Dave & Buster’s Entertainment Inc.’s gap between food and beverage and amusements revenue narrowed in the fourth quarter as the company worked to streamline its menu offerings, executives said Tuesday.
The Dallas-based operator of large-format gaming-restaurant venues has been working to simplify its menu over the past year, said Brian Jenkins, Dave & Buster’s CEO, in a fourth-quarter earnings call.
“Our simplification efforts allowed us to reduce the size of our February menu by another 15% on top of 20% reduction implemented a year ago,” Jenkins said. “Our menu is now appropriately streamlined and still offers a great variety with approximately 40 food items and over 20 different hand-crafted cocktails.”
Joe DeProspero, Dave & Buster’s interim chief financial officer, said amusements and other sales were 55.5% of total revenues in the quarter, but the gap with food and beverage narrowed from the third quarter. The company did see increased costs in food and beverage, he said.
“The increase in F&B costs and reduced gap with amusements was driven in part by the favorable impact of the All You Can Eat Wings promotion partially offset by the unfavorable impact of a slight decline in special events, which has a higher mix of F&B,” DeProspero explained.
Andy Barish, an analyst with Jefferies, said in a report: “We expect to see continued promos around value, especially on underutilized weeknights.”
Jenkins said Dave & Buster’s rolled out premium choice steaks in February in conjunction with the launch of a new menu.
“We've also introduced healthier offerings, such as an on-trend ‘Simply Grilled’ chicken with ‘zoodles,’ a zucchini-based noodle that guests can substitute in pastas,” he said.
In December, Dave & Buster's, a full-service foodservice format since its founding in 1982, introduced its first fast-casual offering, a stand-alone T&T Tacos concept in Dallas.
Jenkins said the taco concept, which had been converted from a private-dining space, was introduced “to gauge the potential demand for a more convenient and accessible food option.”
So far, he added, “the offering has been well received by those who have experienced it. Initial demand has not been as strong as we anticipated, and we are working to improve in-store awareness and utilization and remain optimistic about this opportunity.”
Dave & Buster’s in the quarter also expanded its virtual-reality gaming offerings with the launch of Dragonfrost, a proprietary brand aimed at a younger audience, and tapped into brands like “Star Trek: Dark Remnant” and “Men in Black” for older customers. About half the stores took price increases in the virtual-reality games in the quarters, and the company introduced new RFID, or radio frequency identification, playing cards with higher activation fees.
For the fourth quarter ended Feb. 3, Dave & Buster’s reported net income, with special charges, fell 17.4% to $29.4 million, or 75 cents a share, from $35.6 million, or 85 cents a share, in the prior-year period. Revenues increase 8.1% to $331.8 million from $304.9 million in the same quarter last year.
Same-store sales increased 2.9% in the quarter, exceeding analysts’ expectations. Dave & Buster’s stock price was up nearly 4%, to about $52.40 a share, at midday Wednesday.
Dave & Buster's owns and operates 125 venues in 39 states, Puerto Rico and Canada.
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