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Dave & Buster’s drives growth with new menu, game innovations

Company capitalizes on “New Is What We Do” theme

Dave & Buster’s Entertainment Inc. has targeted new products and promotions to keep traffic growing at its big-box venues, executives said Tuesday.

The Dallas-based entertainment company successfully targeted its primary audience of Millennials 21 to 39 years old through “new news of interest to them,” said Dolf Berle, Dave & Buster’s president and chief operating officer, in a first-quarter earnings call with analysts. The company also cultivates secondary demographic groups of walk-in families and corporate parties.

While continuing television advertising in the quarter on sports network ESPN, as well as Nickelodeon and The Cartoon Network, the company expanded its theme in the last four weeks of the quarter, Berle said.


“We switched to a broader theme of ‘New Is What We Do,’” he said, which included adding arcade versions of Luigi’s Mansion, Nintendo’s best-selling game, and new menu items that were “visually impactful, innovative and shareable.” 

About 35 percent of menu items sold last year have been added in the past four years, Berle said. New items in the first quarter included bacon cheese crispy tater cakes, three-cheese grilled cheese sticks, bacon-wrapped shrimp and chicken with creamy lobster sauce, and the Caveman Combo, which features both ribs and mini cheeseburgers.

New games to be launched later this year include “Ghostbusters,” with the movie debuting in summer, as well as Star Wars Battle Pod and Star Trek.

This month, the company launched sales of wearable radio-frequency identification (RFID) merchandise that customers can use in place of power cards to swipe and activate games. The device will also provide revenue.

“Potentially this will be a replacement for cards,” Berle said, and the company is selling them for $10 with $5 of power card value on them. “We think it will just be a more convenient way for people to access the games and activate the games then a power card itself,” he said.

Stephen King, Dave & Buster’s CEO, noted that the wearable devices resemble a Fitbit-style wristband, a lanyard to wear around the neck, or a wand for younger customers.

King added that Dave & Buster’s has tested some virtual-reality products, but “our results are not compelling from an overall revenue growth standpoint at this point. … People are willing to try it but they don’t tend to play it over and over.”

In the first quarter, Dave & Buster’s opened three large-format units of more than 40,000 square feet in the existing Capital Heights, Md., market and the new areas of Rochester, N.Y., and El Paso, Texas. Dave & Buster’s venues range from 25,000 square feet to 45,000 square feet. King said two units are expected to open in the second quarter, in Little Rock, Ark., and Florence, Ky.

“Given what's going on with some of the department store brands and big-box retailers, there is a lot of real estate becoming available in markets to meet our criteria,” King said. “And while others are having challenges at their mall locations, our mall stores are performing quite well. So as landlords and developers pivot toward more entertainment options versus traditional fashion retail and mall, we are in a good position to capitalize on these opportunities.”

For the first quarter ended May 1, Dave & Buster’s reported a 59.5-percent increase in profit, to $31.2 million, or 72 cents a share, from $19.5 million, or 46 cents a share, in the prior-year period. Revenue increased 17.7 percent, to $262 million, from $222.7 million in the same quarter last year.

Same-store sales increased 3.6 percent in the quarter, compared with a 9.9-percent increase in the same period last year.

Dave & Buster's owns and operates 84 venues in 30 states and Canada. The company has a development agreement for the Middle East, with the first unit opening in fiscal 2017.

Contact Ron Ruggless at [email protected]
Follow him on Twitter: @RonRuggless

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