Objectives for this Session

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Chad Leo Sharp
6 years ago
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1 Revenue Sources in Bowling Entertainment Centers EXISTING & NEW Identify, Prioritize, Implement Objectives for this Session Define revenue centers within the business of bowling entertainment centers Study where sales come from within defined revenue centers Consider alternative metrics for measuring sales and profitability within a center Discuss pros & cons of various profit centers Provide tools for analyzing modifications or additions to your current business model Revenue Centers Five Categories Bowling Food & Beverage Attractions Retail, Rental & Other 1

2 Bowling Reserved Bowling League Birthday Parties Events Tournaments Walk-in or Casual Shoe & Locker Rental Brackets, Record Service, Jackpots, etc. Food & Beverage Catered Food & Take Out Food Over the Counter Dining Area (casual service) Catered Bar OTC Bar (with or without servers) Take out Bar (making sure you re listening) Video Redemption Billiards Shuffleboard/Darts/Foosball Product/Merchandisers 2

3 Attractions Laser Tag Bumper Cars Go Karts Balladium/Ballocity Lazer Maze or Lazer Frenzy Mini-Golf Rock Climbing Whirlyball or Cyber Sport Retail, Rental & Other Pro Shop Other Merchandise (glow, logo, etc) Vending Machines Lottery/Pull Tabs Room Rental Commissions Center Revenue Example 2% Retail 10% Bowl F&B Retail F&B 31% Bowl 57% 3

BEC Revenues Example Retail 1% F&B 32% Bowl 39% Bowl Attractions F&B Retail Attractions 6% 22% Revenue Center Space Analysis Assign floor space to revenue centers Include dedicated storage Include

4 BEC Revenues Example Retail 1% F&B 32% Bowl 39% Bowl Attractions F&B Retail Attractions 6% 22% Revenue Center Space Analysis Assign floor space to revenue centers Include dedicated storage Include dedicated maintenance Include dedicated support Identify all floor space not assigned to a particular revenue center as common or general Determine cost per square foot For each independent revenue center For the common or general area in sum 4

5 Floor Space Analysis Example REVENUE CENTER SPACE % of Total Bowling Food and Beverage Retail, Rental, Other Common Total 23,500 4,500 2,000 1,000 6,000 37, % 12.2 % 5.4 % 2.7 % 14.9 % Sales per Square Foot Calculation REVENUE CENTER SPACE *SALES REV/FT Bowling 23, $36.55 Food and Beverage 4, $ , $19.00 Retail, Rental, Other 1, $ Common 6,000 Total 37,000 1,500 $40.54 *in thousands Identify Variable Costs by Center Cost of Sales Direct, dedicated labor Labor-related, as a % of direct labor Supplies, Repairs & Maintenance Dedicated Service Contracts Dedicated A&P expenses Dedicated Licenses and Fees 5

6 Identify Common Area Costs Sales & Management Labor Utilities General A&P Expenses Insurance, Property Taxes Bank & Credit Card Fees Janitorial and Security Contracts Accounting & Professional Fees Building & Exterior R&M Calculate Labor-Related Expenses Add the following from the P&L Labor Taxes Worker s Compensation Benefits & Bonuses Divide the Total of These 3 by Total Labor $42,000 / $263,000 = 16 % Apply this Percentage to Direct Labor when Calculating Profitability by Center Profitability by Revenue Center Food & Beverage Sales Food & Beverage COS F&B Labor F&B Labor Related F&B Supplies F&B Repairs & Maintenance F&B Advertising Common Area Costs Food & Beverage Profit $466, , ,000-18,000-18,000-4,000-2,000-54,000 $128,000 6

7 Food & Beverage Profitability Per Square Foot Calculation $128,000/4,500 square feet= $ EBITDA per square foot Cost per Square Foot Calculation REVENUE CENTER SPACE *COST COST/FT Bowling 23, $26.38 Food and Beverage 4, $ , $13.00 Retail, Rental 1, $ Common** 6, Total 37,000 1,109 $29.97 *in thousands **applied to 31,000 square feet EBITDA per Square Foot Calculation REVENUE CENTER Sales per Foot Cost per Foot EBITDA per Foot Bowling $36.55 (26.38) $10.17 Food and Beverage $ (75.11) $27.11 $19.00 (13.00) $ 6.00 Retail, Rental $ (125.00) $12.00 Common* $63.00 Total $40.54 (29.97) $10.57 *Information Only 7

8 CAUTION,CAUTION! Remember that F&B is only allocated to dedicated space for service, production and storage A high % of F&B sales is driven by bowling activity alone (75-100%) Can t only look at revenue or profit per square foot, but ask this question Am I maximizing profit per square foot? New Revenue Center Considerations How will it complement or enhance existing revenue centers? Can any common space or weak performing revenue center be eliminated? What licensing or permitting issues will I encounter? Do I need to change my current business trend(s)? New Revenue Center Considerations Staff Flexibility & Expertise Maintenance Sales & Marketing Technical Skills What is the Competitive Landscape? Will the Removal of a Revenue Center impact another RC? What Market Segment do you want to Attract or Expand? 8

9 Revenue Centers to Consider Game Room with Tickets to Prizes Game Room with Redemption Area Laser Tag or Mini Golf Lazer Frenzy or Lazer Maze Bumper Cars or Go Karts Balladium or Ballocity Party Rooms Rock Wall F&B enhancement or remodel Game Room & TTP require square feet each Ceiling clearance a consideration Likely need 1,200 square feet 20 games, 60-70% redemption TTP@$15,000 Inventory Cost: $2,500 Total investment: $125,000 Revenue expectation: 10% of center total Game Room & TTP Center Revenue 1,500,000 Game Room Revenue 150,000 Cost of Sales@25 % (28,125) Additional Labor & LR (10,000) Depreciation (25,000) Repairs & Maintenance (5,000) Total Additional Expense (68,125) Net EBITDA 81,875 EBITDA per square foot

Laser Tag Highly profitable when managed actively Adds significant value

) Technical skills likely in house and can be transferred Expands birthday

operating expenses Laser Tag Requires 150 square feet per pack plus

packs can=higher potential sales per pack Recommendation: no less than

10 Laser Tag Highly profitable when managed actively Adds significant value to group sales menu (team building, project grads, etc.) Technical skills likely in house and can be transferred Expands birthday party opportunities Medium to high capital entry barrier Low to very low operating expenses Laser Tag Requires 150 square feet per pack plus briefing and vesting areas (varies) Multi-level has longer legs; more packs can=higher potential sales per pack Recommendation: no less than 2,500 square feet (16 packs) 3,000 square feet, multi-level gets you 4000 total playing space and 26 packs 10

Depreciation* Repairs & Maintenance Total Additional Expense Net EBITDA

Less through-put than games or Laser Tag Low labor and very low R&M

11 Laser Tag 4,000 total Square Ft. Center Revenue Laser Tag Revenue Cost of Additional Labor and LR Depreciation* Repairs & Maintenance Total Additional Expense Net EBITDA EBITDA per square foot 2,000, ,000 (4,000) (28,800) (27,000) (5,000) (64,000) 136,000 $34.00 *Total Investment $135,000 Mini Golf More floor space than laser tag Less through-put than games or Laser Tag Low labor and very low R&M Excitement level can lead to lower year over year sales Interactive courses have longer legs than static courses Opportunity for increase birthday party sales and group sales 11

12 Mini Golf 5,000 square feet Center Revenue Glow Mini-Golf Revenue Labor & LR Supplies Repair & Maintenance Depreciation (5 years) Total Additional Expense Net EBITDA EBITDA per square foot 2,000, ,000 (16,000) (1,500) (1,500) (30,000) (49,000) 101,000 $20.20 Bumper Cars 1,200 square feet Center Revenue Bumper Car Revenue (3%) Labor & LR Supplies Repair & Maintenance Depreciation (5 years) Total Additional Expense Net EBITDA EBITDA per square foot 2,000,000 60,000 (6,000) (6,000) (1,000) (13,600) (26,600) 33,400 $27.83 Lazer Frenzy 600 square feet Center Revenue L.F. Revenue (2.5%) Labor & LR Supplies Repair & Maintenance Depreciation (5 years) Total Additional Expense Net EBITDA EBITDA per square foot 2,000,000 50,000 (4,000) (500) (500) (10,000) (15,000) 45,000 $

13 Balladium 1,200 square feet Center Revenue Balladium Revenue (3.5%) Labor & LR Supplies Repair & Maintenance Depreciation (5 years) Total Additional Expense Net EBITDA EBITDA per square foot 2,000,000 70,000 (7,000) (500) (500) (15,000) (23,000) 47,000 $39.16 Lane Removal Considerations Calculate lost revenue from removal Reserved business (lose 100%) Waiting list time (lose 50-75%) Determine demolition cost Resale or parts value to lanes removed Gain 1,300 square feet per pair removed How does total EBITDA change? Lane Removal 4 lanes Loss from removal Cost of demolition Gain from sale Remodel cost Laser Tag EBITDA First Year EBITDA change Year 2 EBITDA change Year 5 Cum. EBITDA change (75,000) (10,000) 5,000 (50,000) 136,000 6,000 61, ,000 13

14 Other Potential Revenue Centers Go-Karts Rock Climbing Walls XD Theater Game Rooms with Redemption Centers Party and/or Event Rooms Bar/Grill Enhancements Boutique Lanes Resources

Company Presentation. August 2013

Company Presentation. August 2013 Company Presentation August 2013 1 Untapped User Base India: One of the Largest Consumer Economies India : 4th Largest Economy Globally GDP (PPP) : US$ 4.8 Tn GDP at Purchasing Power Parity in 2012 US$