Luckin Coffee Inc

There will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the call over to Bobby Laban, CFO of Lucky Strike Entertainment. Please go ahead.

Good morning to everyone on the call. This is Bobby Laban, Lucky Strike's Chief Financial Officer. Welcome to our conference call to discuss Lucky Strike's second quarter 2025 earnings. Today, we issued a press release announcing our financial results for the period ended December 29th, 2024. A copy of the press release is available in the investor relations section of our website. Joining me on the call today are Thomas Shannon, our founder and chief executive, and Lev Ekster, our president. I'd like to remind you that during today's conference call, we may make certain forward-looking statements about the company's performance. Such forward-looking statements are not guarantees of future performance, and therefore one should not place undue reliance on them. Forward-looking statements are also subject to inherent risks and uncertainties 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 Securities and Exchange Commission. But Detroit Entertainment undertakes no obligation to revise or update any forward-looking statements, reflect events, or circumstances that occur after today's call. Also, during today's call, the company may discuss certain non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measures most directly comparable to each non-GAAP financial measure discussed in the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on the company's website. I'll now turn the call over to Tom.

Good morning and thank you for joining us today. I am Thomas Shannon, founder and CEO of Lucky Strike Entertainment. Last week, we celebrated our 28th anniversary, beginning with one bowling alley in Union Square, New York, and undergoing a few name changes along the way. Lucky Strike Entertainment reflects our commitments to being a world class entertainment platform. Our company has navigated through turmoil and disruption on multiple occasions. We were the closest bowling center to ground zero on 9-11. Half of our events revenue disappeared during the great financial crisis. 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. Six months ago, we reported double-digit growth and mid-single-digit same-store sales while our peers were down by double digits. However, this most recent quarter came with heightened macroeconomic uncertainty. We began the quarter with the corporate events business on hold due to concerns over the election outcome. Compounding this, Thanksgiving fell a week later this year, shortening the critical corporate events holiday schedule by about a third. And finally, New Year's Eve fell in our next quarter versus being in the second quarter last year. Our sticky league business continues to grow and retail walk-in customer traffic has been steady, despite headlines of the weak consumer. So how did we respond to all of this noise? 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. We tightened capital expenditures, driving down spending by 33% year-over-year in this quarter. Boomers and our two water parks received new offerings that will help improve our earnings this coming summer. We're investing in incremental marketing channels and improving our corporate events operating structure to bring in new business. We leaned into improving food attachment with our new menu, implementing a selling culture among the staff, and adding technologies in-center to drive efficiencies and wallet share. We rolled out dynamic pricing and added hot new games for our arcade business. Food and amusements grew faster than the rest of our business lines. Despite top line pressure, the underlying performance of the different business lines gives me confidence in our long-term operating leverage. And the core product we have built is better than ever. During this quarter, we opened four new Lucky Strike centers, two in Denver, one in Beverly Hills, and one in Ladero Ranch, California. Lucky Strike Beverly Hills and Lucky Strike Ladera Ranch each generated over $1 million in revenue within their first 30 days of operation, a new record. You can view these four new properties images in our investor deck and I encourage you to do so. They represent an evolution of our best in class product that underscores our position as visionaries and leaders in consumer entertainment. 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 will end the year near 75. 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. Thank you for your support. I will now turn it over to Lev Ekster.

Lev Ekster Thanks, Tom. As Tom described, there was a lot of noise this past quarter due to calendar shifts and macroeconomic uncertainty, which especially affected our corporate events business. But our job as 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. As you know, we launched the new retail SMB menu last quarter, which has been well received by our customers. Our KPI, of food and beverage revenue attachment to bowling revenue grew to 80 cents, up from 76 cents the year prior. We continue to lean into our improved F&B offerings at our locations to drive increased average check size and guest satisfaction. Our net promoter score was 74.25, up from 72 the year prior. We saw improved scores driven by the enhanced food experience as we rolled out the new food menu to our retail business. A new menu is now being introduced into our events business across all locations by the spring, the first change to the events menu in 10 years. We expect this new menu to reinvigorate this channel and drive uptake the next few quarters. In the quarter, we also rolled out handheld tablets for our servers. It is still early days, but we've already noticed signs of efficiencies from the technology as seen in our payroll benefits costs being down 9% year over year. The tablets should allow our servers to cover more lanes and grow check averages through upsell prompts. Lastly, the team was focused on decreasing the EBITDA loss we've been running at the PBA and managed to cut that in half going into this newly launched season. We expect these results to continue to improve as we work closely with the newly hired UTA agency to bring on new sponsors. Now let me hand it over to Bobby to review the quarter's financial performance. Bobby?

Thanks, Les. In the second quarter of 2025, we 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. Our total revenue growth was minus 1.8%, and same-store comp was minus 6.2%. The quarter had one less week of holiday events due to the late Thanksgiving year-over-year, and New Year's pushed into the third quarter. The quarter had one less week of holiday events, and that push was about a 300 basis point headwind for the quarter. Our retail business was flat, lead business up small single digits, and events business down mid-single digits in the quarter. Adjusted EBITDA was $98.8 million. We right-sized costs in the quarter to reflect the uncertain macro environment and solve tailwinds from labor, F&B costs, and repairs and maintenance. Main store sales were a $19 million drag that would float to the bottom line. We limited negative operating leverage through cost efficiencies, and we expect to maintain those cost levels as revenue improves driving operating leverage. We earned $3 million of EBITDA from new centers, and boomers and raging waves were a $2 million drag in the quarter. The investments we are making in boomers and raging waves more than doubles our total addressable market and smooths out seasonality of our business. Raging waves generated $9 million of EBITDA from June to August last summer, and boomers should generate similar to that over this summer. We have seen and 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 to the second week of January was offset by wildfires in LA. In addition, January, February, and March are very important months for our business. 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 raging waves. 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, as we reiterated in our earnings release this morning. In the quarter, we spent $53 million in capital expenditures. Gross CapEx was $19 million, new build CapEx was $8 million, and maintenance was $12 million. We spent $9 million purchasing incremental land at Raging Waves that flows through the capital expenditures line. CapEx is down $30 million year-to-date from the previous year. Our liquidity at the end of the quarter was $397 million, with nothing drawn on a revolver and $81 million of cash. Net debt was $1.2 billion, and bank credit facility net leverage ratio was 2.9 times. Thank you for your time, and we look forward to seeing you at one of our new facilities in the coming months. Operator, can we now open the line up to questions?

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. We'll pause for just a moment to compile the Q&A roster. And your first question comes from the line of Pat Hugh Boss with JP Morgan.

Please go ahead. Hey, you've got Zach on for Matt. Tom or Bobby, to start, can you maybe elaborate on the heightened macroeconomic uncertainty you cited and maybe just discuss what you're seeing at walk-in retail versus corporate events and any lead indicators of historical demand you're focused on today?

I'll take this. This is Les. So, Zach, I think everyone with this scene was playing out in the macroeconomic uncertainty environment right now. When you look at the political environment, there's just a lot of uncertainty. And I think the trade down with the consumer is real right now. The consumer is kind of in this wait and see mode. Some people are holding up. They're not going to take that maybe European vacation. We likely will be the beneficiary of that trade down. But you also see that trade down in the flight from premium alcohol, for example. And so when you look at our results, food performed really well, but there's definitely some detachment with alcohol. Alcohol sales didn't perform as well as our food sales did. And we're seeing the consumer just elect to not make that premium alcohol purchase. In response to that, the team's working on various promotions to drive more foot traffic and night-night business to counteract that. I think there's a flight to value right now, and we plan to be the beneficiaries of that.

Just to add to that, you know, offline events, which is really kind of corporate events and office parties, which is a big driver in December. You know, in October, we saw a lot of sort of what I would say election uncertainty. When we got to December, while you know, people who had planned six months out, they had, you know, booked their parties. When we got to December, sort of the last minute parties, you know, they just, they didn't happen. You know, from our perspective, events are what we call offline events is, you know, 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 event side. But, you know, we've seen, you know, good retail traffic, particularly as sort of the trade down plays out.

Got it. I appreciate it. And then maybe just as a follow up, kind of following the latest pricing increase you cited last quarter with the new F&B menus, I was just wondering if you can 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 thanks yes yeah i mean traffic was you know was really the comp that was on the event side versus the retail side traffic was was flat um ultimately the price increases were offset by detachment on the alcohol side so we're seeing f and b up We're seeing traffic sort of, you know, 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, like, weighed on the comp.

Thanks, Zach. Operator? Your next question comes from the line of Stephen Wikinski with Stifel Financial Corp. Stephen, please go ahead.

Hey, guys. Good morning. So, Bobby, just kind of staying on that last topic there. I mean, as we think about the next two quarters, how should we be thinking about same-store sales to kind of get you guys into your guidance range? And 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 there's some headwinds as well, whether that's the economy or California giving the fires. Not sure if you're seeing an impact there. Just You know, 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, you're looking at your guidance range. I think you said the word cautiously and just trying to understand, you know, a little bit more what that means.

Yeah. So let's talk about the fires for a second. So the fires were sort of a $5 million hit. You know, the direct fire impact, was we had three centers that were down for a while, but generally we saw a significant pullback in corporate events in January. So January is gonna be small down. We expect sort of the rest of the year to be off, but we're cautious on that. So from our perspective, we can make our guide on EBITDA because we've effectively managed payroll costs, which is our single biggest cost. We've spent $300 million. The revenue is going to continue to be a little uncertain, but ultimately that events business becomes less important as we go throughout the year. And then you get into the summer month and we'll have a revised summer pass, an optimized summer pass. We're going to have Boomers, which boomers in the second quarter did about $6 million in revenue. In the fourth quarter, it does $15 million plus. We got raging waves, which were expanding their season. And so managing through sort of this macro uncertainty on the revenue, we're going to be a little bit more cautious. Our ability to sort of hit our EBITDA targets is something we feel a lot more

Okay. Gotcha. Thanks for that, Bobby. And then, you know, Tom, maybe a question for you and a little bit of a bigger picture question, but I mean, we continue to get asked, you know, by investors, you know, what makes Lucky Strike different than, you know, other entertainment options. And what I mean by that is obviously the Dave and Buster's, the top golfs of the world are, you know, are struggling. And it seems, you know, you guys are just going to continuously get lumped, you know, get lumped in with them, whether that's fair, whether that's not fair. So, 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?

I'll take that. This is Love. So Lucky Strike Entertainment is just a very special concept. We don't even consider it to be exactly the same as our Valero concept. So right now, as we mentioned, we're actively working to convert Valero locations to Lucky Strikes. We've done four in the last four weeks with one additional this week. When we convert these locations, it's not just a sign change. This is a training for the staff. It's a totally different level of hospitality. In some cases in cold weather environments, you're going to find code check to be included with your experience. We've never offered that before. The menus are completely different, as you know. The training of how to sell the menu is completely different. The design of the interiors is getting revamped. And when you look at a property like Beverly Hills that we opened last month in early December, that property only has 22 lanes. It did a million dollars in revenue its first month. And if you think about those kind of results, you can only achieve that with a special property. And by the way, we opened Ladera Ranch a week and a half later, also did a million dollars in its first month. So what I would invite the investment community to do is visit some of these properties, see it for yourself, walk the spaces, look at the environments that we've created from the decor to the layouts to our game rooms. I'm very closely tied to the amusement business, very passionate about it, our company. I think we do amusements better than anyone in the business. We started as a bowling company. Bowling still came for us. But I think today we do amusements better than anyone. When you visit some of our redemption stores in these locations, at Ladera Ranch, at Beverly Hills, at the old field that we recently opened called the Prize Hall, it's stunning. And I think the product speaks for itself. I think the results speak for themselves as well. That's good color.

Appreciate it. Thanks, guys.

Thanks.

Your next question comes from the line of Jason Fulshan with Canaccord Genuity. Jason, please go ahead.

Yeah, good morning and thanks for taking the questions. And I guess just following up on one of the comments Lev just made, you talked about how industry branding, it's not just sort of changing the signs, but also some of those other improvements. In terms of sort of where you guys stand in the overall portfolio and refreshing centers and 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 and that marker that you put out of 75 centers that will be under the Lucky Strike brand at the end of this fiscal year. Thanks.

Yeah, so the rebrand process has started. We've changed spaces. the masthead of Mar Vista, San Marcos, Atlantic Station, and Houston. And we're going to get a few done a week starting now. The internal part of the change is happening as well. So changing the masthead, my history always gets you kind of like a 10%, 15% bump in retail traffic year one. The question is, how do you make And so maintain it means that we've got cold checks and cold weather geos, we've upgraded the amusements, we've upgraded the food, we've upgraded, we go from paper boats to China dishes. There's a lot of different elements to just improving the experience and that is happening. And ultimately, I think that this is going to be a big tailwind for the business in that, you know, if you look at Chelsea Pier, Times Square, these are two beautiful bowling centers, two biggest bowling centers in the world. And they haven't really been that refreshed yet. in 10 years. So the world where we rebrand them Lucky Strike, we add that code check, we upgrade the amusement, we upgrade the plateware, we upgrade the food, it's just going to bring it to a different level. And this goes to Steve's question is, what is the differentiator between us and some of our competitors? And we are a premium product. People, when they walk into a Lucky Strike, they have an amazing experience. Do they pay a little extra? Sure. But it's a premium experience, and ultimately, people want to come back, and we're building a brand that people can really get by.

I just want to build on the question that you asked, which was, I think the volume of these conversions, and I think we've really perfected the process of these over these first four. We're doing one, as I mentioned, this week as well. So the team has gotten 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 into the summer months when we have a little bit more availability in the locations to make these conversions. So I think that 75 figure is very realistic. What's also really interesting when Bobby talks about the tailwind this provides, as that number of workees increases, you know, this week we'll be at 23. As that volume of locations increases, it's also going to open up the opportunity for us to invest more marketing dollars, right, because we can spread that around more locations. And we haven't really done meaningful brand awareness, brand building marketing for the Lucky Strike brand. But with 50, 75, 100 of these locations, we can really invest into that now.

Great. That's really helpful review there. Just one other follow-up. I think in the prepared remarks, it might have been Bobby who mentioned you're working on improving the corporate event operating structure. I'm just wondering if there's anything else you can share in terms of those plans.

I know a lot to come, but you know, we really want to focus on a lot of food tapings. So, you know, if you go back to sort of the, you know, the ethos of the business, you know, Tom built in 1997 with Bulmore is we had these beautiful events, we had these beautiful food and people, you know, we would have parties. where, you know, all the event coordinators in the market would kind of come in, you know, we let them bowl, we let them play arcade, and we would, you know, serve them this, you know, premium food product. That really stopped with COVID. You know, we really, you know, stopped really engaging sort of the customers in selling them the product. And I think that that's something we're going to bring back, you know, pretty quickly with the way that our F&B portfolio has really been upgraded in the past few years, is you're going to see a lot of sort of pop-up events where we invite in sort of all the sales coordinators or the event coordinators of different companies in their markets and say, isn't this a great product? Why don't you come in and bring it to our office? And that's something that really was lost with COVID. And when we talk about of the lingering effects of COVID, I think that selling part of the business is something we really want to lean into.

Thanks very much. And your next question comes from the line of Michael Kopinski with Noble Capital Market. Please go ahead.

Thank you, and thanks for taking my questions. I just have a couple quick ones here. I just wanted to see if you can add a little bit more color on the margins in the second half. Seasonally, you have better margins in the back half. You're turning a little lower than I expected the first half. Can you talk a little bit about where that margin pickup might be coming from? Maybe gauges, whether it's boomers and raging waves or how much is going to come from the shift in New Year's Eve in the quarter? And are there other dynamics of play in the third quarter and the second half?

Yeah, 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, you know, in the comp, we had $10 million of payroll costs down. That's sort of your single biggest driver. F&B, we did change over our food provider, our food partner on October 1, so we saw a few million dollars of F&B savings in the quarter on the comp. you're going to see that play through the third and the fourth quarter. You know, additionally, in the third quarter, you know, you'll see, you know, a $55, $65 million list over the second quarter. And so, there's just a lot of incremental operating leverage that happens in the third quarter. And that is something that's, you know, 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 $15 million of revenue and $5 million of EBITDA. Ultimately, that negative operating leverage that we're going to have in the second and third quarter as we invest in more of these summer businesses will get pushed into the fourth and first quarter.

Gotcha. Thanks for the color. And then How much of your food and beverage is coming from the sale of alcohol and premium liquors? I know that liquor sales industry-wide are down 7%, 8%. And whether that be from macroeconomic issues or simply that consumers are shifting beverage patterns possibly due to healthcare risk. I was just wondering, I know that the younger demographic is moving to like mocktails. 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?

Yeah, so just to clarify, alcohol did still outperform bowling. And overall, food outperformed. It was just that, excuse me, S&B outperforming food was just way more pronounced. And I think that has a lot to do with the new menu, the new focus on selling the new menu. I think the guest reception to the new menu across our properties has been phenomenal. You know, I mentioned our MTS score was up. I think that's correlated to that as well, you know, going from 72 to 74. But I don't know if it's a permanent shift. away from premium alcohol, we did notice that alcohol lag compared to food. Now, fortunately, we also offer mock sales at our locations and we'll continue to lead into that. But again, we're not gonna sit on our hands and try to find out if it's permanent or not. So I mentioned the team is gonna be launching food and beverage promotions later this quarter, and it's gonna have a focus on driving that stronger nighttime traffic with these value-led offerings. So until the consumer comes back and chooses to upgrade their beverage choices, we're going to lean into promotions and traffic-generating activities to see if we can drive alcohol sales as strongly as we've been able to do with our food.

We historically have not really done happy hours. There's obviously one competitor in the market who has, or one restaurant competitor in the market that has done exceptionally well. And that was really through, you know, a lot of marketing and a lot of sort of specials. You know, we think that our locations are, you know, very primed for that. It's something we've historically not done. And, you know, getting that traffic in 4 to 6 p.m. for happy hour, it's going to be incremental for the business.

Great. Thank you. That's all I have.

And your next question comes from the line of Mike Schwartz with Truvit Securities. Mike, please go ahead.

Hey, good morning. Bobby, maybe just touch on some of the labor efficiencies. I'm just trying to understand maybe the mechanism by which you're deriving that. And 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 comps?

So, great question. So, huge initiative that has been, you know, sort of a core partnership between myself and Lev in that we really want to optimize payroll in the And so using data, we looked at historically what the company did was post-September, when leagues floored, we ramped up staffing into the holidays. And so it's like staffing went from September into December in a straight line. And the business wasn't really there to justify it in the September, October time frame. And so we slowed that down. Now, some inside baseball, have we probably cut a little too much of the F&B revenue-facing labor? Yes, but we think that there's some opportunity to continue to optimize. We found that we're relying a little bit too much on the kiosk midweek versus having that server when you've got a league that's on 40, 50 lanes. like a server can, you know, really justify itself. But this is sort of a lot of the tinkering that, you know, Tom talks about in that, you know, we're tinkering with our labor. You know, we think that, you know, it was good before we're making it better. And ultimately we're going to optimize labor in every center by hour, by day, based on, you know, very defined revenue forecasts. And so ultimately if adding labor is accretive, we'll do it. If removing labor is accretive, we'll do it. And Lev was really the leader of this, so why don't you give some comments?

Yeah, look, I think we've proven that we can operate efficiently during a time when we have to. But like everything else with this company, we're going to continue to fine-tune and add it 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 that historically maybe covered four lanes, now they can cover maybe eight to ten lanes and do it more effectively and get food into the kitchen faster and still provide better guest service and also increase their check sizes because of the prompts on the tablets. So it's not just, you know, crude labor operating. It's also adding technology into the equation that will allow us to be more efficient with our labor.

Okay. And just a second question. And I know you guys aren't the poster children for tariff risks, but is there anything to think of just in terms of some of the, you know, the prizes or sourcing or anything of that nature, you know, where there might be some risk?

So we buy about 15 million of Amusements merch. Half of that is domestic, half of that's coming from China. So we have a million bucks of risk on Amusements merch. I think that as it relates to the global supply chain, there's probably a few more million from China tariffs. We don't have much exposure other than on input costs from Canada. Mexico, but really I'm more concerned about tariffs from like a consumer perspective. Right now, you know, we're seeing softness on events. We're seeing, you know, like flatness on consumers. And, you know, we're getting the benefit of the trade down on top of, you know, we're going to have this, you know, very optimized summer half coming. But, you know, tariffs really hit sort of that consumer sentiment. That's what keeps me up at night is that from a tariff perspective, not the onesies and twosies on inputs. Those are never great, but ultimately I am more concerned about what that would do from a macro perspective. Thanks, Bobby.

And your next question comes from the line of Eric Handler with Roth Capital. Eric, please go ahead.

Thank you. Good morning. I assume your corporate events staff has a database of all the people who have booked parties with you in the past. As they proactively talk to these corporates, you know, are they getting a sense, is this a permanent shift or is this something that, you know, the corporate's view is, hey, it's just a temporary situation?

It's a balance. So I would say they're Is corporate austerity, you know, going on out there? You know, when we look at sort of the IAFA data, you know, the IAFA data says that, you know, 60% of corporates are expecting, we're expecting the cut spend in the December quarter. And that's, you know, really what we saw. You know, ultimately, you know, like everything, you know, we're going to, We're going to optimize as much as we can, but it appears we're going to be optimizing from a lower level to go up. But we've worked through this in the past. As Tom said, we saw 50% of our events just disappeared during GFC. We're going to have to up our game. So it's nice that we really haven't done these F&B tastings. The menu is awesome. I would put our menu against any of our competitors any day. And ultimately, when we get those event coordinators at the big companies and they come in and they have to choose between us and one of our competitors, sure, maybe they're doing 20, 30% less business, but they'll give us more business. And that's something that we've proven in the past we can do. And it's just part of the consolidation that's coming out of COVID.

Okay. And then, Bobby, I know you're saying you're taking a more cautious view with revenue. As you look at the situation, do you still think that we're in a positive same-store comp environment for the year?

I think there's a lot of innings left in this game. You know, with February and March in front of me, it's hard to, you know, really project that at this point. But, again, you know, we'll come in, you know, flattish up, down a little bit. It's not going to be dramatic one way or the other. I think ultimately, though, our focus is we are going to be positive total growth and EBITDA will be up significantly this year.

Okay. And then one last question. So you bought some land next to Raging Waters.

I assume there's some expansion plans you have there. How fast Can you peddle there so that, you know, could this, whatever you're doing there, be ready for the upcoming summer season, or is that going to have to wait a year?

No, and we're in, that will be a two- to three-year project. We are expanding, you know, Raging Waves right now. Raging Waves, you know, has sort of a peak capacity of 6,000 to 7,000. You know, we're putting in some changes this year that should increase that a little bit. But also one of the big changes this year is we're building out an event pavilion. And so ultimately events is something that we haven't really done in size at Raging Waves. And 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 corporates and local schools and things like that. But in two years, you'll see us adding slides. As it relates to the incremental land, that's a two- to three-year project. Got it. Thank you so much.

And your next question comes from the line of Jeremy Hamblin with Craig Halem Capital Group. Jeremy, please go ahead.

Thanks. I wanted to follow up here just to make sure I understood kind of expectations on same-store sales trends. So it sounds like January was down maybe low single digit, you know, several puts and takes there. I think you said $5 million impact from the wildfires, which we would assume is maybe 400 basis points or so, maybe 500 of impact to total comp in the month. But in terms of thinking about, you know, the comment that you're going to expect to be flattish, you know, plus or minus a little bit here for the year, are you still thinking that the March quarter is a positive comp? You're lapping clearly a tougher compare in the June quarter, but just wanted to see expectations here for near term.

Yeah. I'm less focused on the comp. I mean, total growth in the third quarter will be up. You know, again, as we said, it's a little uncertain at this point. So, you know, we feel good about total growth, you know, particularly with Beverly Hills, with Arrow Ranch, Boomers. You know, we've got a few acquisitions that, you know, will come in in the quarter. And so ultimately, you know, we continue to be focused on total growth. But, you know, our confidence on total growth of the year is high.

Got it. 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 you're getting a 10% to 15% lift in the business when you complete those. Can you just walk us through the timing that it takes from kind of initial, you know, work on getting the remodels and the rebrandings done? How much... does that cost on average? How long does it take to complete?

So it really varies by location, by market. A component of that, as you can imagine, is the permitting that it takes or that it requires to change the exterior signage. Had it not been for that, we'd probably do these a lot faster. But that's usually the prerequisite. And then depending on the location, the size, the amount of punch points in the location, anywhere where you would see a bolero is changing. A lot of the elements, seating, the games, that stuff changes as well. So the cost really varies by location, as does the timing. And so, you know, we have our list of focused properties you know that list of 75 that we want to do this year and you just see almost like on a daily basis the locations changing order based on who's coming online faster so um what i also wanted to mention is what happens in parallel to these conversions is a full marketing plan so again it's not just the sign change it's everything that happens outside the location inside the location physically with the staff, with the hospitality, then there's also a full marketing support plan that piggybacks on all of these. And that plan also varies from a dollars perspective based on the location and what the revenue there is that we can justify investing marketing in.

Yeah, I would just add, you know, I think the thing that's the most exciting about the Lucky Strike rebrand is, you know, You know, we'll spend $10 million, $12 million this year on marketing. That is half of what the company spent pre-COVID. And, you know, we've directed a lot of dollars, performance marketing, online continued to crush it. And that is, you know, been proven to be, you know, a very good trade. But, you know, as these lucky strikes roll out, our ability to go spend you know, 50, 100 grand per center to reopen the property, that's how you get, you know, sort of that reintroduction to the event community, to the consumer community, to the birthday community. And so ultimately, we really view the rebrand as a North Star to kind of, you know, really bring the brand back out. and drive that reintroduction to the market that is something, frankly, we haven't done since pre-COVID.

Got it. Just one more from me. So you guys have talked about mobile ordering, improving speed, efficiency. I wanted to just get an update on where you stand in kind of completing the rollout of that. and, you know, kind of how it's measuring versus expectation.

So today we piloted successfully the handheld server tablets at 30 of our locations. We expect that to be at 100 by the end of the quarter. And it's not just rolling them out and leaving it there, right? Like every day there's learnings from the utilization of these tablets where we're speaking to the associates using them, we're adding modifiers, we're improving the flow on the tablets, we're improving the prompts, the functionality, the reception of these tablets. These are big buildings that you have to cover. And, you know, as I mentioned in the recording, these are 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'll be this year. And 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 hand instead of running back and forth to a POS station when they take orders. and sending that food into the kitchen faster, and getting hot food to the lanes faster, and giving their customer an opportunity to order on during their bowling session. So if we can improve the guest satisfaction, we're 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 drink, another app. All of this is going to really increase our F&B attachment, and that's really the name of the game for us.

Got it. Thanks for taking our questions. Best wishes.

Again, if you would like to ask a question, simply press star followed by the number one on your telephone keypad. Our next question comes from the line of Ian Sofino with Oppenheimer. Please go ahead.

Hi, great. Thank you very much. You know, I just want to drill down on the buyback kind of decision there. Maybe also, Bobby, can you give us a kind of a discussion about what cash flow is going to look like for the rest of the year? You know, how you're thinking about deploying that in buybacks versus leveraging or whatever else you want to do as far as acquisition. So any color you can kind of give there would be helpful. Thanks.

Yeah, we try to balance our buyback with cash generated from operations. You know, we are balancing, you know, these are sort of, you know, December to March, you know, we're generating, you know, 30 to 40 million of free cash flow a month. And so, you know, we tie sort of the buyback to that. You know, we're very focused on, you know, analyzing our different voids that exist, you know, on deployment of capital, you know, and right now, you know, the best investments for us effectively are M&A, rebrand, and buying back our stock. So, you know, those are sort of kind of the key initiatives. We'll continue to sort of deploy capital in that way. You know, ultimately, you know, deleveraging is sort of a core focus for mine, but deleveraging doesn't happen in a quarter. It happens over a few years. And that's something that I'm very committed to getting that, you know, least adjusted leverage below five times in the, you know, in the next 24 months.

Okay. So are we going to be free cash flow positive for the year backing out, you know, CapEx? Yeah. I'm just thinking about, okay, thank you. And then on the lucky side, or just the business in general, I know a lot of the effort and a lot of the focus recently has been on, I call it premiumizing some of the product, larger ones, one that's across the old FTX arena. How does that then square with, I guess, some of the trade down you're seeing or kind of lack of the premium purchases? You know, because it seems like you're kind of going in the opposite direction. So how are you kind of mitigating that? And how are you thinking about that, you know, from a business planning perspective going forward? Thanks.

When we say premium in terms of our food menu, we're not saying we're serving caviar and lobster on the menu. We're saying premium product in the sense of quality. So, you know, I mentioned there's a flight to value. When people see the menu and the quality of the product, better ingredients, better recipes, more trending items that the consumer is eating today, that's what we mean. We're not going to filet mignon. I think maybe it's just a matter of the linguistics. In terms of you order a well vodka or a Grey Goose, that's what we're seeing on the alcohol side, but not on the food side. And I don't think our menus are premium in that sense. It's premium in the sense that we're offering items that the consumer is eating today They're popular. The quality is much better. The presentation of the product is much better in terms of the plating, the plateware. The menus are much nicer. That's what we're talking about when we say we have a premium food product now.

Okay. Thank you very much.

There's no further question at this time. This concludes the meeting. Thank you all for joining. You may now disconnect.