Britain’s second-biggest tenpin bowling operator has hired advisers to renegotiate leases on up to a third of its estate in an effort to return the venues to profit.
Essenden, which runs 37 centres under the Tenpin brand, said that it had appointed Ernst & Young to “look at the full range of options” for restructuring the loss-making sites.
Nick Basing, the chief executive, said that while some of the loss-making units were in poor locations and did not have a long-term future within the group, many were “well-located but over-rented”.
Asked about the possibility of a pre-pack administration, he said: “We’re not the first to have discussions with landlords and we won’t be the last. Our hope is to reach a consensual and collaborative outcome.”
News of the move comes amid speculation that Essenden could become a target for private equity. It is understood that Luke Johnson, the former Channel 4 and PizzaExpress chairman, briefly looked at the business a few months ago.
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Mr Basing declined to comment, insisting that his focus remained on pushing through the turnaround and restructuring strategy he initiated after joining the company 18 months ago.
The former Paramount Restaurants chief executive has cut the cost base by £4 million — resulting in 50 management redundancies — renegotiated supplier contracts, surrendered lease commitments in St Helens, Widnes and Preston and revamped sales and marketing. He has also sought to improve and update the bowling centres, adding Costa coffee shops in 11 of the sites, launching a café concept and introducing additional entertainment such as karaoke and laser games.
Mr Basing said that the company, like many of its peers, was in urgent need of updating after “a lack of investment and innovation” over many years. One of the centres in West London is to be relaunched in the second half of this year as a “family entertainment centre” at a cost of between £500,000 and £1.25 million and will act as a pilot.
The fruits of Mr Basing’s efforts were reflected in yesterday’s full-year results. Although sales fell from £58.1 million to £56.6 million, the like-for-like sales decline slowed from 8 per cent to 5.3 per cent and it returned to profitability.
Essenden made a pre-tax profit of £93,000, from a loss of £11.9 million in 2009. Mr Basing said that he was encouraged by evidence of an increase in frequency of visit by customers as a result of the operational changes.
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But he said that he was under no illusions about the challenge ahead. “We are in the eye of a storm ... and we’re in a niche business that suffers from a lack of scale and investment. But we have about 3.6 million customers and we estimate the industry has about 20 million, so this is something that a lot of people enjoy doing.”
• Having to squeeze into ill-fitting, foul-smelling bowling shoes could become a thing of the past at Essenden’s Tenpin centres. After customer research, the group is to conduct a “controlled test” allowing some customers to wear their own training or sports shoes. The bowling lane floor will be adjusted to ensure that it meets health and safety requirements.