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In Part 1 of this Series a case was made for establishing revenue growth as a key goal of a bowling- based business. Revenue growth can be achieved in two ways; selling more or charging more for what you sell. Charging more for what you sell is a matter of knowing what the market will bear in terms of pricing. Ideally increases in price will not lower demand however the manager must be prepared for just such a decrease. Clearly if volume (demand) remains the same Revenue will rise by the full amount of the price increase. Revenue will also increase if demand declines as long as the amount of revenue created by the increase in pricing exceeds the amount of revenue lost from the decline in demand. Bowling operators have for years generally been successful trading off volume for price. There are however limits to this strategy. As Pete Santora, a Fair Lanes executive, frequently stated in the 1980s, “In the end we will have one person bowling for $10,000 a game." Though Pete’s prophecy has not fully come to pass it is a useful reminder that we need to pay attention to volume in addition to revenue.
The successful manager understands why revenue is moving, either up or down. A measure of units sold (volume) provides completes the picture for the manager. An auto dealer counts the number of cars sold. An Air Conditioning repair company counts the number of service hours billed. A movie theater counts the number of tickets sold. Bowling has a traditional and useful measure in the number of games bowled, commonly referred to as lineage. The term has an interesting history. It is sometimes spelled linage but in both cases the root word is the same, ‘line’. Long before the first computer-based scoring systems were installed in a bowling center open play scores were kept by hand using paper score sheets. Each sheet for open play contained room for sixteen games to be recorded. A problem occurred relatively frequently where a customer misinterpreted how he was being charged for bowling. As an example a group of four people bowled a game against each other. The customers felt they had collectively bowled one game and should be charge for one game. The counterperson explains that there were four games bowled and charges the group accordingly. The customer group left convinced they have been ripped off. To avoid the problems bowling operators began explaining that the price paid is for each line filled-in on the score sheet. The exercise of counting games bowled became and exercise in counting lines filled-in on the score sheet. Lineage then became the term used to describe the number of games bowled and therefore became the tradition measure of volume.
Interesting story but why bother? There are many successful bowling operators including some rather large chains who do not count lineage. Their success aside, they are missing an opportunity to improve the management of each business. Counting lineage allows for the creation of a very useful metrics. Revenue divided by lineage yields a certain dollar amount. When the revenue generated is Direct Bowling Revenue the metric is called Price per Game (PPG). When the revenue generated is something other than Direct Bowling Revenue the metric is called Per Line Rate (PLR). Tracking PLR is useful in tracking performance in areas such as Shoe Rental, Food Sales, Bar Sales, and Amusements.
Food Sales provides a useful example. In week 1 the center generates $1000 in food sales. The total paid games bowled (lineage) for the week was 1,200. In week 2 the food sales jumps to $1,300 while lineage increases to 1,700 games. As the operator of the business are you pleased with the performance of your business? You generated more revenue but was the gain what should have been expected? Let’s look at the PLR to find the answer.
Example 1 - Food PLR
Food Revenue / Total Lineage = PLR
Week 1: $1,000 / 1,200 = $0.833
Week 2: $1,300 / 1,700 = $0.765
Although food revenue was $300.00 higher in Week 2 than Week1 the PLR dropped. Given the increase in lineage food revenue should have been $1,416 in week 2 with a constant PLR.
Week 1 PLR X Week 2 Lineage = Week 2 Anticipated Revenue
$0.833 X 1,700 = $1,416
Shoe Rental is another revenue area where PLR is particularly useful. Although the calculation is identical to the one use in the
food example an adjustment in the lineage total is needed to make the metric more meaningful. Everyone who bowls has the opportunity to purchase food. Shoe Rental is however almost exclusively generated by Entertainment and Casual (Open Play) bowling.
Example 2 - Shoe Rental PLR
League: 400 games
Open Play: 600 games
Total: 1,000 games
Shoe Rental Revenue / Open Play Lineage = Shoe Rental PLR
$750 / 600 = $1.25
Using the calculation of Shoe Rental PLR in example 2 the manager would expect to add $1.25 in Shoe Rental Revenue for every additional game of Open Play bowled. On the flip side she would understand a decline in Shoe Rental Revenue for every game of Open Play lost. One of the uses of Shoe Rental PLR is as an indicator of whether there may be theft of shoe rental revenue.
Per line rates, like all tools, have to be used in moderation. Any action taken to an excess becomes a liability, after all, abstinence
taken to the absolute means the end of the human race in one generation. Tracking PLR for every revenue line is equally not productive. Pick a few (no more than five) critical P&L lines and begin tracking PLR. Look for changes over time period, then ask questions, ask a lot of questions. One final key when using PLR is to be consistent with how lineage is counted. If you sell bowling by the hour along with or in place of game bowling, use a consistent conversion. An acceptable standard is five games per hour. Whatever conversion factor you select be absolutely consistent with its application over time.
Knowing that you are generating more or less revenue is good but not as useful as knowing what happens when your bowling center either gains or loses a paid game of bowling; lineage matters.