From February through April of this year, same-store sales at Dave & Buster’s declined more than 5%, marking the chain’s 13th straight quarter of negative same-store sales.
During a call with analysts to discuss the quarter in June, then-CEO Tarun Lal said a barrage of macroeconomic factors contibuted to the chain’s struggles: high gas prices, geopolitical uncertainty, and a “meaningful softness in consumer sentiment.”
Lal abruptly retired from Dave & Buster’s in August to spend more time with his family in India. CFO Darin Harper took the reins, and on Monday, he presided over his first earnings call as Dave & Buster’s CEO.
Though the chain delivered another down quarter, with a same-store sales decline of 2.4% and a net loss of $12.5 million, Harper deliberately left the economy out of his opening remarks.
“That is a pressure we’re facing,” he acknowledged later, in response to an analyst’s question about the macro impact in the quarter. But, he said, there is still plenty of demand to go around for brands like Dave & Buster’s.
“The reason I say that is other brands who were in the same economic environment we're in have performed better,” he said. “I think we feel like despite the difficult environment, we can still execute and grow sales in it.”
Harper explained that Dave & Buster’s has over 90% brand awareness nationally and a specific use case that consumers plan for days in advance. But for some time now, those consumers have been passing over Dave & Buster’s for those occasions.
It’s not clear where they’re going instead. But there is certainly no shortage of places to get food with a side of games these days. The eatertainment segment once dominated by Dave & Buster’s is now home to concepts offering everything from golf to darts, autoracing, pickleball, and scavenger hunts.
Dave & Buster’s has had trouble breaking through with customers seeking these experiences. Harper said this is in part a result of an overstuffed marketing calendar.
“Over the last few years, when it comes to that [brand] recall for the guests, it's very confusing for them,” he said. “‘Hey, what's Dave & Buster's running today?’ ‘I don't know, there's too much stuff going on.’”
One of his priorities as CEO is to simplify the message so that customers are more likely to think of Dave & Buster’s when it comes time to plan a night out. And that message will be about value: Harper mentioned wanting to “beat the drum” about the chain’s Eat & Play Combos and half-price games on Wednesday and Sunday.
The strategy has worked for other casual-dining chains. Though they may not compete with Dave & Buster’s directly, Chili’s, BJ’s Restaurants, Red Robin, Outback Steakhouse, and Applebee’s have all pushed value meals in recent years, and seen traffic improve as a result.
After getting people through the door, though, Dave & Buster’s needs to give customers more reasons to stick around and spend. The chain’s gameplay business, which accounts for about 60% of its sales, has lagged behind its food and beverage segment in recent quarters. Games revenue declined 9% year over year last quarter, while food and beverage was up 9%. Dave & Buster’s customers are eating, but they’re not playing.
In an effort to fix this trend, the chain has been introducing new games for the first time in years, with an emphasis on multiplayer games and pop culture tie-ins such as “Stranger Things.” Data shows that customers are liking the new games, Harper said, but the chain also has some catching up to do after several years of “underinvest[ing] in the midway.”
“A new game stand-alone is not going to be enough to do that,” he said.
The chain has also lowered the prices for its games, a move that has resulted in customers spending as much as 20% more time on the game floor. That has not yet impacted game revenue — they’re still spending about the same amount of money — but the hope is that it makes customers feel like they’re getting more bang for their buck and entices them to order more food or another drink.
Executives are also excited about a plan to tap into consumer interest in collectibles through its games. That could mean more attractive prizes in the claw machine or the Win! Store, where customers can redeem their arcade winnings for merchandise.
“I think a lightbulb went off for us as a management team in terms of the customer demand for merchandise,” said Cory Hatton, interim CFO, during Monday’s earnings call. “We just feel like we have a really big moment here to bring it into a really natural ecosystem that we already have built, and that's going to reap some really big rewards in the future for us and something we're very focused on.”
New COO Amanda Busby will also play a key role in improving the Dave & Buster's experience for customers. She joined the chain in August after years at airport restaurant operator SSP and Red Robin and has been charged with raising standards for staff.
"Delivering a high-quality guest experience is critical in driving repeat visitation," Harper said. "We believe that Amanda and her team are already making significant improvements on that front and will continue to do so."
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.