Kevin Sheehan, Dave & Buster’s chairman and interim CEO, likens the brand’s back-to-basics strategy to a sporting event.
He believes the brand is only in the second or third inning of its plan, or the second quarter, if you prefer basketball. Regardless, he emphasizes that Dave & Buster’s 8.3 percent same-store sales decline in Q1 is “nowhere close to where we want and expect to be.” Revenue was $567.7 million, a 3.5 percent decrease compared to Q1 2024, and adjusted EBITDA was $136.1 million, a drop of 14.5 percent year-over-year.
The company spent the first quarter unwinding “many clear mistakes” from previous leadership—changes to marketing, menu, operations, remodels, and game investment.
READ MORE:
Dave & Buster’s Admits Major Missteps, Eyes ‘Back to Basics’ Strategy
Dave & Buster’s Navigating CEO Shakeup and Sales Slump
Dave & Buster’s Sees Long-Term Growth in High-Tech Remodels
Results have been encouraging thus far. Although negative, comps sequentially improved throughout Q1, with decreases of 11.9 percent, 8.4 percent, and 4.3 percent in February, March, and April, respectively. Same-store sales are down 2.2 percent through the first five weeks of Q2. Another great sign—Dave & Buster’s has produced positive comps in 11 of the past 30 days.
Sheehan is shooting for 3 percent same-store sales growth over the long-term, with additional percentage points coming from new store growth and incremental opportunities, such as international expansion, selling merchandise, and catering.
The goal, according to the executive, is to combine revenue growth with lean management and cost controls to drive higher EBITDA. Then it’s a matter of managing cash effectively.
“We need to first prove to you guys that there’s a powerful amount of cash generation in this business, and we will do that this year,” Sheehan said during Dave & Buster’s Q1 earnings call. “And then you guys will start to see that we’re taking that cash flow and intellectually managing it to drive shareholder value. We’re in this for one purpose and it is to drive the share price to heights it’s never seen and should have been all along.”
Here’s how the strategy is playing out. First, with marketing, the chain rebalanced its media spend and returned to TV. It also improved its creative, simplified its messaging, and reintroduced its historically successful Eat & Play combo, which allows guests to sample menu offerings and try new games. The classic promotion is performing well with a double-digit opt-in rate. Additionally, 30 percent are upgrading to a new unlimited play option. Guests also have access to a new Summer Season Pass that provides unlimited game play and 30 percent off food and non-alcoholic beverages every day.
To elevate food and beverage sales, Dave & Buster’s corrected pricing issues, changed the menu layout, and is working toward a new menu that will bring back previously top-selling entrées. It will launch later this year after extensive testing. Sheehan noted that food and beverage sales have “markedly improved since April.”
With gaming, Dave & Buster’s introduced Leaderboard, a tech-powered experience that lets customers nationwide go head-to-head. The competition launched with five racing games—Hot Wheels Victory Lap, NASCAR Pit Stop, Top Gun: Maverick, Cruisin’ Blast, and Super Bikes 3. The Leaderboard feature will be available year-round, and games will rotate.
Recently improved sales have been mostly driven by traffic. There’s also been growth in average check—not through taking price, but through higher attachment rates coming from the Eat & Play Combo and better speed of service.
In terms of operations, Dave & Buster’s launched a store manager incentive plan driven by same-store sales growth, a move that “has positive shocked the system in a very morale-boosting way by allowing our managers to become true owners of their business.”
“I think we now have, in my opinion, and somebody can prove me wrong, a best-in-class GM program where we have a very competitive salary,” Sheehan said. “We’ve got a strong bonus profile if we hit the right metrics. And we now have a long-term incentive that will lock our people in and it will attract the best-in-breed of potential new general managers … We just think it’s going to drive the behavior of the general manager to start to think more like a CEO of a business as opposed to — I think I said on the last [earnings] call, table stakes of coming in and making sure the lights are on, the team is there for the day, and we’ve got the right food order and all the games are working. We now need to level set the business to a much higher level.”
As for store development, Dave & Buster’s is approaching the completion of 48 remodels; these upgraded units have outperformed the system by over 700 basis points over the past three months. The brand opened two venues in Q1—one in Killeen, Texas, and another in Lansing, Michigan. In Q2 thus far, stores have debuted in Freehold, New Jersey, and Wilmington, North Carolina. Dave & Buster’s also relocated its Honolulu, Hawaii, unit to the Ala Moana Mall, leading to $1 million in week-one sales, the highest weekly sales amount in company history. After debuting internationally in India in December 2024, the company expects at least seven more international openings over the next year. It has secured agreements for 35-plus stores in the coming years.
Dave & Buster’s has 175 venues in 43 states, Puerto Rico, and Canada. It also operates 61 Main Event units in 22 states.
“We are one team, and we are fully focused and dedicated to not just getting this business on track, but making it even better than ever before,” Sheehan said. “We plan to continue to demonstrate to you, the investment community, the power of these brands and this business model.”
