“Our brand is back and we are stronger than ever.”
That’s what Brian Jenkins, CEO of Dave & Buster’s, told analysts late Thursday, unveiling record-breaking revenues, EBITDA, margins and cash flow that far surpassed pre-pandemic levels for the food-and-games chain.
It’s big news for the 142-unit operator that was hard hit by the COVID crisis that forced it to close stores for many months.
“We’re more profitable than we’ve ever been in our history,” Jenkins said. “We’re just in a really good place right now.”
For the quarter ended Aug. 1, Dave & Buster’s posted a same-store sales increase of 3.6% over 2019 levels, as well as revenues of $377.6 million. That’s up nearly 9% from 2019. EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $114 million, or 30.2% of revenue, up from $79 million and 22.9% of revenues in 2019.
But it’s not as if Dave & Buster’s simply turned the lights back on and returned to its 2019 operations. The Dallas-based eatertainment chain has undertaken a radical reimagining of its business, from menu to operations to marketing.
In the last several months, the chain introduced a new menu, rolled out a mobile web-enabled platform that saves on labor, added new games, and debuted a revamped messaging and media strategy.
The simplified menu, which rolled out in May, is designed to boost operational efficiency. Dave & Buster’s is currently undertaking a revamp of its beverage menu, with plans to launch a new platform during the fourth quarter.
The chain is also working on broadening its entertainment offerings, including hosted game and trivia nights, live music and, in some markets, live hosts for big football games.
Tech upgrades have had a major impact on staffing. Dave & Buster’s changed its service model for a contactless order-pay one that relies on tablets and a mobile-web platform. Currently, more than half of all customers are using the contactless option, and a fully contactless model is being tested at two locations.
“This technology will help transform our business model and it allows us to operate more efficiently,” COO Margo Manning told analysts.
Dave & Buster’s plans to launch a new rewards program early in the fourth quarter that incentivizes customers for games played, the chain said.
The chain is also seeing good results from its smaller, 18,000-square-foot store model. A recently opened location in Gainesville, Fla., generated nearly $6 million in revenue during the first half of the year.
“We are encouraged about the efficiency and throughput of this new format and the potential to leverage it in new markets,” Jenkins said.
With business rebounding, the company is aggressively pursuing new locations. Dave & Buster’s is slated to open four new units this year and six to eight new stores in 2022—all of which were in the chain’s pre-COVID pipeline. The eatertainment brand currently has nine properties under lease, but Jenkins wouldn’t set new store goals for 2023 and beyond.
“We have some lifting to do with the leadership team and the bench strength to be able to open our stores well,” he said. “Pre-COVID, we did that better than anybody in the business … We’ve got to build the muscle back a little bit there.”
For the first five weeks of its third quarter, Dave & Buster’s has seen some slowing, with same-store sales increasing 1.3% over 2019 levels. That’s partly fueled by the resurgence of COVID in much of the country, Jenkins said, calling it “a bump in the road.”
“Last year was a crater,” he said. “This year is a bump.”
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