know, we look at our relative performance and we'll continue, you know, using buybacks and dividends to return, you know, to drive shareholder returns.

[Ian Zaffino, Analyst at Oppenheimer]

All right, great. Thank you very much.

[Operator]

Our next question comes from the line of Jeremy Hamblin with Craig-Hallum. Please go ahead.

[Jeremy Hamblin, Analyst at Craig-Hallum]

Thanks. And congrats on the strong results. I wanted to ask about mobile ordering and what you're seeing in terms of how that's impacting operations, how you're seeing customer respond to mobile ordering, you know, in our centers.

[Lev Ekster, President at Bowlero Corporation]

Hi, Lev here. So as of last month, we've rolled mobile ordering across the entire organization and we're seeing the utilization tick up. I think that coupled with the data driven approach we have right now on labor and being staffed as efficiently as possible, I think mobile ordering is really helping that cause. And I think you're seeing that in the results of our efficiencies. We're taking a step beyond that. So we're currently piloting tablets at a number of our locations right now.

[Lev Ekster, President at Bowlero Corporation]

We think we'll have that rolled across the organization in early 2025 and I think that's going to improve efficiencies as well, but also customer satisfaction because we could take more orders faster, get them into the kitchen faster, get fresh hot food to the lanes faster, get more turns with the lanes as a result of that, but also get more items to the consumer during their session. So we have this holistic approach on expanding attachment of food and beverage sales right now. And I think mobile ordering tablets, the revamp menus that we've rolled across the organization, enhanced training for our associates for sales, improving the hiring practices of our kitchen, all of this goes hand in hand. And I think you're starting to see that in the results. And you saw in our press release, the F&B to bowl KPI is growing significantly across the organization.

[Lev Ekster, President at Bowlero Corporation]

All of this is correlated.

[Jeremy Hamblin, Analyst at Craig-Hallum]

Got it.

[Jeremy Hamblin, Analyst at Craig-Hallum]

Just to follow up on that part, I think you had said that there was $0.80 spend per $1 bowling spend on bowling. How did that compare to last year? Then also just understanding that in context of what you got in the quarter at Lucky Strike versus Bowlero.

[Lev Ekster, President at Bowlero Corporation]

Banner, I think the purchase of Lucky Strike and seeing what they were doing in food and beverage sales relative to bowling revenue really gave the push to really put a strong effort behind our food and beverage program. Across all of our properties, that $0.80 compares to about $0.60 prior year. But what I think is most encouraging is at our top 50 Bowlero locations that recently received our Premium Plus menu tier. So we have four menu tiers. Traditional premium, Premium Plus and then this craft menu, which we refer to internally as our luxury menu at our top properties. But the 50 top Bowlero locations that got that Premium Plus menu in October, their F&B to bowl was around $1.10 or $0.18 more than prior year.

[Lev Ekster, President at Bowlero Corporation]

So we're starting to see with these revamped menus and this focus on food and beverage sales, we can really drive the needle on attachments. The Luckies are much higher. If you just look at those on their own, those are over $2 per head at both. So we're at $0.80 in the organization. We're starting to see us get over $1 at those top 50 Bowleros. And I think we're going to continue to increase. I'd love to see us get closer to $1 from that $0.80 mark. And based on the year-over-year jump, I think it's very doable.

[Jeremy Hamblin, Analyst at Craig-Hallum]

Are those Premium Plus locations candidates to be rebannered to Lucky Strike?

[Lev Ekster, President at Bowlero Corporation]

Yes.

[Jeremy Hamblin, Analyst at Craig-Hallum]

Okay, last one for me. I just wanted to clarify also you noted, Bobby, with Boomers that there would be drag on EBITDA until we get into the seasonal months. Can you just quantify what you expect that drag to be for the December quarter and then the March quarter?

[Bobby Lavan, CFO at Bowlero Corporation]

Yeah.

[Bobby Lavan, CFO at Bowlero Corporation]

Boomers plus Raging Waves is a few million dollars drag on EBITDA in 2Q and 3Q.

[Jeremy Hamblin, Analyst at Craig-Hallum]

Each quarter or each quarter? Each quarter.

[Bobby Lavan, CFO at Bowlero Corporation]

Awesome.

[Jeremy Hamblin, Analyst at Craig-Hallum]

Thanks for taking the questions.

[Jeremy Hamblin, Analyst at Craig-Hallum]

Best wishes.

[Thomas Shannon, CEO at Bowlero Corporation]

Thank you.

[Operator]

Our next question comes from the line of Jason Tilchin with Canaccord Genuity. Please go ahead.

[Jason Tilchin, Analyst at Canaccord Genuity]

Great.

[Jason Tilchin, Analyst at Canaccord Genuity]

Thanks for taking my question.

[Jason Tilchin, Analyst at Canaccord Genuity]

I'm wondering if you could share the relative growth rates you saw between walk in and groups during the quarter and just the higher level, how you're feeling about the health of the consumer and expectations for consumer spending in the holiday season and also obviously the corporate booking pipeline as we head into the holiday season? Thanks.

[Bobby Lavan, CFO at Bowlero Corporation]

Yeah, the walk-in in the quarter was higher than events and mainly because of the season pass. So we were getting, you know, we disclosed it last quarter but for every season pass holder they visited eight times in the quarter. You know, recently we've seen more strength in walk-in versus events but we expect that to kind of flip as we go into P6 for December quarter or December month.

[Jason Tilchin, Analyst at Canaccord Genuity]

Okay, great, that's helpful. And then just one follow up. In terms of the Boomers acquisition, why don't you share a little bit more thought if there was anything in particular that attracted you guys to that asset outside of sort of the valuation of the deal and sort of how you're viewing other opportunities in family entertainment beyond just water parks.

[Bobby Lavan, CFO at Bowlero Corporation]

Yeah, I mean, the valuation was extremely attractive, but it also, it's been sort of deprived of capital for at least five years. And so our ability to go put our events platform in, our procurement organization, our above-market ability on arcade, and really look at these assets that are irreplaceable assets in flagship locations, and what kind of capital we put into them. Really, at the end of the day, the underwriting there was what we could do, not just what we were buying.

[Jason Tilchin, Analyst at Canaccord Genuity]

Great, thank you very much.

[Operator]

Our next question comes from the line of Eric Wold with B. Riley. Please go ahead.

[Eric Wold, Analyst at B. Riley]

Thanks.

[Eric Wold, Analyst at B. Riley]

Good afternoon.

[Eric Wold, Analyst at B. Riley]

A couple questions, a couple follow up.

[Eric Wold, Analyst at B. Riley]

Questions to one of them I guess on the food and beverage ratio. I guess one, that $0.18 increase for the top 50 locations, how much of that was price? And then.

[Eric Wold, Analyst at B. Riley]

What would be your goal over the next 12 months in terms of the total network getting above that?

[Eric Wold, Analyst at B. Riley]

Moving above that $0.80 level.

[Bobby Lavan, CFO at Bowlero Corporation]

Yeah. So none of it was priced because we didn't take price until really the past month on F&B. So it was purely good old elbow grease.

[Bobby Lavan, CFO at Bowlero Corporation]

The ability to get the whole network.

[Bobby Lavan, CFO at Bowlero Corporation]

Up to $1 is really going to be a multi-factor equation. So one, we just rolled out mobile ordering into, you know, all of our centers. That helps. But two, we are rolling out tablets or server tablets that should be company-wide by January, February. And the reason that those server tablets are so important is they prompt the server to upsell a double, you know, do you want fries with your burger? Things like that. And so it really is, we're leaning into sort of technology and process to drive that upside. You know, I don't know Lev, if you'd add, you know, what's the.

[Lev Ekster, President at Bowlero Corporation]

Yeah, I think this question alone could probably, we could probably keep you on the line for an hour with this alone. But it really starts at the bottom, which is hiring all of our managers. Now we require food and beverage and hospitality experience on their resume. We have a brand new assessment for our kitchen manager and chef hires to get better talent there. We added some roles focused on food and beverage sales training, which we've never had before. So like I mentioned at the top of the call, it's really a holistic effort. It's not just taking price with the same product. It's a revamped menu, all new items, new taco selection, craft pizzas, more trending items. So we're giving a better product to the consumer and we're getting better at selling it through our people and through technology. That's how we're getting into a dollar.

[Eric Wold, Analyst at B. Riley]

Got it.

[Eric Wold, Analyst at B. Riley]

Last question, maybe in this.

[Eric Wold, Analyst at B. Riley]

Macro kind of talk about the average.

[Eric Wold, Analyst at B. Riley]

Customer you're seeing, obviously you're working on.

[Eric Wold, Analyst at B. Riley]

Getting higher food and beverage orders, the new menus, but in terms of just the customer.

[Eric Wold, Analyst at B. Riley]

Coming in the door, any shift in.

[Eric Wold, Analyst at B. Riley]

Terms of general spending levels, number of games played, anything that can give you.

[Eric Wold, Analyst at B. Riley]

Another kind of look into what that customer demographic looks like versus maybe what you would have had a year or so ago.

[Bobby Lavan, CFO at Bowlero Corporation]

Yeah, I think generally it's steady as you go on the regular way customer. We're seeing an uptake on the F&B. The only place that we're seeing a little softness would be on sort of corporates in front of this uncertainty of the election. But generally, you know, things are moving forward.

[Eric Wold, Analyst at B. Riley]

Perfect, thank you.

[Operator]

Question comes from the line of Eric Handler with Roth MKM. Please go ahead.

[Eric Handler, Analyst at Roth MKM]

Yes, thank you for the question.

[Eric Handler, Analyst at Roth MKM]

You've now left your one-year anniversary for Lucky Strike. Can you maybe talk about what's happened to the Lucky Strike assets over the last year and what kind of returns you're getting and just some.

[Eric Handler, Analyst at Roth MKM]

Of your overall findings there?

[Bobby Lavan, CFO at Bowlero Corporation]

Yeah, so 11 of the 14 assets are outperforming. You know, we're pretty excited about the, you know, when we got in there their California assets were falling down. And now, you know, we pick that up with sort of new initiatives. We've invested in sort of putting arcades in, revamped sort of the CapEx. So overall like the returns there are exactly what we underwrote which is, you know we said we bought it for $90 million day one and had four-wall of $17 million. You know that that's up significantly from then, you know, really targeting sort of getting them to $30 million of EBITDA in the first sort of two years of owning it.

[Eric Handler, Analyst at Roth MKM]

Great. And then secondly, can you talk about how your recent new build openings are doing and are they all profitable at this point?

[Thomas Shannon, CEO at Bowlero Corporation]

Every one of our centers is profitable. We don't have a single center in the fleet that is unprofitable. You know, every cohort of new builds is better and better than the last. So you know, Miami, which opened about seven months ago is on pace to do $10 million in its first year, far, far ahead of where we underwrote that deal. Let's see, what did we open after Miami? Yeah, so we just opened two in Denver. I mean they just opened but you know, the early, the early indications, very positive. But you know our new builds are consistently doing eight plus million on average versus a portfolio average of about $3.3 million-$3.5 million. So you know, the beauty of new builds is you get to cherry pick your location. We only go into a locations.

[Thomas Shannon, CEO at Bowlero Corporation]

So this latest cohort, the two in Denver, which are one in Northfield, one in Southlands, Beverly Hills which will open soon. The first bowling alley in Beverly Hills, really in anyone's memory, maybe ever. We haven't found a bowling alley in Beverly Hills before but I don't want to say never, but it's been a really, really long time if there was one. And then in Ladera Ranch in Orange County, California which is likely to open this calendar year as well. And then you know, we have.

[Thomas Shannon, CEO at Bowlero Corporation]

15 Plus, in the pipeline behind that are in various stages. Some are leased, some have signed LOIs, some are close to LOI, and those are all in exceptional locations as well. So, you know, I think that one thing the company does very, very well is site selection. I think it's always done site selection well. We've only closed one location that we chose, and that was in, I don't know, 2002, 2003.

[Thomas Shannon, CEO at Bowlero Corporation]

So.

[Thomas Shannon, CEO at Bowlero Corporation]

Yeah, the latest ones that we built have been wildly outperformed expectations, vastly outperformed the fleet average, and there's no reason to think that the next cohort will do any worse.

[Eric Handler, Analyst at Roth MKM]

That's helpful, Tom.

[Eric Handler, Analyst at Roth MKM]

And just one last thing.

[Eric Handler, Analyst at Roth MKM]

You guys did a very good job.

[Eric Handler, Analyst at Roth MKM]

Income statement presentation to give a better view of where costs are trending. Are you going to be giving sort of like restated quarters for historicals for the last year or so?

[Bobby Lavan, CFO at Bowlero Corporation]

Yeah, it's filed with the 8-K. It's filed with the 8-K on the press release.

[Eric Handler, Analyst at Roth MKM]

Perfect.

[Eric Handler, Analyst at Roth MKM]

Thank you.

[Operator]

Our next question comes from the line of Michael Kupinski with Noble Capital Markets. Please go ahead.

[Michael Kupinski, Analyst at Noble Capital Markets]

Thank you. Congratulations on your quarter. A couple of questions. You were optimistic about the revamped event catering menu, and I know we kind of danced around some of the commentary about the impact of that, but can you give us some color on how event bookings are pacing for the holidays and maybe some color on the average event revenue at this point? What that's looking like?

[Bobby Lavan, CFO at Bowlero Corporation]

Yeah, I mean, December right now is pacing. December is sort of our Super Bowl, pacing up 10% year over year for a combination of corporates and adult à la carte. So, you know, really we're getting both more events and higher-dollar pickups. So ultimately we expect the average event to be up, but we're pretty happy about that plus 10% so far.

[Michael Kupinski, Analyst at Noble Capital Markets]

That sounds terrific. And then in terms of Raging Waves, you indicated that additional space might be developed to expand the park to take advantage of the peaks and maybe even for events. And as you consider adding more water parks, are there opportunities to take advantage of off season opportunities? And I was thinking maybe like, I don't know, ice skating, Christmas lights or other events, or is the park just shuttered during the winter? I guess my question is, I was wondering, are there opportunities to shave off some of the drag in off season?

[Thomas Shannon, CEO at Bowlero Corporation]

There are, and some companies out there do those things and I think some of them actually do it successfully. But the drag is mostly fixed. So it's a handful of full-time employees and then it's things like insurance and property taxes and things of that nature. So the challenge is that you're not carrying a lot of labor. So let's take Raging Waves in Chicago. Your season's over by Labor Day because typically it's cold. Although this year it got warm again in October. But that's not typical. So, you know, you let everyone go. Everyone goes back to school or wherever and then to staff up again is really a challenge. So you have to be really confident you're going to do an outsized revenue number to do it. Now the second water park that we bought as part of the Boomers acquisition is in Destin.

[Thomas Shannon, CEO at Bowlero Corporation]

And so unlike Raging Waves, which has an 85 day-90 day season, Destin can have 120 day-140 day season. So it gives you a lot more optionality and it also makes you less dependent on having a cold summer or a rainy summer as we actually did in Raging Waves. That was a surprising thing. We were up almost 10% in revenue, but we lost a lot of days to rain. We lost the last weekend because it was cold. And despite that we did really well.

[Thomas Shannon, CEO at Bowlero Corporation]

So.

[Thomas Shannon, CEO at Bowlero Corporation]

There are those opportunities, but I don't think those are the needle movers and I wouldn't be so cognizant of the drag. The EBITDA drag is relatively minor. It only looks big compared to when we're making money because in season these assets are ridiculously profitable. We give a little bit of that back in the off season, but we're not, we're not giving back. You know, it's not big amounts.

[Michael Kupinski, Analyst at Noble Capital Markets]

Gotcha. In terms of acquisitions, look, it really wouldn't matter where the parks were located in terms of location, weather patterns and so forth just because of that, right?

[Bobby Lavan, CFO at Bowlero Corporation]

Yeah.

[Thomas Shannon, CEO at Bowlero Corporation]

I mean one of the advantages of Raging Waves is it's a weather hedge. We have 20 centers in Chicago, so the first weekend we were supposed to open, actually the park didn't open because it was raining, and our 20 centers in Chicago comped up in aggregate 100% year over year. So you know, that's pretty good, right. We've looked at hedging weather by buying contracts. The insurance is sort of proven to be prohibitively expensive thus far, but then we found we had this natural hedge.

[Thomas Shannon, CEO at Bowlero Corporation]

So.

[Thomas Shannon, CEO at Bowlero Corporation]

Yeah, if you could have water parks where you have bowling centers, you've got that built in. And I think that's a good thing for us. It's not driving the decision. But we look on these things on a case-by-case basis. I mean, you would be surprised. We are constantly surprised at assets that are seemingly in the middle of nowhere. And I'm not talking about water parks specifically, just talking about all sorts of assets that do really, really well. So we cast a wide net. But as Bobby said earlier, we're driven by return. We have a very tight deal screen as we always have and thus far over almost 28 years and we've generated wildly outsized returns. If you look at the investor presentation, you can see some of these returns 10x invested capital in very short periods of time.

[Thomas Shannon, CEO at Bowlero Corporation]

So I don't think the market gives us credit for how good we are as investors. The market, I think, has some understanding of how good we are as operators, but we may be better investors than we are operators. Certainly when you combine the two, it's very powerful. And if you take the time to go through and you look at the returns we've had on AMF, Brunswick, Bowl America, Lucky Strike, Raging Waves, et cetera, and we've generated really outsized returns in companies that most people gave up for dead.

[Michael Kupinski, Analyst at Noble Capital Markets]

Totally agree with that. Thanks for the color. Appreciate it.

[Operator]

As there are no further questions at this time, that concludes our Q and A session in today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Bobby Lavan, CFO
• Lev Ekster, President
• Thomas Shannon, CEO

Analysts

• Eric Wold, Analyst at B. Riley
• Ian Zaffino, Analyst at Oppenheimer
• Jason Tilchin, Analyst at Canaccord Genuity
• Michael Kupinski, Analyst at Noble Capital Markets
• Eric Handler, Analyst at Roth MKM
• Randy Konik, Analyst at Jefferies
• Jeremy Hamblin, Analyst at Craig-Hallum