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Pullmyfinger

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We had a thread where I mentioned some points from this article. Can't seem to find it, but here's the article I was referring to:

http://bruceonbowling.wordpress.com/2012/08/09/why-your-local-bowling-center-may-be-closing-soon/



Why Your Local Bowling Center May Be Closing Soon

Bowling centers are closing left and right.  Seems as if you hear daily about another bowling center closing.  In the S.F. bay area Palo Alto Bowl, Mel’s in Redwood City, Serra Bowl in Daly City and Cedar Lanes in Fresno have all closed recently.

 Image

Mel’s in Redwood City is closed, but the sign remains

I grew up in Bloomfield, Connecticut, and learned to bowl at Earl Anthony’s Bloomfield Bowl  (shout out to Pat Bosco, the best bowling center manager I’ve ever known).  I won my first PBA regional title at Paramus Bowl, beating the likes of Petraglia and Roth.  I shot my first 300 at Fantasy Lanes in Upper Saddle River, NJ (my PBA 300 ring says “Fantasy” on it).  Guess what?  All are closed today and the properties redeveloped.

This is a tragedy to me.  But the reality is that a few basic facts explain this phenomenon.  Let’s start with a sign I saw recently at Sea Bowl in Pacifica, Ca.:

Weekend Rates:

Bowling: $29.00 per hour

Billiards: $14.00 per hour

Bowling’s revenue per square foot math doesn’t work.  Let’s talk real estate and revenue per square foot.  A bowling center building requires at least 1,000 square feet per lane, so that a 32-lane center would need at least 32,000 square feet to operate.  A billiard table takes up about 100 square feet.  According to the Sea Bowl sign above, the bowling lane would generate about 2.9 cents per square foot per hour, while the billiard table would generate about 14 cents per square foot per hour.  The billiard table nets nearly 5 times the revenue per square foot, and uses about 1/10th of the bowling lane’s footprint to earn its money for the center.

Also important is that the billiard capital investment is vastly less than bowling; have you priced pinsetters and scoring systems lately compared to even the nicest billiard table?  And, there is virtually no billiard table maintenance compared to the parts, supplies, lane machine, support staff and the many other costs involved with maintaining a bowling lane.  From a financial point of view, one is much better off in the billiards business.

Let’s look at it another way.  Say a 32-lane bowling center, between the lineage, snack bar, lounge, and other revenue such as vending machines generates $2 million per year, and uses 35,000 square feet of space.  That’s $57.14 of revenue per square foot per year.  Indeed, I’ve compared notes with several center managers and a very typical figure is $50 – $60 per square foot per year.  The best number I’ve ever heard was from Jim Carter in Winter Garden Florida (Don’s son and a fantastic person and manager), who proudly said he once earned $74 per square foot per year.

Now let’s talk about Pier One Imports.  Who?  They recently published a 3-year plan in which they announced a goal to increase yearly revenue from $200 to $225 per square foot.  That’s 4 times what a bowling center can generate in the same space!  These numbers vary by store of course (Macy’s take is $161 per square foot for example), and they have higher cost of good sold, but they all handily beat bowling’s earnings potential per square foot.

You can pick almost any business and the revenue per square foot is better than bowling’s.  Restaurants generally lose money at $150 per square foot, and some can net as high as $400 per square foot and up.

I recently toyed with the idea of opening a bowling center in a populated area of Massachusetts.  I found the perfect location – 40,000 square feet in an old Filene’s Basement location in Framingham, Mass.  There used to be three houses in Framingham – today there are none.  I contacted the landlord and was told that the lease would be about $1M per year, and there would have to be a 15-year minimum lease due to all the capital improvements I would have to make to the property.  Doing some quick math, if I opened a center making $2.5 million a year, I would spend 40% of my revenue on rent – a non-starter. The fact is, that location needs to generate in the $200 per square foot range (about $8M per year) to make the property pay.  No bowling center in the world can do that. So much for that idea!

Image

My perfect location in Framingham.  Too bad the rent is $1M a year.

Land value.  The revenue per square foot argument is just one problem.  The other is land value, and what else could be built on the property.  Let’s take Palo Alto Bowl.  It sat on a 3.62-acre site that is now under construction for a 4 story 167-room hotel and 26 condos and duplexes.  Let’s say each condo alone goes for $500,000.  That’s $13M right there – many, many years of a bowling center’s potential profits.

Real estate in Palo Alto is an extreme example, going for millions per acre.  But the same math can be applied to most any bowling center and the end result is that there are a lot more centers still operating where the revenue is too low, the rent is too high, the land is too valuable, or some combination of the above are conspiring to cause the center to close in the not-too-distant future.

In some cases, centers remain open because of rent deals they made long ago.  This was Serra Bowl’s situation.  In 1962 they signed a 50-year lease for $5,000 per month.  It expired in 2012.  I was there the Friday night before it closed, bowling pot games.  The place was packed, with hundreds of people having a great time.  It closed that Sunday.  The new rent would have been so high that keeping it open couldn’t even be discussed.

There is no other social activity like bowling.  When was the last time you saw a group of friends or family bowling who weren’t have a great time?  Bowling centers need to be treated more like parks – community-preserved spots that help provide a safe recreation location and to help maintain a community’s sense of itself.

Turn your local bowling center into a protected area, like a park.  The only way to save some bowling centers is to petition the town.  Ask about your local center and find out if it might close.  if so, go to the town hall and ask about your center’s zoning and if the center’s location is a candidate for redevelopment.  If the land is available for redevelopment, in almost all cases the financial incentive to redevelop that land into almostanything besides a bowling center will in fact cause the center to close, and perhaps in the not too distant future.  The town will be motivated because it will collect more taxes on higher real estate values and/or more revenue.  Tell the town no!

Please help preserve the sport we love.  Get involved to keep your local bowling center open!

SpinBowler300

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Reply with quote  #2 
it really comes down to whether your local bowling center owner WANTS to be in the bowling business. If not, they can sell their property quick and usually for big bucks.
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Pullmyfinger

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Quote:
Originally Posted by amf300bowler
it really comes down to whether your local bowling center owner WANTS to be in the bowling business. If not, they can sell their property quick and usually for big bucks.


I think a lot of owners want to still be in the business, but when they get an offer that will take them several decades to make it's hard to say no. Continental is the perfect example. They had a very strong league base and a good open bowling crowd. Lifetime Fitness offered them $5M for the property and they couldn't refuse. The three family members would never see that kind of profit in their lifetimes. How can you blame them?
Fordman

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Location, Location, Location.  I have no way of checking your numbers so I take them at face value.  My center owner recently built a new home near Ann Arbor Mi.  He drives a Lexus SUV.  He is gone to the Bahamas or places like that 2-3 times every winter (usually for2 weeks at a time)  He owns a 24 lane center that is full every night with leagues.  On weekends when the leagues are done he fills the place up with those dumb kids who want to bowl in the dark.  Must be the easy shot?
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mrbowling300

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Reply with quote  #5 
Growing up, I bowled at West Bloomfield Lanes.  48 Brunswick Lanes.  They opened up in 1976, and were always filled.  It was located next to an apple orchard, where Beaumont (Hospital) Medical Center is now located on Orchard Lake Road.  In fact, I can remember there being a field with a sign, "Future home of West Bloomfield Lanes".  Once open, it was very busy.  It was the place to bowl on a Friday and Saturday night, and they always took reservations to get a lane.  They had moonlight no tap doubles that started Sat at midnight, that always had 20+ lanes going. They had leagues galore.  In the early 90s, it wasn't like it used to be.  Even by then, leagues were dwindling, etc.  The land turned out to be a great piece of property on what became a very busy strip of retail strip centers on Orchard Lake Road.  In 1994, Barnes and Noble Books bought the property for $6,000,000, and the owner closed up.  It was a short lived center, 1976-1994.  He said he was going to open another alley further west, but he never did.  His lanes manager, still works in town for Drakeshire Lanes.  As far as Larry, after the sale, he took a cross country trip on his motorcycle, and from what I understand, he's doing well to this day.  

Our leagues moved from there to Country Lanes.  The location of Country Lanes is poor, and there's no way any retail would be attracted to that area.  It's more in a neighborhood setting, located next to a neighborhood on one side, and apartments next to and across the street. I could never see any redevelopment of the site/building into anything else, but close up, tear the structure down, and build more apartments on the site.  They have survived by living off those centers that have closed in close proximity to them, in my side of town.  I don't know what the future holds, but the owner Jim, seems pretty committed to his business.
Dare

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Reply with quote  #6 
I started bowling at Pee Wee Reese Lanes when they first opened when
their 25 year lease ended they closed because Walgreen's offered the
owner of the building $14,000 a month rent,much more than the $2,000
per month Pee Wee was paying.

Same thing happened to another of my favorites,the drive-ins
RoadRunner

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In Tucson, one family owns four separate bowling alleys. Just last summer they closed a fifth one they owned because a call center wanted their property. It was a good center, one that had been host to a PBA summer stop for many years and still had a big league base, and had a particular draw with Air Force members whose base is just a block down the road.

They took all the equipment out to update the oldest and most in need of modernizing of their centers. Unfortunately, just after all the work was done, the deal fell through and now the bowling alley sits empty. The owners must have fallen in love with the idea of money for their land, since its still on the market despite a large customer base begging them to re-open.
SpinBowler300

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Reply with quote  #8 
I consider someone willing to sell for the "right price" not to be someone who wants to be in bowling. They were just waiting for the money to come to them.

In the case of Continental, I heard from multiple sources the the kids got screwed in the deal because dad kept all of the money from the sale. Dad let the kids profiit only from the sale of the equipment inside the bowling center. The funny part is that dad died about a year after the sale and did not get to fully enjoy his fortune.

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Pullmyfinger

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Reply with quote  #9 
Quote:
Originally Posted by amf300bowler
I consider someone willing to sell for the "right price" not to be someone who wants to be in bowling. They were just waiting for the money to come to them.

In the case of Continental, I heard from multiple sources the the kids got screwed in the deal because dad kept all of the money from the sale. Dad let the kids profiit only from the sale of the equipment inside the bowling center. The funny part is that dad died about a year after the sale and did not get to fully enjoy his fortune.


Ouch. 
Fordman

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Reply with quote  #10 
I have heard of this many times.  Why would someone build a bowling center or open one on someone else's property?  That sounds crazy.
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swingset

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Quote:
Originally Posted by Fordman
I have heard of this many times.  Why would someone build a bowling center or open one on someone else's property?  That sounds crazy.


Indeed, that's a very poor business model for a labor-intensive and technical business like bowling. If I didn't own the land, I wouldn't consider building something like that. I understand it's part of many business real estate strangleholds (which is yet another reason bowling alleys aren't being built), but leasing then constructing a modern bowling alley? No way. That's like building on a fault line.

The truth is many bowling alleys already in existence owe their success to being on property that's already in the proprietor's name and often in parts of town where real estate is relatively cheap (nice way of saying crappy part of town). Because they were build 20+ years ago, the nice areas have moved past them and they enjoy some buffer in this way - no one's threatening to build a mall on any of the houses I frequent. If they go out, it will be purely because they can't keep customers coming in.

I get that the square footage argument makes NEW alleys a losing proposition, that's obvious for most of the nation, but reinvesting in existing lanes and turning them around can be a good business model....we've seen it here with Wayne Webb's Columbus Bowl, which is enjoying a new limelight after years of neglect. Right owner, right town, there's a future for this.

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Fordman

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Reply with quote  #12 
You have to be able to sell a lot of booze too.
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swingset

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Quote:
Originally Posted by Fordman
You have to be able to sell a lot of booze too.


Booze is a profit center, for sure. Really food and concessions is where its at. Soda is a hell of a profit stream - know how much fountain soda costs per .oz? It's a couple of pennies. A large that hits the wallet at $3.00 is one of the most profitable items in a bowling alley, with the least amount of overhead (unlike liquor, which carries more hidden costs and liabilities). Vending machines aren't quite as lucrative, but close.

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Pullmyfinger

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Quote:
Originally Posted by Fordman
I have heard of this many times.  Why would someone build a bowling center or open one on someone else's property?  That sounds crazy.


Never understood that either. Stu Evans Lincoln Mercury built a brand new dealership on M-59 about 15 years ago. Business started out well, but some bad choices put them in a financial bind and were forced to close it a few years later. Not long after that Ford decided to move Crest Lincoln Mercury into the building (Contractually Ford has some kind of financial interest in every dealership). As they were starting to receive inventory, a lawyer contacted them and ordered them to stop. Turns out somehow Stu Evans sold the land from under the building. Ford owned the building, but not the land. The price of the land was outrageous so Ford pulled out. After several other new and used franchises tried their luck there and failed, they ended up selling it to Lifetime Fitness.  
Fordman

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Reply with quote  #15 
If you have a center that has a nice bar and good food you can make a lot of money on it.  I don't know how a center could stay in business in a dry county.  Liabilities are a big expense though.  I heard from a reliable sourse that the center I bowl in has to pay over $100,000.00 per year for ins. 
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