Dave & Buster’s Entertainment, Inc. is planning a major comeback this summer — complete with a revamped menu, new games, and continued investment in ghost kitchens — following a challenging year due the pandemic that ended in a final quarter same-store sales slide of 70%, CEO Brian Jenkins said in Wednesday’s fourth quarter earnings call.
In the earnings call for the fourth quarter and fiscal year ended Jan. 31, 2021, the eatertainment company said they have been testing two virtual brands highlighting specific sections of their menu, with the latest being a virtual wings concept called Wings Out. With the ubiquity of successful wings concepts for delivery across multiple restaurant categories, Dave & Buster’s is testing the potential impact of the “narrow menu of wings and tenders with a variety of interesting sauces to choose from” on customers.
“We understand that [ghost kitchens] will be a relatively small contributor to total sales,” Margo Manning, chief operating officer said during Wednesday’s call. “[…] However, we are just beginning this journey. The next steps evaluating additional ghost kitchen concepts and third-party providers beyond DoorDash and Uber Eats, as well as working to optimize our promotional strategy to fully capture the revenue potential for these concepts.”
But leaning into virtual concepts is just one prong of Dave & Buster’s comeback approach. They are also implementing a new operations strategy that includes new games, a trimmer menu (initially down to 17 items with a final target of 28 menu items, one-third of their original menu), and even more of a digital-forward, contactless experience.
“Our new food identity, Inspired American Kitchen, is rooted in enhanced flavor and quality ingredients across a condensed number of menu items that we have priced to maintain our historic gross margin,” Manning said. “This is the most extensive update to our food offering in more than 10 years, and it allows our guests to explore new flavors while offering a balanced selection of familiar dishes.”
Although Dave & Buster’s fourth quarter performance showed improvement since the start of the pandemic, their numbers were still challenged by continued lockdowns amid the third wave of the pandemic during the winter months. Overall, same-store sales declined 70%, but the strongest month of the year was by far January, which saw some pickup to -59% decrease in same-store sales.
During the fourth quarter, sales at fully operational stores were 52% of 2019 sales. Revenues for the fourth quarter were $116.8 million compared with $347.2 million the same quarter the year prior. The company’s net loss totaled $56.8 million, or $1.19 per share, compared with net income of $25.0 million, or $0.80 per diluted share the same quarter the year prior.
Despite these challenges, Brian Jenkins remained optimistic for the quarters ahead:
“We've been relatively silent for 12 months and we feel like summer is the right time to strike pretty hard,” Jenkins said. “We're going to have 22 new food items, six new games […] so we have some great content coming up.”
As of January 31, Dave & Buster’s has 107 open stores out of 140, up from 136 last quarter (with 6 new store openings and two closures).
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