PLAY - Earnings call transcript Q2 2020 | Dave & Buster's Entertainment, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, everyone. Welcome to the Dave & Buster's Entertainment, Inc.

Second Quarter 2020 Earnings Results Conference. Today's call is being hosted by Brian Jenkins, Chief Executive Officer. I'd like to remind everyone that this call is being recorded and will be available for replay beginning later today.

to over like Chief Scott would Officer. Financial I turn to things Bowman, Now sir. ahead, go Please

Scott Bowman

Thank you Jenkins, Dave behalf and myself, questions. today's and After you, This thank Inc. from & we call, Also us comments copyrighted. being to is we Buster's on will today. call be Entertainment, have take Jenkins is of Brian Mr. Chief happy Officer. for Executive and all your joining on recorded

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

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

the over call Now Brian. turn I'll to

Brian Jenkins

hope behalf last June, joining safe. and their our our thank and industry difficult you Since company, and Buster's for am and your conference resilience commitment economy. business we circumstances. under of the team, you On present team early the call and I afternoon, conditions to Good agility, our COVID are continued families healthy Dave entire for & proud remaining challenging has the today. succeeding call for of tremendous entire to pandemic members our our U.S. their in extremely

conference operating we've detailed temporary changes our model. the June our to made we call, During

the covered horizon taken to priorities. store capital reduce capital also critical decisive our Also steps We secure while extend spending our additional preserving near liquidity have in expenses to order we focus term operating to reopening X and on we in detailed June, capabilities. and

results. and QX accelerating opening review on near safely those we the a and now, possible; change First, in investing the to as model, second provide to an had menu, priorities our term as stores I'll in and our our chance our of soon two, service Scott first programming and efficiently speak after marketing. update our

reopening and During the second steady made quarter, progress improved driving our operational stores results. team

reclose COVID Over to the forcing our with the barring quarter stores. fact, open, XX to stores, a stores stores XX course get XX or in that the of quarter, us recall X was ending to we goal resurgence, occur, XX close did opened, which, reopened

approximately to store X we additional an we XX% permanently During net quarter, have second today. the base total up store including to of X us the our stores the store stores, also of XX quarter, opened open Chicago. Hampshire, decision of difficult a end as downtown the Manchester, close Since made brand-new New bringing in in in

close our additional to We also market. in made Houston the decision X permanently store

of indexing beginning revenue. our revenues. had significant At Over quarter the just XXXX the week quarter, rebuilding progress reopened at XX in the first the in we made of that of we XX% quarter, stores

our continued quarter, some and recovery prior accelerate COVID the by first base stores has end and half reopened of of of levels, in mid-quarter face the in XX following were of resurgence our the XX% generating While revenues nearly to July; at XX June the the we year quarter. in did headwinds late stores, comparable the third

Over indexed comp their XX%, the And levels the stores those date. that, top to XX%. quartile XX past at within same highest comp indexed weeks, stores X at

While we believe we reflects recent calendars COVID. our this pace variation tailwind strong portion a are of by recovery, caused performance by encouraged of the school some from do in

benchmark maximizing lowered operating lean refine those our sales we have We near our index sales are XX% also term XX% efforts the breakeven XX% range to initially We back compared in by index believe June. to to model. the EBITDA to continuing communicated

store-level our for current XX reopened business. Keep some labor, generated recover certain saving more dissipate marketing we reinstitute lean revenues as August. of and our in our month stores mind operational naturally EBITDA that fully, elements initiatives expense of of XX the fact, of and positive In portion will

resurgence, are future timelines terms will before due forecasting stores although any local and our remaining of In the barring of all store of are COVID-XX inherently we additional delay now reopening reopenings, state we reopen December, uncertain. to end

among over those the for of stores of and our XX% in terms XX total to store-level generated expect historical our XX half As our profitability. New remaining top of XX% count. historically to store of we about Combined, approximately have of our openings continue sales last California reopen. include of reopenings, quartile the be system-wide and remaining they XX several stores These to York our cadence stores represent

to are results several the demonstrate very So stores over rebuild levels important expectations to to business obviously, and reopen longer term. pre-COVID in things. order these fully our our These for us

lives. a our resilient have into appetite for customers strong are inject to and brand anxious their back First, fun

maturation profitability. are on see At this current as continue to Second, to operating week liquidity quarter return efficiently position. Scott we second point, comp improvement finally, and absent the And curve and reopen showing to review business our the rebuild an going ask stores COVID stores a passes. for each sequential we sales results clear I'm to resurgence, encouraging our quickly our our

Scott. Here's

Scott Bowman

as our quarter to the well for performance few Thanks, minutes position. Brian. summarize I'll as spend the liquidity current next second our

compared stores opened XX% in at decreased revenues stores decrease period, end XX including of quarter, at of the XX year May, total the XX% prior XX store at an the the second with end opened stores of comparable June and July. end This included sales. the For

As encouraged sales of most in the by index by year nearly quarter quarter the efforts have volumes spending and G&A. our and of end model to at aggressive period. in the current levels our same operating improvement evaluating we and to time, XX% zero-based labor the improvement approach an At includes of to reengineer approach the This accommodate the we store Brian prior stores the expenses. XX% the a reducing were to taking to for end explained, recent X-week further since taken

a offering, our these cash over of contributing burn, approximately average As excluding increasing quarter. May equity efforts result second stores the of effects million $X.X our was and variable the profit, weekly

was of Turning partially operating a prior quarter, leaner and million, year to an of and million, prior the introduction from Operating store in improvement improvement expenses balance expense the higher of and million $X.X tight period mainly the prior sales due model volumes reduced decreased labor over were and the stores. due due expenses spending. compensation consulting expenses. discretionary Other period, XX% primarily G&A and lower $XX.X year, from controls lower of year sales. XX% spoilage offset stores of XX% an to a that as reopened Total to food of to at by as expensed furloughs mix payroll the reopened. was of due from The a of the a XX points sales, basis $XX.X beverage decrease the amusement percent benefits was was $X.X primarily P&L. cost improvement million sales of to expense

$X.X of Second loss a of in was improved month quarter reflecting our EBITDA the which $XX loss again in million business. included July, trends the million,

share-based million million million preopening charge and in Second was EBITDA, loss $X.X the impairment EBITDA excludes quarter from long compensation, million, on adjusted assets. which $X.X $XX.X lived costs $X.X in

to with Turning to We quarter. in million of the $XXX which first quarter ended in the million May. second million included the the our sheet. This $XXX $XXX end closed of proceeds equity raise compared at balance from the cash

$XX X approximately quarters. of in over had million payables most balance to expect deferred the we vendor this next pay Additionally, down and

defer over to XX- XX-month and scheduled rent time of will of We through period. portion rent begin to our the a continue majority deferrals to a January in paying back are December, starting

to for the end of million X these the August. spending. Hampshire X and resume near complete these construction open XXXX. which half currently of quarters, and stores addition the Including to $XX recently of year. plan back store the This for at is on in expect completion, incurred stores $XX we XXXX, expect to the at the We to Manchester, fiscal of that fiscal approximately New in to complete million are we million to already in Turning capital end spend the CapEx opened was in first leaving cost $XX stores,

pivoted construction, addition, stores on our are stages up, committing entire like To In their of to which challenges existing there remain I'd of visibility wrap the XX trajectory. in ramp-up and hold adapt and further are the burn those to Together, from Brian. may the that, past we as the pandemic to With business back over lie reframed faced and the turn meet that minimized to months cash business model, our ability analysis evolve for perseverance and also the pending emerge early our will stores. into as we've I'll strong the over to that team X thank it ahead. the the well and operating on

Brian Jenkins

update of hopefully, want the our and Scott. providing half further and term to results our and and that thanks, as that menu, two I Well, model, spend minutes an accelerating few near you second financial the are for how the of next the recap service the improvement our the ourselves year a unfolds. marketing. second in we quarter change good setting Well, on our up for is priorities second programming gives our investing of

engagement, deliver threefold: experience, first, anywhere those enhance to our through develop to and guest experience team on not near in realities & recent our the Dave as of designed model deliver the to enhance enabling the To to enhance behind making teams closely our store, and brand, our in same at of self-service Rather four the becoming clear service mobile team time, more refocusing leaning rapidly The is corporate order COVID capabilities increasing pay by is time, is broaden investments term memorable with to a thinking speed at that members creating these efficient platform. very a the and accessible relevance Buster's focus future our more for while attachment areas by same team history objectives our new food in working is a the improve to service and business. are operating technologies evidence stuck guest it pandemic. to that or focused satisfaction efficiently. technology formulating beverage guest the our a Our in end, and plan

also is we that a available arcade device or at a central a via Additionally, testing snackable kiosk in are mobile pickup menu a location. the and accessible for

We our work more promise potential far we We'll evaluate with are store channel, test refine encouraged XX% to Dallas stores. of revenue showing guest the coming have so in scaling through as further by F&B we've the results over great the our across of mobile adoption. share seen the for and our

is identity for the quality, The This our allow key reopening frequency third-party culinary our and the second the audience American of complete brand. of change as traffic by guests Buster's for investing we and differentiator driven And relevance amongst that millennial strategy us accelerating our to new core we broad food enhance with recovered our approach. our which simultaneously necessary and menu and are what new, an & in this is business our differentiation are One The strategy focuses informed newer, composition. ingredient operational will explore our that a will stronger resonates while applications. more to data appropriate first- achieve element launch pillar has on a process degree, area will calling a boosting the through we execution. through reach core and strategy and and an menu. entertainment After classics, we innovative Dave

will XXXX, during of throughout strategic the approach will coordination beverage offers to evolve media learn windows driving direction QX process introduce marketing, with rolling new limited us XXXX. in year. time approach new food to Our on culinary we'll this and and begin through continue key and In a our test new to and focused traffic enable the in

Watch and are Wow a developing third we strategy and changes where other stronger around investing The programming in our area accelerating Walls assets.

Our Walls content our foundational sports that implementing digital entertainment Wow screens stream programming, video content, live a will to trivia platform can currently team other each and linear refine and signage, us collaboratively scores local for new is and platform with cloud-based manager such entertainment sponsored to while timing store delivery content the relevance. enable store. team each a centralized and manage via and to at This content working selection programming as

with all premier We be and sweet sports virtually sports in experience. will that in-store to other Select some watching sports with the aim stores chaired technologies fans guests to fall Wow this premium will Walls giveaways support Thanks we and that in destination. journey begin space. teams some stadiums, offer our limiting experiences, also live investment

curated been & while in In heard media actively addition, app. D&B live the are also they in channel Since driving approach leadership and going that be can incorporate and we our new a between all-new & brand developing music, marketing. Live mix their we last holistic of as vibe will radio the streamed a in Live, Coleman, visits. agency, The which will began tactics CMO, promise we first with accelerating through creative with and we've channel to and on are deliver. in investing and of are a Dave have and will Buster's and well new our executing is only reopening website brand we enrollment. station, an awareness brand our our and new our process City. dedicated in launched final launching to around in our Dave lives developed all personalities engage stores, campaign, be nationally New the branded area stores radio singularity audience they're when in fourth in our local when guests campaign in-store our the messaging, which York daily of aid national step Under This providing which changes week recovery, another about enhancing just powerful creating more emotional as Brandon to Buster's Mother stores, our

intelligent continue we integrated the the you evolve In of to through it to touch guest move guest buys blending of with launching match Buster's direction As journey. approach local media as new and our Dave balance will digital will be an with with is see all points. year, TV, our & social out-of-home specific advanced by insights tandem we this radio, customer that programmatic new across TV, messaging,

As enroll a automate systems through optimize understanding guest behaviors. function new messaging to with journey, and And reawaken digital approach. local a messaging our visit will drive visitation. tent-pole grow, customer new relationship data engagement tailored platform our journey guests through will strategic motivations and our increasing With be XXXX aimed ready customer we to across their enrollment, our brand, move guest the management media will new marketing the audiences and mix to we with messaging intelligent at enter powerful frequency and as

up. sum So let me

members our and stores, their the power for driving for are are and proud the and flow, and am out that our done. are driving We brand, repositioning commitment business steady cash developing They in heartfelt thank burn recovery. of our listening improving our making reopening every each in-store encouraging behind implementing any our well team their team you, a resilience, public day. customers is there, of initiatives you to each this very to to long-term improvements progress their of I great delivering members week-to-week And agility, success. our company revenue, expense our for reducing tremendous are

strong. Our brand is

Our execution is solid.

Our committed. people are

value in optimism guests us shareholders. ability to about give of our to stronger emerge in All fun an and to to those our deliver our position confidence competitive things our even plan and

like call line. Kelly to the please the open questions. your Ann, we'd Now to open

Operator

first Jake with hear [Operator Securities. Truist today Bartlett Instructions]. We'll from

Jake Bartlett

are know for guys you the there. out doing thanks work hard I all And Great.

first comments sure comparable trends look at same-store wanted understood XX make reopened to sales stores about sales current release I is I The in about press stores the and be reopened. to the that the in

the think said down in I that you release XX%. press were they

week. XX% the I in think you're down that heard what I last was just

can difference just So there? help understand you the me

Scott Bowman

is stores. whether open our for they're or that's XX%, the latter for Yes, negative was not just all number Jake, this stores and The in chain, metric Scott. the open

Jake Bartlett

Okay.

are it case? XX in last And why that's was XXX base, only so quarter. the if the think I comparable there stores

Brian Jenkins

XX of have XX the of stores quarter, stores. we which Well, end are the opened comp at

recovery the So talking for comp we're talking our store are when stores about about performance index, we're open. comp that

talk index, about stores when XX% a I So the only that's XX for are open. that

comp getting And up weeks, we're XX% levels. going today, So chain our over our XX% about driven back which to for be recovery that things, ran, I overall top open. last us the X as by is driven by getting open. it's said, it's two the getting And XXXX Jake, index, to

the So today. entire our results comp in overall comp because that's open two not our together

Jake Bartlett

color also That's then it was shared seen helpful. or very year improving. Great. of more last reopened Can I the that the have you're steadily reopened? hopefully, quarter, Can maybe roughly reopening, improvement stores the not? just you any around down that you performance consistent kind that XX% you give or that think share prior us of of but had there the seeing And stores levels

Brian Jenkins

to I that XX% open grown last about first time, and in Yes. the talked right. I I think was I their week operation say I time, to that or how it if time, XX% we point what, believe was weeks their we it of think were it I XX%, mean, that at open, at index, are in like around stores remember had how want X --

that been ramp curve. kind they turning get have we stores to they're and we longer out a recovery developing and yes, away open, tend Farther now So this have of more lot on improve. out

this, Jake. like look those And so today bit little metrics a

whole XX look of, of XX%. of week take at first you all that about stores, all we If operations, indexed when comp of those you at -- their group, spoke the I our

better about numbers than the that -- first bit months a of because we first We of I opened week weeks the May. first now really our stores ago. have them out the most but a had couple developed April, stores the end early the XX in So very three quarter, in at we have were talked we think of in

XX operation kind maturity in we weeks and those operating XX%. that that that So around are have stores have that class of are at of

Jake Bartlett

was that And Great. the now. the I question the had helpful. burn. right cash cash the That's burn X you Scott, release per mentioned call million on very week on last in just $X.X

including well as debt sure I in was that want the think of before make I included I rent or service service as million million, But interest just $X.X to understand deferred. $X.X cash currently. burn what's

Scott Bowman

Yes.

So of our of exception that the with all door we've any cash burn that out equity raises done. cash includes the

Jake Bartlett

Okay.

comparable? was was So before, remembering million is was $X.X in that it and that $X I'm if on then Because being was million roughly, I cash, and deferred. it think it right, change rent

much? changed So seems the maybe cash very burn has It it's much. like but underlying not improved, by

Scott Bowman

you much changed and that there. that's It were hasn't that if we really rent component the consider biggest deferring

continue But by your we'll going that to as partially that so January XX go the that then balance deferred as continue to saw will in paying it see our month to to as over about generate we be But pay see back of have to cash in landlords. as we're paying way a on okay? forward, continue will to think mind defer we'll in period. drag going that that more our do continue point, portion we will we a XXXX think down, stores forward on improvement variable down. is QX, we I to of profit. And time to our with and have, QX, we reopen XX starting so payables in And working burn rate in keep we be rent And that of start this QX kind we that and the deferred of a cash we some about rent

cash two So are to our kind looking ahead of burn. know, things important those on

Operator

Stifel. next from O'Cull Chris with hear We'll

Scott Bowman

mute, Chris, you're maybe. on

Chris O'Cull

was I on guys, Sorry, mute.

Brian Jenkins

was That question, question. an next awesome

Chris O'Cull

easy It was one. an

in back last on follow-up you're the that is line questioning. the that rental amount of Just anticipating monthly company what starting deferrals? starts January pay payment when to the Scott, a

Scott Bowman

is, we million Well, end in deferred you what at I the quarter, give second the will around $XX had rent. of

the defer that through So we had the seen we've quarter, of the rent, our second sheet to our we'll looking continue forward, on a portion balance deferrals in about okay? months. December, $XX at of million prior not end extent So in to

to defer continue we'll December. So through

XX- that we'll will to to a down period. then time fairly start that January So in build pay and starting the balance ratably bit, that XX-month over

Chris O'Cull

Okay. store before all? have the mentioned And And number stores in Do it EBITDA August. positive then the has a I of sense like? ramp were to becoming in for prepared of a typically be shortened does remarks, the certain your what mean positive you you open at four more? looks opened or weeks then need

Brian Jenkins

well of job, that manner. really has McCleary our and stores all, are really -- operating to these just operating in and efficient able happy No, Manning a very Margo team fantastic our first been Forler done very, Brian we've we're Ed a VPs, two

now where stores XX% about those a So stores, in generated ran right we we not breakeven, place I generated, stores that XX mentioned, on and that group a profit. we're index of

as being as of open to of weeks. have seem we're mentioned one over definitely bit pen stuff, we speak terms the it's we we it's market get seeing the by label have with that's track in really there marketing as and that stores our now. The of dollars, we our as recovery I XX out our Jake pattern reopening quicker are mature one terms here. But a improve base seen challenges. line. has we to on changing longer bottom pretty level and awareness taking -- But stores improved, dollars But here to right to of short little longevity difficult of market. and were overall, last in that on just So but doing what entire is we're that what the We've happy that

Operator

Haskett. now from Farmer hear Gordon Jeff with We'll

Jeff Farmer

mall recovery or given those mall that relationship any seeing traffic what's & Dave recovery For that for anchor you're between and a mall development, that in traffic Buster's location? mall stores a the

Brian Jenkins

numbers Well, tough, you I've stores, situation non-mall for stores. index locations a mall It's I our at look think mall the percentage X our bit the open that than little about on mall a Jeff. points our are while our candidly, ago is mentioned stores, lower if comp

a I seeing think recovery, definitely telling slower which mall we're is the somewhat. So recovery

that's So right what seeing we're now.

Jeff Farmer

but right. staffing, That's type fixed with you and but expect on All nature how the roll helpful. did And the we touched should any the know on about level, on it of the thinking cost or touch variable calendar is the of then do of control corporate you that if I corporate on into it we be think about enterprise what G&A? XXXX? sustainability size versus this, cost to and of you line some the labor

Scott Bowman

mean, very to expenses stores. I continue well manage G&A as Yes. we our our as tightly

we of G&A of of kind so kind have more And really view a looked cost that. of at the our zero-based bottom-up from

bit it this us in environment, does type differently. look of little it make so And at a

situation back And stores, test that. forward. But as the according at to like we continue And scaled continue reductions take have we continue G&A open we'll go as to make a do evaluate look that in to our our continue we to there, to hard we stores, just So and stores. G&A. do we at the we'll and situation

Jeff Farmer

last helpful. just That's question. And one

or XX And been stores of customers? these sort XX, of these if of how are for the opened a for of sort it guys of So day or that that have capacity that while of this are addressing been of restaurants the for at constrained? taking weeks, these out there advantage studying you so, and that some days or are some hours stores week point have open

Brian Jenkins

last think to I square about stores the one it large footage as time is call. this This having on we social distancing. where talked helpful is relates

development, have sizing said our future to about think lot and have the we would we than discussing a utilization we've the as that's been of it store like down portfolio box capacity. the have. we our of in we be stores. rate is lower And as why have We But past,

the see aren't headwinds capacity So for huge by and we large, that constraints us. causing

I some the our in limit. fairly have low stores, think, some think, of I capacity where exception, With they of Illinois,

So in level. at have did at the And the indexes the with of stores last we're week we top stores our XX% their moment. some running XXXX

One top-performing stores. our of

we're at particularly not So constrained the moment.

Operator

Sandler, we'll move Piper Nicole Miller. from to on And

Nicole Miller

returning metrics, Can of obvious others. would you perhaps there but be gender income age talk the customer, about the are profile

Brian Jenkins

Yes. Nicole. Good question,

at our coming the are of clear are of And is group news think the data results, that some with looking to welcoming the We one, guests out number their marketing us through good it's I improving some sources. for fun come looks our little bit younger has back at little a more this And to enjoy male. a income. some bit bit it And with us. guest profile to skewed be skewed point, a and lower little a opportunity bit

at share the So I could that's what moment.

Nicole Miller

Chicago store just be the speak others about under course, closures, I you you then, think And the Houston attributes consideration? they the are same, led could curious, of that and to And to those? would are there when different?

Brian Jenkins

-- closed years few us. is X store actually back story closure a has for the store third profitable in Well, a the were the Dallas-based it's that store stores. chain. store X We all, that Houston first store been it's And a a the that and of

from So Houston away Jillian's was acquisition was it's profitable, that oldest while call acquired X of the X prior miles it. was store is what And my store chain. here, we it, sister time the a as have a X, in to we part our it

other the that. a end we're that seen before, looked have not cases, analytics, at it our in coming this and just of lease, actually example we've and we've sales store we good the to transfer So of believe will at that but be reopen to Dallas least was accretive

made it. we just decision the not So to reopen

Nicole Miller

how about Chicago? And

Brian Jenkins

lease. great older today actually as made that That's probably the had decision profitable, not where for store one-time but is store that a great pre-COVID location was location, not a to It of well. of store the and us another to lease case at We the not. end is coming do an that was was

already no to this that close of we people us at had reopen it back we the point, that line to close short sight But store came bring there lease. end was just So to and to when that the for of at the time later. point

not So kind negatively to of expected on be big impact any us.

Nicole Miller

Okay.

of any opportunistic way goodness, to Last like $X.X I'm the in guess made appreciate fourth essentially I million note okay I too? but enterprise sounds point, more cash one, my like Is it at the believe week that very it less sounds the at I it service, at had about 'XX ask not in back look burn I quarter the level. that a of topic So a going way, strategic. that's stand. all covering it debt shift does anything And can't this to or to because and prior

Scott Bowman

Yes.

I the the with we look quarter. opened now, at where it so XX to are we of right have way best stores at end think the

opened actual the stores. of so has an naturally new pure expenses those gone We stores profitability. we And as with up some have do offset

that we different than burn not if And saw what much out you that so the expense earlier. net is

the and now cash with right the of debt we think to operating now, and more taking it's where as about all is, burn are capital I number way account well. right spending think cash out So service door, into including it a pure

of said pay January starting before, start of our I some number like deferred we in some payables so to and some our back we And as see variation that when down grant. will pay deferred then we in

Nicole Miller

All working through right. that. Well, keep

Operator

hear Jefferies. We'll Barish Andy with from next

Andrew Barish

all from hear the us to sales same-store stores? Can just August total you you. provide number, including Good

Scott Bowman

All-in total or stores base? the for whole comp for opened for

Andrew Barish

are Yes, currently for the closed. opened all-in that and stores

Scott Bowman

number, And closed? in hand. Andy, I that have don't

Andrew Barish

of think limited, guess, And some end year tonight obviously, football side, with do programming kicking to nobody's then sports kicking, on college may the footfall NFL the schedules actual net I of kind even think, off through of and kind the going a games. trying the reduced, you though be just the to is also positive

guys the business? going market thinking how So watch how component about push? are are that you your to you of And

Brian Jenkins

we is, obviously. kind is Look, like in-store for the going experience, look reality demand Andy, what don't of know to watch really

doing things at being gotten eating, other on to pretty home and I think at in thing. doing and every or general projects and society have their used houses home people

people on question So going assets watch a to is be to drive whether we're in great sports our to able mark.

one that or It's here. we than needle built experience. said, asset other to lean we're watch approach the continue improve and experience move deliver a an of we candid kind is of be to things, going this and how nothing into have our great to That several them. Let's of

better are So would things, sounds right better we right on developing to simple for big somewhat that and that's consistent things there can audience, be at, the simple, them, playbook a foundational are things be games right like to want but we the sure at. make that the some screen should something call fundamental be like I that

we organized, that experiential can do watch are things additive in are that experience. We we there an deploying to some be So manner. consistent believe the to

then with interact can energize the going are And that you so some investing people, and that where are store. mentioned, up have have can guests. the I to if things going vibe And content we're pops it. Launch station, cloud-based a engage some a of with of will, when live partners and this specifically sweet to to And and ambassadors. radio we content, giveaways ramp the crowd, deliver really games going talk working we the in we're with we about to to sort into deal our platform also in us we help try We're stakes, are with DJs, regard. some ton different a content at to there programming, do

we So this make inroads to better and at we'll from build the lose to regard. some get season And get this learn over it mark. fruit things we're to we're try on to want and on it, will it not build going some in going Whether question whether time. year, it to

Scott Bowman

Andy, this is Scott.

Our comp negative XX%. sales store was August for

Operator

next move Markets. Strelzik BMO Capital We'll with Andrew to

Dan Salmon

guys It's for today. Andrew on actually Dan well. you are Hope

two ones for Just quick me.

not many that opening the highlighted some as new stores previously space. as potentially were competitors, you before. see of More First, you maybe easing guys specifically headwinds competitive within from they

sort at several So closures it's in or broader competitive last curious has landscape acceleration if on to or the months? you've observe any that's all competitive evolved the of I'm over begun just if persisted and view uptick a

Brian Jenkins

our a we competitors. didn't when It did bit. many before, have we talked has mean and I stores quite nor opened that

months are competitors open half terms groups concepts, of to X forward of seen either less some and in that this here, point. flash that close of So fully are at There lagging our another we have actually, largest or two subset stores are hardly their some any.

right is bag it a mixed So now.

and here, still Our ultimately. losers to think are some going that there I expectation is winners be

might We of just to evaluate changing had that term, not which But plans, at look flooding will to their the into the be table, store saw shake take plans, situation liquidity thinking to environment are and to did, competitors that And there like near pre-COVID, the these think tend there pace be through. on but it's in what that to think slowdown growth while we're for pressures the going market. pipeline rethink the least, on going a the forward. that going we terms real also like we us at growth others decisions their kind same the I means, I estate they out. little think of a are

I being could bulk I'm think our and they competitive and I margins the the ultimately industry-leading sure the I being from it not profitability at And brand, day. make of doesn't and same necessarily say claim. profitable think the of into will translate bulk end know, what AUV, pre-COVID, set, successful is what highly the industry-leading open, that we

position So to good in a a we're spot. I in emerge think really better

Dan Salmon

can different in so of give on lot maybe touched of but of And I sort you anything sense. then this a the all a the differences any comp on there? there you opened, comp far. And you've that little, parts of makes That appreciate worth in stores given us the are color performance putting just that regional in in terms country, are the

Brian Jenkins

within X to X, bit We tend seems there there And COVID has see over the couple. we question. better. of where kind lower case perform I'd have separate that factors counts last and stores little a do definitely the probably say are chain. a differences Good X months. Markets

folks to who perform in farther I of And coastal We better are or as sort those markets have A areas. flocking then to stores of tended in are lot tourist that areas. in they're tend the are with. stores open answering forgot the the spot questions that was curve, to to, be Jake, longest I maturity better we mentioned a in into maybe to their

South Canada right Florida, New Arizona, Jersey. our So Illinois, have some in is strongest we And area Carolina, up quartile stores now, lower and that are Maryland, Tennessee.

some now. So right differences geographical see yes, we definitely

Operator

William to Blair. We'll with Matt move now Curtis

Matt Curtis

question Getting G&A down on an earlier maybe, the has back come G&A, quarter. ton second in to obviously, a

the on look run year, rate you heading So could any into like? second us the half might G&A give what of of sense the

Scott Bowman

least G&A No. I the very fuel be think at very continue can't mentioned, specific on and what what key I mean, But costs there than give -- based be to costs, initiatives. other with right to now prudent we investments make a to G&A. all our get more that we better is until going we're for prudent store cautious will say on those opening. we very don't little we guidance on nonessential kind time, can Brian to and same need But that I call very, we'll spot And on really in some we some that priorities do component if we'll the of that, that there's spend, we'll forward. at discretionary other going on be

Matt Curtis

food were commentary, saw pressure? second then Maybe in also, are the the and And in And then factors on but your beverage I Understood. what expectations that missed your that drove you what the this quarter the Okay. half? pressure costs. second in on

Scott Bowman

we reopening beverage out we there drove go inventory so we to through system spoilage food of stores. and that all we is on with So the pressure inevitably That the main beverage any start can reopen our processes see spoilage that food was the factor product. fresh and that clear that and as part have of

we've what we we new expect and we as will that that's so And see open seen continue far, to stores. so that

Operator

Brian Vaccaro. we'll James, Raymond hear From from

Brian Vaccaro

I I'm sales wanted some made on to clarify you still little of confused. a the trends. the comments recent

burdened, this eye your on I units reopened as you So a but I it units, with XX% in been that's said at and weeks capturing comes think sales time. average reopened recent XX% I've about And of that's of measure to XX% units. guess closed weekly a close keeping

correctly? down mid-XXs does that in reopened of are XX, sales year-on-year for that's that then the am sort translate I and So all mentioned, change like you that down units somewhere XX%, that of into subset interpreting

Scott Bowman

Yes.

subset XX% is were currently last they think that way the over yes, weeks' XX time down couple the open, to period. of about So the of that stores

our that were that's store sales for Our base. comp XX%, comp total down total

Brian Vaccaro

guess I in on I And to Right. trying hone piece. was the quarter-to-date

it they're incremental bring can take down and we down to fine. But that's piece. So XX% difficult is off-line, in that XX%

Scott Bowman

just The open in comp down XX% the base. is for stores for base the in are and those comp sales store comp that currently all down stores is the XX% the

Brian Vaccaro

the need And just that, In just that they're that the it more got than XX% then something comp So looks based math another we like XX%, how to XX%, down works. base? on that capture. we've right? Is

Scott Bowman

open most cases. isn't better number index, are year just comp that Yes. so comparison. comparable base, you in store comp get are as And in of the we the use stores stores we talk about the the a those prior base, outside Yes, when that

And so base. in we the on comp the focus percentage that stores index

Brian Jenkins

Directionally, Brian, just able close, to you should this is be close.

that because about If have on going of opened index, overall is this you all comp at stores to half are performing have inclusive XX% your be average. at only of a performing a XX% of opened, the index XX% index, stores, you XX%

Brian Vaccaro

Yes. Yes.

offline. back circle We'll Okay.

Brian Jenkins

we moved and that had and index We XXX, the continue open these that so marching towards open. stores need to we that the in XXs of some last need the to to have need of kind out our two both chain we north. up We run California are weeks New XX% not our things. get We up get and XX, can York need to number now closer matured

Brian Vaccaro

change. reopened October? by and you point, the it's month on that expect of December, of understood. the you But you subject know reopening sense this end by And I Yes, know I pipeline, of said and could the a end how to give many us to in have

Brian Jenkins

not there's but ton that end uncertainty be to that I jurisdictions, the at a York would looking of right period. off and of the California say here. pinpointing of just based New time we're near have until now, really We

period. and few here the about of up a will big some that time expecting but closer talking these of we're have other California. the there, we York, here that to So I'm end jurisdictions New open markets

I really we way. right it has both And what meaningful is just and is dining dining guess in-store is New now. QOMO to or recover have But before trailed, do would what need happened up in-store to is York today open believe California we lastly Now our time the up good. all arcade, a use, virtually we which an has which ability no opened in know was yesterday,

Operator

question Jake follow-up from a Bartlett take We'll with Securities. Truist

Jake Bartlett

Island is first My or that Long in yesterday on the was store maybe question on the even really York. before Islandia. day reopened in it Great. last New And that

reopen. to about be frame? like New time And I it's in in going wrong Am at look stores that the York, but makes in so couple stores delay be more the a areas are you XX as you December most to seem the think that? could York What's a in I New the stores, boroughs, the getting that

Brian Jenkins

and that Islandia Well, our from other And the for food The have stores. couple food opened of for arcade. Jake, beverage business to and struggle revenue we and that the plus beverage We we see what general, of beverage alone, way element. XX% we a have if is would generally. we're Hawaii opened In food happen comes us. just a

Islandia. doing So it we're in

have in a will reopen. And leadership ready We our members number now all to to stores of as we to a stores protect unclosed because that's back right that as these go. our leadership York our it's imperative have ability team well reopen brought New

it very nimbly doing in we're So Islandia.

to we doing good for the place a Concord, arcade. without right meaningful we're We have that Carolina, other a get don't one in view North but now in one us opportunity to as

need full So brand of the we to... expression

Jake Bartlett

you know a now much finding makes now. the that you efficiencies regain you're the think do the That beverage. And improved? margins that to think are in be do know really it. that's whether had when volumes G&A and but unit you you're much ask a might store how in the other of those sustainable? sense it's Got were as efficiencies very just you really I well sense. I operating question early, as have as you is before, didn't how finding to food about My just

Scott Bowman

I start our that. scale and Certainly, Yes. lot cost our on labor we've else. off structure stores as these a learned down can and we've model everything reopened and

take benefit hard like but benefit a helped And you more so the stores, to think bit guest that menu, really little be, bit, efficiency things about in to knowledge. a will mean, be quite out quickly. tell the as how just there exactly to as to just increase there. getting smaller I mean, and from that's that I labor we'll our just a standpoint we It's continue And there's some we volumes ultimately, think going much

good going some we're learning. a So to it's But make adjustments.

XX-item our to be somewhere of right have and plan working menu. that It's going that, is north now. on a So not we're long-term to

from guests going and standpoint. variety, there, to right so we somewhere not as a as far. seen we down be also that efficiency Also see opportunity of the from a the that now not as on an experience, big a some of for reason we're guest between in because some that that It efficiency from technology maintain it's we give So reasons want to had and doubling be focusing is, before. but standpoint, it one the that that's of will we've but kind on big that only

that, services reason It's able then but efficiency I there some that some learned we things on we longer days but there's the cases, zero-based so with some I partially negotiated was and needed partial, when approach kind that contracts some And some term. we've were in of had much. early that we to be bit of expenses. thing just it. And took. last piece to lower of worked a to the mean, a weren't our the still is think some closed, really that stores been on so vendors down that why And is suspend mentioned and expenses prices our

and guest things that and on of can we not we affect some experience. So some really we up, ramp still learned where the as back cut

really hard that feel on basis. but cut well, there kind it's really number we how on that back So as build that benefit also, the of will stores, be back much be, an at as some then to we've put a as-needed we'll there'll but on exactly G&A

we that drive it. need be thought do to that process to add general for to that's the there the we big need mean. that's it reason really is something going as be business so back, a And And overall

evaluate the So any of those us a gives increase before that those we to expenses chance future. in

Operator

from Jon Fargo. with We'll hear Wells next Tower

Jon Tower

willing mind just what Jake questions margins. you the I'm did just have be those Would in this order form on walking level that you to curious of talking food, higher but wouldn't that And Brian, that of Most coming against if had was bit, balancing through in discounting you amusement been I to of of just about. box over a margins thoughts margins answered, be previously time? you consistent question, maybe to comes great. the would maybe more some earlier, my little some those sacrifice to to store you have mentioned perhaps And traffic kind traffic drive through that And around follow have a store have into level the your industry-leading talk up crisis. you

Brian Jenkins

want stave revenue. way our we for think don't I Yes, to no

to So all. that's not at what here do we're trying

learned think We've through the some help our into team we nimble to more areas we I us have where in in revenue-generating And terms be term efficiency. lot. XXXX, near we So approach think we're that that that can to drive and carry and going as Scott think our identified areas will capability we've a said, of business. invest

have you to sometimes deliver So that.

to furniture the So not to here. damage looking sales burn we're

why So rebuild we that is the business. as some we'll areas lean in

Jon Tower

in just in North previously, this think might time, a market XXX I addressable over stores of was one Okay. be America. there about this little the total And about current bit -- But more know company. to your then challenges I difficult know facing long-term as

part that dynamics about business the even the Is thinking competitive is ahead? more conversation opportunity those you're your the you that see of Or X, now? still if XX years given opportunity there is now actually long-term from anymore? So shifting, in view,

Brian Jenkins

a great That's question.

now, right another sorry, particularly really looking and going Jake, Jon, better way, the size we probably and at In discontinue terms actually day development in as -- terms other on rethink recently our and of maybe I'm been we've store rate of sites that with a could down rental have focus the because you we fight at discussed guys.

to first see, at being the So at time, quite growth. of said, a wrong. as competitive investment And set I we're think, I term, I least be I much as think for of least all, in bit going little near quite aggressive don't as could

going reasons. see We need or So as know other obvious the focus I near one the market aggressive be not We team need about on to and back, to know don't the way get way earn in to will don't ideas this We disciplined term, to I for materially things enough. now. that's building its right and addressable we we for deliver on the And that think need we, nimble. business they're have a different with feet. expenses, very stores pretty back back going their core. I And add we're to to have us. be how

right now, our back first. build core focus where is really the that's So

we will have strong stores coming some had very because pipeline this. a We very, into

out right will not some, XXXX, that us some focus into have of sort we our continue but to there grow here that's So we have allow now. XXXX that term to immediate

Operator

I'd to back and like for to all remarks. gentlemen, Ladies you closing turn things

Brian Jenkins

today. forward continued All right. you you next for December Well, look updating joining progress on here. listen, this our call on to thank We our

look soon. you wish everybody. night, great fall safe our very a of reopened to one each D&B and seeing of forward also a healthy We at want season and to you locations Have

Operator

And does Again, conference. joining thank conclude you all for today's us. that

Dave & Buster's Entertainment (PLAY) 11 Sep 202020 Q2 Earnings call transcript