Dave & Buster’s Entertainment (NASDAQ:PLAY) reported lower second-quarter revenue and earnings but said same-store sales trends improved during July and the early weeks of its third quarter as the company pursues a “back-to-basics” strategy centered on traffic, value and store execution.
Revenue for the second quarter was $544.1 million, down from $557.4 million a year earlier. Company-wide same-store sales declined 2.9%, an improvement from the 5.4% decline reported in the first quarter. Interim CFO Cory Hatton said sales trends improved further in July, when same-store sales were down 1.6%, compared with a 5% decline in June.
Food and beverage growth offsets some entertainment weakness
CEO Darin Harper said the company’s food-and-beverage comparable sales rose 7.6% in the second quarter, marking its fifth consecutive quarter of growth in that category. Special-events sales have increased for seven straight quarters, he added.
Harper attributed food-and-beverage momentum primarily to a return to what he called a proven menu, improved execution of the company’s Eat & Play Combo and higher food-and-beverage attachment among gaming customers. The company also plans to raise awareness of its food-and-beverage offerings and take what Harper described as strategic, consistent inflationary price increases.
Sports viewing remains another area of focus. Harper said more than half of guests identify football, basketball or baseball among the sports they watch, while more than 90% of guests who watch sports at a food or bar venue order food and more than 80% order alcohol. He said the company produced double-digit sales growth during activated World Cup matches, including the tournament final.
“We are a perfect occasion for that type of experience,” Harper said of the World Cup activations, which included themed food, reskinned games, prize integration and ticketed events.
Strategy focuses on occasions, relevance and value
Harper said the company is maintaining the core of its back-to-basics plan while providing a more detailed framework for execution. The strategy centers on capturing existing demand around personal, seasonal and cultural occasions; offering relevant entertainment and food-and-beverage choices; and delivering a consistent value message and guest experience.
He said Dave & Buster’s has high brand awareness but has not consistently been the “obvious answer” for guests planning an outing. The company intends to shift away from what Harper described as large, disconnected “tent pole” campaigns and place greater emphasis on targeted marketing around seasonal and cultural moments.
Dave & Buster’s appointed Jeremy Tucker as chief marketing officer during the second quarter after operating for more than a year without a CMO, according to Harper. The company also recently named Amanda Busby chief operations officer, Kevin Fish chief technology and digital officer, and Rachel Morgan chief legal administrative officer and corporate secretary. Aldo Rosales was promoted to chief strategy and revenue management officer.
On the entertainment side, the company launched 10 new games and attractions so far this year, including titles connected to The Mandalorian and Grogu, John Wick, Stranger Things and Hot Wheels. Management said it is also developing a plan to address consumer demand for collectibles through merchandise, prize offerings and midway games.
Harper said the company simplified its Power Card rate card and adjusted game pricing in recent months to make the experience easier to understand and allow guests to play longer. Those changes have produced a 16% to more than 20% increase in gameplay and dwell time, he said, while maintaining basket size and margins through redemption payouts and Winner’s Circle pricing.
Cost and capital discipline remain priorities
Hatton said second-quarter EBITDA comparisons included several items that were not repeated or were higher than normal, including a $10 million non-cash deferral adjustment in the prior year, $3 million in higher pre-opening expenses and about $2 million in non-normalized insurance expense growth. Excluding those items, adjusted EBITDA would have declined by approximately $16 million year over year, he said.
The company said adjusted free cash flow was positive $19.5 million through the second quarter, compared with negative $36.5 million in the prior-year period. Cash from operations increased to $160.6 million from $129.8 million, while net capital expenditures declined to $127.6 million from $155.4 million.
Management remains on pace to spend less than $200 million in net capital expenditures during fiscal 2026. Harper said the company could spend about $150 million or less in fiscal 2027, depending on opportunities to invest in games, technology and the existing store base. Hatton said recurring capital needs, including game refreshes, are approximately $95 million to $100 million annually.
- Dave & Buster’s opened six domestic stores in the second quarter, bringing its first-half total to seven: five Dave & Buster’s locations and two Main Event locations.
- The company plans to open four additional domestic stores during the remainder of fiscal 2026 and five in fiscal 2027.
- It operated 250 company-owned stores at quarter-end, including 184 Dave & Buster’s locations and 66 Main Event locations, along with six international franchise stores.
- Six Dave & Buster’s remodels were completed during fiscal 2026, with two additional remodels planned for the second half.
Hatton said the company has identified $15 million in savings expected to be realized over the next 12 months, primarily from areas that should not affect the guest experience, including general and administrative overhead, information technology systems, insurance and vendor arrangements. He said management sees a path to at least double that amount in additional savings.
Harper said the company expects its initiatives to support improving same-store sales, revenue and EBITDA in the near term, while acknowledging that the business still faces a difficult consumer environment and has more work to do on traffic, affordability and service consistency.
About Dave & Buster’s Entertainment (NASDAQ:PLAY)
Dave & Buster’s Entertainment, Inc (NASDAQ: PLAY) is an entertainment and dining company that operates venues combining arcade games, sports viewing, food and beverages, and social experiences. Its Dave & Buster’s locations are designed for adults and families and offer interactive games, prize redemption, casual dining, full-service bars, and space for group events and parties.
The company also operates Main Event, a family entertainment brand offering bowling, arcade games, laser tag, virtual reality attractions, and food and beverages.
