Performance has been flawless since it joined the stock market in 2016
Thursday 31 May 2018 Author: Daniel Coatsworth

Tenpin bowling UK market leader Hollywood Bowl (BOWL) is a fantastic opportunity for anyone seeking a high quality small cap investment.

Shares in the £350m business have increased by 47% to 235p since listing in 2016 and we believe they should keep rising.

We’re really impressed by the way management are testing ways in which to drive up revenue. They are being very methodical to see if initiatives work before rolling them out on a wider scale.

This cautious approach should be applauded as it means the company isn’t taking bold bets on initiatives that may not work, thus isn’t wasting lots of money.

Hollywood Bowl has successfully tested different pricing models and found ways to drive up the volume of people bowling and the amount of money people spend in its sites, as well as having more efficient operations.

An incredible 6.9m bowling games were played at its sites in the six months to 31 March 2018, up 3.6% year-on-year. The average spend per game increased by 5.5% to £9.20; and the average number of games played on a lane before equipment developed a fault increased by 21% to 431.

A dynamic pricing model has seen Hollywood Bowl test ways in which it can charge customers more money depending on how far in advance they book and the time of day at which they would like  to play.

It has added £1 to the price of a game and then applies discounts based on various factors. The next phase of this pricing model is to work out how it can avoid losing interested customers if they want to book at times when lanes are full.

‘We are going to test ways in which to convince someone who wants to play at 2pm on a Saturday, for example, to come at 10am instead,’ says chief financial officer Laurence Keen.

The company is benefiting from higher lane utilisation thanks to a more efficient booking process, plus initiatives such as letting customers wear their own shoes (no time wasted queuing up for bowling shoes) and taking orders for food and drink during games, so the refreshments are ready as soon as the game ends.

Bowling only accounts for 51% of its revenue so keeping customers interested in other activities is vital for earnings growth. As well as revamped diners and more efficient ordering, Hollywood Bowl is testing the use of cashless amusement arcades which has shown to boost the average spend per amusement machine.

smaller1

‹ Previous2018-05-31Next ›