Dave & Buster’s Entertainment Inc., founded in 1982, has found 35 years later an especially winning combination in its offerings of games, amusements and casual-dining food with an arcade-like atmosphere.
“We started out with a unique base and a differentiated product that Dave and Buster had created,” said Steve King, who has served as Dave & Buster’s CEO since September 2006, “and we were able to evolve that into an even more powerful version of what it was.”
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The Dallas-based company, which opened its 100th unit this year, rose to No. 50 among restaurant brands in the most recent Nation’s Restaurant News’ Top 100, booking $991.8 million in U.S. systemwide sales for its fiscal year ended in January, from $919.6 million in the preceding year.
“Fundamentally, what has driven that success was an inevitable evolution in thinking about it being a restaurant with games to being more entertainment-focused with great food and beverage,” King said in an interview. “That internal switch, if you will, made a big difference in terms of how we thought about the business.”
The timing of the flipped switch came just as consumers shifted to seeking more entertainment value from their dining-out dollars.
King said Dave & Buster’s tapped into that shift over the past five years by emphasizing amusements, which now generally make up about 55 percent of revenues.
“We really made that switch in 2012,” King recalled. “We really started advertising against that message of what we describe as ‘marketable capital.’”
The company highlighted its “Eat, Drink, Play and Watch” tagline with both proprietary games that it created, such as Rock ‘Em Sock ‘Em Robots and Star Trek, as well as exclusive periods with highly anticipated releases like “The Walking Dead” arcade game.
“That point of differentiation, where it’s more than just dining, has been a powerful lever in the past five or six years,” King said.
Dave & Buster’s has been able to weather the “difficult macro-economic environment for restaurants,” King said.
“That creates some headwinds that other folks out there are facing,” King said, resulting in price and advertising competition.
But with the ability to drive traffic with the amusements, Dave & Buster’s has a lead on the crowded competition, he said.
“We can get those footfalls with the amusements,” King said. “Then we cross people over into the food side. That’s given us an advantage against those who don’t have that lever to pull.”
The amusements have played a part in Dave & Buster’s since the first unit opened in Dallas, a 40,000-square-foot emporium created by David Corriveau and James “Buster” Corley. Games of chance have been a part of the brand’s DNA since Day One, when Corriveau and Corley reportedly flipped a coin to decide whose name would go first in their new
enterprise.
Dave & Buster’s first went public in 1997, and the company was taken private in 2006 by investment firm Wellspring Capital Partners III L.P., the chain’s previous owner, along with HBK Main Street Investors L.P. That was the year King was hired as Dave & Buster’s chief financial officer and soon was named CEO.
The company emerged again into the public markets in October 2014 with a $94.1 million initial offering.
King said his first restaurant job was washing dishes in a work-study program during his undergraduate years at Cornell University. “Let me tell you, those industrial dishwashers can be pretty intimidating,” King recalls with a laugh. “And they are super hot. I can visualize it right now, even though it’s more than 35 years later.
King worked his way up through various busser, waiter and bartender positions.
He joined what was then the Carlson Restaurant Group, parent to the TFI Fridays brand, in 1984. “It was a really small company at the time,” he said, with only 68 restaurants.
“I was working for Prudential in their real estate department,” King said. Greg Dollarhyde, then CFO for TGI Fridays, hired King as director of financial analysis. He rose through the ranks and left Fridays as president of the international division.
“What I liked about moving to Dave & Buster’s was that it was differentiated,” he said. “It was a great strength to the brand, being so different from any others at the time. Also, when you looked at the geography of where they were located, I thought there were a lot more places they could be.”
Currently Dave & Buster’s forecasts 211 possible locations for the brand in the United States and Canada.
“Those are where we’ve put pins in the map,” King said. The company earlier this month expanded its forecast for new stores this year, saying it would open 14 rather than the earlier announced 12, achieving a unit-growth increase for 2017 to 15 percent.
Measured growth remains important, King said. He recalls being at Carlson’s TGI Fridays when performance was not meeting expectations. “That was a reflection of the overall organization getting distracted with other brands,” he said, “and it leaned on the Fridays brand for income. We probably went a little too far on pricing and all the rest. At the end of the day, we were able to reel that in.”
The lesson of that, he added, is: “You really have to make sure you don’t break that trust with the guest and lose focus on what you are trying to deliver to them.”
King said his advice to anyone interested in a restaurant career narrow their interests to a foodservice category that shows strength. “You should pick the segment first, and then pick your company,” he said. “It doesn’t matter how well you execute as a manager if you are in a part of the industry that’s in serious secular decline or shrinking. The opportunities just don’t come your way.”
King emphasized that he considers Dave & Buster’s success built through the hands of many.
King said he takes pride in helping develop Dave & Buster’s employees to assume larger roles in the company. “This continues to be a business where you can start at the bottom, if you will, and rise up and become a successful member of the management team,” King said, adding that several recent regional manager promotions were of employees who started out as hourly workers.
“I consider this a team sport, not an individual sport,” King said.
Contact Ron Ruggless at [email protected]
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