Westlake Lanes Bowling
Memorandum
To: Shelby Givens (General Manager)
From:
Subject: Westlake Lanes: How can this be saved
Date: March 10th 2010
______________________________________________________________________________
As you know your business Westlake Lanes is currently not performing up to the mark. I think there are a lot of steps we can take for the betterment of the business. There are many problematic issues with the business and I have identified some of the core ones-:
• It feels old, no major renovation done in a long time
• More machines need to be replaced, maintenance expense is on the rise
• Since 2004, Revenues have fallen by 50% and healthy profit five years ago has turned into a loss
• Not targeting the right demographics of people aged 21-44
During my analysis, I looked at several scenarios, which included renovating the bowling alley into an urban bowling lounge, converting it into a kid friendly place, keeping the business as it is, or selling the business. In the appendix attached you would see that I have taken 3 cases into consideration for urban bowling lounge and kid friendly bowling alley.
• Worst Case Scenario (Low Revenue)
• Moderate Scenario (Average Revenue)
• Best Case Scenario (High Revenue)
All the assumptions are mentioned in the appendix
Option 1: Urban Lounge/ Bowling Alley
Pros
The Bowling alley already has a liquor license, which is very expensive to attain. Alcohol sales also have a very high gross profit margin as compared to food and beverage. In this alternative our target group will be young professionals in the age group if 21-34, who spend more per person thereby generating higher revenue even with less footfall. By combining a bowling alley and a lounge we are creating a new market, which is currently not present nearby, thereby creating a competitive advantage. This also reduces the threat of new entrants, as investment is very high. Buying power in Raleigh is also on the rise, which further supports this option.
To: Shelby Givens (General Manager)
From:
Subject: Westlake Lanes: How can this be saved
Date: March 10th 2010
______________________________________________________________________________
As you know your business Westlake Lanes is currently not performing up to the mark. I think there are a lot of steps we can take for the betterment of the business. There are many problematic issues with the business and I have identified some of the core ones-:
• It feels old, no major renovation done in a long time
• More machines need to be replaced, maintenance expense is on the rise
• Since 2004, Revenues have fallen by 50% and healthy profit five years ago has turned into a loss
• Not targeting the right demographics of people aged 21-44
During my analysis, I looked at several scenarios, which included renovating the bowling alley into an urban bowling lounge, converting it into a kid friendly place, keeping the business as it is, or selling the business. In the appendix attached you would see that I have taken 3 cases into consideration for urban bowling lounge and kid friendly bowling alley.
• Worst Case Scenario (Low Revenue)
• Moderate Scenario (Average Revenue)
• Best Case Scenario (High Revenue)
All the assumptions are mentioned in the appendix
Option 1: Urban Lounge/ Bowling Alley
Pros
The Bowling alley already has a liquor license, which is very expensive to attain. Alcohol sales also have a very high gross profit margin as compared to food and beverage. In this alternative our target group will be young professionals in the age group if 21-34, who spend more per person thereby generating higher revenue even with less footfall. By combining a bowling alley and a lounge we are creating a new market, which is currently not present nearby, thereby creating a competitive advantage. This also reduces the threat of new entrants, as investment is very high. Buying power in Raleigh is also on the rise, which further supports this option.