Raphael Stevens

Disney topped earnings estimates while reporting revenue that was roughly in line with analyst expectations.
Disney+ and Hulu reported a combined profit in the quarter for the first time ever.
When combined with ESPN+, the streaming unit reported a loss of $18 million in the quarter.
Traditional TV revenue and box office sales slumped in the quarter.

The “Partners” statue of Walt Disney and Mickey Mouse, at Cinderella Castle at the Magic Kingdom, at Walt Disney World, in Lake Buena Vista, Florida, photographed Saturday, June 3, 2023.
Joe Burbank | Tribune News Service | Getty Images

Disney reported fiscal second-quarter earnings Tuesday that beat analyst estimates after narrowing streaming losses. Revenue was in line with expectations.
Disney’s total segment operating income jumped 17% as the company’s entertainment streaming applications — Disney+ and Hulu — turned a profit in the quarter for the first time. When combined with ESPN+, the streaming businesses lost $18 million in the quarter, much narrower than the $659 million loss the division reported a year earlier.

Entertainment streaming revenue (excluding ESPN+) rose 13% in the quarter to $5.64 billion, and operating income was $47 million after a loss of $587 million a year prior. Disney credited increased Disney+ subscribers and higher average revenue per user for the gains.
Disney+ Core subscribers increased by more than 6 million in the second quarter to 117.6 million global customers. Total Hulu subscribers grew 1% to 50.2 million. ESPN+ subscribers fell 2% to 24.8 million.
Here is what Disney reported compared with what Wall Street expected, according to LSEG:

Earnings per share: $1.21 adjusted vs. $1.10 cents expected
Revenue: $22.08 billion vs. $22.11 billion expected

“Our results were driven in large part by our Experiences segment as well as our streaming business,” Disney Chief Executive Officer Bob Iger said in a statement. “Importantly, entertainment streaming was profitable for the quarter, and we remain on track to achieve profitability in our combined streaming businesses in Q4.”
U.S. parks and experiences revenue rose 7% to $5.96 billion, and international sales soared 29% to $1.52 billion on increased attendance and higher prices at the Hong Kong Disneyland Resort.

Disney reported a loss attributable to the company of $20 million, or 1 cent per share, compared with a profit of $1.27 billion, or 69 cents per share in the year-earlier period. Adjusting for restructuring and impairment charges, among other things, Disney reported a profit of $1.21 per share. Revenue rose to $22.08 billion, up 1% from a year earlier.
Disney shares fell more than 8% in premarket trading Tuesday.

Traditional businesses struggle

Disney’s TV business continued to lag as millions of Americans drop cable TV each year. While ESPN’s revenue rose 3% to $4.21 billion, operating income dropped 9% to $799 million. A drop in cable subscribers and higher programming costs attributable to the College Football Playoff led to the decline. ESPN’s advertising revenue increased to offset the subscriber losses.
Linear network revenue across Disney’s portfolio, excluding ESPN, fell 8% to $2.77 billion. Operating incomed slumped 22% to $752 million. Disney cited fewer subscribers and a drop in international affiliate fees due to contract rate decreases for the declines. Advertising revenue decreases due to “lower average viewership” were also a factor, Disney said.
Content sales, licensing and other revenue, which includes box office, fell 40% in the quarter to $1.39 billion as Disney didn’t have any blockbuster movies in the quarter. Disney noted last year’s quarter also included the benefit of the ongoing performance of “Avatar: The Way of Water,” which was released in December 2022 and generated more than $2.3 billion in global box-office sales.
Disclosure: Comcast, which owns CNBC parent NBCUniversal, is a co-owner of Hulu.
This story is developing. Please check back for updates.

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Disney’s second-quarter results shows that the company’s future strategy is fully in effect.
Disney+ and Hulu made money in the quarter — $47 million. Last year in the second quarter, Disney+ and Hulu lost $587 million.
Excluding ESPN, linear TV operating income slumped 22% to $752 million.

The Walt Disney Company CEO Bob Iger attends the Nominees Luncheon for the 95th Oscars in Beverly Hills, California, U.S. February 13, 2023. 
Mario Anzuoni | Reuters

For Disney, the future is now.
It’s been five years in the making, but Disney nearly turned a profit in its streaming units for the first time in the second quarter, losing just $18 million between Disney+, Hulu and ESPN+. That’s improvement from a loss of $659 million a year ago.

Stripping out ESPN+, Disney+ and Hulu actually made money in the quarter — $47 million. Last year in the second quarter, Disney+ and Hulu lost $587 million.
The thesis among all major legacy media companies has been that streaming will eventually take over for cable TV as the primary money-making engine. That’s why Disney, Paramount Global, Warner Bros. Discovery and Comcast’s NBCUniversal all built their own subscription streaming services.
That hasn’t happened yet, but this quarter finally suggests that moment is upon us. It’s not just that Disney nearly made money in streaming — it’s that the company’s traditional linear TV results were awful.
For years, Disney held back on making ESPN available outside of the cable bundle because of how lucrative the sports network was inside the walled garden of traditional TV. Those days are also nearly over. Disney is launching a skinnier bundle of linear cable channels with Warner Bros. Discovery and Fox in the fall, making ESPN available outside of traditional cable for the first time. Next year, Disney will launch its flagship ESPN streaming service, which will allow consumers to subscribe to ESPN without cable at all.
Looking at Disney’s results in the second quarter, it’s clear why the company has finally pulled the ripcord on ESPN. While ESPN’s revenue rose 3% to $4.21 billion, operating income dropped 9% to $799 million. A drop in cable subscribers, and higher programming costs attributable to the College Football Playoff led to the decline, Disney said. ESPN advertising rose to offset the cable subscriber decline.

The decline in the company’s other linear networks, such as ABC, Disney Channel, FX, National Geographic, and Disney Junior, was even more alarming. Linear network revenue across Disney’s portfolio, excluding ESPN, fell 8% to $2.77 billion. Operating income slumped a whopping 22% to $752 million.
Disney shares fell 5% in premarket trading.

The new reality

Simply put, traditional TV is dying on the vine. It’s declining at the most rapid pace consumers have seen.
Disney has prepared for this moment for years. Streaming will become profitable in the fourth quarter, Disney reiterated, and will “be a meaningful future growth driver for the company, with further improvements in profitability in fiscal 2025,” the company said in its earnings release.
The big question for the company is if its investors will embrace this new reality. That will be up to Disney’s streaming execution in the years to come, and likely, Chief Executive Officer Bob Iger’s still to-be-named successor.
Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.
WATCH: Disney earnings top analyst estimates as streaming nearly breaks even in the quarter More

Private equity firms have been circling Peloton for a potential buyout, people familiar with the matter told CNBC.
Some of the discussions have centered on how to cut Peloton’s operating expenses to make a buyout more attractive.
Last week, Peloton announced CEO Barry McCarthy would be stepping down and said it planned to cut 15% of its staff as it issued a disastrous earnings report.

A Peloton Bike inside a showroom in New York, US, on Wednesday, Nov. 1, 2023. Peloton Interactive Inc. is scheduled to release earnings figures on November 2.
Michael Nagle | Bloomberg | Getty Images

A number of private equity firms have been considering a buyout of Peloton as the connected fitness company looks to refinance its debt and get back to growth after 13 straight quarters of losses, CNBC has learned. 
In recent months, the pandemic darling has had talks with at least one firm as it considers going private, people familiar with the matter said. The firm’s current level of interest in acquiring Peloton is unclear. A number of other private equity firms have been circling Peloton as an acquisition target, but it’s unclear if they have held formal discussions.

Firms have zeroed in on how to cut Peloton’s operating expenses to make a buyout more attractive. Last week, Peloton announced a broad restructuring plan that’s expected to reduce its annual run-rate expenses by more than $200 million by the end of fiscal 2025. 
Shares of Peloton soared more than 17% in premarket trading after CNBC’s report was published.
There is no guarantee a deal will be made, and Peloton could remain a public company. The people spoke on the condition of anonymity because the talks are private. 
A Peloton spokesperson declined to comment on CNBC’s reporting. 
“We do not comment on speculation or rumors,” the spokesperson said. 

Peloton has become a takeover target after seeing its market capitalization plummet from a high of $49.3 billion in January 2021 to about $1.3 billion as of Monday.
Peloton has a consistent and profitable subscription business with millions of loyal users, but the business has been hamstrung by the equipment that originally made it a household name. The company’s bikes and treadmills are costly to make and have been the subject of numerous, high-profile recalls that have turned members away from the brand and cost Peloton millions. 
Plus, as many consumers from all income groups pull back on big-ticket purchases, demand for at-home exercise equipment that can cost thousands of dollars is limited. 
Over the last two years, Peloton has been on a downward trajectory as it struggles to grow sales, generate free cash flow and chart a path to profitability. Demand for its hardware has fallen and its costs have been too high for a company of its size. 
Last week, Peloton announced CEO Barry McCarthy would be stepping down as it issued a disastrous earnings report that missed Wall Street’s expectations. On the same day, it announced plans to cut its staff by 15%, or by about 400 employees, explaining “it simply had no other way to bring its spending in line with its revenue.”
The savings Peloton will generate from the restructuring will come primarily from the layoffs, along with cuts to marketing, research and development, IT and software. The cuts will make it easier for Peloton to generate sustained free cash flow, which executives said can be obtained even without sales growth, and will make it more attractive to the private equity firms that have been interested in it. 
Debt has also weighed on Peloton. Its debt totaled about $1.7 billion as of March 31. The company owes $692.1 million on its term loan, which could mature as early as November 2025, and $991.4 million on its 0% convertible senior notes, which are due in February 2026, according to a review of Peloton’s most recent quarterly securities filing. 
Last week, the company said it’s working closely with its lenders at JPMorgan and Goldman Sachs on a “refinancing strategy.”
“Overall, our refinancing goals are to deleverage and extend maturities at a reasonable blended cost of capital,” the company said. “We are encouraged by the support and inbound interest from our existing lenders and investors and we look forward to sharing more about this topic.”
One source close to the company said Peloton isn’t expected to have any issues refinancing its debt. More

Life Time fitness is trying to grow its brand by investing in America’s fastest-growing sport, pickleball, and expanding its offerings.
The upscale fitness company has teamed up with Lululemon, naming it as an official apparel partner of Life Time pickleball and tennis.
It also has partnerships with tennis legend Andre Agassi and top-rated pickleball player Ben Johns to grow the sport further.

Ben Johns and Anna Bright play pickleball at the new Life Time at Penn 1 next to Madison Square Garden in New York City on May 4, 2024.
Mike Stobe | Getty Images

Life Time fitness is all in on pickleball.
That commitment to America’s fastest-growing sport was clear in New York City on Saturday, where one of the world’s top-ranked male pickleball players, Ben Johns, and former tennis great Andre Agassi were practicing their dinks and drops at Life Time’s brand-new courts.

It is all part of the upscale fitness company’s strategy to grow its brand by investing in pickleball.
To continue that goal, Life Time on Tuesday announced it is teaming up with Lululemon, naming the company as an official apparel partner of Life Time pickleball and tennis. The relationship includes selling Lululemon apparel online at Life Time clubs, in addition to collaborating on key pickleball events.
“This partnership highlights the extraordinary growth of these sports and brings together the best in athletic apparel with the best in tennis and pickleball experiences,” said Celeste Burgoyne, president of Americas and global guest innovation at Lululemon.
Life Time, founded in 1992, currently has more than 170 “athletic country clubs” across the country.
Such clubs are looking for creative new ways to get America moving again as the fitness landscape has evolved post-Covid. Life Time CEO and founder Bahram Akradi, an avid pickleball player himself, is betting that the hot, tennis-like sport will be that catalyst.

(L-R) Tyson McGuffin, Collin Johns, Life Time Founder and CEO Bahram Akradi, Andre Agassi, Anna Bright and Ben Johns pose for a photo at the new Life Time at Penn 1 next to Madison Square Garden in New York City on May 4, 2024.
Mike Stobe | Getty Images

“Pickleball is working. It’s packed all the time,” he told CNBC.
And it keeps growing. On Saturday, Life Time unveiled Manhattan’s largest indoor pickleball destination, just blocks from Penn Station. The 54,000-square-foot club has seven street-level pickleball courts that officially opened on April 15.
Akradi said the company has installed new playing surfaces or converted tennis courts nationwide and now offers more than 700 pickleball courts across the country. It has become the largest provider of permanent pickleball courts in the country.
Akradi estimated that the company has invested between $50 million and $100 million into pickleball already, and it has brought in 6% to 7% of Life Time’s membership dues.
“That’s substantial. That’s a big number,” he said.
Life Time has also partnered with professional pickleball to host nearly a dozen pickleball tournaments on the company’s courts, with some even being broadcast on national television. This week, for example, the Atlanta Open, part of the PPA Tour, will compete at a Life Time in Peachtree Corners, Georgia, with 16,000 people expected to be in attendance.

Andre Agassi and Anna Bright play pickleball at the new Life Time at Penn 1 next to Madison Square Garden in New York City on May 4, 2024.
Mike Stobe | Getty Images

Agassi recently started playing pickleball, which is a lower impact sport, after racking up years of wear and tear on his body from his illustrious tennis career.
“I think wherever we are now, there’s going to be 10 times the people playing the sport in the next five to seven years,” Agassi told CNBC. He said he thinks pickleball will succeed because it promotes healthy habits, builds community and has a low point of entry for beginners.
In February, Life Time appointed Agassi as the inaugural chairman of the company’s newly formed pickleball and tennis board, where he will be tasked with elevating the sport’s profile, programming and leagues.
“My hope is that it grows in college and grows in the Olympics,” Agassi said.
Off the court, Life Time is now offering advice from top pickleball player Johns. The company announced last month that he and his brother Collin will be providing members with 70 instructional videos to help players take their game to the next level.
“We partnered with Life Time because they are very into spreading pickleball and their members want to get better,” Johns told CNBC.
Johns has had a front-row seat to the exponential growth of the sport and said he has seen his salary grow 10-fold since 2021 as pickleball has captured more sponsors and media rights.
Already, Life Time’s pickleball strategy is showing early results.
While Life Time’s stock was down about 23% from March 2023 to March 2024, its first-quarter earnings report showed total revenue growing by $85 million from March of last year, adjusted EBITDA up more than 20% and net memberships up 38,000.
Analysts blame the recent poor stock performance on a combination of macro, balance sheet and interest-related concerns.
“LTH remains, in our view, the most underappreciated story in our coverage and perhaps in the broader consumer space,” a Guggenheim analyst wrote on May 1. More

There are signs that the U.S. consumer is still spending, especially on experiences.
But stubbornly high prices are squeezing consumers with lower incomes, pressuring everyday purchases and corporate profits.
Home Depot and Walmart kick off first-quarter retail earnings next week.

A customer walks through The Home Depot store on February 20, 2024 in Austin, Texas.
 Brandon Bell | Getty Images

The state of the consumer in 2024 is already taking shape — even before the country’s major retailers begin to report first-quarter earnings, starting with Home Depot and Walmart next week.
There are signs that the U.S. consumer is still spending, especially on experiences. But stubbornly high prices are squeezing consumers with lower incomes, pressuring everyday purchases and corporate profits.

Broadly speaking, credit card companies like American Express, Visa and MasterCard have described spending trends as “relatively strong,” “relatively stable,” and even “healthy.” Payment firms like PayPal and Block are still seeing strong transaction volumes and payment growth.
Airlines and hotels are expecting a strong travel season ahead, particularly when it comes to international destinations, with Morgan Stanley’s Michael Wilson noting that “one third of consumers prioritize travel over other discretionary purchases and services.”
In fact, a Morgan Stanley survey showed that 60% of U.S. consumers are planning a summer vacation this year — and just about half of those traveling are expecting to spend more than they did last summer.
Priceline parent Booking Holdings told analysts there are no signs consumers are taking shorter vacations or trading down in their hotel choices. Caesars said overall spending is still strong at its Las Vegas casino resorts.
What’s more, cruise lines are seeing record bookings, even as prices have soared. Passengers are also spending freely onboard the ships, despite having to pay significantly more for food and drinks.

Royal Caribbean’s Icon of the Seas, the world’s largest cruise ship, docked at the Port of Miami on Jan. 11, 2024. 
Mike Stocker | Tribune News Service | Getty Images

Concerts, too, are still hot tickets even at sky-high prices — with Live Nation saying there are “no issues at all on fan demand relative to last summer” and that “global fan demand is stronger than ever.”

Everyday purchases

But the picture is different when it comes to more discretionary items and everyday purchases as consumers appear more tight-fisted due to economic headwinds like elevated food costs, rising mortgage rates and fewer government rebates.
As online artisan marketplace Etsy put it, “consumer wallets remain squeezed so there’s often little left after paying for food, gas, rent and child care.”
Consumers have been delaying large purchases for their homes amid the economic uncertainty — potentially a key factor to watch when Home Depot and Lowe’s report results this month.
Wayfair, which reported results Thursday, told analysts that the bigger-ticket category “remains weak” and it’s uncertain when demand for home furnishings will improve. Stanley Black & Decker issued a similar warning, saying “muted consumer and DIY demand” has been a result of “some levels of hesitation from the consumer and from any end user in the bigger ticket items.”
Whirlpool, too, has experienced struggling appliance sales. And Pool Corp. — one of the country’s biggest distributors of pool supplies — said that although pool maintenance spending is “stable,” pool construction and more discretionary purchases were weaker due to high interest rates.
Consumers have also become more discerning with how often or where they dine out. Restaurant sales in the quarter largely disappointed Wall Street amid traffic struggles.

Stars Coffee logo is displayed on a mobile phone screen and Starbucks logo in the background for illustration photo. Krakow, Poland on August 23, 2022. Stars Coffee, owned by a pro-Putin rapper Anton Pinsky, opened the chain of coffee shops in Russia replacing Starbucks Corp which withdrew from the Russian market in March after Russian invasion of Ukraine. (Photo by Beata Zawrzel/NurPhoto via Getty Images)
Beata Zawrzel | Nurphoto | Getty Images

Starbucks CEO Laxman Narasimhan told analysts, “We continue to feel the impact of a more cautious consumer, particularly with our more occasional customer. And a deteriorating economic outlook has weighed on customer traffic, an impact felt broadly across the industry.” McDonald’s added that “the consumer is certainly being very discriminating in how they spend their dollar.”

Price sensitivity

What has become clear this earnings season is that U.S. consumers are increasingly price-sensitive, particularly when it comes to those everyday purchases. Bank of America’s Savita Subramanian notes that “consumer cracks are emerging,” especially among lower incomes.
Here are just some of the companies warning about price sensitivity:

Both Coca-Cola and PepsiCo have observed behavioral shifts in consumers seeking out value, particularly at the low end.
Meat producer Tyson Foods told analysts that cumulative inflation pressures have “created a more cautious, price-sensitive consumer” and that it’s experiencing “a little slippage to private label with lower-income households.”
Hershey said that it continues to see “value-seeking behavior from consumers.”
Special K and Pringles owner Kellanova saw a 5% decline in North America volumes amid elasticity pressures as a result of prices being 5% higher than a year ago.
Burger King and Popeyes parent Restaurant Brands noted, “We’ve seen consumers become a bit more sensitive to price, resulting in moderating check growth.”
Footwear and apparel maker Steve Madden bluntly said, “We do see a customer that still is price sensitive” and noted that its outlet stores have outperformed its full-priced business.

Weakness in the lower-end consumer could pose issues for discounters like Dollar General and Dollar Tree as well as off-price retailers like TJX, Ross Stores and Burlington Stores when they all report earnings in the coming weeks.
Amazon succinctly describes the new normal: “Customers are shopping but remain cautious, trading down on price when they can, and seeking out deals.” Etsy shared that same sentiment: “Consumers feel really pressured and so they are seeking value and deep discounts and deep promotions.”

Profit squeeze

As a result, companies are now being forced to compete for consumers’ dollars via promotions and deals. Some have found at least near-term success.
Shake Shack said its sales improved from February through April thanks to effective promotions and offers. Domino’s said its revamped loyalty program has helped sales. Taco Bell’s value menu has incentivized guest visits.
While there’s growing pressure on companies to cut prices to win over consumers, sticky inflation in food, energy, labor and other input costs poses a major hurdle to profitability for restaurants, retailers and consumer product firms alike.
Most companies have already seen decelerating pricing power in recent quarters — partly due to the more challenging demand climate and partly due to prices already being at very high levels. 

Pavlo Gonchar | Lightrocket | Getty Images

Shake Shack said it raised prices in mid-March, but executives told analysts they have “no current plans to further increase price this year.” That decision was made even though they “expect inflationary pressures in wages and food and paper to persist.”
With a greater focus on promotions, profit margins will be under more pressure. Look at Starbucks, which saw margins that both missed Wall Street estimates and shrunk compared to a year ago. One of the reasons cited in its earnings report for the disappointing margin performance: “increased promotional activities.” Compound that with weak traffic, and it’s a recipe for trouble.
Ultimately, as companies face more pricing pressure ahead, they will likely have to rely on other cost cuts or effective cost management to help preserve their profit margins in the coming quarters.
Brace yourself for an intriguing retail earnings season in the coming weeks.

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Dozens of former employees who say they were fired from Bowlero based on their age or out of retaliation plan to sue the bowling company after the U.S. Equal Employment Opportunity Commission closed its case against Bowlero, according to their lawyer.
The EEOC, which had been investigating Bowlero since 2016, told the company it won’t be moving forward with a lawsuit, which gives the individual claimants their right to sue.
In a letter the EEOC sent to Bowlero last week, the agency said its decision to close its investigation doesn’t clear the company of wrongdoing. 
Bowlero denies the claims against it.

A Bowlero location at Chelsea Piers in New York City. 

Dozens of former employees who say they were fired from Bowlero based on their age or out of retaliation plan to sue the bowling chain after the U.S. Equal Employment Opportunity Commission closed its case against the company, the attorney representing the claimants said Monday.
Bowlero, the world’s largest owner and operator of bowling centers, had been embroiled in an EEOC investigation since 2016 involving more than 70 former employees who claim they were unlawfully fired, the company previously disclosed in securities filings.

They alleged in complaints to the EEOC that Bowlero fired them for being too old as it worked to transform its hundreds of locations from what the company has referred to as “dingy” bowling alleys to upmarket experiences with elevated food and drink offerings, CNBC previously reported. Bowlero denies the claims. 
The company, which went public in late 2021 through a special purpose acquisition company, was among the select successful stocks to emerge from the SPAC boom. It owns two of the biggest brands in bowling — AMF and Lucky Strike — and operated more than 300 bowling centers across North America as of July, which is the most recent data available. Between 2021 and 2023, Bowlero nearly tripled its annual revenue, from $395 million to $1.06 billion, according to company filings. Bowlero’s stock is down about 21% year to date, as of Monday’s close.
On Monday, Bowlero disclosed in its fiscal third-quarter earnings release and quarterly securities filing that the EEOC has closed its case and will not move forward with a lawsuit. 
“The Company has received positive updates on the status of the age discrimination claims that had been pending with the EEOC … the EEOC issued Closure Notices for the individual age discrimination charges that had been filed, in most cases, many years ago with the EEOC,” Bowlero said in its press release. “The notices provide the claimants, as a matter of course, with an individual right to sue.”
Bowlero noted it received letters from the EEOC stating the agency has decided not to bring litigation against the company. In one of the letters, the agency said the closure of the cases doesn’t clear the company of wrongdoing. 

“By terminating the handling of this case, the Commission does not certify that [Bowlero] is in compliance. Also, our termination of the investigation does not affect the rights of any aggrieved persons to file a private lawsuit or the Commission’s right to sue later or intervene later in a private civil action,” said the EEOC’s letter, sent Friday. 
During the company’s earnings call with Wall Street analysts later Monday, executives said that the EEOC investigation was now behind them and would no longer be a distraction. 
“Over eight-and-a-half years, the company has vigorously denied and contested the false allegations made against it,” CEO Thomas Shannon said in his opening remarks. “We are pleased to report these very positive developments on behalf of our shareholders.” 
Later, when asked about the financial impact the EEOC investigation has had, finance chief Robert Lavan said “there’s been a few million dollars” that have flowed through the income statement, but “more importantly, it’s been a distraction.” 
“So we’re happy to focus 100% now on our business and get this behind us,” said Lavan. 
However, Daniel Dowe, a lawyer representing dozens of claimants, said the case hasn’t gone away — it will now just take another form.
The EEOC’s decision allows the former employees to move forward with their own lawsuits, and Dowe expects to file a single lawsuit on behalf of more than 70 former employees, he told CNBC. Dowe plans to seek monetary damages in connection with the case.
The EEOC had previously found reasonable cause in 58 of the complaints brought against Bowlero, and the rest were still under investigation when the agency closed its case, according to Bowlero’s securities filings and Dowe. The employees who still had cases pending with the EEOC also have the right to sue and are among the potential plaintiffs that Dowe is representing, he said. 
The company disclosed in the filings that the EEOC’s investigation also resulted in a determination of reasonable cause that Bowlero had been engaging in a “pattern or practice” — a term that indicates systemic issues — of age discrimination since at least 2013, which Bowlero also denies. The EEOC’s pattern or practice investigation was also closed, Bowlero said.
When the EEOC finds reasonable cause in a complaint, it means it believes discrimination occurred. The agency typically makes that determination in only a small fraction of cases each year, EEOC data shows. 
Under EEOC procedure, when the agency finds that discrimination has occurred, it works to resolve the situation between the employer and the victim, it explains on its website. If the parties are unable to come to a solution, the EEOC must decide whether to sue the employer — a matter the EEOC’s commissioners need to vote on. 
“Because of limited resources, we cannot file a lawsuit in every case where we find discrimination,” the EEOC explains on its website. 
The EEOC tried to settle the complaints with Bowlero for $60 million in January 2023, but those efforts failed last April, CNBC previously reported. 
It’s unclear if the question of whether to sue Bowlero made it to a vote with the EEOC’s commissioners. The EEOC declined to comment because most of its processes are confidential under federal law.
Dowe said that he requested the agency close its case last month so his clients could move forward with their own lawsuit. He added that he’s “delighted” the matter is now ready for private action.
“The investigations were thorough and deep and they resulted in 58 to zero decisions in our favor, so our clients felt we should let the EEOC do its work,” Dowe said. 
He added that age discrimination is “one of the worst forms of discrimination. Most of what you hear about in discrimination cases is about race and gender, but age is awful because people are at the end of their careers, they can’t go back to college and retool. It’s humiliating, it kind of ends their life in a disaster.” 
He told CNBC he plans to sue Bowlero for $80 million, plus legal fees. As of March 31, Bowlero had approximately $212.4 million in available cash and cash equivalents, according to its quarterly securities filing. Dowe said he has until mid-July to file the lawsuit.
Some of the complaints against Bowlero are years old and could be challenged under the statute of limitations, the company has said previously. Dowe said he is confident that his clients will prevail in federal court and there is “strong” case precedent in their favor.
In response, Bowlero’s attorneys Alex Spiro and Hope Skibitsky at law firm Quinn Emanuel said they “are pleased with the outcome of the EEOC investigation.” The attorneys said the company will fight any claims filed by its past employees. 
“Bowlero will defeat those claims,” the attorneys said. In previous statements, they denied the claims against Bowlero. 
In a separate but related matter, a request from former Bowlero executive Thomas Tanase to countersue the bowling chain for claims of extortion and retaliation was denied in Virginia federal court last week. Tanase’s attorneys previously said if the request is denied, the suit can and “likely will” be filed as a new action. Bowlero also denies Tanase’s claims. 
Tanase’s attorneys didn’t immediately respond to a request for comment. More