Dave & Buster’s Sees Traffic and Sales Declines as Eatertainment Restaurant Category Struggles
Dave & Buster’s Entertainment, Inc. is struggling to boost customer visits following a post-pandemic spike in traffic, as same-store sales for the second quarter ended July 30, 2023 were down 6.3%. The dwindling traffic and sales were driven in no small part by challenging macroeconomic circumstances, Dave & Buster’s leadership said during Wednesday’s Q2 earnings call.
“What has us at this point is we can’t control the macroeconomic factors that are driving traffic numbers,” Mike Quartieri, CFO of Dave & Buster’s said during Wednesday’s earnings call. “What we do control is what happens in the four walls of our business….as you look at the back end of Q2 and what we’re seeing today…unfortunately, it’s a decline, but those levels are pretty consistent across the board…. At this point we’re not seeing any one particular group that’s underperforming vs. the rest.”
Dave & Buster’s CEO Chris Morris said that even though the leadership team analyzed its business to figure out where the same-store sales decline was coming from, they came to no meaningful conclusion, other than a shift in consumer behavior.
And Dave & Buster’s is hardly the only eatertainment company struggling with traffic. Data from Gravy Analytics revealed that Dave & Buster’s was down 39% this quarter, but similar brands in the eatertainment space, Topgolf and Bowlero, declined 30% and 56% the same quarter, respectively. The Gravy Analytics team seems to be attributing this to a shift in consumer behavior toward at-home entertainment.
“Consumers appear to be prioritizing entertainment that offers lasting value, like video games and electronics that they can enjoy repeatedly,” Gravy CMO Jolene Wiggins said in a statement. “This choice seems to stem from a desire to make the most of their spending, especially when compared to costlier, one-time experiences offered by entertainment chains.”
Dave & Buster’s does have a plan of attack, however. The company is focusing on six growth initiatives, including, most notably, a renewed focus on digital marketing and loyalty, continued menu revamp and store remodeling. Digital marketing will begin playing a larger part of the Dave & Buster’s business starting in early 2024, Morris said, which includes targeted marketing and personalized guest engagement. The loyalty problem has grown by almost a half a million users in the past quarter, and Morris said that loyalty members tens to spend 15% more when they visit.
As for food and beverage, although Dave & Buster’s has been tweaking its menu for a couple of years now, the company said it is looking to roll out its new F&B strategy and menu additions systemwide by the end of September.
The biggest changes coming to the eatertainment company are in the form of store remodels, as one store remodel rolled out this past summer and 11 more are on the way. If all goes well, store remodels will be spread portfolio-wide through 2024.
“We are in the process of modernizing and refreshing the look and feel of our D&B stores, improving the layout to increase traffic and overall productivity, as well as implementing technology to support guest engagement and introducing new entertainment offerings to drive traffic for walk-in and special event business,” Morris said. “Although it’s only been three weeks, the new format is being well received by our guests and performing ahead of expectations of a double-digit improvement in comparable store sales growth trends.”
During the second quarter ended July 30, 2023, revenues increased 15.7% compared with the second quarter of 2012. Dave & Buster’s net income totaled $25.9 million, or $0.60 per share, compared with a net income of $29.1 million, or $0.59 per share in the third quarter of 2022.
As of July 30, Dave & Buster’s has 213 stores in its portfolio, with three net new stores opening during the quarter.