Q2 2025 Lucky Strike Entertainment Corp Earnings Call
Good morning, and welcome everyone to the Lucky strike Entertainment.
Speaker Change: Earnings Conference call all lines have been based on mute to prevent any background noise. After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time since their press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star One again I would now like to turn the call over to Bobby Lavan, CFO like a strike entertainment.
Please go ahead.
Speaker Change: Good morning to everyone on the call. This is Bobby Lavan, Lucky Strike's Chief Financial Officer.
Speaker Change: Welcome to our conference call to discuss Lucky strike second quarter 2025 earnings today.
Speaker Change: Today, we issued a press release announcing our financial results for the period ended December 29 2024.
Speaker Change: Copy of the press release is available in the Investor Relations section of our website.
Speaker Change: Joining me on the call today are Thomas Shannon, our founder and Chief executives and lead Baxter our president.
Speaker Change: I'd like to remind you that during today's conference call. We may make certain forward looking statements about the company's performance.
Speaker Change: Such forward looking statements are not guarantees of future performance and therefore, one should not place undue reliance on them.
Speaker Change: Forward looking statements are also subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed.
Speaker Change: 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.
Speaker Change: Sure Ike Entertainment undertakes no obligation to revise or update any forward looking statements reflect events or circumstances that occur after today's call.
Speaker Change: Also during today's call the company may discuss certain non-GAAP financial measures as defined by SEC regulation G.
Speaker Change: GAAP financial measures most directly comparable to each non-GAAP financial measure discussed and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on the company's website.
Tom: Now I'll turn the call over to Tom.
Tom: Good morning, and thank you for joining us today.
Tom: I am Thomas Shannon founder and CEO of Lucky strike Entertainment.
Tom: Last week, we celebrated our 28th anniversary beginning with one bowling Alley in Union Square in New York and undergoing a few name changes along the way.
Tom: Key strike entertainment reflects our commitments to being a world class Entertainment platform.
Tom: Our company has navigated through turmoil and disruption on multiple occasions, we were the closest bowling center to ground zero on 911, <unk> events revenue disappeared during the great financial crisis.
Tom: Even though it seems like a distant memory, we're still experiencing the lingering effects of COVID-19, during which we shut down and quickly rebuilt to where we are today.
Tom: Six months ago, we reported double digit growth and mid single digit same store sales, while our peers were down by double digits.
Tom: However, this most recent quarter it came with heightened macroeconomic uncertainty.
Tom: We began the quarter with the corporate events business on hold due to concerns over the election outcome.
Tom: Compounding this Thanksgiving fell a week later this year shortening with critical corporate events holiday schedule.
Tom: Third and finally, new year's Eve fell in our next quarter versus being in the second quarter last year.
Tom: We're sticky lead business continues to grow and retail walk in customer traffic has been steady.
Tom: <unk> headlines of the weak consumer.
Tom: So how did we respond to all of this noise.
Tom: As we always have we optimized payroll to reflect the uncertain environment, resulting in a double digit reduction in payroll hours across many of our centers.
Tom: We take any capital expenditures driving down spending by 33% year over year in this quarter.
Tom: Boomers and our two water parks received new offerings that will help improve our earnings this coming summer.
Tom: We are investing in incremental marketing channels and improving our corporate events operating structure to bring in new business.
Tom: We leaned into improving food attachment with our new menu implementing a selling culture, among the staff and adding technologies and center to drive efficiencies and wallet share.
We rolled out dynamic pricing and added hot new games for our kids business.
Tom: Food and amusements grew faster than the rest of our business lines. Despite topline pressure the underlying performance of the different business lines. It gives me confidence in our long term operating leverage.
Tom: And the core product, we have built is better than ever.
Tom: During this quarter, we opened four new Lucky strike centers two in Denver, one in Beverly Hills, and wondering with Darrow Ranch, California.
Tom: Lucky strike Beverly Hills, and Lucky strike with Dara ranch, each generated over $1 million in revenue within their first 30 days of operation a new record.
Tom: You can view these four new properties images in our investor deck and I encourage you to do so.
Tom: It represented the evolution of our best in class product that underscores our position as visionaries and leaders in consumer entertainment.
Tom: We also began the rebranding of centers to Lucky strike with four centers changed to date and the rollout ramping up. We currently have 21 Lucky strike centers and we'll end the year near 75.
Tom: Our ability to consistently grow despite the challenges we have faced over the past 28 years is a testament to our resilience and the endurance of the business model we have built.
Tom: Thank you for your support and we'll now.
Speaker Change: I'll now turn it over to <unk>.
Paul: Thanks, Paul.
Paul: As Tom described there was a lot of noise this past quarter due to calendar shifts and macro economic uncertainty.
Paul: Especially affected our corporate events business.
Speaker Change: But our job is to operators is to focus on the things that we can control, which is why I'm pleased to report on the progress we made on our operating initiatives during the quarter.
Speaker Change: As you know, we launched a new retail F&B menu last quarter, which has been well received by our customers our kpis.
Speaker Change: And beverage revenue attachment Ebola revenue grew to 80 cents up from 76 cents a year prior.
Speaker Change: We continue to lean into our improved offerings at our locations to drive increased average check size and guest satisfaction.
Speaker Change: Our net promoter score was 74 in the quarter up from 72 a year prior.
Speaker Change: We saw improved scores driven by the enhanced experience as we rolled out the new lending to our retail business.
Speaker Change: A new menu is now being introduced into our events business across all locations by the spring the first change TFS menu in 10 years.
Speaker Change: We expect this new menu to reinvigorate the channel and drive uptake next few quarters.
Speaker Change: In the quarter, we also rolled out handheld tablets for our servers. It is still early days, but we've already noticed lines of efficiencies from the technology as seen in our payroll and benefits cost being down 9% year over year.
Speaker Change: Tablets should allow our servers to cover more lanes and grow check averages up sell pumps.
Speaker Change: Lastly, the team was focused on decreasing the EBITDA loss, we've been running at the PVA and managed to cut that in half going into this newly launched season.
Speaker Change: We expect these results to continue to improve as we work closely with the newly higher EPA agency to bring on new sponsors.
Speaker Change: Now, let me hand, it over to Bobby to review the quarter's financial performance Bobby.
Bobby Lavan: Thanks Glenn.
Bobby Lavan: In the second quarter of 2025 generated total revenue of $300 1 million and adjusted EBITDA of $98 8 million compared to the last year of $305 7 million and adjusted EBITDA of $103 1 million.
Bobby Lavan: Our total revenue growth was minus one 8% same store comp was minus six 2%.
Bobby Lavan: The quarter had one less week of holiday events due to the late Thanksgiving year over year, and new years pushed into the third quarter.
Bobby Lavan: The quarter had one less week of holiday.
Bobby Lavan: And that push.
Bobby Lavan: Well, it's about a 300 basis point headwind for the quarter.
Bobby Lavan: Our retail business was flat lease business up small single digits events business down mid single digits in the quarter.
Bobby Lavan: Adjusted EBITDA was $98 8 million.
Bobby Lavan: <unk> costs in the quarter to reflect the uncertain macro environment.
Bobby Lavan: <unk> from labor F&B costs, and repairs and maintenance.
Bobby Lavan: Same store sales were at $19 million drag that will flow to the bottom line.
Bobby Lavan: We limited negative operating leverage through cost efficiencies and we expect to maintain those cost levels as revenue improves driving operating leverage.
Bobby Lavan: Earned $3 million EBITDA from new centers, and boomers enraging waves were $2 million drag in the quarter.
The investments, we are making in boomers and raising weighs more than doubles, our total addressable market and smooth out the seasonality of our business.
Bobby Lavan: Regionally, we generated $9 million of EBITDA from June to August last summer and boomers should generate similar to that over this summer.
Bobby Lavan: We have seen and we will see over the rest of the fiscal year Lumpiness in revenue the benefit we expected to get from school winter break being pushed from the third week of December 2nd week of January was offset by wildfires in la.
Bobby Lavan: In addition January February and March are very important months for our business.
Bobby Lavan: We continue to focus on F&B and amusement initiatives and we expect to see a good lift in the spring and summer from boomers and raising wages.
Bobby Lavan: Overall with the current macro uncertainty we are taking a cautious view of our guidance for the rest of the year, but we still expect to be within our full year guidance range for the fiscal 2025, and we reiterated in our earnings release this morning.
Bobby Lavan: In the quarter, we spent $53 million in capital expenditures gross Capex was $19 million Newbuild Capex was $8 million to maintenance was 12.
Bobby Lavan: We spent $9 million purchasing incremental land at raising ways that flows through the capital expenditure side.
Bobby Lavan: Capex is down $30 million year to date from the previous year.
Bobby Lavan: Our liquidity at the end of the quarter was $397 million with nothing drawn on our revolver and $81 million of cash net debt was $1 2 billion Bank credit facility net leverage ratio was two nine times.
Bobby Lavan: Thank you for your time, and we look forward to seeing you at one of our new facilities in the coming months.
Speaker Change: Operator can we now open the lineup for questions.
Speaker Change: This time I would like to remind everyone in order to ask a question simply press Star then the number one on your telephone keypad phosphate just a moment to compile the Q&A roster.
Speaker Change: And your first question comes from the line of Batu Boss with JP Morgan. Please go ahead.
Zach: Hey, you've got Zach on for Matt.
Speaker Change: Tom or Bobby to start can you maybe elaborate on the the heightened macroeconomic uncertainty you sited.
Speaker Change: Maybe just discuss what youre seeing it work in retail versus corporate events and then he lead indicators of historical demand you're focused on today.
Speaker Change: Yes, I'll take this so that I think.
Speaker Change: Everyone is seeing what's playing out in the macro economic environment right now and you look at the political environment. There is just a lot of uncertainty and I think the trade down what the consumer is real right now the consumer is.
Speaker Change: Wait and see mode. Some people are holding up theyre not going to take that maybe European vacation, we likely will be the beneficiary of that trade down.
Speaker Change: You'll also see that Sri down in the flight from.
Speaker Change: Premium alcohol for example, and so when you look at our results.
Speaker Change: Food performed really well.
Speaker Change: Definitely some detachment with alcohol alcohol sales.
Speaker Change: As well as our retails did.
Speaker Change: We're seeing the consumer just elected to not make that premium alcohol purchase.
Speaker Change: And our response to that the team is working on various promotions to drive more foot traffic in late night business to counteract that but I think there is a flight to value right now and we plan to be the beneficiaries of that.
Speaker Change: To add to that.
Speaker Change: Offline event, which is really kind of corporate events and office parties, which is a big driver in December.
Speaker Change: October.
Speaker Change: We saw a lot of sort of what I would say election uncertainty.
Speaker Change: When we got to December while people, who had planned six months out they had booked their parties. When we got to December sort of a last minute parties. They just didn't happen.
Speaker Change: From our perspective.
Speaker Change: So what we call offline events is 20.
Speaker Change: 25% of our business in the second quarter, but it drops down to about 13% of our business. The rest of the year and so we really saw a lot of uncertainty on the corporate events side, but we see.
Speaker Change: Good retail traffic, particularly at sort of a trade down.
Speaker Change: Plays out.
Speaker Change: Got it I appreciate it and then maybe just as a follow up.
Speaker Change: Kind of following the latest pricing increase you cited last quarter with the new F&B menus.
Speaker Change: I was just wondering if you could maybe break down the composition of same center sales between traffic and ticket this quarter and then maybe any initiatives in place moving forward to kind of drive the embedded acceleration in the back half.
Speaker Change: Yes, yes, I mean traffic was.
Speaker Change: Really the comp, but that was on the event side versus the retail side traffic was flat.
Ultimately the price increases were offset by attachment on the alcohol side. So we're seeing F&B.
Speaker Change: We're seeing traffic sort of.
Speaker Change: Down on events flat on retail and events is just a bigger portion of the business at this point in the second quarter. So ultimately it weighed on the comp.
Speaker Change: Thanks, Matt.
Operator.
Speaker Change: Your next question comes from the line of Stephen <unk> with Stifel Financial Corp. Steven. Please go ahead.
Steven: Hey, guys good morning.
Steven: So Bobby just kind of staying on that last topic. There I mean, as we think about the next two quarters.
Steven: How should we be thinking about same store sales to kind of get you guys into your guidance range I guess, what I'm trying to figure out is look there's clearly a tailwind now with new year's being pushed into the third quarter, but it seems like theres, some headwinds as well, although thats whether thats the economy.
Steven: California, given the fire is not sure if youre seeing an impact there just youre just trying to see how we should be thinking about the next two quarters and then maybe elaborate a little bit more about I think you said in your prepared remarks Youre looking at your guidance range. I think you said the word cautiously and just trying to understand a little bit more what that means.
Steven: Yes, so let's talk about the buyers for a second so the fires were sort of in the $5 million hit.
Steven: The direct fire impact was we had three centers that were down for a while.
Steven: But generally we saw a significant pullback in corporate events in January So January is going to be small down.
Steven: We expect sort of the rest of the year to be.
Steven: But we're cautious on that so from our perspective, we can make our guide on EBITDA because we.
Steven: Thirdly manage payroll cost, which is our single biggest cost we spent $300 million.
Steven: The revenue is going to continue to be a little uncertain.
Steven: But ultimately that events business become less important as we go throughout the year and then you get into the summer months.
Steven: And we will have.
Steven: Our revised summer pass.
Steven: Optimize AMR path, we're going to have.
Steven: Boomers, which boomers in the second quarter did about $6 million of revenue in the fourth quarter at $15 million plus the operating waves, which were expanding their season.
Steven: Managing through sort of this.
Steven: Macro uncertainty on the revenue.
Steven: We're going to be a little bit more cautious or ability to sort of hit our EBITDA targets is something we feel a lot more confidence.
Bobby Lavan: Okay got you thanks for that Bob and then.
Bobby Lavan: Tom maybe a question for you in a little bit of a bigger picture question, but we continue to get asked.
Tom: By investors, what makes lucky strike different than.
Tom: Other entertainment options and what I mean by that is obviously, the Dave <unk> Buster's the top golf, so the world or are struggling and it seems you got.
Tom: They are just going to continuously get lumped get lumped in with them, whether that's fair or whether that's not fair. So.
Speaker Change: How would you combat that narrative and kind of show the investment community that you guys are in fact different from those other entertainment options.
Speaker Change: I'll take that this is love. So let me show you. The team is just a very special concept, we don't even consider to be exactly the same as our Valero concept.
Speaker Change: Right now as we mentioned we are actively working to convert Valero locations flocking strikes.
Speaker Change: We've done four in the last four weeks with one additional this week.
Speaker Change: When we convert these locations it's not just the sign change. This is a training for the staff, it's a totally different level of hospitality and some cases in cold weather environment Youre going to find co check to be included with your experience we've never offered before.
Speaker Change: And maybe these are completely different as you know.
Speaker Change: We're training them how to sell the menu is completely different.
Speaker Change: The design of the interiors is getting a revamped and when you look at a property like Beverly Hills that we opened last month in early December at the property only has 20 lanes. It did $1 million in revenue its first model.
Speaker Change: Think about those kind of results you can only achieve that special property and by the way we opened up the Delaware Ranch. We can have leader also did a $1 billion in its first of all.
Speaker Change: What I would invite the investment community do is visit some of these properties see it for yourself work spaces.
Speaker Change: Look at the environment that we've created from the decor, the layouts to our game rooms.
Speaker Change: I am very closely tied to the music business.
Speaker Change: Very passionate about our company I think it's better than anyone in the business. We started as a Boeing company OLED still ink for us, but I think today, it's better than anyone when you visit some of our redemption stores in these locations that were there a range.
Speaker Change: Hill's as you'll feel that we recently opened called the price fall is stunning.
Speaker Change: Yes.
Speaker Change: The product speaks for itself I think the results speak for themselves as well.
Speaker Change: That's good color I appreciate it thanks guys.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Jason <unk> with Canaccord Genuity Jayson. Please go ahead.
Jason: Yes, good afternoon, good morning, and thanks for taking the questions and I guess just following up on one of the comments I've just made.
Jason: Talked about how in this rebranding it's not just sort of changing the signs, but also some of those other improvement in terms of sort of where you guys stand in the overall portfolio and refreshing centers in sort of putting in those upgrades like amusements and things like that just wondering if you can give a little bit of an update on where that stands overall in relation to sort of the rebranding progress on that mark.
Jason: That you put out a 75 centers that will be under the Lucky strike brand at the end of this fiscal year.
Jason: Yes, so the rebrand process has started.
Jason: We changed fee, we've changed the masthead of Marvell, San Marcos Atlantic station in Houston.
Jason: And we're going to get a few done a week starting now.
Jason: The internal part of the change is happening as well so.
Jason: <unk> had my history always get some kind of like a 10% 15% bump in retail traffic year. One. The question is how do you maintain it.
Right and to maintain it means that we've got co checks in cold weather Joe's we upgraded the amusements, we've upgraded the food we've upgraded we'd go from paper votes too.
Jason: China's.
Jason: China dishes like there is a lot of different elements to just improving the experience and that is happening.
Jason: Ultimately I think that this is going to be a big tailwind for the business in that if you look at Chelsea Tier times square.
Jason: To you to full bowling centers, two biggest bowling centers in the world.
Jason: And they haven't really been that refresh in 10 years, so the world, where we rebrand them Lucky strike, we add that coat check we upgraded the amusing we upgrade the state where we upgrade the food, it's just going to bring it to a different level and that goes to.
Speaker Change: Deep question is what is the differentiator between us.
Jason: And kind of.
Jason: Some of our competitors.
Jason: We are a premium product people when they walk into a lucky strike they have an amazing experience so they pay a little extra sure.
Jason: But if the premium experience and ultimately people want to come back and we're building a brand that people can get really get pop.
Speaker Change: Yes, I just wanted to build up on the <unk>.
Speaker Change: Question that you asked which was I think the volume of these conversions and I think we've really protected the process of these over these first four originally we want to as I mentioned this week as well. So the team has done the hang of this process because there are a lot of touch points outside and inside the locations you're going to start to see that ramp up as we get.
Speaker Change: Into the summer months, when we have a little bit more.
Speaker Change: <unk> ability in the locations to make these conversions. So I think that 75 figure is very realistic.
Speaker Change: What's also really interesting Bob you talked about the tailwind is provides and that number of what these increases.
Speaker Change: We'll be at 23 as that volume of locations increase it's also going to open up the opportunity for us to invest more marketing dollars, because we could spread that around more locations and we haven't really done meaningful ran awareness brand building marketing with Lucky strike brand, but with $50 70.
Speaker Change: 100 of these locations, we can really invest into that now.
Speaker Change: Great. That's really helpful overview, there just one other follow up I think in the prepared remarks.
Speaker Change: And Bobby you mentioned.
Speaker Change: We're working on improving the corporate event the operating structure I'm just wondering if there's anything else you can share in terms of those plans.
Speaker Change: I mean, a lot to come.
Speaker Change: You really want to focus on a lot of food safety.
Speaker Change: If you go back to sort of the.
Speaker Change: The ethos of the business.
Speaker Change: Tom Bill to 1997 with Baltimore is we had the beautiful events. We had these beautiful food and people, we would have parties, where all the event coordinators in a market where kind of come in we let the ball, we let them play arcade and we serve them the premium food product.
Speaker Change: That really stop.
Speaker Change: With Covid, we really stopped really engaging.
Speaker Change: The customers in selling them the product and I think that that's something we're going to bring back pretty quickly with the way that our F&B portfolio has really been upgraded in the past few years youre going to see a lot of sort of pop up events, where we invite and sort of all the.
Speaker Change: Sales coordinators event coordinators of different companies in their markets. These days and it's a great product once you come in and bring your office and Thats something that really was loss with Covid and when we talk about kind of the lingering effects of Covid I think the.
Speaker Change: That selling part of the business is something we really want to lean into.
Speaker Change: Thank you very much.
Speaker Change: And your next question comes from the line of Michael Kaplinsky with Noble capital markets. Please go ahead.
Michael Kaplinsky: Thank you and thanks for taking my questions I just have a couple of quick ones here I just wanted to see if you can add a little bit more color on the margins in the second half I know seasonally you have better margins in the back half you're trending a little lower than expected the first half.
Michael Kaplinsky: Talk a little bit about where that margin pick up might be coming from maybe gauges.
Michael Kaplinsky: It's boomers breaking waves or how much it's going to come from a shift in <unk> in this quarter and there are there other dynamics at play in third and third quarter in the second half.
Michael Kaplinsky: Okay.
Speaker Change: Yes, so I think there's a few kind of core things. So in the first quarter you did not see much if any benefit from payroll costs being down in the second quarter in the comp we had $10 million of payroll costs down.
Speaker Change: Your single biggest driver F&B, we didn't change over our.
Speaker Change: Our food provider our food partner on October one so we're seeing we saw a few million dollars of.
Speaker Change: That can be savings in the quarter on comp youre going to see that play through the third and the fourth quarter. Additionally, in the third quarter Youll see.
Speaker Change: $55 $65 million lift over the second quarter.
Speaker Change: And so there's just a lot of incremental operating leverage that happens.
Speaker Change: The third quarter.
Speaker Change: And that is something that's really playing out, particularly as boomers, which this last quarter was $6 million of revenue minus $1 million of EBITDA in the fourth quarter will be $50 million of revenue and $5 million of it right.
Speaker Change: Alright, and so ultimately that that offer that negative operating leverage that we're going to have in the second and third quarter as we invest in more of the summer.
Speaker Change: We will get pushed into the fourth and first quarter.
Speaker Change: Got it yeah. Thanks for the color and then.
Speaker Change: How much of your food and beverage is coming from the sale of alcohol in premium liquors, I know that liquor sales industry wide are down seven 8% and whether that be from macroeconomic issues or simply that consumers are shifting beverage patterns, possibly due to health care risk I was just wondering I know that the younger demographic is moving to.
Speaker Change: Mark Tales, and can you talk a little bit about whether or not you think liquor sales will come back or do you think that there might be a need to retool the offerings that you have there.
Yes, so just to clarify.
Speaker Change: All of this.
Speaker Change: Outperform holding.
Speaker Change: And overall food outperformed.
Speaker Change: It was just that.
Speaker Change: F&B outperformed food, we're just way more pronounced and I think that is.
Speaker Change: There's a lot to do with the new menu the new focus on selling the new menu I think guest reception to the new menu across our properties has been phenomenal.
Speaker Change: I mentioned, our NPS score was up I think that's correlated to that as well going from 72 to 74.
Speaker Change: But I don't know.
Speaker Change: A permanent shift away from premium alcohol, we did notice that alcohol lag compared to now.
Speaker Change: Now Fortunately, we also offer marks sales at our locations and we will continue to lead into that but again, we're not going to sit on our hands and try to find out if its permanent or not so I mentioned.
Speaker Change: The team is going to be launching food and beverage promotions later this quarter and it's going to have a focus on driving that stronger nighttime traffic with these value led offerings. So.
Speaker Change: Until the consumer comes back and chooses to upgrade their beverage choices, we're going to lean into promotions and traffic generating activities.
Speaker Change: See if we can drive alcohol sales as strongly as we've been able to do with our food we.
Speaker Change: Historically have not really done happy hour.
Speaker Change: Yes.
Speaker Change: Obviously, one competitor in the market, who has a one restaurant competitor in the market that is an exceptionally well and that was really through a lot of marketing and a lot of sort of specials.
Speaker Change: We think that our locations are.
Speaker Change: Very fine for that is something we've historically not done and getting that traffic in or <unk> for happy hour it can be incremental to the business.
Speaker Change: Great. Thank you that's all I have.
Speaker Change: And your next question comes from the line of Mike <unk> with <unk> Securities. Mike. Please go ahead.
Mike: Hey, good morning.
Mike: Bob maybe just touch on some of the labor efficiencies I'm, just trying to understand maybe the mechanism by which you are deriving that.
Mike: As we think about the year ahead, and the I guess the push to lift comps I mean is there any risk that by removing that labor you kind of penalize your ability to grow comp.
Mike: So great question.
Speaker Change: Huge initiative that has been sort of a core partnership between myself and lab in that we really want to optimize payroll in centers right. So.
Speaker Change: Using data we've looked at historically, what the company did was post September when leagues floored, we ramped up staffing in the holiday right and so it's like staffing went from September into December in a straight line.
Speaker Change: And the business wasn't really there to justify it in the September October timeframe, and so we slowed that down.
Speaker Change: Now.
Speaker Change: Some inside baseball.
Probably cut a little too much of the F&B revenue facing labor, yes, but we think that there is some opportunities to continue to optimize we found that were relying a little bit too much on the kiosk midweek.
Speaker Change: Versus having that server when you've got that.
Speaker Change: On $40 50 Lane.
Speaker Change: Our server.
Speaker Change: Really justify itself, but this is sort of a lot of the tinkering that Tom has talked about in that we're tinkering with our labor.
Speaker Change: We think that it was good before were making it better and ultimately we're going to optimize labor in every center by hour by day based on very defined revenue forecast and so ultimately it's adding labor is accretive we'll do it if we're moving labor is.
Speaker Change: Accretive we'll do it.
Speaker Change: It was really the leader of this so once you give some comments.
Speaker Change: I think we grew.
Speaker Change: We can operate efficiently during a time when we have to.
Speaker Change: But like everything else with this company, we're going to continue to fine tune and added back where it's justified I want you to also consider other initiatives that we've rolled out and we're going to continue to optimize like server tablets. So server tablets are going to allow a server.
Speaker Change: Historically, maybe cover Orleans now they can cover maybe eight to 10 liens and use it more effectively and get food into the kitchen faster and still provide better guest service and also increase their check sizes because it prompts on the tablet. So it's not just <unk>.
Speaker Change: Labor operating it's also adding technology into the equation that will allow us to be more efficient with our labor.
Speaker Change: Okay.
Speaker Change: The second question and.
Speaker Change: And I know you guys arent the poster children for tariff risks.
Speaker Change: Is there anything to think of.
Speaker Change: Just in terms of some of the surprises or sourcing or anything of that nature, where there might be some risk.
Speaker Change: So we buy about $50 million of new since March.
Speaker Change: Half of that is domestic half of that's coming from from China. So we have.
Speaker Change: A million bucks of risk an amusing smart.
Speaker Change: I think that as it relates to the global supply chain. There is probably a few more million from China tariffs, we don't have that much exposure other than on input costs from Canada, Mexico, but really I'm more concerned about tariffs from a consumer perspective right now.
Speaker Change: Seeing softness on events, we're seeing.
Speaker Change: Like flatness on consumers.
And we're getting the benefit of the trade down on top of we're going to have this very optimized summer half coming.
Speaker Change: But tariffs really hit sort of that consumer sentiment. There is that's what keeps me up at night is that from a tariff perspective, not the onesies and twosies on inputs like those.
Speaker Change: Are never great, but ultimately I am more concerned about what that would do from a macro perspective.
Bobby Lavan: Thanks, Bobby.
Eric Handler: And your next question comes from the line of Eric Handler, We dropped capital Eric. Please go ahead.
Eric Handler: Thank you and good morning.
Eric Handler: I assume your corporate events staff has a database of all the people book parties with you in the past as they proactively talk to these corporates are.
Eric Handler: Are they getting a sense is this a permanent shift or is this something that the.
Eric Handler: Corporates view is it's just a temporary situation.
Eric Handler: Yes.
Eric Handler: So I would say there is corporate austerity going on out there when we look at sort of the <unk> data.
Eric Handler: The <unk> data says that 60% of corporates are expecting we're expecting that.
Eric Handler: And then in the December quarter, and Thats really what we saw.
Eric Handler: Ultimately like everything.
Eric Handler: We're going to we're going to optimize as much as we can but we are it appears we're going to be optimizing from a lower level to go up.
Eric Handler: But we've worked through this in the past as Tom said, we saw 50% of our events has disappeared during GSC.
Eric Handler: We're going to have to.
If our game. So it's nice that we really haven't done. These F&B tasting menu is awesome I would put our menu in any of our competitors.
Eric Handler: And ultimately when we get those.
Eric Handler: Event.
Eric Handler: Coordinators at the big companies and they come in and they have to choose between off in one of our competitors sure maybe theyre doing 20%, 30% less business, but will give us more business and thats something that we.
Eric Handler: Proven in the past, we can do and it's just part of the consolidation that's coming out of Covid.
Eric Handler: Okay.
Bobby Lavan: And then Bobby I know, you're saying, you're taking a more cautious view with revenue as you look at.
Bobby Lavan: The situation now do you still think that we're in a positive same store comp environment for the year.
Bobby Lavan: I think there's a lot of innings left in this game.
Bobby Lavan: With February March in front of me, it's hard to.
Bobby Lavan: Really project that at this point.
Bobby Lavan: But again.
Bobby Lavan: We will come in.
Bobby Lavan: Flattish up down a little bit like it's not going to be dramatic one way or the other I.
Bobby Lavan: I think ultimately, though our focus is we are going to be positive total growth and an EBITDA will be up significantly.
Bobby Lavan: Okay and then one last question. So you bought some land next to raging waters I assume there is some expansion.
Speaker Change: Plants you have there.
Speaker Change: How fast can you pedal there so that could this whatever youre doing there be ready for the upcoming summer season or is that going to have to wait a year.
Speaker Change: No.
Speaker Change: We're in that will be at two to three year project.
Speaker Change: Expanding raging waves right now raising wave has sort of a peak capacity of 6% to 7000.
Speaker Change: We're putting in some changes this year that should increase that.
Speaker Change: A little bit but it also one of the big changes this year as we're building out and event pavilion. So ultimately event, it's something that we haven't really done any size that raging way, so that will add to sort of like not necessarily peak capacity, but it will add to capacity during the week, where we bring in corporate.
Speaker Change: In local schools and things like that but in two years Youll see us, adding slide as it relates to the incremental land that's a two to three year project.
Speaker Change: Got it thank you so much.
Speaker Change: And your next question comes from the line of Jeremy Hamblin with Craig Hallum Capital Group Jeremy. Please go ahead.
Speaker Change: Thanks, I wanted to follow up here just to make sure I understood.
Speaker Change: Your kind of expectations on same store sales trends.
Speaker Change: It sounds like.
Speaker Change: January was down maybe low single digits.
Speaker Change: Several puts and takes there I think you said $5 million impact.
Speaker Change: From the wildfires, which we would assume is maybe 400 basis points or so maybe 500.
Speaker Change: Of impact to total comp in the month.
Speaker Change: But in terms of thinking about the <unk>.
Speaker Change: Comment that youre going to expect to be flattish plus or minus a little bit here for the year.
Are you still thinking that the March quarter is a it's a positive comp.
Speaker Change: You are lapping clearly a tougher compare in the June quarter, but just wanted to see.
Speaker Change: Expectations here or near term.
Speaker Change: Yeah.
Speaker Change: And let's focus on the comp I mean total growth in the third quarter will be up.
Speaker Change: Again, as we said, it's a little uncertain at this point. So we feel good about total growth, particularly with Beverly Hills with Air Ranch Boomers, We've got two acquisitions that will come in in the quarter and so ultimately we continue to be focused on total growth, but our comps.
Speaker Change: On total growth years.
Speaker Change: Sure.
Speaker Change: Got it.
Speaker Change: Okay, let's come back to the Lucky strike conversions right. So you're excited about what you're seeing there I think you indicated that typically youre getting a 10% to 15% lift in.
Speaker Change: In the business.
Speaker Change: When you complete those can you just walk us through the timing that it takes from kind of initial.
Speaker Change: Work on getting the Remodels and the rebranding done how much does that cost on average.
Speaker Change: How long does it take.
Speaker Change: To complete.
Speaker Change: So.
Speaker Change: Really varies by location by market a component of that as you can imagine as the permitting that it takes.
Speaker Change: Wires to change the exterior signage had it not been for that we probably televisa lot faster.
Speaker Change: But that's usually the prerequisite.
Speaker Change: And then depending on the location the size the amount of touch points and the location anywhere where you would CFO arrow is changing a lot of the elements seating the games that step changes as well so the cost really varies by location as does the timing.
Speaker Change: And so we have our list of focused properties.
Speaker Change: List of 75 that we want to do this year and you just see almost like on a daily basis.
Speaker Change: The locations changing order based on who's coming online faster.
Speaker Change: So.
Speaker Change: What I also wanted to mention as well.
Speaker Change: What happens in parallel to these conversions as a full marketing plan. So again, it's not just the sign change everything that happens outside the location and type location.
Speaker Change: We with the staff with the hospitality then there is also a full marketing support plan that piggy backs on all of these and that plan also varies from $1 perspective based on the location and what the revenue there is that we can justify investing marketing in.
Speaker Change: Yes.
Speaker Change: Pat.
Speaker Change: Seeing it the most exciting about the lucky strike rebrand is.
Speaker Change: Yeah.
Speaker Change: We'll spend.
Speaker Change: $10 million $12 million this year on marketing that is <unk>.
Speaker Change: <unk>.
Of what the company spent pre COVID-19.
Speaker Change: And.
Speaker Change: We've directed a lot of dollars for performance marketing online continues to crush it.
Speaker Change: And that has been proven to be a very good trade.
Speaker Change: These lucky strike's rollout our ability to go spend.
Speaker Change: <unk> hundred Grand Paris Center to reopen the property, that's how you get sort of that reintroduction to that community.
Sue Mercury: Sue Mercury.
Sue Mercury: The birthday community and so ultimately we really view the rebrand is the north star.
Sue Mercury: End of <unk>.
Sue Mercury: Really bringing the brand back out and drive that reintroduction to the market. It is something that frankly, we havent done pre COVID-19.
Speaker Change: Got it just one more for me. So you guys have talked about mobile ordering.
Sue Mercury: Improving speed efficiency.
Speaker Change: Yeah.
Speaker Change: I wanted to just get an update on where you stand and kind of completing the rollout of that.
Speaker Change: And you know.
Speaker Change: Kind of how it's measuring versus <unk>.
Speaker Change: Expectation.
Speaker Change: So today, we piloted it successfully.
Speaker Change: Handheld server tablets at 30 of our locations.
Speaker Change: We expect that to be at 100 by the end of the quarter.
Speaker Change: And it's not just.
Speaker Change: Rolling them out and leaving it there right like every day there is learnings from the utilization of these tablets, where we're speaking to the associates using them.
Speaker Change: Adding modifiers, where improved improving the flow on the tablets, we are improving the prompts the functionality.
Speaker Change: Yes.
Speaker Change: Reception of these tablets. These are big buildings the cover and.
Speaker Change: As I mentioned in our reporting either early innings of a new technology, and we're going to continue to Tinker and fine tune it until it's across our entire organization, but that will be this year and.
Speaker Change: The efficiencies I think we're going to pick up the benefits are really immense when you again consider just how much more coverage a single server can have with a tablet in their hands.
Speaker Change: Instead of running back and forth to Pos station, when they take orders and sending that fluid into the kitchen faster and getting hot food to the lanes faster and giving their customer.
Speaker Change: An opportunity we're on during their bowling session. So if we can.
Speaker Change: Prove the guest satisfaction were off.
Speaker Change: Also serving better food as you know, we're getting it to the consumer faster they have more time to order additional items, a dessert item a second drilling another app.
Speaker Change: All of this has been a really increase our F&B attachment and.
Speaker Change: That's really the name of the game for us.
Speaker Change: Got it thanks for taking our questions best wishes.
Speaker Change: Again, if you would like to ask a question simply press star followed by the number one on your telephone keypad alright.
Speaker Change: Our next question comes from the line of Ian Zaffino with Oppenheimer. Please go ahead.
Ian Zaffino: Great. Thank you very much.
Ian Zaffino: Can you just wanted to drill down on the buyback kind of decision there.
Speaker Change: Maybe also Bobby can you give us a kind of a discussion about what cash flows will look like for the rest of the year.
Speaker Change: How youre thinking about deploying that in buybacks versus deleveraging or whatever else you want to do.
Speaker Change: Insurance acquisition so.
Speaker Change: Any color you can kind of get there would be helpful. Thanks.
Speaker Change: Yes, we try to balance our buyback with cash generated from operations.
Speaker Change: We are balancing.
Speaker Change: These are sort of.
Speaker Change: Sember to March.
Speaker Change: We are generating.
Speaker Change: $30 million to $40 million of free cash flow months.
Speaker Change: So we tie sort of the buyback.
Speaker Change: We're very focused on.
Speaker Change: Analyzing our different void that exists.
Speaker Change: Deployment of capital and right now the best investments for us effectively our M&A rebrand and buying back our stock. So those are sort of kind of the key initiatives, we'll continue to sort of deploy capital in that way.
Speaker Change: Ultimately deleveraging is sort of a core focus for mine, but deleveraging doesn't happen in a quarter. It happens over a few years and thats something that I am very committed to getting that.
Speaker Change: We suggested leverage below five times and the in the next 24 months.
Speaker Change: Okay. So are we going to be free cash flow positive for the year backing out.
Speaker Change: Capex.
Speaker Change: Hum.
Speaker Change: Just I'm just thinking about okay. Okay.
Speaker Change: Thank you.
Speaker Change: And then on the Lucky side.
Speaker Change: Just the business in general.
Speaker Change: I know a lot of the effort and a lot of focus recently has been on call. It premium.
Speaker Change: Premium rising some of the product larger ones when that's across Neil <unk> Arena.
How does that then square with I guess some of the trade down youre seeing or kind of lack of the premium purchases.
Speaker Change: Because it seems like Youre kind of going in the opposite direction. So how are you kind of mitigating that.
Speaker Change: And how you're thinking about that from a business planning perspective going forward. Thanks.
Speaker Change: We see premiums in terms of our food that we're not seeing surgeons have your loss on the menu, we're seeing premium part of the incentive quality.
Speaker Change: No.
Speaker Change: There is a flight to value.
Speaker Change: When people see the menu and the quality of the product.
Speaker Change: Better ingredients better recipes.
Speaker Change: More trending items that the consumer is eating today, that's what we mean, we're not going to.
Speaker Change: Felipe.
Speaker Change: So.
Speaker Change: I think maybe it's just a matter of the linguistics, but in terms of.
Speaker Change: You order, a well thought or a great news, that's what we're seeing on the alcohol side.
Speaker Change: But not on the food side and I don't think our menus are.
Speaker Change: Premium in that sense, it's <unk>.
Speaker Change: Premium in the sense that we're offering items that the consumer is eating today.
Speaker Change: They are popular the quality is much better the presentation of the product is much better in terms of depleting the plate ware. The menus are much nicer, that's what we're talking about when we say we are a premium food product now.
Speaker Change: Okay. Thank you very much.
There is no further question at this time. This concludes the meeting. Thank you all for joining you may now disconnect.
Speaker Change: Okay.
Speaker Change:
Speaker Change:
Speaker Change: Yeah.