LUCK - NYSE

Thank you for standing by. My name is Leslie, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Lucky Strike Entertainment Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Bobby Lavan. Please go ahead.

Good morning to everyone on the call. This is Bobby Lavan, Lucky Strike’s Chief Financial Officer. Welcome to our conference call to discuss Lucky Strike's Third Quarter 2025 Earnings. Today, we issued a press release announcing our financial results for the period ended March 30, 2025. A copy of the press release is available in the Investor Relations section of our website. Joining me on the call today are Thomas Shannon, our Founder and Chief Executive; and Lev Ekster, our President. I'd like to remind you that during today's conference call, we may make certain forward-looking statements about the company's performance. Such forward-looking statements are not guarantees of future performance, and therefore, one should not place undue reliance on them. Forward-looking statements are also subject to the inherent risks and uncertainties that could cause actual results to differ materially from those expressed. For additional information concerning factors that could cause actual results to differ from those discussed in our forward-looking statements, you should refer to cautionary statements contained in our press release as well as the risk factors contained in the company's filings with the SEC. Lucky Strike Entertainment undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances that could occur after today's call. Also during today's call, the company may discuss certain non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measures most directly comparable to each non-GAAP financial measure discussed and the reconciliation of those differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on the company's website. I'll now turn the call over to Tom.

Good morning. I am Thomas Shannon, Founder, Chairman and CEO of Lucky Strike Entertainment. Last quarter, we spoke about the resilience that defines our team and our brands, how we navigate volatility with focus and versatility. This past quarter that same turbulence persisted, but so did our momentum. In fact, we've been actively calibrating our business to not just withstand the uncertainty, but to thrive in it. Our total revenue rose 0.7% for the quarter, a modest increase that masks meaningful gains in our retail, online and league segments. While layoffs and corporate austerity, particularly in the tech sector, have impacted our off-line mostly corporate business on the West Coast, we see this as a transitory headwind. We felt this since summer, but brighter skies are ahead. As we lap those declines in the coming months, we expect the picture to shift. Meanwhile, we are filling available land capacity by growing our leagues business, which is already up low single digits and continues a multi-year growth trajectory. The leagues business is sticky, high frequency, loyal and managed correctly, high margin. Corporate events have been hit by macro uncertainty, but we're already seeing signs of rebound. Our Boston, Miami, and New Jersey sales groups all comped positive in April, and several more sales groups are close to flat. And with sales driving initiatives coming online ahead of our peak season in September, we're positioned for a strong comeback. In Southern California, the lingering impact of January's devastating fires continues to weigh on our business there. More broadly, layoffs and corporate caution have created headwinds since summer 2024. But here's what's changing. Consumers are turning towards local, high-value entertainment. As air travel softens, we're ideally positioned to meet demand for convenient and memorable out-of-home experiences. In a clear indication of that, early sales of our summer season passes are already up 200-plus percent year-over-year. That tells us where the consumer mindset is, and it's encouraging. For the first time, we're entering summer with large water parks in Destin and Panama City Beach, Florida, our flagship 54-acre Raging Waves Water Park in Illinois, Six Boomers branded parks in California and Boca Raton, Florida; and our newest family entertainment center, Adventure Park in Visalia, California. Whether it rains or shines, we are becoming more hedged to the climate. Lucky Strike is on track to deliver positive growth this fiscal year, continuing our remarkable streak of consistent revenue gains over the last 12 years. Alongside that growth, our team has adeptly adjusted our cost structure to increase operating leverage. Despite some lumpiness, we've delivered 4% to 5% average annualized same-store sales growth since 2013. Our new builds or properties launched between September and December of 2024, and are exceeding expectations, delivering nearly $8 million in revenue and $4 million in EBITDA. These results prove the power of our model and the strength of our team's execution. As we invest in our water parks, family entertainment centers, and upgraded bowling experiences, we expect to not only maintain our industry-leading performance, but to accelerate it. With that, I'll hand it over to Lucky Strike's President, Lev Ekster, to walk you through the exciting organic initiatives ahead. Lev?

Thank you, Tom. We launched the presale of our popular summer season pass in early March, and the response has been incredible. With 1 week of the presale remaining before redemption begins, we're already approaching 100,000 passes sold. At a time of macroeconomic uncertainty, consumers are clearly gravitating towards high-value offerings and our summer season pass delivers just that. It is set to drive meaningful traffic to our centers during what is typically a seasonally softer period. When these guests arrive, they'll be met with our refreshed food and beverage experience, and a lineup of exciting limited time summer offerings, which will continue to drive strong results. In Q3, comparable food sales rose 1% with total food sales up 8% year-over-year. With increased summer traffic, we are confident that this momentum will continue as our revamped food initiatives gain even more traction and attachment. I also want to share an exciting update on the PBA, which just achieved a 103% year-over-year increase in viewership for this past Sunday telecast of its first round of playoff. Last week, we announced a multi-year media rights agreement with our new broadcast partner, CW. Starting next season, CW will be featuring 10 PBA events on consecutive Sundays, which our fans are thrilled about. We will soon announce additional partners that will increase the distribution of our events across broadcast and streaming. These media rights partnerships, combined with a growing roster of sponsors, which strengthen the PBA financial footing, we are now well positioned to unlock its full potential in the years ahead. Now, I will hand it over to Bobby to review the financial results.

Thank you, Lev. In the third quarter of 2025, we delivered total revenue of 339.9 million and adjusted EBITDA of 117.3 million. This compares to 337.7 million in revenue and 122.8 million in adjusted EBITDA. While total revenue grew modestly by 0.7%. Same-store sales declined by 5.6%. Breaking down the performance by segment. Our retail business remains steady. Our leagues operations experienced low single-digit growth and our events business faced high single-digits decline. Adjusted EBITDA for the quarter came in 117.3 million, with same-store sales acting as a $19 million headwind to the bottom line. Offsetting that were improvements in comp payroll to the tune of 8 million and reductions in repair and maintenance, supplies and services costs coming in around 3 million. Boomers and Raising Waves represented a 2 million drag in the quarter. However, we anticipate this will reverse in the next 2 quarters as we move into the peak summer season. For context, Raising Waves generated 9 million in EBITDA last summer, and we expect Boomers to perform similarly for this summer. Geographically, California, which accounts for 21% of our total sales, contributed nearly 50% of the same-store sales decline. This was primarily due to broad-based softness in the Los Angeles market in double-digit declines in the Corporate Events segment. However, as we cycle past tougher comparison, we expect improved performance starting this summer. We also continue to invest in growth through acquisitions. In April, we acquired Shipwreck Island in Panama City Beach, Florida for 30 million. We are excited about the long-term potential this property adds to our portfolio. During the quarter, we deployed 25 million in capital expenditures; 14 million for growth initiatives, 1 million for new builds and 12 million for maintenance. Additionally, we invested 9 million to acquire incremental land at Raising Waves; excluding this land purchase, CapEx year-to-date is down 40 million compared to last year. Our liquidity position remained strong at 391 million, with 79 million in cash and no borrowings on our revolver. Net debt stands at 1.2 billion and our bank credit facility net leverage ratio is 2.9. We appreciate your continued support and look forward to welcoming you to one of our new or expanded venues this summer. Operator, please open the line for questions.

[Operator Instructions] Your first question comes from the line of Matthew Boss with JPMorgan. Please go ahead.

Great, thanks. Maybe Tom, could you elaborate on what you're seeing from walk-in versus corporate trends over the course of the quarter, maybe what you've seen in April and early May. And then if we just take a step back and we think about economic uncertainty today relative to historical, what behaviors are you seeing today that maybe is influenced by using times of the past thinking about your business model and how maybe historically it remains more resilient.

Hey Matt, I'll answer the second part of the question. I'll give the first part to Bobby. We've seen this cycle before, where in the face of macro headwinds like we're seeing now, companies pull back on entertainment. There was an article in the Wall Street Journal last weekend about how not only are the layoffs pretty significant in Silicon Valley, but they've done things like eliminating most travel, they've eliminated corporate events, everything that's really discretionary related to employees. I mean we see this. We saw this in [2008] [ph]. We saw this in COVID, we saw this after 9/11. So, it's entirely predictable. The good news is that it's relatively transitory and just like corporate America, I think, has been shocked by the macro news over the last couple of months, things can turn very quickly in the other direction too. So, we are, I don't want to say levered to the corporate event business, but it's a significant part of our business. We do $300 million a year in events. Not all of that is corporate. Some of it is birthday party, but we have a higher beta when it comes to corporate events than a lot of our competitors. So, we outperform in good times, and we have our headwinds in challenging times. As Bobby said in his comments, more than half of our same-store sales decline on a comp basis was because of California, which is 21% of our revenue, and that is almost entirely corporate. So, I expect this to come back fairly quickly by the third calendar quarter of this year, if not the fourth. I don't view this in any way as an enduring trend. It's -- but it is what we're dealing with that. Now, the upside is the other parts of the business have been surprisingly strong. So, let me give it to Bobby to give you the specifics about performance of the lead business and our retail walk-in business.

Hey, Matt. The retail business is flat. The league business is up low single digits. It really is this off-line corporate business, which is how we concentrated between sort of November in March. That business is down a good double digits. When we think about sort of the trends, we talked about the trends in January where January was down 3%. The fires in L.A. impact us. February was down 10%. I think that the industry as a whole was impacted by weather. In February, the macro is that sort of its peak of uncertainty, it's gotten better since March, got better -- March was similar to January, April is getting better. I looked at sort of our numbers the past few days, were positive the past few days. I'm very excited about as we get into sort of May, June where the summer season pass is outperforming right now, it's looking about double of where it was last year. And we go into this period where corporate events goes from 20-plus percent of our business to single digits. I think that at the end of the day, the retail trends are fine. We want to continue to see like a lift coming driven by food. The lead trends are great, and we're leaning into leads. But one thing that Lev just talked about is the events business does hold lanes across our 14,000 --. And so if you have an expectation that your events business is going to come in, you don't necessarily bring in a stickier, lower per cap lane lead, that's something that we're really kind of leaning into. So ultimately, the trends -- the trends are getting better. And as Tom said, when corporate turns or when corporate at least starts to comp, that's when the whole business will turn as well.

Great. And then maybe just a follow-up, Bobby. Areas of expense flexibility near term that you have? And maybe relative to that, how you're prioritizing multi-year initiatives? And if you see potential for M&A opportunity that might arise out of all of this disruption?

Yes. So, -- I mean we've dropped comp payroll sort of 8-plus million a quarter. You see it's less significant in our March quarter, you'll see a much bigger benefit when we get to the June and September quarter. We dropped R&M, supplies and services, that's about 3 million a quarter. Again, the bigger, higher revenue periods are going to have more negative and positive operating leverage. So, you'll see the benefit of that in the June quarter, September quarter. On M&A, we did a $30 million deal in April. We got it -- firm sheet to close in 30 days. We bought a water park with land at near 6x, 7x multiple. We think once we operate, it will be even lower. So, prices are coming down. Activity is up. Everyone is very concerned and continue to be concerned about the macro. So, I would expect to see a very active summer from us.

Great, best of luck.

Thank you.

Your next question comes from the line of Steven Wieczynski with Stifel. Your line is now open.

Hey guys, good morning. So, Bobby or Tom, I really want to ask about what happened relative to -- if we go back to your last call, which was early February versus where we kind of sit today? And I guess what I'm trying to get is, I think you guys were expecting positive same-store sales in the third quarter versus the negative 5.5% or 6%, whatever was reported. So just what we're trying to do here is trying to figure out and bridge kind of what happened over the last, call it, 8 weeks of the quarter to have those same-store sales move so much against you guys? Was it -- obviously, you called out corporate. I'm just trying to understand, was it really all corporate? Or was it something else that kind of caught you guys off guard?

Yes. I mean we were -- on that call, we were very cautious about revenue. I would tell you that the corporate business got dramatically worse in February and March. That business, California had the fires in L.A. and ultimately, the corporate business across California is just getting worse. It's bottomed, and we get to sort of an easier comp starting in July. But ultimately, that business was 20% of the business in the quarter.

Okay, understood. And then in terms of the decision remove guidance. Look, obviously, we fully understand that decision given the uncertainty that's kind of out there in the marketplace. But as we kind of move, I guess what I think is somewhat confusing here is with your fiscal end ending in June, which is about 7 weeks away, is it -- the decision to remove that? Is that basically coming from the uncertainty that kind of caught you off guard in February, in March? I'm not sure if I'm asking this question very well, but just trying to understand a little bit more about that decision. And also, the decision now to continue to buy back shares versus reducing debt in this uncertain -- in this uncertain environment? Maybe a little bit of color around free cash at this point as well?

Well, this is Tom. I think Bobby said in the guidance that he was much more comfortable talk to giving guidance the expense side and on the revenue side. And we pulled out, for example, in the last month, we were down by 90,000 hours year-over-year on a same-store basis. So we've been very, very aggressive on the expense side, and that's why despite being down, I think the number was 18 million or 19 million on a comp basis in the quarter that we made up most of that on an EBITDA basis. So, there are things that are within our control largely like expenses. There are things that are somewhat in our control like up-selling when people walk in, increasing the per cap lead business, we are being much more proactive on the sales side with corporate events, for example, we've mandated a return to the office for our sales force. It takes effect fully by June 30, but probably half the salespeople are already back in the offices where they haven't been since 2020. We're doing walk-throughs and tastings and other things. So, we're being very proactive on every front, but there are certain things that are out of our control. So if Silicon Valley decides as they have in past downturns that they're going to suspend all corporate activity, and that's millions and millions of dollars of business that we had in the prior year, you can't make that up. Conversely, when the sentiment changes, we get as much of it as we can. So, we have a -- we're a very short-cycle business. A lot of the retail buying decisions are made same day or a day or 2 before the corporate business may stretch out for 2 or 3 weeks, but rarely does it stretch out much more. So, I think it's difficult for a business like us to give meaningful guidance because again, it's so short cycle. We have no insight into what's going to happen a month from now. I would say that the sentiment among management is that we're pretty pleased with the quarter based on how it could have gone. When you look at all of the sort of exogenous factors that happened, if we weren't as proactive as we were I think EBITDA could have been down meaningfully as you see with our competitors. So, if you take our main competitors sort of that people perceive as our main competitor in the space, I will mention them by name, when they have a revenue downturn, their EBITDA craters, we had a revenue downturn and our EBITDA was modestly down. So, I think that's a function of really good expense control, but it's also a function of us making money in the business lines where we can; but, there are certain things that we just throw along for the ride on. So if again, the West Coast fires, and companies say we can't have parties in Southern California because it sends the wrong tone to the people who lost their houses and the tech industry is laying off, so they're not having parties, very hard for us to guide meaningfully months out when we don't have any visibility into that at all. Now, one thing we do have visibility into is things like our summer season pass, which last summer, we did $8.5 million. We are up 200% in the presale, which is meaningful dollars. So, that will be a meaningful impact on the business in a positive way. We have additionally the impact of 2 water parks that will be opened this summer that weren't open last year. Big Kahunas in Destin, Florida and Shipwreck Island in Panama City Beach. These should be very meaningful EBITDA contributors. We have 7 family entertainment centers that are, again, outdoor good weather properties. Six of them are in California. One is in Boca Raton, Florida. So, from our perspective, there's a lot of very positive things happening. And at some point, again, we lap the corporate downturn that we started to see in the third and fourth calendar quarters of 2024. And so we remain very positive. But to give specific guidance, I think it is [indiscernible] because it's just impossible to do given the short-cycle nature of our business.

Steve, when I think about the next 7, 8 weeks, we have round numbers, 200 million of revenue over the next 2 weeks. You heard on the previous question, like the comp is whipping right now, down 3%, down 10%, down 3%, getting better from there. So, from our perspective, you can sort of drive a truck through sort of the volatility right now. And it's very important for us to be honest with our stakeholders, about when we're confident on which direction the business is going in the short term, in the long term; in the short term, the volatility is too high. I think that we are evaluating throughout the summer that the volatility come down. Are there better KPIs that we can give the Street, so they can focus on the performance of our business? But ultimately, I still have 200 million of revenue to go over the next 8 weeks. And that sort of variability is still very high. We are excited about, as Tom said, season pass. We are very excited about corporate being less of the business this summer; but ultimately, the volatility continues to be very high in the market.

Okay, got you. That’s great color. Thanks guys, appreciate it.

Your next question comes from the line of Jason Tilchen with Cannacord Genuity. Your line is now open.

Great, good morning and thanks for taking my question. I'm wondering if you could share a little more on how the rebranding initiative has gone, the performance of those centers that have already seen that rebranding compared to ones that haven't -- I think you mentioned in the prepared remarks, and in the press release, the desire to sort of given the heightened macro backdrop, taking a little bit more disciplined approach to capital investments, how that balances with the sort of previously announced plans to sort of accelerate the pace of those rebrandings over the coming months?

This is Lev. So, since the start of the calendar year, we've performed 15 rebrands of Bowlero to Lucky Strikes and we're still committed to doing the same number, specifically because the cost of these rebrands is actually pretty modest, right? There are some sign changes. But really, it's what Lucky Strike is versus Bowlero. And that's a much better menu, more hospitality, different playlist in the centers. It's just a different environment. You can establish that pretty cost efficiently, which we've done -- when we do these rebrands, we see a resurgence and excitement from the consumer base in that market. We see increased foot traffic. These are accompanied by almost open houses to reintroduce the community to this new concept, Lucky Strike, so we're going to continue to do these. I think the goal is still 75 by the end of the calendar year. But the cost in dollars is pretty modest. The benefit is noticeable. What's also important about these is it increases our volume of Lucky Strike, then when we start thinking about our future marketing plans, we can really start investing more dollars into promoting this brand on a national scale, because we're going to have the center count to justify those costs.

Yes. And so I think it's really important to focus in on the one -- the point in less common -- our comp was minus 5.6%. Our food comp was positive. And our total food was up high single digit. The consumer is responding to the rebrand consumers responding to the food initiative. So, we are pulling back on non high-returning CapEx, the rebrand of the Lucky Strike are the highest return we see in the market right now.

That's really helpful. And just one quick follow-up there. I think you mentioned sort of total food up high single digit, and then food and bev, I think, was up maybe 1% from the paired remarks, and that would imply sort of continued softness on the bev side of things. Any additional color you can share on sort of the rollout of tablets and things like that and how those have had a benefit and impact on sales trends in centers?

Yes, I'll take this one. So look, I don't think it's -- you can make the argument there's some societal changes with alcohol consumption, but it's not going to deter us. So, we're expanding our

The tablets are driving an increase on per check 7%. So it's working. And we're leaning into food while we wait for the corporate business to come back.

Great, thank you very much.

Your next question comes from the line of Eric Handler of ROTH Capital. Please go ahead.

[indiscernible] Eric, is that you or us? Operator? We'll go to the next question.

I'm sorry. Your next question comes line of Michael Kupinski of Noble Capital Markets. Please go ahead.

Thank you, thanks for taking my question. A quick one. I'm kind of trying to understand the cutbacks in corporate events. Is it due to short-term concerns or are there more broad, longer-term economic concerns specific to Silicon Valley? For instance, a number of companies that I follow also have indicated that business and particularly corporate business seems to be floating around the tariff issues and they saw weakness around Liberation Day, but then you saw some improvements come back as some of those concerns subsided. And I was just wondering in terms of your corporate events business and you're seeing some improvement. I was just wondering, do you have any thoughts if it is really related to more of the tariff issues and how businesses are trying to react to the prospects and the economic fallout around that?

I think it is there are -- look, it's different by market. So in April, for example, we were -- we have about 25 sales groups around the country. A handful of those groups actually comped positive. And a number of them were flat and the ones in the West Coast were down significantly. The difference on a comp basis between the East Coast and the West Coast in the last period was 20 percentage points year-over-year. So, the tech industry tends to be the first to sort of react to negative news on the macro environment and other people tend to be less impacted by it. I don't think this is a long-term trend. I think this strikes me very much as it did in 2008, where people really pulled back very quickly. And there are other industries that will fill in the gap. So, as I mentioned before, we're returning all of our event salespeople to the office. We've been actively naked in terms of not having people in office since the pandemic. And it didn't really matter, because corporate activity was so robust that work from home actually worked. But when the environment changes, we realized that most of our customers had zero contact with our salespeople or in many cases, with our venues before they were booking an event. So, they were potentially looking online and pictures of us, and pictures of our competitors and had no way of really being able to understand the qualitative differences between the 2. Our locations are overwhelmingly best-in-class and our food is excellent. And so what we're doing now is whenever we get an inquiry, we are encouraging people to come in and see the property and to eat the food, and that is working. We're seeing an uptick in conversion rate among people who are doing that, a meaningful uptick I should say. And so we're very proactively leaning into how to address this. As Bobby said, the corporate activity, the corporate business as a percentage of revenue declines over the summer. And so it will, despite its great nature become less important for a while by the time we get back to fourth calendar quarter of this year. I think a lot of the noise in the market will have abated. But the impact of the tariffs is really meaningful. I'll give you an example for us. So, we had a number of leases we were negotiating that were predicated on a construction cost of a certain amount that we knew we had paid in recent months to build new centers. And we anticipated that the cost of construction could go up by 20% or 30% as a function of higher material costs, but also less labor availability and thus much more expensive labor related to construction. We canceled -- we stopped moving forward on 8 of those leases, which represents about $100 million of capital spend. I think that we are one of many, many, many companies who are viewing the world in the same way that the impact of the tariffs is hard to predict; but overwhelmingly, the impact is negative, whether it's revenue uncertainty given the macro backdrop and increase in costs that you can't necessarily predict or budget for. And so I think the impact of tariffs right now on corporate sentiment is very, very pronounced. And the earnings you've seen recently were by companies that weren't really affected by that, because they had orders that were fulfilled in the last quarter that weren't impacted by the tariffs. But, I guarantee you that the activity for most people right now is dramatically slower as a result of the tariffs. Now, that -- the issue could go away just as quickly as it came, right? And the sentiment could change just as quickly as it went negative. But I'm not in the betting game. So, I don't know when that will happen; but, none of these negative exogenous shocks last for very long. The economy always reverts back to the mean, sentiment always reverts back to the mean. And so whether that's 2 months or 4 months or 6 months, I don't view this as a -- as a permanent impairment of our business.

Great, thank you for that color. I greatly appreciate it, that’s all I have.

The next question comes from the line of Michael Swartz with Truist Securities. Please go ahead.

Hey guys, good morning. Maybe just wanted to touch on some of the water parks and family entertainment centers. As this is a growing part of the portfolio, I know it's still small in the context of 300-plus locations. Can you give us a sense or maybe frame for us the annual contribution from these businesses now? And maybe how to think about the seasonality in totality?

Yes. So on the water park side, you're really going to see revenue pretty much from June to August. We have a little bit of revenue in April, May. Really, it's June to August. Right now, we have 3 water parks that will contribute 30-plus million of revenue between June and August. Then you have the Boomers/FEC business, that's another 30 million of revenue that is throughout the year, but 50-plus percent of it happens between June and September when school is out. So, from my perspective, we're highly confident in strong growth this quarter, strong growth next quarter, because we just have these businesses flowing in and so we'll continue to do that. And again, the comp on the bowling side is one thing, but the inorganic growth that we get on these businesses in Boomers, we bought for 26.5 million, it's going to do 10-plus million of EBITDA going to higher than that. And so the flow-through on that business is very similar to the rest of our business is that, overall, we can get good 30s, if not low 40s EBITDA margin.

Okay, that's helpful. And then Tom, I think you made the comment of consumers during periods of uncertainty, consumers turn to local entertainment to a greater degree. And I think you kind of mentioned the season -- success of the season pass this year. Are there any other data points that kind of give you the confidence that we are starting to see that happen?

Well, it's not just the bowling summer season pass, we are also seeing in the water park season pass sales. So Raging Waves, which is our flagship 54-acre park in Illinois is up more than 100% in season pass sales at this point. So I think the combination of people wanting to stay local, but I think we've really done a very good job now of marketing these and getting the pricing right. So, there's a lot going on behind the scenes here. Management has been extremely proactive on every front. We are building a world-class marketing function. We've been hiring and training the new cohort of salespeople. We've been rationalizing the activities of the salespeople to focus on things that they hadn't focused on previously. And you're starting to see it in these indicators. And again, I think the data Bobby provided about how much we were impacted by a very small part of the country in the first quarter should be indicative that, the consumer is pretty healthy and is spending money on these activities. If we hadn't historically been so strong in the corporate party business, we'd probably be comping positive now. That would not be a good thing, by the way, because being exposed to the corporate party business is a very, very net positive part of our business, very profitable and but a more volatile one. So, what we're seeing in terms of walk in the retail business is effectively flat. Now, one thing that I think is important to understand is that the company, on average, has increased same-store sales about 5% since 2013. Even now, we're up 25% on a same-store basis versus 2019. So, when you see a negative comp, it's a negative comp after enormous growth. Our average unit volume went from 2.1 million to about 3.3 million in the last 5 years. And so there's a little bit coming off, as sort of a natural function, I would say, or a pause in the growth. But the trend line remains intact. So, from our perspective, having been doing this for 28 years, there are ebbs and flows in the natural business cycle. But there are a lot of positives here. Positives being that we've taken a lot of cost out of the business that we lived with for a long time that we realized we didn't need to live with. Capital efficiency, being that 40 million in R&M is significant, paring back our capital expenditures on new builds to only those deals that are really in the center of the bull's eye from a revenue -- expected revenue and cost perspective. And then doing really attractive M&A, as Bobby mentioned, Boomers for 26.5 million. Ultimately, we see that business producing more than 15 million of EBITDA and we're buying assets on a forward basis, including land at around 5x EBITDA. So, we feel really good about where things are. Someone asked earlier why we were buying back stock if the -- maybe we should be focused on delevering. The reality is that our attention will shift from stock buybacks to delevering. If anything, I wish we had more flow frankly, we probably bought back too much stock. But that's something that can be dealt with. But yes, I think over time, our goal, and the goal of the Board is to start to delever the business, and we'll probably do that by growing EBITDA against a constant level of debt.

Your last question comes from the line of Jeremy Hamblin with Craig-Hallum Capital Group. Your line is now open.

Great, thanks for taking the question this morning. I wanted to focus actually on SG&A spend. And so as you saw very modest growth here in the March quarter, you saw a pretty significant uptick in the total SG&A costs. I wanted to just get an understanding. I know you've talked about in the past some flexibility to really dial down your spend if the market conditions warranted. And obviously, uncertainty, I think, is probably going to be around not just for a couple of months, but probably for an extended period of time. How should we be thinking about your SG&A spend here given that you've got a change in the dynamic where you now have water parks, you have boomers, businesses that you have to operate and spend money on during the summer months. But how should we be thinking about your SG&A cost structure here year-over-year in the June quarter? And then as we look ahead into the back half of calendar 2026?

Yes. So, let me just address one complicated technical dynamic that happened in the quarter. SG&A had a $5 million charge, noncash charge related to Brett retiring from the company. So, we had to take a charge related to that, it was noncash. I expect SG&A to be down. And it was down last quarter. It would have been down [indiscernible] charge that is more of an accounting dynamic than operational. We have taken a -- to SG&A costs. Our priority is to grow revenue while maintaining SG&A flat out. So that's sort of the formula of the business, and that's how you should look at it.

Okay, and then just following up on that. So, as we look -- as we look to, again, kind of into fiscal 2026 and the commentary around you're probably not going to be quite as aggressive on new deal flow. Is it -- is the expectation that as you focus on kind of higher return remodels and so forth in the Lucky Strike brand, what type of cost now are you expecting with that? And again, I know you mentioned that there's little bit of increase in costs around tariffs. But how should we be thinking about that? And then whether or not the kind of the employee market remains robust or whether or not there are some kind of comments out there in the pure-play restaurant sector that the employee supply is a little bit tighter than it had been?

Yes. The way I would look at my cost structure is 400 million of payroll. Payroll is always going to have a little bit of cost of living adjustment in it, some sort of inflationary factor. We have another 600 million of non-payroll-related expenses, we're going to bring those down. Even in a tariff environment, there's still a lot of opportunities to sort of bring cost down, drive efficiencies, we're building a procurement organization. We're partnering with our vendors for scale. We're no longer buying things like couches one at a time, now we're buying 1,000 at a time. We're -- that's sort of the core reason for the Lucky Strike rebrand is really focused on having a single brand we can get behind and that drives efficiencies across our cost structure.

Great, thanks for the color. Best wishes.

That will conclude our question-and-answer session. And I will now turn the call back over to Bobby Lavan for closing remarks.

Thanks, everyone. We'll be on the road for the next few months and look forward to seeing you. Thank you.