Dave & Buster’s is blaming mounting eatertainment competition and an unfavorable calendar shift for poor same-store sales, spurring the chain to downgrade its 2019 economic forecast and sending its stock price tumbling nearly 22% in midday trading Wednesday.
The Dallas-based gaming, food and drink chain reported a same-store sales dip of 0.3% for the quarter ended May 5, while total revenues grew 9.5% to $363.6 million. Dave & Buster’s opened seven new stores during the period and has eight units under construction.
The company revised its fiscal 2019 projections and now forecasts comparable store sales of negative 1.5% to 0.5%, down from an estimate of flat to 1.5% sales growth.
“Our results were mixed,” CEO Brian Jenkins said in a call this week with analysts. “While new store performance remains strong, comparable store sales were below expectations. … We are working to drive awareness of our F&B improvements but expect this will take time. Additionally, we expect increased competition over the balance of the year as we continue to see aggressive entry into our markets.”
This year’s timing of Easter and spring break negatively impacted the chain’s first quarter sales, executives said.
Dave & Buster’s has made a major push into virtual reality gaming in recent months, unveiling several proprietary and other titles. Overall, amusement sales grew 11.9% to make up 59.2% of the chain’s total revenues for the quarter.
Dave & Buster’s executives are tracking the expansion of more than two dozen dining-entertainment brands, Jenkins said.
“I think what we have to do is focus on what we do best,” he said. “And as we think about the competitive set for the long haul, I’m not convinced that all the brands … will have sustainability. Many of them are small independent players. And, candidly, we have significant advantages over them.”
The chain recently tested a fast-casual “taco truck” inside a Dallas unit, for game players who wanted a quick bite instead of a sit-down meal. So far, the concept has not met expectations, Jenkins said.
“We expected that to perform better than it has,” he told analysts. “So we are exploring what to do with the taco trucks.”
Including stores under construction, Dave & Buster’s has commitments for a total of 23 new units extending into 2020. The chain, which currently has 128 North American locations, has plans to double its current unit number at a pace of 10% growth or more annually.