Same-store sales at Dave & Buster’s and its sister chain Main Event declined 6.3% in their fiscal second quarter, the company said Wednesday.
It continued a difficult run for the food-and-games concepts. Same-store sales have been slowing in the past three quarters. The results also disappointed investors, who sent the company’s stock down 5% in morning trading on Thursday.
“This is a team that’s very much focused on delivering on that long-term plan,” CEO Chris Morris told investors on Wednesday, according to a transcript on the financial services site Sentieo/AlphaSense. “We don’t really get caught up in month-to-month trends.”
Still, comparisons do not get easier. And same-store sales have been slowing when compared with pre-pandemic levels—they were up 17.5% in the third quarter last year compared with the same period in 2019, for instance, and have slowed in each period since.
Morris said Dave & Buster’s has “sliced-and-diced” the data and can’t make see any noticeable consumer trends to explain the slowdown. Executives simply blamed difficult comparisons for the slowdown. Same-store sales, Morris noted, remain 6% above where they were in the same period in 2019.
“We’ve analyzed the heck out of our business,” Morris said. “There’s not one thing that we could point to that would suggest that [the slowdown is] related to a shift in consumer behavior.”
But they also have plans to boost revenue. The chain plans to bring back its successful All You Can Eat Wings promotion on Mondays and Thursdays during football season. It is also marketing a $5 Bites menu as part of its fall football marketing campaign. And the company is building its loyalty database, now with 5.2 million users—up nearly 10% from last quarter.
Customers in Dave & Buster’s loyalty database come in 50% more frequently and spend 15% more when they visit.
Dave & Buster’s also plans what it calls “strategic game pricing” to boost revenue. Most of Dave & Buster’s earnings come from its games. The company believes that improving its pricing strategy there could boost revenue over the long term, “while still maintaining our everyday value proposition with game prices still well below our peers,” Morris said.
Improving its menu is also an opportunity, he said. The company has tested a new, simplified menu that improves quality. It also features improved technology to speed service and improve labor efficiency. Morris said stores that have tested the new menu have improved same-store sales in the low single digits, with the cost of sales improving by 170 basis points thanks to improved operational efficiency.
The company plans to launch its new menu systemwide by the end of this month.
It is also planning remodels. The company launched a dozen test remodels last month that included improved entertainment offerings. They also improve the layout to increase traffic and productivity and feature more technology. “It’s only been three weeks,” Morris said. But “the new format is being well received by our guests.” He said same-store sales are ahead of projections of a double-digit improvement.
And Dave & Buster’s hopes special events will be a revenue driver. The company plans to adopt some strategies used by its Main Event brand to improve the special events business at the much larger Dave & Buster’s. That includes adding sales managers to stores that can drive more of that business. Stores that have taken that step have doubled the special events bookings in the second half of the fiscal year compared with those that haven’t.
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