Strike It Rich
Built in 1970, this 32-lane bowling center features a bar, fast-food restaurant, and pro shop. It is located on a major highway in a growing suburb. Three bowling aficionados bought the business in 1997 and have since spent more than $500,000 on renovation, including installing a new automated scoring system in 2000, upgrading the 60-seat bar, and replacing the carpet and tile throughout the building. As important, they instituted a promotion called Cosmic Bowling--think black lights and loud music--for which birthday parties and late-night teenage crowds are willing to a pay a premium.
A 32-lane competitor opened last year about eight miles away, but another nearby center with 56 lanes was recently closed so the land could be redeveloped. Thus, the current owners of this center think there's an opportunity to attract new customers. In terms of recurring business, 40 percent of revenue comes from league play and the center is home to bowling teams from two high schools.
The 30-seat restaurant, currently vacant, has in the past produced $1,000 a month in lease income. A general manager runs the center and a staff of six. One of the owners passed away; the two remaining partners are eager to cash out to focus on other businesses.
Price: $1.4 million including 2.8 acres of land. The broker says that an industry veteran should be able to get a bank to back him or her with 20 percent down, compared with 30 percent for a novice.
Price Rationale: Centers of this size typically sell for five to six times cash flow or two times revenue. With cash flow at almost $200,000 in 2005 and revenue of $863,000, this price appears reasonable.
Pros: It's a fun business, with room to expand. The seller suggests one possibility: A buyer with capital could transform the existing bar into a classier sports-bar destination to appeal to nonbowlers.
Cons: The center's operating margin is only 10 percent, and revenue derived from league play trails the industry average. The scoring system may already be obsolete, and it could cost $200,000 to replace.
The Bottom Line: The current owners have brought the center back to profitability. Now this business needs a savvy promoter.
*Earnings before interest, taxes, depreciation, and amortization. Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Pat Bosco of Sandy Hansell & Associates at 847-644-7039.
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