Lucky Strike Entertainment - Q4 2024

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bowlero Q4 and Fiscal Year twenty twenty-four Earnings Conference Call. All lines have been placed on mute to prevent any background noise, and after the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one a second time. Thank you, and I would now like to turn the conference over to Bobby Levin, Chief Financial Officer. You may begin.

Bobby Lavan (CFO)

Good afternoon to everyone on the call. This is Bobby Levin, Bowlero's Chief Financial Officer. Welcome to our conference call to discuss Bowlero's Q4 twenty twenty-four earnings. Today, we issued a press release announcing our financial results for the period ended June thirtieth, twenty twenty-four. A copy of the press release is available in the Investor Relations section of our website. Joining me 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, we may make certain forward-looking statements. 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 the inherent risks and uncertainties that could cause actual results to differ materially from those expressed.

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 SEC. Bowlero Corporation undertakes no obligation to revise or update any forward-looking statement to 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 measure is 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 may be found on the company's website. I'll now turn the call over to Tom.

Thomas Shannon (CEO)

Good afternoon. Thank you for joining us today. I am Thomas Shannon, Founder and CEO of Bowlero Corporation. When I founded our company 27.5 years ago, I was driven to provide customers with a world-class experience. With a positive 6.9% same-store comp and near 20% revenue growth this most recent quarter, our results speak for themselves, and we have become a premier location-based entertainment platform. In 2013, we acquired 266 centers from AMF out of bankruptcy for $270 million. We spent the past 10 years investing deliberately in rebranding the centers, upgrades across the kitchen, audiovisual, seating, technology, and overall experience. These legacy bowling centers became the best-in-class entertainment location in their communities for children's birthday parties, corporate gatherings, leagues, date nights, and group outings.

At the same time, they run efficiently and operate at near 50% EBITDA margins, compared with an industry average less than half that. This playbook was repeated with our acquisition of the 85 bowling centers from Brunswick Corporation in 2014, 17 centers from Bowl America in 2022, the 14 centers of Lucky Strike in 2023, and almost 50 from sole proprietors, along with building around 20 new centers in superb locations during this time period. We have spent over $2 billion on acquisitions and capital expenditures over the past 27 years, and in fiscal year 2025, we project $520 million of four-wall EBITDA and more than $400 million of consolidated EBITDA. We target strong double-digit returns on invested capital, and we have the expertise to continue achieving that.

We continue to drive forward with the majority of our focus on deploying capital into bowling through new builds, acquisitions, and upgrading our centers. We are currently under construction on four new centers in Beverly Hills, California, Ladera Ranch, California, Northfield in Denver, and Southlands, also in Denver. These powerhouse locations will open between September and November of this year. In May 2024, we acquired a large water park in Yorkville, Illinois, named Raging Waves. We acquired this asset, along with 60 acres of real estate, at an attractive valuation and underwrote synergies from implementing our operating philosophies and having efficiencies at scale. Throughout our first summer, we implemented our tried-and-true practices of focusing on the consumer while also executing efficient operating standards.

I am happy to say that revenue is up double digits year over year, and we have identified significant capital deployment opportunities at the property to deliver powerful long-term growth. This experience with Raging Waves confirms that the Bowlero operating philosophy can expand outside of bowling as we look more broadly at the location-based entertainment industry. We will continue to seek opportunities to deploy capital for double-digit returns while implementing best-in-class operating standards that drive efficiencies at scale and grow earnings well in excess of our cost of capital. We will deliver outsized returns to our investors that will continue to scale and accelerate in the coming years. Let me hand it over to Lev to talk about our internal initiatives, and then Bobby will review the financial details. Thank you.

Lev Ekster (President)

... Thanks, Tom. This summer, our season passes were a success, driving traffic during the slower summer months. As a reminder, our weekly sales from April through November are approximately $17 million, compared to $25 million plus starting in December through March. Incremental traffic into our locations with improved attachment helps our business during the slower months. We believe the seasonal passes improve customer satisfaction by providing value and ultimately helping them revisit our locations during the critical holiday and winter periods. As we discussed last quarter, we are leaning heavily into increasing food and beverage sales. This summer, we started the rollout of all new retail F&B menus, and by the end of this month, all of our locations will be featuring a new menu that will be more compelling to our guests, featuring better presentation, a better offering, and better portion sizes.

The new menus are setting us up for success in the holidays, when we will also be introducing a fully revamped event catering menu for our top 75 locations, with an innovative offering of higher quality selections, such as Mike's Hot Honey Pizza, Spicy Rigatoni, Lobster Mac and Cheese, and Sweet Poppy Salad. Additionally, we have begun piloting tablets for the servers in our locations, which provide strong efficiencies from having to walk back and forth to point-of-sale stations, thereby improving the process for our associates and the experience of our guests. The Lucky Strike brand has a new logo, which we will be hanging on three new locations opening in the next few months: two in Denver and one in Beverly Hills. More to come on the expansion of the Lucky Strike brand.

We will continue to optimize our offerings to improve customer satisfaction and traffic, while increasing guest spend as we look to become the preferred out-of-home entertainment destination of choice. This is how we will continue to outperform our peers, and now I'll pass it over to Bobby.

Bobby Lavan (CFO)

Thanks, Lev. In the of 2024, we generated total revenue ex service fee of $283 million, and adjusted EBITDA of $83.4 million, compared to the last year of $235 million and adjusted EBITDA of $64.5 million. As a reminder, service fee revenue is a pass-through. Non-contributor earnings is being phased out and normalizes year over year in fiscal year 2025. Our total growth in the quarter was 20.2%, and same-store comp was positive 6.9%. April, May, and June all saw positive same-store growth. Adjusted EBITDA was $83.4 million, up 29% year over year as we returned to positive comp and meaningful operating leverage. In the quarter, we had a $2 million insurance true-up, and PBA continued to operate at a worse-than-expected loss.

Food costs are a headwind that we will manage through in the upcoming year, while the previously mentioned amusements investments have turned positive, with amusements contribution outperforming the rest of the business in the quarter. We expect to achieve operating leverage around 50% in FY 2025, as we have comped the March 2023 managerial wage increases and one-time COVID costs. We found a good balance of investing in payroll and managing costs, with our same-store comp payroll flat year over year in the quarter, which is better than last quarter at -$4 million. Non-comp centers contributed $9 million of EBITDA on approximately $32 million of revenue. Raging Waves, our water park in Illinois, contributed $3.5 million of revenue and $2 million of EBITDA in June.

The week of July Fourth was a slow start to the year, and July Fourth falling on a Thursday this year, was Tuesday the prior year, and we have seen positive same-store comps since mid-July. In our press release today, we issued fiscal year 2025 guidance. While we are hearing concerns in the market of weakness in the consumer, we are not seeing signs of that, and at this point are guiding to total growth of mid-single digits to 10% in fiscal 2025. This includes a forecast of low to mid-single digit same-store sales comp. EBITDA margins will be 32%-34%. We spent $193 million in capital expenditures in FY 2024.

As we shift our focus to internal initiatives, we are paring back our capital expenditure plans for FY 2025, with a total CapEx spend expected to be $154 million. The breakdown includes growth CapEx of $50 million, new build CapEx of $45 million, maintenance of $44 million, and we plan to allocate $15 million of CapEx to rebranding Bowlero centers to Lucky Strike. We plan to continue to balance investing in our growth and rewarding our shareholders. We increased our revolver capacity the past few months to $335 million in anticipation of an increased M&A environment. Pro forma for those increases, our liquidity at the end of the close, $386 million, with nothing drawn on the revolver and $67 million of cash. Net debt was $1.1 billion, and the bank credit facility net leverage ratio was 2.6.

Thank you for your time, and we look forward to seeing you on the road in the coming months.

Operator (participant)

We will now begin our question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, press star one a second time. If you're called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many of your questions as possible, we ask that you please limit yourself to one question and one follow-up. Again, it is star one if you would like to join the queue, and your first question comes from the line of Steven Wieczynski with Stifel. Your line is open.

Steve Wieczynski (Analyst)

... Yeah. Hey, guys, good afternoon. So, Bobby, as we think about fiscal year twenty-five and your expectation for low to mid-single digit same-store sales comps, is there a way to help us think about, you know, maybe the cadence of how the quarters might look, or I should say, maybe how the quarters should play out? Just, I mean, just wanna make sure we're thinking about how, you know, the quarters could or should come together, and any headwinds or tailwinds that could impact those, you know, that low to mid-single digit outlook for the year. Thanks.

Lev Ekster (President)

Yeah, the only thing I would direct you to is New Year's does fall in the third quarter. And January last year was extremely weak from weather. So I would expect stronger relative performance in the third quarter, but generally, we're expecting positive comps throughout the year.

Steve Wieczynski (Analyst)

Okay. Thanks, Bobby. And then, Tom, maybe for you, maybe a little bit of a bigger picture question, but it seems like it's, you know, pretty clear that you've been pleased with the, you know, the acquisitions outside of the, you know, the bowling arena, so to speak. So, you know, I think, you know, kinda going through your press release and your presentation, it's pretty clear that the M&A environment still seems very, you know, very healthy at this point. Is there any way to help us think about, you know, as you kinda go down that M&A path, you know, will it be more allocated towards, you know, towards traditional bowling?

Or do you think that mix really starts to, you know, maybe shift a little bit more towards, you know, non-bowling amenities? Thanks.

Thomas Shannon (CEO)

We'll do every attractive bowling deal we can do, whether it's a new build or the acquisition of a center. You know, we're about to open four new centers in marquee locations. The pipeline for new builds is very strong after that, with about a dozen deals percolating, and these are much larger on average than the acquisitions, right? So the average acquisition we do has revenue in the $3 million range. The average center that we're opening now is, you know, $7.5-$8 million on average. So, even though we're not doing as many, the new builds are quite large in terms of their contribution. Similarly, we're very pleased with the results out of Raging Waves, and we're opportunistic, so we'll continue to look at every opportunity within location-based entertainment.

And we'll apply the same very tight deal stream that we always did with bowling. But yeah, we're casting a wider net now, but it's really dependent upon the deals and the returns that we're gonna get from the deals.

Steve Wieczynski (Analyst)

Okay, great. Thanks, guys. Appreciate it.

Thomas Shannon (CEO)

Okay, great. Thanks, guys. Appreciate it.

Lev Ekster (President)

Thanks, Steve.

Operator (participant)

And your next question comes from the line of Matthew Boss with J.P. Morgan. Your line is open.

Matthew Boss (Analyst)

Thanks, and congrats on the nice quarter. So, Tom, maybe could you speak or elaborate on the inflection in traffic and same-store sales that you saw as the fourth quarter progressed? And really, you know, what you've seen so far in the first quarter. And maybe taking a step back, just if you could walk through what you think is differentiating your experience rather relative to other parts of leisure in this economic backdrop.

Thomas Shannon (CEO)

Yeah. So I'll sort of answer that from a bigger picture perspective, and then I'll hand it off to Lev to talk about some of the tactical things that we've done. But look, bowling is a very good, enduring business. We've spent a lot of money to build really wonderful, excuse me, wonderful centers that are the best product available. They're easily accessible, they're in your community, and it's still a very good value. I think that the fundamentals of bowling get overlooked. Bowling is an absolutely fantastic business. We love it. We're committed to it. It's extremely high margin, and it's very resilient. When we started to comp down last year, realize that we were comping down off of unbelievably high results that came out of COVID.

So comping down off being up 40% in three years, you know, it's a comp down, but it was in no way a repudiation of the strength of bowling. Bowling is as strong as it's ever been. It's enduring. We have the best product, and most importantly, we have the best management team, I believe, in location-based entertainment. And so you take the fundamentals of bowling, you take the product that we've built, which is best-in-class, and you combine that with our data-driven, very results-oriented culture, and you end up with wide outperformance versus our peers. So let me turn it over to Lev to talk about some of the things we did specifically over the last few months to get to this result.

Lev Ekster (President)

As Tom mentioned, obviously, we do bowling incredibly well, and we continue to invest in our facilities. We wanna have the best bowling centers in every market that we're in, but we're not sitting on our hands, and these results don't happen by accident. You read that we launched a brand-new summer Season Pass this summer. We didn't launch it last summer at all. We didn't just relaunch a former pass, we totally revamped it. We removed all the complexity from the product. We made the value proposition to the consumer very, very clear, and we sold over $8.5 million worth of summer Season Passes. How do we know there was a clear value proposition? That pass was redeemed this summer 1.6 million times.

So our consumers got a great value for it, and as a result, our NPS score continues to climb, and I think we're starting to take market share. So, you know, we mentioned we were investing in our amusements business. That continues to improve. We're adding better games. We're maintaining our centers a lot better than other competitors. You're never gonna walk into one of our arcades and see half the games down or prizes not stocked. We're upgrading our redemption counters. We're launching locations now with a brand-new redemption store called Prize Vault. Our food and beverage menus are improving. We've released all new food and beverage menus across our traditional centers, all the way up to our premier centers, the Lucky Strikes, and we're starting to see growth there. We're investing in the food and beverage team to grow sales and just offer a better product there.

We're just upping our game across the enterprise, and I think you're starting to see that in the results. We've continued to see those results these first two periods of the fiscal, which are both positive. As Bobby mentioned, we expect to see that throughout the rest of the fiscal.

Matthew Boss (Analyst)

Great. And then maybe just a follow-up, Bobby. Any puts and takes to consider as it relates to EBITDA margin this year, embedded within the FY 2025 outlook? And just procurement and SG&A, any efficiencies that you've identified to support the bottom line?

Bobby Lavan (CFO)

You know, let's... We're always gonna be focused on costs, Matt, but we're not gonna, you know, be one of those companies that that's how we drive earnings growth. You know, from our perspective, you know, we have hired a procurement team. We like that. But really, you know, at the end of the day, you know, as the comp goes up, as the acquisitions roll through, and we continue to manage sort of, you know, the costs at the centers, that's where you'll see the earning leverage.

Operator (participant)

And your next question comes from the line of Randy Konik with Jefferies. Your line is open.

Randy Konik (Analyst)

Hey, thanks a lot. I guess Bobby, first for you, any thoughts on how we should be thinking about the low- to mid-single-digit comp as it relates to the first quarter? And I think you spoke about the near shift impacting the 2Q. Does that kind of mean that the 2Q comp should kind of fall without potentially outside the annual range for comp guidance? Just curious there. And then also on the guidance, does the annual guide include, or I guess exclude unannounced or include any M&A that you're thinking of in the guidance? Just thought there. Thanks.

Bobby Lavan (CFO)

It does not include M&A. It does include the new builds. So M&A would, you know, effectively could drive you to the higher end of sort of the guidance and above. From a cadence perspective, you know, I'd like to stay sort of in the low single digits, mid-single digits as we go through the year. You know, this quarter, we still have some time to go, but you know, I would stay in the low single digits to mid-single-digits range.

Randy Konik (Analyst)

All right. Super helpful. And then I guess, Lev, you gave some good perspective on the season pass success. Have you guys looked at, you know, what the lift was from food and beverage of season pass, kind of, redemption, people that visited on the pass versus those that visited not on the pass? Did you see an extra lift in food and beverage on those season pass attendees? And then, Tom, you know, you gave some good perspective on, you know, widening the net for potential M&A that could include a lot of different types of location-based entertainment. What would be probably helpful to us on the call is to give some perspective of what you don't want to look at from an entertainment perspective.

What types of businesses or areas of the entertainment economy are you not, you know, interested in or you don't think are particularly good businesses or business models? Thanks.

Lev Ekster (President)

So I'll just hit the first part of your question about the F&B, and I don't want it to be limited to that because I think the attachment across our amusements business is also significant, thanks to the pass and all of these visits. You heard that our amusements performance is now outpacing the other revenue lines, and I think it's because when we created this pass, we put focus around those segments. So with a premium pass, you were getting 15% off food and non-alcoholic beverage. You were also getting a $5 arcade reload during every visit. And as a pass holder, you were able to get, one time per visit, a discounted arcade card. And so again, we wanted to drive a lot of value to pass holders.

The amount of visits we got out of it was pretty obvious. Food and beverage sales were up. Now, it could be attributed to all the new menus that we mentioned. It could also be attributed to the visitation, but overall, I think the consumer is quite clearly telling us that they're loving the pass, they're loving the product that we're delivering to them when they come, and that's driven our decision to launch, for the first time ever, a fall season pass. We're being very selective during October, November, when you can use the pass. Right? We exclude peak times on Saturdays, so we don't want to cannibalize that traffic. But there's a lot of opportunity those months to fill in the centers, and we're really excited for the opportunity to launch that new product.

Thomas Shannon (CEO)

Yeah, just to complete the thought there, we did over $2.5 million in the neighborhood of $2.5 million of season pass sales at Raging Waves, despite only owning that property for about 40 days between close and season opening. I would expect next year that that number will be $3-$4 million in season pass. We're leaning really hard into the season pass because it there are a lot of attributes. One is enormous customer satisfaction and increased customer visitation, but it always it also insulates you from weather, right? So all these businesses have some weather dependency.

One of the advantages that we found from Raging Waves is that it was an excellent weather hedge to offset the effects of good weather in Chicago metro area, where we have nineteen bowling centers. The first day Raging Waves was supposed to open, it actually didn't open because of rain, and what we found is in the three districts that comprise the centers in the Chicago area, we were up about 90% same-store sales versus prior year. So excellent weather hedge. Of course, it reverses, right? Raging Waves had several days, over $350,000, which is an astonishing number for a single day revenue in a regional park. While at the same time, our bowling centers were very challenged because of the good weather. So, lots of exciting stuff going on there.

I think you asked the question, what wouldn't we look at? And I would say that the one thing that we're probably least excited about is things that are dining-centric, right? Restaurant-centric. We don't view the restaurant space particularly attractive. Selling food and beverage that are attached to bowling or a water park visit, for example, are great because those are ancillary and add-on. But, you're probably familiar with Pinstripes. Pinstripes is really a fine dining concept with a handful of lanes attached. I never thought that was a good business model. That is a great example of a business that we would never be interested in owning.

Lev Ekster (President)

Very helpful. Thanks, guys. Very helpful. Thanks, guys.

Operator (participant)

Your next question comes from the line of Jason Tilchen with Canaccord Genuity. Your line is open.

Jason Tilchen (Analyst)

Great. Good afternoon. Thanks for taking the question. I wanted to follow up on a comment from Bobby on, in regards to the CapEx allocation for this year, and particularly that last portion regarding the amount allocated for rebranding of Bowlero centers. Is there anything more you can share, in terms of the strategy to expand these to the Lucky Strike brand?

Bobby Lavan (CFO)

Yeah. So we're opening a flagship property in Beverly Hills, you know, in the next few months. So there'll be a lot more to come about, you know, our leaning into the brand and, you know, let's leave it at that.

Jason Tilchen (Analyst)

Okay, great. And then one more quick follow-up. In terms of the guidance for next year, is there anything you can talk about, in terms of the same store sales, the breakout we could sort of expect between traffic and pricing?

Bobby Lavan (CFO)

We're not assuming any pricing this year.

Jason Tilchen (Analyst)

Okay, great. Thank you.

Operator (participant)

Your next question comes from the line of Jeremy Hamblin with Craig-Hallum. Your line is open.

Jeremy Hamblin (Analyst)

Thanks. Congrats on the strong results, and I wanted to come back to the kind of the operating piece of the business. Your SG&A was a little over $40 million in the quarter, I think the highest that you've had. And you know, in terms of thinking about that, I think I caught in the prepared remarks a $2 million insurance true-up, which I'm assuming folds into there, but also just wanted to understand, you know, given the seasonality of Raging Waves, of how much that might have contributed into your SG&A.

Bobby Lavan (CFO)

Yeah, that. So that $40 million did not include anything for Raging Waves, but it did include $4 million of write-offs related to some abandoned software development costs, $4 million of deal costs, $4 million of D&A, and $4 million of share comp. So you'll see in our non-GAAP rec in our investor deck that, you know, we view SG&A as a $26 million cost. Next quarter, we will remove D&A from our corporate SG&A costs, so it will give a lot more clarity. This is just sort of the end of the gross profit income statement, so you'll have a lot more four-wall going forward.

Thomas Shannon (CEO)

Got it. And then I wanted to come back to the comment just made in here on pricing and in terms of, you know, what you're expecting from or what your consumer maybe is expecting, as well. You know, obviously, you're having tremendous success here with the season passes, and that's a driver to get, you know, foot traffic in the door. You are seeing a bit of price competition from other, you know, entertainment businesses, but, you know, wanted to get a sense for, you know, how you felt like you needed to operate your pricing models, you know, particularly your weekend pricing models.

Jeremy Hamblin (Analyst)

... and whether or not you feel like, you know, you need to dip into more of the kind of promos, to drive traffic outside of just the season passes?

Bobby Lavan (CFO)

Yeah. So one thing to be clear, the season pass you can't use on a Saturday, right? So, you know, we're. We don't need to discount or promote Saturday. The season pass is, you know, is great when school is out. We extended the hours of our centers so we could sell more F&B. You know, really, the focus is gonna be getting people into the center and then selling them more food, right? We've talked about this a lot, and, you know, we've actually got proof in our first kitchen that has the upgraded menu, and I'll hand that over to Lev to kind of jump into.

Lev Ekster (President)

The blueprint that I think triggered this focus on food and beverage is obviously the acquisition of Lucky Strike and seeing what's possible. Their food and beverage attachment was multiples higher than ours. And when we launched Lucky Strike Miami, the menu that we built there, in terms of the innovation from the mixology, right, the cocktails that we were making there, a menu that was featuring craft pizzas and street tacos and bao buns and seasonal salads and bowls. So now we're looking at the results there, and we're seeing, you know, nearly $3.40 food and beverage spend for every dollar bowling. And again, that's much, much higher than we've ever seen. So we've used that as an inspiration to launch revamped menus across all of our centers. We went down to the traditional centers.

They got all-new menus, all the way up to the Lucky Strike Premier centers, and now we're gonna be focused on our catering menu. So it's just given us, like, a sense of confidence that we're capable as an operator to run this type of food and beverage operation. And again, bowling is still king, but when you're visiting us for bowling, if we're offering you better food and beverage options, if we're offering you a better amusement option, the attachment's gonna continue to grow. I see a world where you're gonna show up to a Lucky Strike this year, and you're not gonna have any plans to go to dinner before or afterwards, where you're gonna find us to be a great option for that. That's what we're driving towards. And, you know, early indications are super encouraging.

Bobby Lavan (CFO)

Yeah, and I would just... You know, F&B revenue was up greater than bowling revenue this summer. So proof is in the pudding. We get people in the centers, and we sell them more food. The upside is significant.

Jeremy Hamblin (Analyst)

Great. Thanks for the color. Best wishes.

Operator (participant)

And your next question comes from the line of Eric Handler with Roth Capital. Your line is open.

Eric Handler (Analyst)

Good afternoon. Thanks for the questions. Bobby, can we talk a little bit about the gross margin? So while same-center sales were up in the fourth quarter, implying volume was up, gross profit was down. As we look into fiscal twenty-five, how do we think about the direction for gross margin?

Bobby Lavan (CFO)

Yeah. So as you know, we've talked a lot about this issue. Our legacy reporting standards date back to the acquisition of AMF, where AMF also had a manufacturing business. We're not gonna be reporting gross margins starting in the first quarter. So I really look at four wall. The depreciation amortization that came in from Lucky Strike is what the drag on the gross margin. If you look ex D&A, you know, gross margin was up two hundred basis points. So it's just something that is a legacy standard. You can't really change it in your K, but we are changing it in our two going forward.

Eric Handler (Analyst)

Got it. Okay. And then you did sort of dance around, you know, how first quarter was going so far. Wonder if you could just talk about, you know, what you saw in July and August?

Thomas Shannon (CEO)

I don't think we've danced around it at all. We are positive on a same-store basis through the first two periods of the fiscal year, and we're seeing expanding operating margins.

Eric Handler (Analyst)

Okay, fair enough. Thanks, Tom.

Operator (participant)

Your next question comes from the line of Michael Kupinski with Noble Capital Markets. Your line is open.

Michael Kupinski (Analyst)

Thank you, and thank you for taking the questions, and congratulations on a solid quarter. A couple questions. I kind of want to go back to the same-store revenue growth. Obviously showed a nice acceleration from the Q3. I was wondering, can you maybe give a little bit more color on what you're seeing that is allowing it to grow so nicely in spite of the macroeconomic trends that are hurting other discretionary consumer businesses? And it seems like you're introducing higher-end food items and so forth. Are you seeing any differences in consumer spending patterns? I'm just wondering if you're moving up the demographic towards higher-income consumers. Just kind of giving a flavor of what, you know, what you're seeing that is allowing you to kind of grow so nicely.

Thomas Shannon (CEO)

This is Tom. If you look at where our centers are located geographically and then really how those centers perform relative to other centers, we are very overweighted from a revenue standpoint towards the higher end consumer. So, you know, our highest grossing centers are in Bellevue, Washington, our two locations in Manhattan, Tysons Corner, Virginia, now in Miami. You know, we're these are all A markets. The average household income is probably well in excess of a hundred and fifty thousand or maybe even two hundred thousand dollars. So we're overweighted to the higher end customer. Where we're particularly strong is in our events business, where through some really good revamps of our online booking platform, we've dramatically increased online bookings for reservations very close to the time or date of the desired party.

So we went from, in the past, we weren't able to book parties within three days of a given date. Now, you know, that's down to, what, three hours? Two hours, right? So through technological and operational refinements, we've made it much easier for the guests to buy, particularly spur of the moment, and that's had a very meaningful effect on our event business. We're seeing the larger event business remain strong, continue to grow. We have excellent sales leadership. Our head of sales and the team he has below him is really superb. No doubt, they're the best in class by far, and we'll do... Bobby, do you recall what we did in event sales?

Bobby Lavan (CFO)

We're up, total?

Thomas Shannon (CEO)

Yeah. What was the number?

Bobby Lavan (CFO)

Two seventy-five.

Thomas Shannon (CEO)

$275 million of event sales in the last fiscal year. That number will certainly be over $300 million in this fiscal year. So we're seeing strong retail events. We're seeing strong corporate events, and then we're also really focused on offering value to the value-oriented customer when they want it. So the season pass going from a zero last year to $8.5 million certainly added to... $8.5 million is a lot of money in our slowest revenue periods, so it made a meaningful difference. Also, things like Groupon, where the number was $17.4 million, I believe, last year. Conditions very favorable to us, so we have a disproportionately large hold from Groupon. We also restrict use to off-peak times, so we don't squeeze out any full price revenue.

So it's, it's a lot of things. It's a lot of operational nuances, and getting full price when we can and discounting when we need to. I think we're continuing to refine our model, and we're just getting better and better at that. And then, going back to something I said earlier, don't discount the quality of our product. You know, we've spent a lot of time and effort and money to build really spectacular facilities, and if you come and visit some of these, which I would encourage you to do, in Miami, the new one in Beverly Hills, we're about to open Tysons Corner, any of these that we've built new, I mean, it's almost like Vegas in your community, that level of glitz and glamour. So you put it all together and we've got a winning model.

Michael Kupinski (Analyst)

Gotcha. That was very helpful. I appreciate that. I do have one more question. I know that it's a relatively small acquisition, Raging Waves, but, I believe that there was a relatively mild summer in Illinois. I lived there during the summer, so, except for the past few weeks. Can you-- and I'm kind of surprised that you had such strong growth. I was wondering, can you kind of give us a little flavor of what drove the growth? Or was it, you know, the, the increase in gas price increases, or were you able to implement some of the revenue initiatives that you had planned, or are those still on the, on the dock?

Thomas Shannon (CEO)

Great question. It was mild. It was surprisingly cool this summer in Chicago, which definitely hurt us, which makes me feel very excited about what might happen next year. Combination of factors, we leaned really hard into season pass sales, which were up significantly over year, drove attendance, which was up more than 10%, revenue more than 10%. Maybe it'll shake out in closer to 15%. It's too early to know, and frankly, we still have one more weekend to go. And then we got a liquor license, which we put into effect, where we'll sell beers from about the middle of the season on, which had a beneficial effect. It wasn't a game changer, 'cause again, it was only for a partial period, but definitely increased food and beverage sales.

You know, things that didn't happen was that we didn't fold the event booking process into our existing Chicago-based sales force, which is quite large and quite capable. We think there's $500,000-$1 million of upside from events, whether it's birthday parties, corporate, you know, team building, family stuff. We're actually gonna be building a dedicated area within the park to really facilitate those sorts of events. I think that really summarizes most of it, but we, you know, we paid $49 million for that park. Figure it'll do $7 million of EBITDA this year, give or take. I think the upside in that park is, in the next year or two, it could get to $10 million of EBITDA, and I think that ultimately the number could be meaningfully higher. I mean, it's 60 acres, but 13 are undeveloped.

13 acres of expansion capacity allows you to go from sort of an in-park-

Bobby Lavan (CFO)

... comfortable capacity of five to six thousand people on a peak day to eight or nine thousand. Which makes a huge difference because, as you said, when you have a mild season, there are gonna be days that are disproportionately busy, and it's really important to be able to capture as much revenue as you possibly can in those days. And so, we're doing some tweaks to expand the park capacity, but longer term, we also have the ability to meaningful increase the capacity of the park on land that we already own, that's adjacent to the existing facility.

Michael Kupinski (Analyst)

Well done. That's all I have. Thank you.

Bobby Lavan (CFO)

Thank you.

Operator (participant)

And your next question comes from the line of Eric Wold with B. Riley Securities. Your line is open.

Eric Wold (Analyst)

Thank you. Good afternoon. A couple questions. I just wanna go back, Bobby, on to the same sort of sales question. I know that, you know, in the guidance for this year, you noted an expectation of not taking price or obviously driving, you know, more food and beverage uplift. Maybe ask a different way, within the same sort of sales guidance, you know, how much is attendance and how much is, you know, per person spend? And then if you're not taking price, at least not planning on taking price right now, what do you say is kind of the biggest drivers in helping you offset, you know, any input or labor cost inflation that may arise?

Bobby Lavan (CFO)

Yeah, so there's event growth. So event, you know, comes in at least 20% higher per cap than retail walk-in, and in a lot of centers, the bigger centers, it's 50% plus on a per cap basis. So as we do more events, you know, it, the check size goes up. Secondarily, you know, we've spent a lot of time talking about it. You know, our online business is killing it. You know, it's up 30%-40%. It continues to get better. The new website has rolled out. A lot of different technologies are being used, and the website drives, you know, wallet share and drives ticket price up. So ultimately, it's not, we don't need to go and raise the price of the bowling, right?

We're moving up sort of the value chain as we get wallet share, and then, you know, the big initiative that we talked about that we're seeing, you know, early green shoots is the F&B attachment.

Eric Wold (Analyst)

Got it. And then, you know, does that all play into... Obviously, those are all great in terms of driving, you know, per person spend, but if you start seeing some cost inflation, you know, would you offset that with price, or you think you have other levers to play where you don't have to do that?

Bobby Lavan (CFO)

We have other levers to play. You know, I've been very focused on kind of rebuilding, sort of procurement, rebuilding systems, and so when you look at every dollar, you know, you can figure it out.

Eric Wold (Analyst)

Perfect. Thanks, Bobby.

Operator (participant)

And your final question comes from the line of Daniel Moore with CJS Securities. Your line is open.

Daniel Moore (Analyst)

Thank you for all the color. Just I think most have been asked or answered, but just in terms of the balance sheet and free cash, obviously you've got very healthy liquidity. Is there a range of M&A you're targeting this year? And based on the EBITDA guide, what are your expectations for working capital and any thoughts around kind of a free cash flow range for fiscal 2025? Thanks again.

Bobby Lavan (CFO)

Yeah, working capital is gonna continue to come in as we just try to turn product faster. But it's, you know, working capital has never been that meaningful part of our business. From an M&A perspective, the range is wide, because there's a lot out there to do. You know, that's, you know, we've quietly been raising our revolver capacity. You know, we added $100 million in the past few months. So, you know, we're expecting, you know, that there's an opportunity out there, but the M&A environment is very active. And so, you know, we'll announce deals as we get them done, and it will be, you know, that kind of trajectory.

So I know that's difficult for you guys to model, but I think it's better for us to, you know, surprise to the upside if we get more M&A done.