Expanded cable TV advertising and increased summer walk-in traffic helped boost same-store sales at Dave & Buster’s during the second quarter ended Aug. 2, executives said Tuesday.
Steve King, CEO of Dallas-based Dave & Buster’s Entertainment Inc., said in an earnings call with equities analysts that “our primary driver was walk-in sales, which grew an impressive 12.1 percent and points to our core demographic appeal, while our special events business increased a modest 2.2 percent.”
King credited the traffic increases to the expansion of the brand’s games promotional windows to three from two in the previous year, and also an increase of Nickelodeon advertising to seven weeks, starting in June, from last year’s four weeks, starting in July. The summer vacation period also saw a lift in kids’ entrees and sales, he said.
Food sales made up the slowest-growing category in the quarter, King said, but they still rose 7.3 percent. Beverage sales rose 8.3 percent.
Dave & Buster’s swung to a profit of $12.6 million, or 29 cents a share, in the second quarter, from a net loss of $13.9 million, or 42 cents a share, the previous year. Revenue increased 19.8 percent, to $217.3 million, from $181.4 million the previous year.
Same-store sales rose 11 percent, compared with a 5.7-percent increase the previous year, the company said.
Dave & Buster’s completed the rollout of an electronic ticket program at all but two units at the end of the quarter, King said. The remaining locations were converted in the third quarter.
King said the company is seeing favorable benefits beyond just the ticket savings, which alone equates to about $3 million annually.
Dave and Buster’s has also rolled out smartphone versions of three popular games that guests can play outside its units.
“We believe extending Dave & Buster’s beyond our stores can build brand loyalty by enabling players to redeem points they won to the mobile games at the winner circle, and creates an opportunity for them to stay for drinks, food and arcade games,” King said. “We don’t want to overplay the importance of this initiative, as it’s early in the life of these titles, but, overall, this represents a modest investment on our part. And if these games are well-received, we plan to rollout more games in an app form.”
Brian Jenkins, Dave & Buster’s chief financial officer, said the company plans to have added eight to nine new locations this year, an increase of one unit from earlier guidance.
“We have opened five new stores to date [this fiscal year], with the remainder under construction and all in the large format,” he said.
Jenkins added that the company typically spends about $1.4 million on a large unit, and about $1 million on small version.
“All but one of our store openings this year are large format,” he said.
King added that Dave & Buster’s has already signed leases for 16 locations in 2016 and beyond, and the company is also continuing its renovation program.
“This year, we are substantially remodeling three locations and creating D&B Sports lounges in five additional units. Those are all completed,” King said. “These efforts are designed to strengthen our positioning as the destination of choice for one-of-a-kind dining entertainment, and should enable us to better serve our existing guests and attract new guests to our brand.”
King added that Dave & Buster’s, which already has units in Canada, plans to expand beyond North America, and is “extremely close” to signing an agreement for units in other international locations.
Dave & Buster's Entertainment owns and operates 77 locations in 30 states and Canada.
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