Hollywood Bowl smashes profit expectations despite living costs crisis
Hollywood Bowl, the UK’s biggest tenpin bowling operator, has increased annual revenues and profits to well above pre-pandemic levels and believes its value entertainment will continue to appeal to families cutting back on household spending.
The company, which claims to be cheaper than its rivals, said the ability of a family of four to play for less than £22 would continue to make it attractive during the cost of living crisis.
“Although our customers are undoubtedly facing a number of challenges, I firmly believe that our great value for money offer will remain very attractive to families looking for high quality, affordable leisure experiences to enjoy together,” Stephen Burns, the chief executive of Hollywood Bowl, said.
The chain, which operates in the UK and Canada, said like-for-like revenues grew by more than 28% to £185m in the year to 30 September compared with the same period in 2019 before the coronavirus pandemic.
The UK, where it operates under the Hollywood Bowl and Puttstars brands, reported revenues of £178m in its latest financial year, compared with £72m in 2021 and £130m in 2019.
Annual profits, which the company said would exceed market expectations, were also up more than 40% compared with pre-pandemic levels. The company, which reintroduced its dividend this year, said its business was relatively insulated against soaring energy bills and inflation in its supply chain.
UK electricity costs are hedged until the end of 2024 and food and drink account for less than 10% of overall costs. The company has simplified its menus to minimise exposure to food and drink cost inflation.
Staff costs are equivalent to less than a fifth of total revenue and the workforce has benefited from the introduction of a new bonus scheme and received a cost-of-living payment totalling £1m.
Hollywood Bowl employs 2,200 staff in the UK and 200 in Canada. This is significantly more than the 1,787 staff the company employed at the end of September, according to its most recent publicly available annual report.
“Hollywood Bowl is our top pick in our UK leisure coverage,” Roberta Ciaccia, an analyst at Investec, said. “The company is extremely well-protected against rising food, labour and energy costs, a position of relative safety in UK leisure.”
Hollywood Bowl, which has £56m in cash on its balance sheet, intends to expand its business in the UK and Canada by about 50% to 110 sites in the coming years.
The company operates at 67 UK locations, including three centres that opened in Belfast, Birmingham and Harrow during financial year.
Two centres are due to open soon in Speke and Peterborough, with another 10 sites in the UK planned by the end of 2025.
In Canada, where Hollywood Bowl operates six sites, the company aims to open up to 10 centres over the next five years, and a further 20 sites over the next decade.
“We see a significant opportunity to grow our business to more than 110 centres,” Burns said. “Our strong balance sheet and cash generative business model, combined with our resilience to inflationary pressures, will allow us to capitalise on this organic and international growth potential.”