Lucky Strike Entertainment targets 1% to 5% same-store sales growth amid rebrand acceleration and cost focus

Earnings Call Insights: Lucky Strike Entertainment Corporation (LUCK) Q1 2026

MANAGEMENT VIEW

* Thomas Shannon, Founder and CEO, reported that "total revenue in the quarter grew 12% and adjusted EBITDA was up 15%. Same-store sales were close to flat at negative 0.4%, with retail revenue up 1.4% and league revenue up 2.1%, which shows healthy customer engagement across our core bowling and entertainment venues." He highlighted encouraging double-digit momentum in the online booking funnel and noted that offline events, largely corporate bookings, saw an 11% decline but stated, "trends have clearly turned the corner. October was our strongest month of the year for both offline and total events, which gives us confidence heading into the holiday season."
* Shannon emphasized a disciplined focus on improving free cash flow: "CapEx for the quarter came in at $26 million, down from $42 million a year ago, reflecting tighter capital allocation and benefits from our procurement function." He also announced a strategic real estate investment: "In July, we made a strategic real estate investment, acquiring the land and buildings for 58 of our existing locations for $306 million."
* The company completed a $1.7 billion refinancing extending debt maturities to 2032 at a 7% average cost of capital. Shannon described expansion through the acquisition of two water parks and three family entertainment centers, noting, "The $90 million transaction is expected to generate returns above our historical average, with most of the financial contribution coming next summer."
* Shannon introduced new senior hires: "This quarter, we welcomed Brandon Briggs as Chief Revenue Officer... and Laura Cobos as Vice President of Field Training following her 3-decade career at Texas Roadhouse. Both are already having a measurable impact on our service and culture."
* Robert Lavan, CFO, stated, "the event business, which we talked about sort of the -- the main sort of headwind the business has had in the corporate events business. That business was down in the September quarter, sort of mid-single digits. October, we had sort of the best month we've had in more than 1.5 years."

OUTLOOK

* Lavan maintained guidance: "From a same-store sales perspective, we guided the year to 1% to 5%, and that holds. You can kind of see how that should flow through. But ultimately, we expect for same-store sales to be in that range for the second and third quarter, and then the fourth quarter being a little bit better."
* No changes to the guidance range or methodology were announced compared to the prior quarter.
* Lavan noted the promotional environment is slowing: "Online, you generally have to offer some sort of call-to-action promotion to drive purchase. But we're being a little bit more tactical about that. We'll have a Black Friday sale. Maybe we won't have a sale in the first few weeks of December, where our lanes are 100% utilized for events."

FINANCIAL RESULTS

* Shannon reported CapEx of $26 million for the quarter, a reduction from $42 million a year ago. The company executed a $1.7 billion refinancing at a 7% weighted cost of capital, extending maturities to 2032.
* Food revenue grew 10% in Q1, with no price increases, according to Lavan. The company sold over $8.5 million in pizza and pitcher combos in five months. League headcount increased, and five consecutive weeks of all-time high food and beverage revenue from league bowlers were reported.
* Locations branded Lucky Strike had 50% higher food and beverage to bowling revenues than Bowlero and AMF locations. Lavan stated, "If we are able to normalize that, that's a $125 million to $150 million pickup."

Q&A

* Matthew Boss, JPMorgan Chase: Could you break down the drivers of 1Q's roughly flat comp as you look across your walk-in retail business relative to events? And specifically on events, could you elaborate on the clear signs of recovery that you cited heading into the holiday? Lev Ekster responded that retail and league categories both showed continued strength, with league revenue up over 2%. He noted, "October, we closed up over 5% in leads, and that was driven by a combination of an increase in headcount of bowlers... also we were seeing an increase in the average price per game."
* Steven Wieczynski, Stifel: How should we think about the cadence for the rest of the year in terms of same-store sales? Lavan answered, "we expect for same-store sales to be in that range for the second and third quarter, and then the fourth quarter being a little bit better."
* Randal Konik, Jefferies: Updates on the Lucky Strike rebrand and economics? Ekster replied, "we're up to 74. We set a goal to be at 100 by the end of this calendar year. We're still on track for that. We anticipate being at 200 by the end of 2026."
* Jason Tilchen, Canaccord: Clarification on walk-in retail trends and October performance? Lavan responded, "In October, we've seen mid-single digits on retail."
* Michael Kupinski, NOBLE: Relationship between food and beverage revenue and Bowling revenue, and Lucky Strike locations compared to Bowlero locations? Ekster said, "I couldn't have imagined that we'd be at 10% in Q1 of this fiscal year... there was this legacy mindset that league bowlers were not big on purchasing food and beverage. So historically, the centers weren't staffed the same way for league nights as they were staffed for retail nights. Well, we've ripped up that notion, and now we're staffing the same way."

SENTIMENT ANALYSIS

* Analyst sentiment was neutral to slightly positive, with questions focused on retail trends, event recovery, rebranding execution, and food and beverage attachment. There was interest in operational improvements and the cadence of same-store sales.
* Management maintained a confident and constructive tone, repeatedly citing strong momentum in retail, food and beverage, and operational initiatives. Shannon stated, "We're selling with confidence, serving with heart, and continuing to raise the bar for hospitality and out-of-home entertainment."
* Compared to the previous quarter, analyst tone shifted from cautious optimism to more confidence as event trends and comps improved. Management maintained consistent optimism, though with more specific examples of operational execution.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for same-store sales remains at 1% to 5%, unchanged from the previous quarter. The company reiterated its acquisition and rebranding strategy, now reporting 74 Lucky Strike locations and aiming for 100 by year-end, compared to 55 locations last quarter.
* CapEx declined from $42 million in Q1 last year to $26 million this quarter, following a focus on cost discipline. Real estate investment and refinancing were completed in both quarters, with this quarter emphasizing extended debt maturities and flexibility.
* Food and beverage growth accelerated, with a 10% increase in food revenue in Q1 versus 2.5% same-store comp last quarter. League revenue improved, and management highlighted new menu initiatives and staffing strategies.
* Analyst questions shifted from macro headwinds and cost structure to operational execution, retail momentum, and food innovation.

RISKS AND CONCERNS

* Management identified continued pressure in the corporate events business, particularly in California and Washington, attributed to "significant amount of Silicon Valley layoffs."
* Lavan described proactive measures: "We are leaning in. We are accelerating sort of marketing spend... and a go out and get the business mentality on the events side."
* The company noted focus on cost management, capital efficiency, and the need to drive free cash flow, with CapEx guided below $130 million for the year.
* Analyst concerns included the sustainability of food and beverage growth and the timeline for event business normalization.

FINAL TAKEAWAY

Management emphasized that disciplined execution on capital allocation, a sharp focus on food and beverage innovation, and strategic expansion through rebranding and targeted acquisitions are positioning Lucky Strike Entertainment for sustainable growth. The company is seeing encouraging signs in core retail and league segments, while working to offset event business headwinds, especially in challenged regions. With operational momentum, new leadership appointments, and continued cost discipline, management reiterated confidence in achieving its guidance and driving long-term value creation.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/luck/earnings/transcripts]

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