PLAY - Earnings call transcript Q4 2017 | Dave & Buster's Entertainment, Inc.

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Operator

Good afternoon, everyone. Welcome to the Dave & Buster's Entertainment Incorporated Fourth-Quarter 2017 Earnings Results Conference Call. Today's call is being hosted by Steve King, Chief Executive Officer. I'd like to remind everyone that this call is being recorded and will be available for replay beginning later today.

Now I would like to turn the conference call over to Jay Tobin, Senior Vice President and General Counsel, for opening remarks. ahead. go Please

Jay Tobin

and Ashley, all joining for Thank thank us. you, you

of today On and Officer. Chief each your Mr. questions. are recorded to Executive Inc., is behalf be call we After King will Jenkins, Officer; from This Financial King, Entertainment take Chief of Steve the Dave is happy Buster's and copyrighted. Jenkins, and comments being call Mr. on Brian &

Litigation the be call fact discussion our the results, within your anticipated. of such XXXX. actual and attention forward-looking at various could on which be which meaning to responses entirely forward-looking Private All certain www.daveandbusters.com and to to the our are items with those Investor in Before your we begin events section. Reform cause considered risk Any under the are subject of in based statements our and the has of that I'd Company's historical remarks available SEC, discussed our from questions, like Relations website relating facts. such and not Information risks on future should differ on to items Act been which are may to statements published uncertainties our uncertainties, filings factors the the results to Securities

also principles. our In is afternoon, website. and that results contained measures are addition, to store should references and released comparable measures available earnings GAAP our EBITDA the which remarks generally announcement this to review these are financial non-GAAP not our accounting today EBITDA, operating accepted depreciation adjusted Investors will in reconciliation which include the under amortization, income on of before defined

over to Now, I'll turn Steve. call the

Steve King

efforts and full-year in call. everyone. your and participation and then, sharing year-end I'll and before update finally, by update fourth-quarter on the on overview XXXX I'll of will development good We and begin key provide performance afternoon, into our our Jay, an you, providing conference you an our up your Thank it financials the priorities. to strategic by conclude Brian questions. Today, appreciate quarterly updated we delve open guidance. And

grew the significant environment finished low keeping Looking we by of with But context, last year a several The us, in declining as bit to did results, reported year. for after in surprise modestly comps fourth anticipate sales amusements. The month the years flat latter in change positive the sales this slowdown QX, quarter in put XXXX. proved comps challenging for We was about we X.X%. EBITDA at unfortunately, October, growth, dramatic the of of over X% the most abrupt the the be of and digits, we full-year comparable-store same-store double not the year. EBITDA margins drop while down revenue momentum relatively trend a fiscal quarter in fiscal part To sales. overall by had

For a year business the were increasing our the XX%. first nine on stack, about just in under two-year up and amusements comps comps XXXX, us, for performed X%, months with of the well

further, in pointed we quarter, strong early in year. the we early slight December weeks point, forecast. January. we last was In At which the December. call trends saw trends that part in expected the compelling first had those year. quarter fourth and reverse the on amusement out retrospect, a period than the However, softening, comparable Weather of proved our and was than impact seasonally unfavorable, of have our less of to fiscal in our higher soft Instead, trends during into the we in deteriorated competitive continued new still this and the quarter intrusion offerings

more are some that focused more be on younger less say a gaming aspects subset are tend to often our research those who of the and experience. they recent who shows other addition, guests, In of casual of coming about

We meet have their better during needs and offerings their to visits. improve opportunities our beverage to food

satisfy with it content, as centered better, accessible. with demographic be need food plans improve satisfaction. overall the that the of well specifically, to food will the issue guest comes are we Value continue as deliver that research, and less our while faster opportunity to to several through superior more redemption improvements, service our on and serve price on game experience. also service prizes more game So initiatives advance in to an key core taking Overall, our content, this as we to new quality but appears we're

four which few include our friction strategic specifics growth you priorities unit and amusements, and Now more or intermediate update results a to experience, let and in driving annually. the guest beverage, driving food the get for on over XX% me into term, long reducing

amusements for First, the visit. reason primary remains the

of the As in We nonexclusive basis. the continue excited the offering year. our reality we'll virtual amusement our a differentiate or such, remain titles our adding on middle launch proprietary, to by XXXX platform game proprietary including exclusive, lineup, of planned about

have well-known franchise. title a our details film We based of as as conjunction soon We an -- development with is very Hollywood which on agreement to partner. under plan signed for is this our title, studio way soon, and the in first announce

content reality of we a for opportunity build call, us capitalize will As library the the enable platform on virtual mentioned and last years. on many our to

toward than a launch platform increasingly more plan important ever. this VR we offering the an will be fact, environment, content second on differentiated to end of the In proprietary competitive title In year.

overall Second, is the food satisfaction know with their guests that correlated and of our highly with beverage. experience dining We us.

our burger plan introduced of We're improve in to hired guests steak out a can And a to and new that Our recently contracts. our with guests. efforts quality enhance our service to We're redesigns and and items higher of number launch in finally, Angus in February speed investing XX% lead and see we menu year, by existing development reduced product is simplifications about menu process improving We this quality this through by beverage food of service our goal area. taste. the and and area. vice kitchen offering more streamlined In our many blend service. new and beverage that. and product food our food of synonymous the slightly speed is within with beverage our we an chicken a of offering new than transition as Speed of we president for of and the the

take a and the In of results to delivery back test this D&B our addition, on this complementary of and to mechanism tasks implementing will the time. casual these all potential view facilities. dining the inside reading track quick-casual during we're the half as the offering inside year some Again, initiatives

strategic guest people A we experience. technology, will of friction operating the strategy. reducing to processes, and Our in key combination priority how be is this third deploy our

pay table We reduce that at continue can wait turns in dining the and technologies test table as improve to new room. times the such

well, front In XX% the areas games desk, to and bars, the at at is which we area. addition, be or growth long we're value arcade in the the annually, of more biggest in working our while The term. on as especially other driving unit believe reducing friction activating over priority fourth driver

the existing cash-on-cash very system. continue taking Our return account into generate after to impact the sales even strong on new stores

will choice and given in in category the tenant a site often area. get a believe we a call particularly good if pressure the on trade some that units. choose existing the the or remain If alternative is forward, As identified to previously targets, best leader, one often of is the first use location we brand of we fit sales create our our move

offer deliver our reflected young improving value of these among adults. This We're insight. in will promotions three aimed media combine in young how in specifically our we with also We to core digital capabilities be our more that data of will these This target be and have investment ever big at reflected first increased in The to games what relevance strategic significantly research leveraging we that than priorities and XXXX. are adults. investing gain plan perception. new in increase greater food reach before

the recently Our been a competition. need delivery, record context broadcast recognize we media with the at digital Overall, a we with and continuously agency to increase and not media, new our the track in innovation, especially strong has of with brand relevance hired guests, measurement. evolve media and consistent growing

opportunities potential returning quick record track to will solutions of easy. comparable-store the That of not sales. is that be reenergizing strong for identifying to of do has we be the deeper good goal at evolving positive or brand. a Our with and the expect level news The the a improvement team turnaround testing on and focus management said,

groundwork of that recalibration In XXXX the lay evolution. much will as fact, of for this a we year consider

we guidance lower be growth year-over-year of expect in to at And comparable will With than his we to low-double-digit these our XX% guidance elaborate prepared year-over-year midpoint a flat And a now terms prior in X% of EBITDA the Brian In basis. XX-week for on on our of basis range, Brian? that, which is XXXX, the our revenue growth. on expect changes guidance, remarks. revenue

Brian Jenkins

Steve, you, afternoon, everyone. good Thank and

First, want to for our to EBITDA. consecutive fourth year the net that members hard income, continued their record our across of deliver thank I and country team enabled us work revenue,

four recently for managers' challenging see resolve have grown our annual more importantly, past on recent reverse we we commitment and the passion and hosted EBITDA D&B the the years, Over have our to team. expanded trends. the significantly our conference, this encouraging it general was We and of brand, shoulders comp-sales the our margins team's and to

from X.X X.X the which highlights EBITDA, in week approximately fourth revenue, XX you, period. I weeks the net versus extra will million XX.X and million The quarter, in in fiscal now X.X included year-ago EBITDA. XX some Turning income, of to in weeks XXXX adjusted this generated the in remind million million year in

to week. For and total the XXX.X stores the of due our increased benefit to the XX.X% contributions strong extra newer revenues from quarter, million

Excluding year. from That's during revenues the comparable five while including our in XXX.X our million, to basis, million. XX XX-week were from XX revenues the fell non-comparable X.X%. extra million, the up up prior that increased to from quarter, opened X.X% stores, revenues million On stores $XX.X from down XX.X week, XXX.X a

amusement grew grew and beverage sales food Turning collectively XX.X%, sales while other and to category sales, XX%.

XXX-basis-point and comp was decrease X.X%. walk-in business of continuing special while the fell reflecting During amusement prior-year long-term a events XX.X% revenues, a Breaking down the X.X%, other the our quarter, in trend. X.X% sales from period, represented our increase down total sales,

respectively. bar X.X% In X.X%, sales, down category was terms our business and down was and of food X.X%, amusements while

particularly factors. mentioned, and previously less content, game competitive intrusion season busy were bitter all compelling higher-than-expected impacts weather, cold from the Steve during As holiday contributing

X.X% and in pricing of a commodity and period Cost year. and shift, XX.X quarter million new offset sales, decline total X.X% sales bev points product more of basis of cost same early higher margins, F&B launch of approximately related inflation, mix was in an the and than points write-off cost, partially sales. and pricing, of year. and our a by percentage XXXX. the burger to year, in last product terms In of amusement a improved This mix was unfavorable and as last XX offset reflected moderate the in cost as by beverage as merchandise a a basis compared in amusement versus points our sales amusement beverage This XXX games. percentage a amusement increase than percentage food game-play was margins lower by to a of in simulation XX WIN! was driven last of toward and and shift was improved other as in price a basis food increased higher Food sales

managing benefit payroll hourly and drivers XX favorable incentive points higher about lower despite the operating this This was stores. offset Lower of Our comp-sales inefficiencies year our comp, X%, of non-comp on pressures. benefit by expenses, the hourly partially over basis key underlying typical inflation improvement. year was were strong a store-management labor, costs and and focus wage cost

of store well. non-comp Our XX% base performing our and represent stores they're now,

class In more first-year model. our cash-on-cash new-store of fact, above our XX%, XXXX stores of returns generated well economic than

week, a to higher you basis were labor primarily higher Other occupancy our prior related space, inflation media be less to XXX compared driven tend store in as know our from efficient a digital-media costs. in comp base. and However, were costs the as from deleveraging also year operating test XXrd expenses by at expenses higher the points calls, in further mature they result stores. our year, stores of non-comp media Marketing perspective, to and over incremental store our

reflecting Store invested and compelling growth was addition, research million more XX.X better quarter, In depreciation year, more compared for promotions. amortization understand before the significantly XX.X million income and to develop guests to in we X.X%. advertising and to operating our of last

better incentive cost of As a our compensation, sales, expenses legal XX.X%. and lower of decrease a to store reduced percentage were million, support versus the prior control expenses, year basis essentially points XXX year this G&A as XX.X headcount over flat was offset year, to increased base. growing

from of growth. costs significant year basis increased leverage strong revenues, impact primarily lineup decreased our expenses to million. due fourth pre-spending, sales our million associated to percentage That's of points quarter G&A on year over X.X XX was to This XXXX. the up the a due XXXX As Preopening X.X openings. of of with

costs As preopening points year. a percentage basis increased revenue, compared to prior XXX X%, of up the

well million, increases That's prior as Our to period points XXX the -- XXth last Net quarter marking year, and consecutive higher the basis were growth. margins million EBITDA impact by and EBITDA debt the of our due LIBOR to of I'm X%, cost increased excluding EBITDA to extra grew X.X underlying down sorry, week, from same increased million. the X.X% XX.X driven interest as rate higher XX.X year. grew levels. quarter XX.X% for the to million in average XXX versus expense of in the Adjusted XX.X%, up X.X debt

taxes. Turning to

government During and quarter, of a to rate tax XX%. deferred-tax one-time totaling the non-recurring Cuts X million federal or Tax positions new the of share. diluted Act, required the fourth $X.XX the resulted our provision adjustment statutory favorable fourth-quarter our the in Jobs which federal per enacted This using revaluation

In addition, one million, for of increased our and net month by year income the lower or statutory the of respectively. rate $X $X.XX, fiscal impact EPS approximately

$X.XX result, last balance XXX.X approximately the or on $XX.X last base year quarter, outstanding low or the income X.X net million, quarter our net of tax of per the compared per for on generated for XX.X% effective XX.X%, of $XX.X of or a income debt of on At our income XX.X in was reform the As share. share shares. We million EBITDA. minute. rate to a diluted-share diluted million the we the million, of in a credit diluted-share tax of just and fourth per Shifting compared the share would've had quarter million, in Net net XX.X of base times a sheet been the benefit of $XX.X resulting of EPS year. $X.XX excluding facility, shares, to fourth to quarter $X.XX end leverage million

March X.X million $XXX just with XXXX, fiscal XXX.X X.X million XXXX, of $XXX repurchased under shares The stands XX, for During authorization. million. approximately shares available as just stock for common at under million our we total million current of $XX still million inception-to-date our over

over -- targeting will of stores. existing store currently be we our compares. development under year, stores comps half of perspective, two already a two X% Turning to reflecting XXXX, to to year markets XX new basis. including the projected brand. are sales our basis, This environment, large-format than XX-week stores skew is first the prior first a trends, guidance relative XX fiscal Comp-store to a openings for XXXX. construction. a is in our to revenue. and have a to low-double-digit recent softer-than-expected now than to half and roll growth on the on this down plan From be we year. of XX-week second-half On basis in These as of have mid-single up opened comparable first digits, of comparable stores, cannibalization outlook higher revenues year, X% Total to quarter more X% we or we're easier billion, X.XX expect more low and expected and toward four XXK competitive new over range to fiscal from our better to format lower billion up to the for eight approximately open compared We've XX% openings, those X.X

net on projecting million XX% income based to an legislation. tax are the XX to XX%, of effective which million includes of tax new XXX impact rate the We of

be million million I also projected payments of million. EBITDA shares. estimate XXX XXX after compared to we capital diluted-share to million, XXX XXXX, million. have project other X a We respectively. that less are count allowances one and XX will Net XXX week unfavorably And XXXX million about landlord about remind and of EBITDA to impacting XX additions tenant We do you million to by in revenue want to and

the shift impact million in the of of be to and our revenue QX, to unfavorable a not anticipate and results XXrd seasonality calendar will quarterly one-week week have will We the last favorable due directly impact Additionally, the year-over-year the year an on comparable QX. our X.X million due in calendar QX, business. of to million million QX, in shift, in X.X XX.X in X.X and elimination

XXK-format mix expected includes X.X -- that are Lastly, in that their XX,XXX million our first please of mind keep million to AUVs of stores to XXXX in two stores generate X.X of lower back than over our to is stores. about operation, will that, to call make original remarks. year XX% Steve some which full I the turn final small-format to With XX%

Steve King

I'd a store-development upcoming Brian. well you, like Thank recent opportunity. and little about the to review long-term bit activities our as as

store continue mentioned, We response pleased, with of the our very openings. recent as Brian be to

During Florida, opened northern a the delayed east we stores Auburn, Washington; in just fourth of recall quarter, Baltimore, was in Brandon, Puerto you which Jersey; may Woodbridge quarter. Rico, New Tampa; is new five about and by Maryland; which Bayamon,

Puerto Rico Jersey, the New are and for brand. new or territories all states Washington,

first already about plan XX state Jersey; in is the also eight have presence. mentioned, store, a stores growth, so to for unit stores markets D&B, stores, of for new four Rogers, XX% opened and The is open are we represent in Memphis, new new remaining Brian with stores in we markets year far, this which XXK-format comprised to XX% XX quarter where we've us. located Arkansas, Alaska, Anchorage, Wayne, brand to already including northern Tennessee; As stores and our the in New first which a

total leases, significant We're needed team and signed dedicated have XX XXXX strong currently our and construction confident early to us stores we a XXXX. have mentioned, Brian new-store growth vision providing of under we well on these into of visibility stores. on As opening eight and with a that execute

In will this that including nine higher and stores, of the between those square XX,XXX XX,XXX remaining comprised of feet, expect our stores and range, stores. square are feet, are two footage, that again to terms two stores, of XX,XXX square small end at XX,XXX we the large XX XX,XXX and of XXK-format square are approximately be feet two

XXX opportunity format. white-space XXK the targeting our believe to and locations States we conclusion, alone, in in United remains including Canada large. We're So the XXX

focuses market unit same time, by pace. by our Our offering, measured continuously brand effectively. the taking need a our to on reasons driving plan evolve the at At box, perceived value of share that well improving our and reaching enhancing develop the showing the executing growth to consistent, audiences and we offerings, new we're visit inside

we Dave & your the in at this would And always, Ashley, you for open appreciate As Buster's. lines interest Q&A? please time,

Operator

We'll our from instructions] first ahead. question Bartlett Please [Operator Thank with go you. take Jake SunTrust.

Jake Bartlett

and look being you the early the quarter touch games narrative quarter the you gave as first I'm when kind new moving wondering improved. of quarter-to-date has if weather, over can weather seems back on holidays here, update was successful. like fourth the not around then what in just around into the it kind of forward And

successful of of you this this comp you in negative staying now. maybe of what's were been that different kind even going if you I'm digit came now, where have better of You -- deceleration? in explain driving it's help out trend sort assuming could any mid-single happening And view some what and us changed? you right but kind of had and thought has -- maybe you been mid What of right Do games do quantify has or be more recently. are the to that as kind kind how

Steve King

me So I let clarify. if can see

the The and said were we what we that the far really -- when were and what has to folks weather referring think they really pre-announced what from fourth was intrusion weather when different things from I I we by two major we competitive in January, competitive so weather content the say, we in thought talked kind been think results first, after influences of intrusion not you're we in followed would this were our friend to, quarter. not anticipated. as I quarter. different were are first-quarter that

what of things over one shift unlikely specifically, content that I change of show from good to content to year really, trajectory last best the And we during quarter roll think that the VR. were we a going when from come the significant to thought part weren't of good rolling this first saying the significant on basis, were the was was we any that that year-over-year was second prospects as quarter year. early a ICR until was we kind see in

Jake Bartlett

to and going having to to I year, game thought you be do that turned you a as you successful. Raider better Pirates which that going that last out was than out Tomb going to not thought about were game a successful then talking equally come Caribbean, with was been Walking had about be Dead the were to of

they So that sounds successful ago. that way it? Is about were to think the it like put than -- year right the been but far out a less so you've games have

Steve King

they haven't more any what we year traffic than a ago. rolled driven Well,

-- trends based fact, traffic traffic is trends what during we're guiding, our on remain and call, this In weak. said traffic we've what --

the piece far. relates it's as of haven't about -- rolled as of a worth. it we has seen been them two out what so we for of weeks just a result currently And turn two So one that content

Jake Bartlett

consumer blame little blame being your needing to in? -- that to Or you be on come you Do that on just more the inspired content? bit do a

Steve King

which again, Well, such second we'll the of is, in VR I to driving quarter. that anticipate when is kind get the significantly have we've the out rolled that's what something that we in different not think we that than traffic the that past, content it is

call to think that here of in of what related specifically less there in go it broader terms and than content, the and in feet the sort been less-committed-to-games had issues Buster's research but the less-attached-to-games us we've would of mean, I are F&B. lay of those I issues we've part, And offering Dave like -- to trying & are & or lot surround, the Buster's a I elements So Dave are more content. to than we've guests of been that critical we're than able attract to some that had what that past are guests attracted do of there them, at of and thing, in guests other are say the that I to visiting have

Jake Bartlett

just And quickly virtual up the on reality. following

quarter? You title the or going to expect is? you to what with launching frame title you that And how it how back start about know second sounded then -- could impact we sounded end time of it testing at mentioned like like you're -- tail a just second but can a and roll-out -- that think in the about you're when the with What's we a should title. VR results? of offering of the the the quarter more terms Or

Steve King

the exact I I've we when have development. and exact being we'll continued under it's the It's mean, say timing. to mentioned written. announce we've timing midyear, currently

IP. the for agreement an have We

we're So we're XXX% line behind it sight confident that to deliver that timing to. have is we but that wait something of exact going until we'll in midyear,

Operator

our [Operator with Blair. instructions] from Sharon We take question William Zackfia will next

line is open. Your

Sharon Zackfia

not us Are said you virtual I would up It the can reality? I easier. the reality, comparisons getting pricing anticipating I VR? guidance, specific you you had just to Power because you utilized expected on think, would any it better are in virtual any be you're still if thinking case. benefit separate. idea then you I'm with previously, how said Card. guess on from think just give about get And wondering be following And comps that's the

Steve King

for Card. test -- a utilize item Power on the to an without and So we ability your as in separate have priced credit VR cash on it

terms activate for the planning doesn't of it little participate purchase use, will the do so for for of a intend attraction that a terms how on similar, in to we in a you ability better able for And we'll Power easier a revenue regular kind standpoint. description, of people your to what have an think other Card or put intent us make chip you we price, from we you use, although a that And to then we're from or lack it this. deplete manage that anticipate that roll or is can separate just we chips chips call it VR as be offer VR. chip, in Our way VR of the a to incremental throughput to bit to

Our associated measurement when some tested the was incremental this was there it, again, and was so with generic by it. it we -- and tested way, put that there overall television, that didn't just was with we on content, sales

Sharon Zackfia

And then are points, that? price you discussing comfortable

Steve King

you We per tested and offer we demand of it for kind out what we get generates. promotional I with it it see And person is of some at at a to $X $X kind mean, that price, person. think per we roll thought ways will $X per person. at I put it may lower but our

Sharon Zackfia

on this we're of when. Is know to or summer. last or I you be And kind thinking if June one July question it. said June? around launch I know going the don't technically

Steve King

been Well, specifically, haven't we specific.

over midyear it will so times, several by midyear. deliver we mean, I said think we've I So

Operator

next take Strelzik question we'll from our Capital Markets. Andrew And BMO with

Andrew Strelzik

There's you about laid kind been and of question, timing think half out can you're so a each me of the different lot things of of lay XXXX? that back is obviously, foundation, midyear easier that improve. Understanding and the So reality I that this of for there's a think of conversation, trajectory on, laying on, can you the might these of initiatives the one help compares exactly timing things my the you reasons working what about working of as drivers that about you're but is kind the out first as them? the just understand number in guess comp virtual getting the that we

Steve King

than of as out be are it will some Raider Tomb kind the think relates potential pipeline truly marquis that there, rolled but names I I titles have do in VR we we is that year. the this hero so the traffic-drivers, Sure, we've think mean, content, Rampage that far to that to bigger or have other things

have titles So year. about the we're the the balance we for encouraged of that

We and kind longer-term I that to, in results shrunk immediate number better expect as mean, that. February. that to expect over that of that's again, of reaction think have faster to quality us attempt already you really, the changed I our menu time an we of we're see would don't a in but, for speed. from the terms rather longer-term when and view And I we deliver get a thing play that's also to then initiative. really out will an be half items, year. order on of any second of do where test. I of other have be we so couple wouldn't impact that a would than That in invest perhaps a that that an to idea we to an there. XXXX stores sometime could of the give to tested in start, us in XXXX called significant impact quick-casual we the directionally kind have intend in have That'll

same the roll done with chicken We as steak. counts, we've I'd on little quickly a as the we a out the already that bit intend contract, that's quality to as about F&B can, side. burgers. So say do we

there's it to out can So that get tasting it guests. where pulling of we get friction out, way will so talked then call from point some as we an different a absolute the we from products a relates number And about, the credit elements friction. we to credit, can or and point from changing think both in that

that. I We kiosks kiosks, deploying, new upgrading, its new are that XXX think additional technology on are

the from there's are front to in that an against to who resources to occurring event by bust don't line order in lot in that's and We And there. deploying our try the say, the it's really, are either desk line prevent line of the frustrated getting front people a attracted being attempt to being to line at that in all. desk need be or

that time for that's to how then you're line, we pricing without experience, that different of figure and make I to pay deploying a our to table's of the out close bumpier If it folks we'd year, access on be cards out and we part a testing communicate a the of waiting slowly trying RFID looking for card sure ways the think I the in it to gone So second there's much this the cards and comes enough, really than at the for than table. RFID primary like. if that with games, we're the in think then we'd more like, could at and as bit you to clearly question we're other that. Pay half

having other brings their be we like I to way, terms pay to successfully, to service, the us speed a we terms think to convenience of guests, when of to want for be so they of frame speak, being pay. that stores what able in into it elements deploy to of able being roll turn, But that successful end-of-the-year table test of the it that in time of and would that in order are to if able with kind that. an lot

Andrew Strelzik

but maybe to your the presumably the have ask basis up second better this don't to year, level number is stores an away new very the stores, helpful suffered on openings that. taking way suffered some in is may and how of the appreciate know locations any those you've favor sign say number open you're there best that new to the ops That's that guess, I managers the ramped that store color. at talent management and stores, it? your I has at absolute of the in I as question, -- of My delicately, existing per the existing --

Steve King

new think have there's the don't existing from we there's new want don't part stores I open parts of sitting the we two it's So a to ideally execution of I'll compromised by stores with on I doubt been resources the by seeing Intuitively, mean, opening think that to GM stores. the to going store. have depleted the to that objective how appear our measures of that we're that model new caveat I saying that. question. any some to

in guest-satisfaction XXX,XXX-or-so the we're a fact, a little seem bit to and surveys don't level of -- basis. it's the And increasing So getting by mean deteriorating. that indicate overall that execution is I on year-over-year that,

assuming what from it comp So seem a explain sampling standpoint. there's even we're doesn't error, just to seeing some

Operator

from Wells ahead. with our next question Please go Fargo. And we'll Jeff Farmer take

Jeff Farmer

to understand the cliff. trying help it's on You same-store touched you you fell us amusement can terms by in off early what around same-store the happened surprise caught sales at back amusement so, a winter sales? again of seemingly fell understand several what it fall headwinds, why same-store then I said, And of looking over with the into November why you time really, so think sales abruptly? the amusement frame, so

Steve King

mean, into a year. in fourth in visual -- said were we started different a something in on quarter method anticipate of going momentum QX related think big, before we to the opening latter Again, that I the year. particularly quarter we my dramatically quarters I amusement, But positive very that which honestly, doing as three been compelling we drop amusement. I in Sock'Em comments, advertising didn't the first Rock'Em fourth the in part running the of it of X% retrospect, of that the was perceive It last had the slowdown for roughly had slowdown guess I not in did Sock'Em. Rock'Em, amusement comps

would the it's the reacting so you dissatisfied a And if three disappointment our average, advertise event content may on where to something nature. relatively I frequency, they're point to that, they year mean -- that side. the it can fourth over the as quarter in A it by content on in people were would in situation opposed a infrequent. disappointed quarters. people were react couple, you a back to cumulative discrete times years and previous toward more that to time take again, year nature you for when over And in see with maybe So that's to

sales there's don't was of I basis. December X different amusement sales that clear-cut -- know dropped, again, So, a it on because that a and but year-over-year October were radically between amusement

Jeff Farmer

get But to ask lineup and of Then you confidence than gaming what I on to forward, beyond proprietary part fiscal in as 'XX that impactful just you another moving really, middle be way a gives in questions we the 'XX year. the fiscal what gives it VR? more guess VR your confidence of was lot this will but question,

Steve King

games XXXX. beyond no XXXX. planned other not well, proprietary. games proprietary We have than, exclusive technically for XXXX. was do had We to We proprietary guess, But VR, I in we did proprietary one in any games had but us. any proprietary we in that not year XXXX, Yes, only Spider-Man was proprietary moving games last games that have was the that had

impactful with mean, of can one the than I any we visually utilize I So much of mentioned, elements have that that intellectual platform something multiple what And that games we think all, property. as VR, more multiple first XXXX of I in think, rolled was. that we ways

will is will well. property well-known. I that we'll we're as one actually that extremely be be intellectual think one the that doing December And first extremely well-known rolling be in that

And so terms of that of timing the IP significant it and have a a part we roll it, this, wanted to from of be compelling has would very be in well-known some with standpoint. been that consumer --

others that, it with generic are some VR. platform utilizing rolling weren't more I a guess, for we So

Brian Jenkins

even said that ride operating think it's I'll generic the good some and notion saw, the Steve and ride. were of the it penetration advertising, of this platform. when I'd earlier, mean, emotion-based also tested content, pretty add, uptake we a because -- I we without I an platform, call as

it our than content we a have TV great-looking kind is very could a well spot, if perform it test when of it's going generic were lot be is -- platform. better that It's present testing TV, environment our on compelling So the feeling we IP, platform, in so. that which we a to put

Steve King

anybody that And environments. think add in in have our I don't you today we other I'll midways a going Jeff, one this else have games other find that to we is do is that thing can think competitors' to this. I number of

And I to our offering proprietary an that effort theirs. is so compared our toward to differentiate move think really

Operator

our Maxim Steven Group. question And we'll from take next Anderson with

Steven Anderson

couple follow-up. I service you reducing some have about the periods yourselves to have labor add initiative. where you've been trying increase? -- particularly of potential to question a Yes. I a times keep given costs, having foresee additional to -- And control that last on peak service studying labor have the And -- then quarters, during do trying your of to

Brian Jenkins

that labor's focus fabulous numbers down for mentioned our under And Steve and teams, our teams when this mean, decade as year been this and our since came long scores comps would the us our in call pressure I a over a sizing Well, the company operating what Obviously, down did were softer. QX, not not I our ago. time, we to a shifted a did reacting for came staff to job guest-sat suffer. sales just

improved. we fact, In

the isn't at experience, So have. data the evidence that the in guest least we short-cutted we

to time again, and gap those smallest the regional really And, in the sort narrowed -- -- of talked and base and some two this on worked comp operating stores. between long are have we've non-company the for folks quicker this in in recent lot to base our significant We a focus had hard calls, of been we've significantly non-comps a QX. finance our and a in between and on folks we've and new the our about that's teams we've big QX. them grown as gap of try immature store base dial The in

helped is, the done the react heat have used of in allow really now and better midst I pieces platform in but staff impacting lot. We lot be the this So and at more right we midyear, that. we're to the we're time, I so labor-management to that right be people in time a staff experience. more tool the we with aren't We'll us a real-time will place that around sometime of like the and optimizing battle dealing of we system of right so the aren't -- negatively putting with that in terms that will the hurting its it in that one place, upgrading, the impactful the do technology most at workforce-management new that in upgrading back for it of long think we midst in though, was believe a have that a fact a we're of a The and good It us that actually are those XXXX time. we -- put things. system used was right

something in money we're around putting on we focused in we're new it's people always tool and and this and as putting investing So speak.

Steven Anderson

emphasizing $X $X.XX in maybe casual in $X.XX to a -- the see, certainly on you you to emphasis you or little the it's and business casual that huge that I just well and expanding service was -- Play the your question marry the in anything Eat at other whether on the Combo, where opportunity a side & dinners value see quick maybe or for there's and ask or Well, of a platform? on wanted have burgers wanted look if like also discounting, dining. I two that food do more dining, may beverage

Steve King

Play have new our So but or value happy-hour & Price really, historically, for of EPC the offering. mentioned Eat Combo, games a been Wednesdays, for EPC, XX XX cornerstone and offering X/X free, you and our playing actually

resonating as EPC, it as in once Some you was it's past. not well not honestly, that And mentioned uptake are, were. getting they the the

that. recast So we're working to

actually, EPC the is on beer. the don't over food the choose focus I prices and testing going than well, groups, side off on beverage broadly entree that's you XX% a means. version that what we on Again, because have discounted then a more in we're of really of test we've done, people quite we've new more some understand discounted had very we isn't a to one we're example, have cocktails your I'd what amusement resonating as special For always our say, And side. where time, that, but version, attractive happy cocktails that, say and research currently discount card. new we and that's XX% hour, off and

you conducting digitally. or is the in good $X. of meaning four, hour, it again, item promote either And actually we're five news happy about So, can is that $X, the three, $X, every a process

confirms is centered an advertising, issue research linear see price. not on on that alcohol specific I we do value promote more those work seems but up, on because we're to overall so mean, tests need bring the that doing can't much on it You and consumers but a quality value.

better really things specific those values to are. in mentioned order go two I just try pricing going to we're after Although communicate where to what

Operator

Andy question next our with Barish take we'll from And Jefferies.

Andy Barish

consumer bit Hey guys, on of have the was more the into I in answered interested I sort just think but that you you question, a may little non-game-attached mentioned. digging

it probably where be maybe seeing think the research other disconnect value, primarily your one-third where but would helpful. -- any and the place. is on taking showing you're I is And larger customers factors that's about that of a

Steve King

I think it's value and both speed.

have mechanism. We things. a different a delivery like They'd significant number of

counter-service a in because full-service our a offering, wants some that environment attach think our them past, of a able want stuff a rate would and don't that like of we on mentioned order of eat see if significant store, be the that full-service not and got we quick-casual take phone it it a some way -- it's people to to I a can envision up complement "I before of who still increase that when those to we a after to have better So sit down, complement that perhaps of for we've have are offering. part D&B. I offering we we eat experience. full-service that they our to that and the of -- significant experience, time in envisioned a number pick a quick-casual could they'd and my a and majority, opportunity eat the them rather even what it to offering enjoy is prefer go where on or table even to up having say, I a ready." a folks a But for things, don't sort walk I'd But it as think list would what want time sort be come seeing to quick-casual peak. We take majority want I much out eat. not at either them something to by

Andy Barish

you're as follow a of is seeing quick that just on And demanding a that customer that younger those? sort that. Did up mention you

Steve King

of disaffected, those its younger. would I'll appeal, terms in terms it, of I who be be they are, think would that skew call in offering more but broad

Operator

yourself. our your James. Brian, open, take if with can unmute we'll And next Vaccaro is question Raymond line you from Brian

Brian Vaccaro

still I'm Good guys. learning button. evening, sorry I'm that mute

Steve King

Brian. That best yet, was question the

Brian Vaccaro

I all That's had.

means? you the on trends, but now, I if the be date to back under coming would two belt sales said think soft, you and remains So willing put with you'd quarter we the would recent could, on I months the your willing point to quarter? than Is any what that a fourth worse for to reported color that downside provide? Or just nine finer additional be

Steve King

don't guidance But the been I the in giving know And why of a try out. as week-to-week the middle have. most of in versus just year Easter to year to it plug or end guess we're giving provide that slightly no. holiday I it what mention think it. all the weather that amount any best creates of I all And tremendous can The and that and of and last end of, at QX right. the in you, of quarter think quarter, basis rest a having shifting would be you to is I'll this -- so here shook color that, This of was a would see number of today, a that we meaningful based as did is to everything We'll us I better happen. have the know quarter, we the mean, will to going volatile I bunch noise we earlier, say and in think where than on the QX. in answer no, after our is quarter which was of it's we we're on not said the you the mentioned accurate to here. the it some And Not

Brian Vaccaro

spring month of is correctly, and I just And March, in so earlier the remember the benefit to that's a shift correct? in that Easter shift breaks,

Steve King

Yes, a well they March, That's I benefit. saw notes should dining doing in like sounds some yes, really casual on have.

Brian Vaccaro

A if cleanup right. of VR, on couple questions All I could.

said $X is just Thursday that still still a to sort play the be per plan? of, during, wanted going that person. to is initially you period, confirm, the I So through offered Sunday

Steve King

plan so times, at exactly. is we peak Our haven't it to offer said

nights roll-out, to -- depending demand weekends, you and where most mean, we relatively there's I kind based adapt initial expand because people we But of low. per as on nights going advertised then labor weeks, the be mean, think during but what I no-brainer may so during to -- will of only the for a need likely on a no-brainer weekends, in clearly think holiday associated it terms labor think, is. kind but it of I couple I we're that, summer I hour, will be a with of, the those for it's pay as be may is the week. certainly the early on, hours demand over perhaps and well the

we and appropriate. it as will So open monitor

Brian Jenkins

to to the have a part like have we'd reason a it week. operate Yes, of large

again, yes, be created how goes stores here. equal and we'll so all probably And it see will not

that is We and platform, and volumes the it have the necessarily same will of stores four-player this will be won't some of them, stores every some do two -- capacity get we huge in store. actually so

Brian Vaccaro

the quarter? been quarter, it line, labor of cost doing fourth the the the around we sort in quarter down know saw in of, starting on what place, in I savings some And like third helpful. All on in there per right. looks was That's top XX%. the put kick but week in have months obviously, initiatives you in were third recent new And

Brian Jenkins

talking operating asking total labor Well, you're average? Brian, about when that's here? to labor, about an overall you're speaking you're Total what

Brian Vaccaro

about Yes, the labor the quarter. third underlying quarter cost in just trends versus speaking fourth

was color that And unit And sort new in you initiatives were it to ramp. third been productivity about said sort maybe the -- of asset outside place just margin seeing then in there quarter? have the I think quarter, that you any third specific in gains fortify of versus XQ base, existing on new

Brian Jenkins

know a I'd call it if new don't I initiative.

with pressure discussion our to the labor to line stores. trying of comps But mature so, of in in terms non-comp without stores -- in make a faster experience, QX, that on significant obviously, we focus in dial but damaging focused bring them Company. dial in when always up are more to them the came under We stepped topic in

the benefits, talked a XX XXXX. bps in the operating there labor focus been and just in self-correcting significant compensation in my a So we favorable comments, that's be number. of it's when that clear, Again, bonus our But nature to back huge driver being is half about around of incentive program. in

there. there's we Company, field, miss a in correction if budget, So the in the

comps as just when stores. as that's which So close by about, a base most driver, the down they of big sales, hourly behind labor again, and this followed growing percent significant non-comp really is of were impressive think better being you

then great So we I feel the I my on said -- as a team And labor. job did like we deleveraged did management in actually remarks.

So the some that we pie. these structure sales saw given big in deleveraging a actually have was stores, QX, in that in we management teams, that lower whole piece

are there's in So putting internal platform. and is couple a on factors, of state-of-the-art heavy amount this. that's believe focus a resources what significant investing a but of dollars why on workforce-management we we And

Operator

go take we'll ahead. question Jaffray. Miller Please Nicole from Piper our And next with

Nicole Miller

is today the that time go the back in been the it impression us closed case. to not Sorry previously quarter that at I was the commentary factor, January, not biggest the was the under you fourth sounds to albeit out the in to and like talked had weather but quarter,

could that So basis XXX helpful impact. XXX it'd How be can you along if we that? about very lines the of basis Is think quantify points? weather the points,

Steve King

multiple and in intrusion was No. X was, the was were compared we ICR of first we So on what all, -- X I the said what to X No. expecting. weather; competitive times think increase content; No. directionally, at was

was weather of bps So about that. XXX

Nicole Miller

for of and And to reason XQ those is some us appropriately, to you the the to comp segment are and Or similar amusement to date? have can modeled but total-system implying are much is get first you beverage very in comp similar food similar imply for volatility margins terms is the quarter then trends, respect of current to changed meaning that XQ?

Steve King

trends we best were food in level of the our that terms kind and to of terms that. comp, but trail are in and trying the same I'm specificity, not in directional of give beverage sure of amusements,

Brian Jenkins

of They talked narrowed. ICR gap QX. that what obviously, food food-and-bev performance we've about that's amusement-to the outperformed in a narrowing we part the near still we amusement the saw not significant bev and seen, at and between the year, level Clearly, in our in and QX but first

Nicole Miller

certainly they're bev not, kind to and food steady? margins of know I need of and kind do equal, you else and all comp amusement what then, And what hold

Brian Jenkins

our marketing, and increasingly margins higher are in stores comp impact haul, as long then growth And to, Well, G&A of not the as continue a become and a our -- bit on labor-efficient. seen maintain as margin we we costs we've we -- basis, and over always evolved because about our leverage set. I of our non-comp could mean, grow we've talked X.X% X% time comp drag need year-over-year we as to to that's stores, our in that are set the comp overall on they over we occupancy a

with that's structural of been some there's higher the the base leverage sort costs. offsetting G&A we've of marketing So years, growing over and had this big non-comp

the kind low, of bps what look one pick picking, a you're comp year-over-year depending to we're a directionally bps. if around If point guiding XX the so, on comp would number is negative high -- guiding guide, and a to we're you on XXX you be our at what decline XXX

about bps kind So is on XX every impact a one of point business. our

Nicole Miller

going strongest for Are up recession. movie? helpful. how golfing? going? understand define survivorship-type your great That's are And they you they Are playing actually frame going guests, gaming these us? And trying a on and home final going just record they and Can where to Are question. games? fourth-quarter Are since they had it. to The holiday competition Retail period I'm you rank the they going that shopping? the the

Brian Jenkins

Well, us. the rapidly something changing for competitive that's is environment

plus, three many In those in the stores an I that if talking about of it and tracking of kind today, really, lot started us we we're a dozen right. to names really that remember talk didn't XXXX You've of form landscape that, about activity; of part group and whole dining dining doubled entertainment. opened, their bigger, names. years our generating at It's than look names view, returns, we we see space. past Because us, in heard prior some for, the Year are combined leader space. first XX% the collectively, We're of a awesome we're we and have entertainment units. X. look they've They're as of the at And how when still this they attractive couple

is lot investment attractive Our to necessarily significant money folks over headwind we going and capital. foreseeable a us for been be to not a that's view away. There's put think of it's future. It's looking somewhere. to the There's in going space, go this

looking total solid levels, market potential in that's a to the take pipeline, addressable to we're not to first not be markets. our and in We and we our list come be to why look Steve compelling are at If want but the of competitor to on brand, growth, friction counts. the so let day, mover at continue seize execution in to it's content, market look a we really quite the talking looking slow we're frankly, spot. the and, the our in continue what about down So really need our to how evolve good our in to do launch controlled system,

with lot units of evolving something we're There's form it's entertainment. some folks So value names. a couple of and out a in of that's lot a there tracking

dining, of golf, categories, You mentioned the entertainment. some

talked that. two always about but names big it's we've So than broader

Operator

from Please have a we Wells question go Fargo. ahead. follow-up Farmer with Jeff And

Jeff Farmer

that ahead staggered into When be roll at will you the the you with some balance system entire able the 'XX? the launch same at and midyear, point out guys of roll-out a do move XH time? 'XX that be to VR will Or over

Steve King

in be bang, big will stores It XXX be short. we'll in. Over

now. we're time. over I to to think wrap have We're it going

Operator

to for conclude the I'd King Steve to call that for session our comments. today. additional back any And like does over question-and-answer turn conference

Steve King

first-quarter June. with Thank brief. when us be you look today. for joining you We results our we forward I'll to Thank speak reviewing in you. early

Operator

thank may now your And you today's We you disconnect. for that conference call. all concludes participation and

Dave & Buster's Entertainment (PLAY) 3 Apr 182017 Q4 Earnings call transcript