Eric Wold: Thanks, good morning. So, you mentioned a couple times about potential rebranding of some centers as Lucky Strike and leading into that brand. I guess first off, remind us what the plans are for the existing Lucky Strike centers you acquired in terms of how much needs to change either structurally, or operationally within those? And then what makes that determination on whether a new build or existing center would be switched over to Lucky Strike. And then what needs to happen if you do make that change in terms of within the center, is it really more of a name and branding around it?
Thomas Shannon : So, the Lucky Strike portfolio is kind of unique in that they have most of their centers are in really marquee locations. So, L.A. Live, Hollywood, — Bellevue, Washington, which is important tech center on right side of Seattle, Downtown Denver Downtown Chicago, Downtown Boston, Downtown Philly. So, it, it’s really an irreplaceable set of assets Now Lucky Strike has sort of been financially challenged for a long time and they haven’t had the reinvestment capital, so a lot of the properties are very tired. So, we’ve got a significant capital budget that we’ve allocated to refreshing the properties, but they’re in no way meaningfully impaired. They’re just tired-looking, so that’s an easy fix. We’ve done — we’ve hired Nielsen to do a brand study and they came back and said that the Lucky Strike brand was meaningfully more powerful than Bowlero.
And that was sort of our intuitive sense as well. And so, we’re going to open a couple of new centers under the Lucky Strike brand and sort of see how that goes. Now, it’s hard to tell right, when you have a new center, did it do better as a Lucky Strike than, then it would’ve as a Bowlero, but I think, we’ll at least have a strong intuitive sense after that, whether or not we got a lift. And if so, then I wouldn’t rule out eventually rebranding all of the Boleros as Lucky Strikes. Certainly, all the new builds would come online as lucky strikes. I’m not predicting it, but I’m saying we’re, we’re certainly open to it, I think everyone we’ve spoken to says thinks that the Lucky Strike brand is better. That’s our sense as well. And so, we’re happy to roll that out.
Eric Wold: The follow-up question — On a Q2 call, you noted some of the in-lane ordering kiosks, maybe not going as well given the need for kind of training and staffing or kind of train the staff around them. Any updates on how that’s been progressing and if you’ve seen any improvements in engagement or check size with the centers you have focused there?
Thomas Shannon : Well, I think that’s part and parcel of what we’ve been talking about with creating the selling culture. So, unrelated to kiosks specifically, but the fact that the key — people were not adequately using the kiosks because they weren’t being taught and sold from the staff was, is basically was the problem that we’re addressing. And so, we started out with a special, and it’s important for I think, listeners to understand just how successful a special has been. So, we started out with a very simple proposition, which was full a third game because all of our data suggested that people bowled $1.8, $1.9 games per visit. So, prepay for a third game and we’ll sell it to you for $5 and we’ll give you a $5 arcade card.
And over time we’ve raised that $5 special in certain centers, $6 and even $7 because the demand was so hot over hundreds and hundreds of thousands of transactions. The take rate on that has been north of 60%. On some days it’s even higher than 70%. So, we’ve gone from a culture where there was no selling going on to a culture where there is selling and tremendously successful results. We broadened that to an arcade upsell we call the Power Up. And then three weeks ago, the pizza and pitcher special, which is actually two specials, a pizza with one topping and a pitcher of soda or a pizza with one topping and a pitcher of beer. And then in short order, there’ll be an upsell on the beer from, domestic to imported premium. In the first three weeks from a standing start, we did over a million dollars on pizza and pitcher in the slowest part of the year.
So, we’ve really gone from the employees would literally process the request when they came in order takers to now we have a fairly strong cultural basis on which we’re building with a selling culture. And I think that long term that could have a and will have a very meaningful impact on the business.
Eric Wold: Very helpful, thank you.
Operator: Our next question comes from line of Jeremy Hamblin with Craig-Hallum. Please proceed with your question.
Jeremy Hamblin: Thanks. And congrats on the, a strong year last year. Wanted to see if I could just start by getting some clarification in what’s included in the acquisition for your guidance for the year. So, you noted that your closing deals that would have annualized run rates, a hundred million or a little bit higher than that, but you haven’t closed the biggest acquisition thus far. You’re, nearly done with the first quarter. So, my baseline assumption is even if you included that, you couldn’t contribute more than, $75 million or $80 million to the full-year guidance. But Bobby, I wanted to just see if you could clarify within that $1.14 billion to $1.19 billion, how much of that is kind of the legacy organic business versus the acquired business?
Bobby Lavan : Yeah, our guidance is the organic business is flat, all of its M&A, plus some conversion’s kind of towards the end of the year. Lucky closes next week, Mavrix and Octane closed at the end of August. Those are kind of the two biggest acquisitions. So that’s really the fuel and the fire of the guidance.
Jeremy Hamblin: Okay. So not a specific range and what portion of Lucky Strikes is being included on that for the full year?
Bobby Lavan : Yeah, I mean, it’s going to be, three quarters of Lucky Strike and you remember Lucky Strike, like our events business is very heavy in the second and third quarter.
Jeremy Hamblin: Great. And then as a follow-up, in terms of how are the Lucky Strike centers performing? So, if you guys have kind of fallen into comps, running in this down low single-digit to, down mid-single-digit range, how are the Lucky Strike centers performing in this environment?
Thomas Shannon: Yes, I mean, it’s similar…
Jeremy Hamblin: Okay. And then the last thing is you’ve reflected Tom, you’ve talked about how if you have a softer consumer environment. I know you’ve had a lot of questions about what happens if we go into recession, how does the business perform? And you’ve noted that you can take out maybe as much as 30% out of your SG&A, in the June quarter you saw gross margins down pretty significantly. And my assumption is you’re going to see some of that same degradation here in the September quarter. But, how are you thinking about kind of the split of your performance in this 32% to 34% EBITDA margin guide, how much of that Bobby is kind of the gross margin degradation versus SG&A savings, and then included within that guidance? I just wanted to see if you could give us some color on what your transactional advisory costs are expected for the year.
Thomas Shannon : Thank you. So, from a cost perspective, we are implementing significant cost saves. So, there are kind of two primary buckets, what I would call our excesses at the centers. So, the centers had post-COVID excess security. That was a huge one. They have sort of we’re overspending on sort of what I would call consultants. And so, this is money we can kind of bring in at the center. So, these are the people who install AV. These are the people who do maintenance. Like we, costs have just been ramped up and so we’re going to pull those back. At the same time, there’s a lot of opportunities at corporate, whether it’s insurance, whether it’s IT, there’s a lot of different opportunities to cut costs, but we are going to reinvest some of that.
