Dave & Buster’s sees some light at the end of what has been a dark tunnel.
The food-and-games chain has struggled with brutal same-store sales over the past two years. It finished the last fiscal year with same-store sales down 9.4%. And on the surface its first quarter of this year wasn’t much better, with the Dallas-based company reporting an 8.3% decline in the period ended May 6, the company said on Tuesday.
Yet those sales numbers improved dramatically as the quarter went on. In February, same-store sales were down 11.9%. By April, the end of the period, they were down 4.3%. So far this quarter, meanwhile, they are down 2.2%.
That’s still down. But the number is still a good bit better than the chain has averaged. Dave & Buster’s first-quarter result was its ninth-straight negative number, a period in which the company averaged a nearly 7% decline.
“We’ve got a lot of opportunity to drive top-line sales,” Interim CEO Kevin Sheehan told analysts on Tuesday, according to a transcript on the financial services site AlphaSense. “We are in the second or the third inning, or the beginning of the second quarter of a basketball game. We’ve got a long way to go. So getting the business fixed into the right cadence is job one.”
The result sent Dave & Buster’s stock up more than 6% in early-hours trading on Wednesday.
The food-and-games company is undertaking a fix-it plan while it searches for a new CEO. Chris Morris resigned in December and was replaced on an interim basis by Sheehan, the company’s chairman, who has undone several of the former chief executive's moves in a bid to get sales back on track. “We unwound clear mistakes,” Sheehan said.
Marketing has been a big one. The company has reconfigured its media spending, focusing more on television with a simplified message.
It also reintroduced a value-focused Eat & Play Combo, which has helped generate traffic and drive sales. It also added a Summer Pass allowing for unlimited games and discounts on menu items, Sheehan said. The company also brought back top-selling entrees that had been removed from the menu and “corrected many pricing issues,” he said.
Sheehan also said the company has scaled back changes and returned to previous operations practices that were proven. It is also rolling out incentives for store managers based on same-store sales growth “that has positively shocked the system in a very morale-boosting way.”
“We were acquiring too many not-fully-tested or thought-out changes to promotions, menu, service style, pricing, labor setup, remodels, all while cutting back on training and failing to properly engage with the store team,” Sheehan said.
Dave & Buster’s has completed nearly 48 remodels, which have generated better sales in recent months. The company believes that is another source of potential sales down the line. It also plans more new store development and opened two locations in Kileen, Texas, and Lansing, Michigan. It has already opened two more locations this quarter in Freehold, New Jersey, and Wilmington, North Carolina.
Dave & Buster’s said that it largely generated sales with improved traffic and fewer discounts. The company sees opportunity both by improving operations during peak periods but also by doing more to drive sales during lower-selling periods such as lunch and late night.
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