Eric Wold: Got it. It’s helpful. And then last question, kind of a higher-level question. I guess there’s been a lot of focus on investments over the past year plus to drive traffic, including the current quarter or the last quarter, you talked about the investment in the PBA, amusements, obviously, you continue to focus on payroll. Did we get to a point where you feel you can take the foot off the gas of these investments and still be able to sustain any traffic gains? Or should we now think about maybe a longer-term need to spend at higher levels just to kind of get to that normal traffic and kind of expect maybe a longer-term lower margin as a result?
Bobby Lavan: Yeah. You’re going to see the investments come down. I think we probably overshot a little bit this quarter. The new website turns on June 2, the PBA renewal resets next year, and amusements, we continue to tinker, but we’re finding the right answer. But what I think you’re going to see is a meaningful step-up over the next 12 to 18 months of revenue from these other ancillary lines, whether it’s F&B, whether it’s PBA, whether it’s amusements. And so, you’ll see a very strong comp in the near-term and then we’ll get back to sort of a run rate mid-single digit comp. And those investments that are driving that big step up will normalize and come down, particularly website. I mean, websites, we were spending $200 per acquisition six, nine months ago. Now we’re spending less — significantly less than that. So you’re just seeing things coming down. And really, I would call 3Q ’24 as kind of the nadir of all that.
Eric Wold: That’s very helpful. Thanks, Bobby.
Operator: The next question comes from the line of Daniel Moore from CJS Securities. Please go ahead.
Daniel Moore: Thank you. Appreciate it. A lot of the stuff, a lot of the questions have been covered, but just clarifying guidance. Near the low end of the range, I assume that means likely to come in a little above or a little below. Should we think of that as the new midpoint? I know it’s semantics, but just trying to clarify.
Bobby Lavan: Yeah. It should come in at the low end of the range.
Daniel Moore: Okay.
Bobby Lavan: We’re always going to have a little bit of a range, right, but we feel comfortable with where we’re at.
Daniel Moore: Okay. And then just — I think you talked about it and certainly Tom talked about it. But just how the Raging Waves acquisition came about? And then, given this is obviously [indiscernible] and the new opportunity in a much bigger [TAM] (ph) or to expand the TAM, is it plan to operate it for a season or two before maybe expanding in that new vertical and see how things go? Just wondering about the cadence of how you’re thinking about that. Thank you, again.
Thomas Shannon: We have a partner who has a number of these assets and manages them, some of them for the owners, some of whom are very prominent, well-known businessmen. These guys are the best in the waterpark business, certainly on the regional level. So, if you think about the market, right, it’s everything below Six Flags, Cedar Fair, and SeaWorld, and there are a lot of them out there. And some of them are quite large and have a very wide moat, because as you can imagine, it’s very hard to build these assets now, costs are very high, zoning prohibitive, et cetera. So, these businesses we view as being very, very attractive businesses. This particular deal was brought to us by this company who would have financed it themselves and bought it themselves, but they found that the cap rates they were being offered in the sale leaseback market were higher than they wanted to pay.
And so, we made a great deal for both sides where they run it with an incentive structure and we own it. I think that the EBITDA can double from where we purchased it in the next couple of years. The park is beautiful. The infrastructure is first class. It’s well located. But there were a lot of things they weren’t doing that are sort of fundamental basics in the waterpark and amusement park business. I’ll give you one example. They didn’t sell alcohol. So, it can be a 95-degree day, and the park is packed with 8,000 people, which is about its capacity, and you can’t get a beer. So, simply adding that not only enhances the experience for the adults but gives you meaningful revenue and EBITDA upside. One of many examples. So, like the bowling business, largely mom-and-pop operated, older proprietors who are natural sellers at this point.
And so, the deal was brought to us. We jumped on it. We’ve already effectuated a lot of changes. For example, applying for a liquor license months in advance of closing the transaction, which occurred one week ago today. That location will open around Memorial Day, and we’ll have basically the entire season to evaluate how we like that business before any other potential transactions would come down the pike. So that’s a very long-winded way of saying, yes, we’re going to know exactly how this thing is performing and really know how well we like this business in very short order.
Daniel Moore: That is helpful. Thanks again.
Operator: The next question comes from the line of Randy Konik from Jefferies. Please go ahead.
Randy Konik: Hey. Thanks a lot. I guess first question. Bobby and Tom, how should we — just back on the bowling side of things, how should we be thinking about over the next few years, the split between buy versus build on the bowling center side? Just give us your updated thoughts on how you’re thinking about that part of the world?
Thomas Shannon: Well, the decision is in some ways made by the market. So, to the extent that you see more attractive deals on the buy side or the build side, you naturally allocate capital in those directions. There was a very long period of time where we didn’t see a lot of really good new build opportunities, either the location wasn’t good or the economics weren’t attractive. And over the last two years, that has changed. And so, we opened three new builds this fiscal year. We have four under construction currently in Beverly Hills, two in Denver, and one in Orange County, California, and about a dozen behind that working their way through the pipeline. So, what we’re seeing now is, on a relative basis, much more new build activity than acquisitions.
That said, we’ll acquire 21 or 22 existing bowling centers this fiscal year. So, it’s not like there was a dearth of that activity, but you definitely — we’re definitely seeing higher quality, more attractive new build opportunities now than we’ve seen historically. The good news is, is that the average unit volume of those new builds is significantly higher than the average unit volume of the typical acquisition. I say the typical acquisition because this year we bought the Lucky Strike chain, which had much higher average unit volumes than the typical centers we’ve seen. And by the way, is on pace, I think, to dramatically outperform our expectations and the market’s expectations. So, just to ballpark, through about six real months of our ownership, those assets are doing, ballpark, $12 million of EBITDA.
And you can annualize that to a number that will be in excess of $20 million in the first year against a $90 million purchase price. I think you could naturally extrapolate that out to eventually get to $25 million or $30 million of EBITDA against the $90 million purchase price with all of the CapEx that we used to enhance those properties generated out of the cash flow from those properties. So, it was a really, really good acquisition year because the Lucky Strike assets are phenomenal, extremely well located in major markets. And then, we got the brand for free. We love the brand. We’ve tested it, we had Nielsen test it, and the unaided awareness was 50% higher than it was for Bowlero. That’s why all the new centers we’re building, we’re building under the Lucky Strike brand.
So, it was a really, really good year for acquisitions, in large part because of Lucky Strike. But the aggregate number in the low 20s is a pretty good number for us historically. But over the near-term, you’re going to see a lot of the new development be new builds. But look, a year from now, we may find that there’s a whole new crop of existing centers to buy. So, we’re opportunistic. We deploy capital in the highest IRR opportunities first, and we’re not — we don’t limit ourselves to, at this point, strictly bowling. That’s why we were able to buy Mavrix and Octane in Scottsdale. That’ll do on order of $8 million of EBITDA in its first year against a $33.5 million purchase price. There’s a lot of really, really good stuff out there that I view as continuous to our business and very similar to our business in terms of how it operates and what the levers are.
And they’re all in our sweet spot.
Randy Konik: It’s super helpful. And shows you obviously know how to buy and build. So, I guess my last question would be more for Bobby. Look, we had the quarter. It’s printed. It’s now behind us. I think it’ll be very helpful to people listening to the call and trying to frame out more of a long-term focus here is, how do you think about kind of long-term EBITDA margins and where they should sit over the medium to long-term, and why they should be at those types of levels? That would be super helpful.
Bobby Lavan: Yeah. I think that based on what we’ve seen, particularly what we’ve engaged on over the past six months, we have a long runway of acquiring traffic very accretively, right? And so, ultimately, I think that we’ll start shifting into the higher end of the 32% to 34% range on an EBITDA margin going into 2025. But over the long-term, we should hold those levels as we find the optimal sort of CAC to LTV transaction, or what really gets customers to keep coming and coming more. And so ultimately, we will continue to invest. I expect a material step-up in EBITDA over the next sort of 12 to 18 months, and then we’ll grow from there as we continue to sort of invest, but invest where the EBITDA number is higher and the investments are lower as a percentage of EBITDA.
This is a very sort of transitory time in that we had a bad quarter, but we had a bad quarter from an investment perspective, we had a bad quarter, and that January was just a massive, massive drawdown. If it wasn’t for weather the first three weeks, this would be a very different conversation where we would have hit our numbers and continue to invest in the business. Now, we missed our numbers, but invested in the business. We’re not going to just stop investing in the business just because of some weather impact. But ultimately, I think that the next few quarters, you’re going to see significant operating leverage because we’ve invested in that traffic, and that traffic is coming in accretively.
Randy Konik: Super helpful. Thanks, guys.
Operator: The last question comes from the line of Michael Kupinski from Noble Capital Markets. Please go ahead.
Michael Kupinski: Thank you for taking my questions. Just a couple of follow-up. One, you make comments about the Lucky Strike brand. Is there a prospect for converting Bowlero locations into Lucky Strike?
Thomas Shannon: Oh, yeah. The plan is to convert nearly all or all of the Bowleros to Lucky Strike. We’ll eventually consolidate down to two bowling brands; Lucky Strike, which will be the experiential, and AMF, which will be the traditionals.
Michael Kupinski: Got you. Thank you.
Thomas Shannon: Yeah. And we’re building — sorry, go ahead.
Michael Kupinski: I’m sorry. Go ahead.
