Ten-pin bowling operator Hollywood Bowl is hoping for a better experience than former London Stock Exchange-listed peer Essenden when it joins the Main Market in July.

The UK’s largest ten-pin bowling operator, which owns 54 centres across the UK, plans to float next month ‘to continue to build the momentum of the business, providing a solid platform for further growth’.

The group wants to open two new centres each year to make bowling more accessible to new segments of the UK population, although this is dependent on the availability of sites and rental prices.

We’re sceptical on the likely success of this strategy as the bowling market in the UK is saturated.

Former AIM-quoted bowling group Essenden managed to turn its fortunes around by boosting footfall and spend per visit, but its shares were held back by its failure to expand or make acquisitions. It was taken private in July 2015.

Essenden had previously told Shares that the UK's ten-pin bowling industry had already hit maturity and expansion plans were very limited. As such it was looking at diversifying into holiday camps but couldn't strike a suitable deal.

Hollywood Bowl has acquisition experience, having bought 11 Bowlplex centres in December 2015.

Its main focus will be on increasing the number of customer visits by refurbishing its existing estate and using its CRM (customer relationship management) system more effectively. ‘Bowling is a relatively low-frequency activity compared to other forms of leisure, such as the cinema,’ it says.

It reckons there is scope to increase the price and spend per bowling game by improving the customer experience and ‘dwell time’ in each centre.

Between October 2012 and March 2016 it completed 16 refurbishments, which included introducing a more boutique ‘urban’ format, new dining concepts like Harry’s Diner and VIP lanes. Two refurbishments were defensive in the face of increased local competition.

Over the medium term, the group intends to undertake between seven and 10 refurbishments each year.

For the financial years ended 30 September 2013 to 2015, revenue rose from £70.2 million to £86 million. This equates to a compound annual growth rate (CAGR) of 10.7%.

Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) increased from £11 million to £20.6 million – a CAGR of 37%.

Hollywood Bowl intends to pay its first dividend for the financial year ending 30 September 2016, followed by a progressive dividend policy.

Issue Date: 15 Jun 2016