Driving like-for-like growth
The Group’s strategy is to drive like-for-like growth by attracting new customers, increasing the frequency of visits and raising the spend per game. This strategy is supported by a focus on improving the customer experience through investments in, amongst others, technology, staff training, marketing, and refurbishments. Like-for-like sales growth was +6.8% in FY2016.
The Group intends to undertake between seven to ten refurbishments per year over the medium term in order to generate improved sales and profitability at existing centres. It is expected that future refurbished centres will benefit from the introduction of new dining concepts such as Hollywood Diner and an upgraded bar offering as well as investment in the bowling experience including the introduction of VIP lanes, all of which will support higher prices and a higher spend per game as well as drive game volumes and visit frequency.
The Group’s centres have generated attractive returns from capital invested, with the 8 centres refurbished/rebranded in FY2016 being on track to out perform our 33% targeted Return on Investment (ROI).
Conversion of the Bowlplex estate
At the 11 centres acquired as a result of the acquisition of Bowlplex Limited in December 2015, the Group intends to offer staff new training and apply the business processes, marketing initiatives, IT and human resources systems that form part of the Group’s business in order to raise the operations at the Bowlplex centres to the standard of the Group’s remaining estate. As part of the Group’s refurbishment programme (described above), the Group intends to refurbish an average of three Bowlplex centres per year to bring them in line with the higher standards seen across the Group’s estate. Of the 11 Bowlplex centres acquired, four have been refurbished and re-branded, with another seven to be similarly refurbished and re-branded, as Hollywood Bowl centres. The Directors believe that there is significant potential to improve the revenue and profitability of the Bowlplex centres.
Development of new centres and acquisitions
The Directors believe that there are substantial opportunities to achieve attractive returns from the opening of new centres. The current medium term strategy is to seek to open, on average, two new centres per year, although this is dependent on the availability of suitable centres and rental prices.
Leisure and retail park landlords see the advantage of including the Group as a tenant within their schemes as the Group is a strong driver of footfall as well as contributing to an overall ‘dwell time’ within the parks. In this regard, the landlords for each of the new centres have contributed to the total cost of each new centre developed by the Group. For the four new centres which opened during the Historical Period (as defined in the Prospectus), the average return on capital, excluding the landlord contribution, was approximately 28%. Including landlord contributions, the average return on capital from these four centres was over 100%.
The Directors also believe that from time to time, there will be opportunities to achieve further growth through the acquisition of existing bowling sites from other operators and improving their operations by, for example, converting them into Hollywood Bowl centres, similar to the current strategy being pursued with regard to the 11 centres acquired as a result of the acquisition of Bowlplex.
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Hollywood Bowl Group
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