PLAY - Earnings call transcript Q2 2021 | Dave & Buster's Entertainment, Inc.

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Operator

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

Second Quarter 2021 Earnings Results Conference Call. Today's call is being hosted by Brian Jenkins, Chief Executive Officer. He will be joined on the call by Scott Bowman, Chief Financial Officer; and Margo Manning, Chief Operating Officer. everyone available call today. for remind and being to be will replay like that is this recorded I'd beginning later

I turn Bowman to would over Now, Scott to the for conference remarks. opening like

Scott Bowman

and Christie today. you, for joining thank Thank us all you

Entertainment, Margo, Brian being Dave today. our your us also have our questions. and to recorded take prepared of comments, Inc. This In Chief and Brandon Buster's Officer, is Marketing on copyrighted. addition behalf & we to happy call joining After Coleman, is we'll be

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

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

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

Brian Jenkins

us Thanks, for this Scott and joining everyone, you, afternoon. thank

challenges strategic has the team initiatives. while at our time Over the same past XX our successfully accelerated navigated months, COVID

we competitive emerge accomplished a as have report single company. that that today goal more We have am goal. pleased had to I stronger, a to

back we stronger Our than ever. brand is are and

new today We we virtually high The record-setting financial announced second that metrics. reaching succeeded. have earlier performance, achieved team's all extraordinary financial are efforts proof results watermarks compelling quarter this on

XXXX quarter million. Second all-time an surpassing by $XX million for us, $XXX of revenue was quarterly high

Our X.X% of mark levels. success in million quarter performance. more achieving strong return $XX the by by in million $XXX positive first QX to XXXX our XXXX. from impressive QX EBITDA time $XXX sales was in of fueled any the Even for the We our EBITDA, or was comp million history, XX% blew over up

team XXXX's over EBITDA first optimizing job, operations and our leveraging pay XXX order by adapting deliver costs crest outstanding did an points. QX new margin compare and basis ever technologies, service our to the exceeding to Our XX%, model

able new equity store online, During a bond we two business an invest the year, imperative, also reopening bolstered when quarter, we were and stores strong in have We structure, flexibility base, credit to of complete in the capital our for successfully by our our company. infusion, facility. back Last future. a milestone offering bring liquidity run now our and our was important our significant amended marking a rebuilt to Canada

million, our the in liquidity providing flow $XXX the With debt the available QX, quarter. by with record-setting $XX nearly over we at us cash outstanding reduced of generated in million operating net end

outstanding As announced to $XX recently available we intend in redeem further our bonds we of XX%, the of evidence that million confidence or cash. our business, using

to for we second the half a possible is a come in In over results year. past our a and one us our and make new menu years entirely These to over just an company. appeal made long quarter, execute. focus by an that a way stronger accelerate initiatives to unwavering broadens introduced have We strong stores very easier our were

our a of seven introduction new games. made Over meaningful summer, investment offering, the we entertainment in the with

programmed offering steps entertainment our widen events select We to by plans also markets. took in

store our message that voice, with strategy rebuild and new of in the and and summer first we've been focus few to weeks was efforts up pay our our leapfrog in brand while a members also most these in more a entertainment broaden this the relaunch order of team spending in life. confident we our new comp that media our We on, with of improvement we increase that To will menu With And quarter in our the concentrated team despite to challenging the to foundation crucial a This our new temporary with marked resiliency including and are brands. in versus great strength the facilitating and a These The labor are to for a efficient strategy. deliver web-enabled QX, our the solidify a XXXX, team was extremely investment reach marketing incentives early operation now half to allowing significantly are experience. majority system-wide the a the changes reflecting strong, rollout web we D&B our from of sales Day, has that has frequency X%. sales new to environment, shift this weeks Labor on we Coleman, platform. been and we from X% and hear improvement part us media periods use of and encouraged begun shoulder success year, adoption who traditional featuring accelerating an games. expectations. exceeding this deliver new quarter. our new bring first our Brandon revamped are and still our of a guests our to dramatic impact a first mobile would leadership CMO, financial and meaningful. attracting to of pay investment headwinds, culminated and of buying necessary agencies this the were in talent creative the the QX, Comp pipeline. our our Mobile up those have our succeeded our and visit also moment, on-boarded technology five While front from windows quarter down platforms in of will increase changes brand you final outstanding weeks Under five media were to eight the on provided

of opening our to recent QX, stores stores six Washington four York open Bellevue, planned meaningful in store and one in to to Brooklyn, New to We XXXX. we open year, representing the in XXXX. between expect next for eight compared With plan store acceleration a

the have in the priority us. the discussed we As a past, for store format rightsizing potential for and is sales market

XX,XXX with pleased small-format most of extremely recent the that are We of store this new beginning performance at opened the our year.

first alone, have expectations absolutely store nearly during investment. generating EBITDA for ground and the crushing of the Florida first small return built is $X Gainesville, half revenue, format XXXX from our that in up, revenue we the unit Our freestanding on million

to and encouraged the leverage are format We efficiency it about of in and markets. new the this potential new throughput

This is resilient proves our with performance that and guests resonate ages. quarter's of brand all

half. what the year. marketing our more expectations will continuing more that, we We for excited cover momentum insights After the and second of are a summer, I'm quarter well results for little as the thrilled and some Brandon in share this performance back with second operating remainder as half Scott the the Manning; in of the in CMO, about we've Scott? planned that have detail implemented the innovations going and our Margo bit in and our detail time, year. Coleman, COO, to ask At our on record-setting to cover

Scott Bowman

Thanks, Brian.

significant ramped & second the in for to stores for we record a demand which quarter Total per we were cash in our margin-enhancing -- profitability comparable store were XXX We results execution weekly quarter profitability XXXX. brand, new opened business. sales versus generated revenues for of the Buster's and stores the for acceleration Average of of the included $XXX for are during an quarter sales seeing XXXX. week With flow second second up a $XXX,XXX reflect able sales Dave all-time quarter. sales quarter and ended produce with rapid sales were store quarter all record Our open, strong XXXX of of as including our our and compared increase that they the strong one impressive versus all With open, during growth the in X.X% record million the stores the $XXX,XXX our quarter. including California with initiatives, for quarter.

category was down XX% XXXX. compared of up Amusements terms with were F&B XX% In business the comp, while sales,

cap increase by mostly increase driven was the an per Amusements, spending. in For

marketing by For was acceleration mainly decline slight versus units F&B, increase offset quarter to Sequentially, per Comparable the XXXX, traffic compared during spending. weeks sales the and both negative our a showed the in store the comps due quarter. for trends through cap was was weeks California with significantly driven partially compared F&B the by the with more a for driven in and last effective first by quarter. the units sequential Amusements improvement improved to sold, decline XXXX This and of up X% partially first improved stores. of eight X% ramping of five the which of plus quarter

performance XXXX. same $XXX increased was credit long-term per to lean the operating model, other to of we sales quarter leverage million increase The all-time basis Amusements million in ended share. compared $X in stood preopening XXXX, senior outstanding higher total consisting lower for Regarding costs denomination on XX% of quarter a the operating XXXX. Cards. our in reduction or Power cash EBITDA point Total quarter the our the and sales, a XX% XX% resulting the and labor $XXX sales. mix, driven second a discounts of mix, improved EBITDA end results of by represented quarter, to the and produced in record XX% expense in and $XXX million in representing million leverage a and for our sales quarter, in a improved million staffing $XXX on in was for at fewer EPS from period compared operating improvement These XXXX. XXX $X.XX point improvement income facility. notes shift maturing million to driven the or the Adjusted in in the quarter levels Amusements period higher XX.X% flow revolving from the by a with and quarter was cash basis sales million Net of of and with XXXX XXX with at zero due costs operating secured quarter debt higher an diluted $XX versus same the was during XX.X% $XXX of

and using strategy current allocation our As capital in we a capitalize of our part the position, senior secured to redemption redeem to $XX our decision million on made indenture cash agreement. recently of option our notes

to may notes of during during at first price principal the we the issue. may notes the redeem redeem to XX% end issuance amount the the of October. interest. a the executing redeem XX background, By million another XX% pay notes XX% XX of at over As of the amount We we'll the XXX% begins $X.X will which months premium annualized of up a after we the in after second but principal months million $X.X save redemption redemption,

of approximately end the the on had negotiated the of deferrals at million $XX rent we Additionally, balance quarter, sheet.

to remainder thereafter. in million expect throughout back XXXX, the fiscal and $XX XXXX We the fiscal of pay of deferred $XX rent approximately remainder million

current Regarding expect tax the a million to carryback refunds; mid- in approximately from and legislation due receiving refunds XXXX. late in We now delay these we Act of $XX to now IRS to backlogs, receive Cares in expect refunds losses. XXXX

year. the the an by relocate stores established tenant we store XXX $XX finish one new Turning of the with to are we the to will in going net the end of quarter at the we relocation we total quarter, end and quarter, sound year opened very new footing the and additional In existing of of additions financial end Subsequent results us fiscal opened store have additional pleased in the half openings the one one spending; capital of back Overall, bring to open August. of million and store invested with we second new plan to capital the a which fourth second the quarter four into the to store one and year. allowances.

quarter some to third of XXXX. to our would outlook; like for offer the insights Turning fiscal I

going forward. As details note, a guidance provide reporting like would I on some to housekeeping and

more Regarding power metric, be to to on business. normalized This earnings versus forward. emphasis as metrics; will we is EBITDA going profitability adjusted our place who prefer it EBITDA investors the the of represents better responsive this true

annual normalize, Regarding the provided with continues business in to guidance; will XXXX, starting be updates back as to reverting quarterly. guidance we

the line COVID Southeast with to despite negative weeks, recent have comparable the over to reflecting trend to current Regarding resurgence five been in unfavorable changes weather third in X% first including the Based comp XXXX, total Labor in these with our and sales strength expect trends, due compared quarter-to-date markets. quarter third trends, calendars, school on compared Day, broad-based store approximately we for be sales impacts XXXX. in quarter

updating expect experience plan in higher our percentage improvements margin, From third slight upgrade compares with quarter. gross These that margin an further which XXX drive quarter Keep $XXX This second benefits on the $XX payroll points technology continue we to guest invest basis we $XX quarter moderation to with WiFi expenses. position, and than million in rollout that We perspective, of will but operations. our reflects are EBITDA million our to million XXXX the our as be our accelerate upgrades guidance in and to equipment current exceeds the to additional the to over capability stores. will $XX target financial towards significantly the a opportunity some which change strong select increase upgrade to mind third compared guidance technology, million. new improvement are may time by stores the work and in level invest benefits $XX to in prior CapEx and returns. XXXX driven million normalized Based and our of improve preopening deployment we more in these to accelerate of taking is

cash on are our in has implementing impact an help positioning have fully pipeline company to accelerate second for that, while of Margo. In well I'll for our we effects flow. stores closely managing growth of of enhanced their XXXX. the number the positioned the further taking job summary, are reopening half, development Additionally, impactful opportunity over initiatives the while to a team and XXXX, of during several our maximize first and the all half outstanding ongoing the it in pandemic. stores that profitability With We're to turn done

Margo Manning

initiatives Scott. and We games the concentrated our we've second enhance over against we is our been sales quarter appreciation put and that team's execution menu, efforts. and I Thank the model the drive the past focus to echo store streamlining for that profitability. new tremendous believe months helping implementing you, service have strong nine

of are start Let's flavor May, initiative. operational provides refreshed our design ingredients Since new with by in our or it's half talking our deployment profiles. and execution options. simplifies guests top quality bestsellers about either menu enhanced and XX

offset increase gain time visitation rate, to addition, we a of that the a conducted test Based experience late menu August extensive inflation our In pricing pressure. the us on an take effective gave full on continue a price watch menu confidence frame. to it's understanding longer guest sales to to guest performance we'll impact and the over

indicates to we On research The some beverage now refinements beverage appeal the attractive beverage research beverage our analysis is data our news and that front; offering. to here is needs and are to guests and targeted evolve completed good our simply expand menu the it's reach. our using the

improve relevance a launch beverage to QX is in drive to to order in sales. goal beverage Our and freshly curated menu attachment

among with events These appeal are important to work also these are We of nights early market and to initiatives talk rapidly some the intend to We tests to of tests easy games, easy to to markets our Who the want on fall hosted which our launched trivia this based more successfully In it's to determine Geeks are Drinks. execute expand success. QX, we we doing. is several entertainment entertainment I Next, programming. about most guests.

during guests pregame an the performers D&B before, format. our entertainment have would about This lean without we'll activities heavily interactions. we'll what music, proprietary film refine football. fall the live be an markets, elements guests to will entertainment and additional our bring standpoint, off-peak highly before with help typically amplifying be football radio week during after to we'll live talking to and These game video They're price introduce course, experience. into kickoff, times. continued live to engage stores giveaways. hosts And integration they video of games. In These formats, football content we'll select we added with tests. it key new D&B's with This fall into year, amplify From during Additionally, engaging football the not and custom fall, incorporating is considered live content are events. our our introduce fun held music guests and to

Our model ways we XXXX, this and give the to intention guests the expand look continue further is use program come to it in year throughout to reasons to for as D&B. more visit

gained Now, let's programs staffing hiring levels The labor bring will for seasonal tools retention QX, be to busy very what to pressure a technology temporary our we investment a incentives This holiday we staffing. which market on and to QX made our the bolstered in will with a turn less continues challenging. us traction In lift significant new was put and that our season. drop time to combined sites will summer. give staffing. staffing

staffing to place aspects team we season. in selectively need that is critical as to intention in of Our holiday we programs extend the the to ensure QX have bring the

Our to by From feedback in-store model our been a prior and to a Medallia. enable channel. of and to self-serve two deployment service experience web our completed completely Brian operate date, it trends tool we utilizing efficiently. will our continuing execution. mentioned combines a tool, completely XX% to mobile mobile and our mobile guests, feedback of more It's experience. comprehensive implemented call, allows identify offering contactless new the in-store The that us full a social guest the This earnings guest and improve brand-wide to of new gathers that Due we this a stores. in guest adoption the web-enabled to has order-pay model our strong are test a are more guest model over chats a integrated business transform experience. provides and it help technology our rollout of service new platform tablets On

results thank with the summer we'll insights experience. team this up, really challenging for use performance wrap guest entire the the I to exceptional improve continuously pleased our in-store to and environment, Given want these and our To recognize quarter. we're

members a home to During turn up to over has my at our support this see guests hard results our team Brandon. store energized by set forward. here worked I working fun to to team our to that, this the the experience and and summer. with stores momentum deliver we'd this visits, office, to critical you, needed I'll for quarter call a love provide We're great the record-setting And carry

Brandon Coleman

Thank you, campaign the over have exciting new then from under strategy. first reviewing ran look The employed our provides that begin our new marketing relevant. share loyalty which mid-June into new news is early and and our today This Margo. campaign I like and focus our by have marketing to Today, to general brand where our summer Dave we completed Buster's as some I'd to media campaign's to most ahead program. future plans awareness. marketing July, and incremental depth marketing dollars visitation our in periods approach communications window-based change in prioritizes strategy concentrates performance &

changed by to us shift total of our media. media. spend while campaign during has summer the a mix more enabled of media This We be as shifting video the audience levels maintaining target, majority of percentage also high our digital to with impressions dramatically our surgical

connections across channels. discount-driven commercial to combined brand also an powerful This new shared this improve consumer third-party learnings also to For that comp by visitation. more codify shift The leverage half creative The emotional messages captures first-party creative, during in sales a fresh with deliver a communications winning brand intentional this in the visual from enabled targeting Ding highlighting campaign, back data our pivot, punctuated able value to drive was we audience XXXX. media conversion intelligent approach Ding expression, the through us experience simple auditory for trend the and marketing and brand window. We strategic demand, strengthening Ding. improvement were in to of yet the substantial rates in

campaign. over-indexed For and this we be will football two about windows, media half winter football campaign. lower audiences. which fall brand focus will summer the watching spend for The QX our Reaching than year, and media selected QX media our on system, this will stores sports support fall

of D&B several transactional a in loyal program engaging and for rewards enrollment new data achievement. brand. a collection to bolstering That's launches a buzz games the talk partnership the testing, physical early rewards leverage conversion. whose activations spend guests which sports complete but improve approach addition earn new where we Take, a consumer component be in & push, summer introduce launch campaign rewards that will higher status media and program. guests they to developed combinations have similar to in both consumer airline satirical played, will across well campaign media D&B brand a program. In will driving sports QX, for miles again loyalty flown. we to The November, from will In also framework unique My array to our credibility in return guests Buster's after has audience also media aspirational incentivizes the campaign iterations fans through also to rewards. data among the Dave we digital right; for winter of The new with with sports match incentivize the Pardon to drive new rebates more to campaign functionality this The diverse called follows program targeting our programs This and channels. an elevate that of D&B activities The can will our challenges, new

growing Finally, D&B team From learning user incremental linked the this to to consumer the adding and inextricably will the program insights, further landscape. base. our is app, our relevance to be marketing meet media loyalty app's optimizing functionality for improving changing to and always

This guests. guest relevance come. to help We for to enable our informed on connect build increasing Buster's profitable known Dave ultimately deeply are and personalization & with maneuver competitors to more database will drive evolution and constant sales, focused years more our increased brand

back closing Now, I'll his for Brian the call to hand remarks.

Brian Jenkins

Brandon. Thanks,

of Buster's. enthusiastically implemented the the business. that marketing our past We and the facet programming unique elements enhance built extremely beverage guests see how we've experience new model, initiatives to feel past our to ever remaining the our staff XX position are fully on Dave over the every years more than implementing to innovations to months the in country stores. and We and gratified we've of around focused & about XX We're the guest service have fully confident over returned menu,

record-setting our tenacity Our want an brand the team. for to turn their of and our our dedication of ordinary proves every I thank second to extraordinary again entertainment resilience the day and quarter into for day them they their passion everything an do help guests performance and experience.

Now, we'd like to open the call to your questions. Operator?

Operator

go Jefferies. [Operator Barish to first Instructions] We'll Andy from

Andy Barish

Amazing results over the summer. Congrats.

Brian Jenkins

Thanks andy.

Andy Barish

there -- you're sales to and maybe didn't or Beverage hope starting anything On the during shift more rollout to Is happen that for is and little it new of just bit that a node? the a to noticeably -- given think expecting customer of to the going add I patterns? of Food little really bit take an Or that's effort given on time the quarter. with menu kind

Brian Jenkins

the in by -- and for we Look, of were move pleased with great quarter. we by close had as when both obviously, Amusement traffic the of quarter. end by month end counts little Power By Food back X% Food is was andy. bit, about of July, center. our traffic We're the down quarter, we traffic Amusements the hit was positive up that X% to a question the down the extremely in a our really Card food It's measured measured the territory.

the improvement of quarter. versus significance So first sequential

comp prepared per piece traffic back first Scott quite we're we've positive for extremely time. the getting with remarks, in moves the time in as some business. seen of in cap lift we and both into pleased his mentioned the look, continue Amusements So the to territory with the see significant And business

buy-ins, we're getting we're discounting. very high So not

we're think that don't here. it's seeing surprising Amusements outperform I So

Andy Barish

when Got does we drive it, points can on rewards spend? And to then to where as existing the commentary follow-up rewards, at more look so they roll as out line. long are as of discounting frequency a this you understood. that? customers or explicit And quick 'XX, or things and the cost redeem On like out program, then customers any have Brandon

Brandon Coleman

andy and Absolutely. A great question you. thank

games do the The address of Dave to love what for It's they frequency is play points & intended guests drive spend. and Buster's with to First, which games. both do intention program. I'll incentivizes the played to

be there each spend achieved to this will awards through increased progression. per to There be of three significant step that that and member to icon or from visitation in program and visit. So player levels can awards more progresses legend seeing between total There on range as the are cost be But badges bonus activities. micro also an on in we're behaviors spend. will of to percentage to that free a based appetizers chips. from X% and These about awards digital play loyalty

Operator

we'll next, And go Securities. Bartlett to Truist from Jake

Jake Bartlett

window. the the deceleration? that's on is deceleration But And and I the peak delta impact the a and you're And Great. great to the whether the follow-up. above but primary that's to major amazing here. just trends. to point back. anything one trying XXXX the was return there driving five gauging My of quickly. this last big on -- still positive Or congrats can that's how mind see question to over also, just there, really the it's whether sales so the same-store question question understand the periods The on like factors they're it's your kind the in a then volatility some investors' focused so on, driver maybe levels after driver of Obviously, versus -- weeks, have think you seems the to on it's pulled there deceleration I for is -- you advertising it

Brian Jenkins

from to we back I positive the looking the of as time time. obviously towards window by a Again, prior comp saw with the second of the territory. that Yes, investment And really summer recovery good first course Obviously, question. that in were of some go in all, in really Jake. some into and and Nice think out very back quarter. strong to that we remarks, this hear get super on big the with discussed new QX. Well, a saw of you, get back to over was encouraged games as voice, change with impactful we media my I we nice trajectory the part during said and really calls the menu appropriate pretty concentrate nice combination new

So super and of pleased guests entertaining summer. this a our our job the our with on part did of the results. hard phenomenal Lot A work just operators team

happy super that. So about

popped into with through markets this this a third from it activity as Yes, softening as of a encouraged this some some country, I now this, really, and business have As enter we're factors. the some is period is hit right hurricane There by nose of view, We're with This get road. our now. -- the brand, But of some have that but are and that school Ida the And have and through all I'm that. some where some There and enter up do we seen regional where our Henry. the would being cases some markets it. have call from we then the look, look, we're way super pockets resurged into in positive encouraged QX to was crater, -- around up have bump. in and pleased And the calendars Last right a August into been year my as bump are we're a going fine. year super to is of COVID where headwinds be we shifted. a we third quarter, the is comps results places some slight number well. decline a there quarter,

Jake Bartlett

I your what And on the do entertainment press for arrangements this of Great. a any to with is been to of betting, Barstool you're Sports'. think I to watch. there. sort your content, really Barstool -- waiting And so just we've kind while release now, noticed related follow-up morning, sports then, see going and

some there? seen and helpful. Maybe haven't So would update point? puts this maybe the of such agreement update is any kind off table of maybe why the at Any an or agreement takes, be we yet, the

Brian Jenkins

summer. this of entertainment. to games actively we a little in and get We're going talk let Margo We're the programming -- new we're second. to pleased bit super betting I'm or sports about the a with the pursuing launched I'll broader and lineup aggressively

I seven biggest investment, First years. mean, in a we've -- introduction titles, two significant had

content put So for new to it's out our nice guests. some

of exciting the titles some the have planned year. for We balance

Specifically, we our hit excited is we delayed we about that. of the we that Transformers that all delayed And of summer. the highest-grossing Gun fourth and again next under time; launch mentioned getting window. here We title quarter VR one the VR of going so title development into that to last have franchises a plan pushed the film is quarter, Top to get because as

watching appeal little bit active betting, to programming. We're we're that. let when we working share enhancement that have share. But agreement, a sports more but meaningful believe will as relates And discussions. now. in a as finalize don't our really that to else represent I'm that around partnership. that ready we destination. question talk betting we have to -- that. pushing on right We're anything And will we'll on explore but I continue be going your about a do So with sports a to it We to Margo title to sports

Margo Manning

Yes.

just So, more We I'll to of a about mentioned about able little new we're hired excited that short been make had the just bit period programming we really a time. that in leader impact and a he color has add programming.

of not traction several had expand at hosted We we're and that trivia types great different have have number testing stores the actually of also and are but such have looking demand some doing be because to we great for going we're trivia doing weekly only night games to that. the

there. we that format throughout stores a more that talk test get the we about just a hear us sense start to So we're the taking is been entertainment and you'll frequency content has broader refining the format something and also encouraged to brand refine by. live as to amount we or The what deploy that of as we're want of and that right

Additionally, different elements, incorporate it's because live in 'XX different trying in video hosts, The to that into us looking us. that when about exciting the lot what us of style movie premieres, and we take for to important to to is lot about we're really most a we fall identify right ability ways, content premieres. and TV some a talk this market scale football some of is take that for is

we're our most from how future we guests. the to is hearing about programming -- executing with really appealing and as So you'll not what us in in kind the only more depth get be but of content

Operator

Farmer Jeff to go we'll Haskett. Gordon from Next,

Jeff Farmer

actions increases? guys Food you August pricing any Beverage quantify what segments into any You the with on can might price do or menu planning pricing did to the potential but and the again, And touch of across you taken side you've segment insight the Amusement business be summer? over

Scott Bowman

Yes.

So the mid-single increase we about price menu in digits. talked

Amusement really increase effective with discounting keep We that, in the time. Amusements lately, to effect, mind we an the amusements. do But in we've that price due talked in Amusement we side, area the about to little very have done proactively seen And anything the demand side. what on haven't on similar last that's in

We of demand we're haven't been the any much seeing really still doing discounting but there.

of doing that think you close we're is past. in the the business, about not in per to to about XX% when measure just due discounting cap so And that XX%. Amusements done the the increase XX% about We really that seeing we've or estimate

favorability So pricing pulling back been the taking a actions, that us specific without discounting. has just for on

kind So pricing thought of we two we've that helping years Beverage. since any was and the on us, about done It's Food pricing that food been is activity warranted.

help of offset pressures that the the we in And so that will see inflationary some business. other

Jeff Farmer

then... And Okay.

Brian Jenkins

we recent you we're XX, is increase Did mid-single-digit talking here. really clarify August that say. a about the that event food just

Scott Bowman

right. that's Yes,

Brian Jenkins

Yes.

to Just clarify.

Jeff Farmer

inflation. then touched Okay, rate that's had at also helpful. least similar or And you on wage mentioned topic, a

things what what I wage of the So things hourly overtime just currently pure I and environment? not guess you question wage are that I'm like employees to seeing rate the is, second but saw, rate in say, you referring quarter would in inflation and inflation your for of as about for would of as into Any get going as be seeing insight there to challenging third going to the moderates quarter? helpful. Are XXXX? then get more are it they're and head we then Or sort sort expectation we get much things challenging? terms And in

Scott Bowman

Sure.

look about there continue inflation, And to in of XXXX. we think like benefits kind of potentially a soon and away back here And that pressure change or unemployment wage seen could We to seeing industry. things year. the other continuing things view. that the increase then A and think estimation our that back couple our with in very be that tight. be many we've will could alters at do going kind As we do a that annualized versus we mid-single-digit inflation others of is half one of the feel we're way just dynamic so the market for estimate. that's the continue remainder that -- be be returning that labor to That people the the high more demand year. the of work. half a expect But level similar there'll to like will Based for of labor for

Brian Jenkins

I the of efficient through pressures, implementing we're a that her in and I the in with handhelds new tool. mean good Margo working operators out that, here and of mitigate terms of have become helped way. seeing pressure technology wage teams that's phenomenal done we're just has is think, big has thing how some that the despite and our team POS web some mobile Jeff, a around that the still... of rolling job helped terms really efforts the of And in our some of us that wage

Margo Manning

Early days.

Brian Jenkins

Margo. Early days, right,

Operator

next, we'll go Brian Bank. from to And Deutsche Mullan

Brian Mullan

updates it expansion in than on a from prior ultimately the normalized prove EBITDA points be to about basis the If Even to be XXXX margin your year, to if moderation which of this the framework. first year, we of they here any there's might if be expansion basis look EBITDA very a appear I'm could margin at your obviously XXX XXX up there to wondering greater strong. points is Scott, some versus basis? sustainable EBITDA margins half first half for

Scott Bowman

Sure.

of that kind back, forward help was hurt improvement cost commitment things number XXXX AUVs. that and XXX in go XXXX original basis area. points really structure that analysis and and And improved can comparison the hit done or that pressures with things like And that XXX structure. we points the meant that doing expenses that once other in an preopening proactively inflationary of margins But benefits to was cost is things was to would were that. our with we the cost of Just or basis lower going XXXX the be gross on there's reduce

-- that. better So you we've know, than as done

be mainly near alone, look for due sustainable the and so, margin see higher gross we somewhat forward And mix. we to the a as our improvement will Amusement think term. in That, we

points confident we our feel AUV. at so forecast, And with of can kind that in achieve least that we at basis XXXX XXX do that

mix. the well last of a, fewer quarter, comp year our think on bit store positive you little comp, about strong we second did with recent that, down to of a No And a that that's you were As give to Most we're that quite nature seeing expenses those bit. was on just bit. itself building we most And a of think preopening stores. gross Amusement flow-through above margin a color as overdo sales. the the well. quite just And due that was as margins about helped by

of margin kind and that on especially -- examples of the we of things contemplated improvement are really were more that what gross because structural XXX the the preopening, side those So focused in two points basis business.

knowing those so those And ebb items, excluded could two flow. and that we

as so out, And favorable it they've turned been us. for

enjoyed then, favorability. payroll favorability well. we've mentioned and the on side; the of And we've as benefits And more a technology. so rollout there Brian little that seen

has helped that trying So up, to we're us staff still certainly but too.

making staffing. we're there So increase to trying progress but still

benefit about normalized we're mean, focused really a on that But seeing bit. that and we made. bottom we're maintaining surely us then as down So the I that the on do and closer kind all and what little more as And grow come seeing that we're of more get will staffing, benefit being excited will that we than that that capability to sales, ever, said, we commitment line.

Brian Mullan

there see then pace My great the units as on encouraging color. is, XXXX pipeline, is And in question to XXXX. six more That's out what are to and you? new Just great. business? your development you're Or going the Is you scenarios beyond, look to maybe thinking. expecting the eight right Okay, sweet to for open current be on spot than where you unit of this to could that? eight for color six units any growth

Brian Jenkins

place we're mentioned really history. in ever right just I really, the been in flowing place really, our We're right financial good more remarks, my in lot in as now, than a a Well, strong We're profitable we've really foundation, cash. just with a of now.

and mentioned, eight And growing ability the six right feel our actually my pipeline. have working so stood eight pursuing locations protected for down And our on XXXX, have -- now, pipeline. we've about numbers. towards nine nine lease as look which and our this good very best And to in on on units. active development But hit it's in a mode, now, XXXX year. those We our that under pipeline got to I we're will. aggressively Obviously, I as then next target is, we now in additional and we view, right lot are beyond. properties very business the in right team is you we if

have this build working leadership at to We've on strength. our to to a -- we're XXXX do I We number to So step do tough tough XXXX and work actively our really was on our business, right and now. right still XXXX team. pick moment. want and out don't

to to and So accelerate we're want pick don't stand it for very number where some an I that. we to the about we're active XXXX. optimistic have into work be able to we in rebuild strength to But do exact But today. bench

Operator

And Sandler. Nicole Piper go to next, we'll Miller from

Nicole Miller

performance. Two on Congrats the questions.

is, AUV quite translate So comparison? we it's that EBITDA? lay the translate also to you into share, XXXX about revisit enough. for you I down current well. Can And what as the quickly same to seasonality, couldn't about helpful you if date And comp said thinking the EBITDA. possible, of that write right? XXXX dollars first XQ I'm The that versus land. the get get, really, Could to the or of

Scott Bowman

like would part you which repeat on So to EBITDA?

Nicole Miller

you you relation this, else. but sorry, that. In XQ. to in something just sorry. I'm be then XQ should said didn't catch I'm higher said I

Scott Bowman

Okay.

trying we think much XXXX. to beat EBITDA, from saw XXXX convey QX standpoint we see numbers as at we in QX of I it current But will be based will that was EBITDA look percentage was versus we as dollar don't a yes, on XXXX. a significantly beating trends, QX the quarter we the as beat What think So QX, significantly third from percentage about it standpoint. if you think

Nicole Miller

And or the to just will percentage but an Okay. hot on way comp? X.X% translate then is AUV XXXX number does XXXX that? fill underlying GAAP. I know it basis, the what that comp, Either a crazy what it's the versus

Scott Bowman

Yes.

of practice giving the in a been of kind versus we've So comp XXXX.

And of $X.X so think mirror that comp XXXX kind really if you store. of kind million per should -- comp. yes, AUVs I the -- -- the think in was OR And about so our AUVs

it'll given that just than So just be the slightly higher X.X% comp.

Nicole Miller

work. forward forward. get that'll reacceleration the Okay, the just and maybe could about the And going we hear like going to about then talk on to to it helpful was pipeline,

I it confirm. on remember, brain part, eight, and where good those they that last maybe new back international in pick sorry, maybe the a they Or And like should prior? six XXXX, as something just are the for to to -- stores are you're So to these your in opening? And and I thought are And because day that's an are just kind pipeline? sounds position but comes leases the opportunity. I back I that really signed of wanted there LOIs almost

Brian Jenkins

eight in Look, you. from that pre-COVID were are hear to our to for Nice we XXXX about all the pipeline. talking six

that this for There's had is on California a stores New a of more of couple towards a markets They a us. existing little York, we reactivation lean of mix. previously. couple in bit path this So

-- new small-format a the and got couple stores then markets. of well we've So and as

couple a there's two the of sort lower. of and so XX,XXX or So of

terms mean for we're reevaluating of in as think We're how it format, So really addressable I can of right strength market. our we go, that us mean box. that for we excited the that given what deep could about mentioned, and total now

as at top yes, or many the in nine on. are additional but those our -- as pipeline in our current of are well paused the pipeline of end were are pre-COVID eight were so before, we working, And those all that that we

those weren't lot look our at that sites we're some to as on And new mix properties pre-COVID. had so in the continuing only were in And we not additional of prior. that that radar a but mentioned, I mix

a building now, position we to back. dealing in it's the our negotiations So be development focus XXXX. of that lease very to team in in the lot with now were pipeline than way better active And for most is

encouraged. very So

And on right something to really international, to relates have we are is something we right sought that, that but we don't the -- domestic now. attention revisiting I on our revisiting deemphasized I pre-COVID core we something that it to as but now. business. and that that that opportunity that is as are, is anything As that said, report focus really

Operator

And Andrew BMO. from we'll to next, Strelzik go

Andrew Strelzik

there's have tablet mentioned consumer any right, would know you've of times, the implications, anything Just that on bit there. or great ones couple behavior a platform rollout more on quick hear what about love that's for I maybe implications All check great. you're little web if hear. and margin me. the there? going there's and with anything surprises don't implications be A I'd that or efficiencies to or couple the of of to learning different been you if a

Margo Manning

It's Margo.

server it, reduce one about get talk And it we we being been it our we learn to believe, more over expand with think has our that to time, staffing team enabled to that things to through ability I been the has you us days, when So, also one as and comfortable it, offset able what we critical help and things more get challenges. obviously, with with staffing just but It server in experience this hours. the difficult environment, have of really about sections the point, touch able to powerful some guest are guests don't deal great And detail of days, focus the we we we have team so refine been want that I on. again, points to and will seeing go impact. as to are the as a our the way of into want really is early your It overtime. to just best the more is comfortable we it become early

on definitely time the that But short have encouraged the guest I too to very was continue we'll up. the It's the we surprised you the to on we as will with go definitely guess surprise, we're exactly I to when your tell So journey. horizon. with early surprise, you end really And comment where about adoption. of it you, I question share think level

So to been have surprise using has on over this for XX% us take our up guests a of really positive us.

Andrew Strelzik

on in there's I great Okay, of about and going that's the to look how profile the does going the year, just being help a of kind of I marketing guess hear. think helpful I in forward, margin kind ask dial looks channels to learnings on I'm based that it what larger time levels, cetera. this as to of a terms trajectory still trying normal marketing end be normal on I Are as frame year? lot this up up, well. to trying wanted et been -- Any than changes also marketing. you would a of that's the from year? the to know is over like

Scott Bowman

quarter, that in A to for your But window-based approach, $XX from learnings gaining year will consolidating right from lot concentration versus million marketing as two-third concentrated We're about to year, XXXX. spend absolutely. $XX last and we the within QX. that that does each anticipate But of Yes, promotion. will pulling answer million over and spend Andrew? our the of be QX not come that's Due still be approximately slightly million now, through quarters. necessarily -- a full media comes a and spending in other we $XX question be

Andrew Strelzik

just that's looking me. one what one I was quick last exactly for. Yes, for Yes. And

allocation you're thinking dividend The -- there. you're It curious in forward, it's obviously, cash back direction if Just but in flow if going going cash the to that, is shareholders. be XX% guiding a there's grower performance terms going is that capital the well. it's or or know a Dave of not of kind strong whether plus not like trading is to and a philosophy, unit how be about of strong. to lot allocating opportunity & very I seems going just Buster's I'm as very not

your So just curious for perspective.

Scott Bowman

Sure andrew.

broader is business So The new that do big for the will we'll our here. to time. be over us against balance standpoint, we maintain the delever to priorities a term, openings. picture capital our from near intent want flexibility allocation a And strategy. And store key

returns on So to up We've our there. great we starting some are ramp seen stores.

format. revised, us see that We bigger on returns, efficient even have some small-store more could help format especially the

to want also we the top So is our equipment. dollars our business at that, in upgrade that investments core spending of some kind done business. We've sure of we our But with we're in the make more core technology our but want recently, invest list. more to to good

may priority, for balance the near that interested business lower And it most over make change And customer. have we that, the good in kind Our They'll delevering sure a we're share dividends. through shape. is our AV want to time. of best-in-class watch to now, term. equipment and But that shareholders returning store that to buybacks least and the make in sheet. growing in after right at for And cash

Operator

to Chris And next, we'll go O'Cull Stifel. from

Chris O'Cull

hoping type reasonable that talking a back regarding development. pace, sounds couple hearing growth years, to have follow-up I Or development you the three question to of within the next two you're Is maybe like a assumption? XXXX the right? you're I given a about. to It like am get

Brian Jenkins

year. 'XX is acceleration I've eight this a XXXX of We're Look, pacing. -- with right think is going we're picked to we're targeting what on pleased for don't the kind now I meaningful number. that which

It's exact open our stop can time, for picking we over the some the to acceleration. right for do going XXXX. lifting bench to able stores do we 'XX get what now. leadership strength we'll 'XX really numbers and of think, it's again, digest. to short all But I and able can be I'm team with well. think to done to see But some be we I have

here. back business. record. anybody pre-COVID, And think had in way than strong I towards really to don't acceleration track work but muscle did that a think, But pick build got I we yes, I bit number. a we some little we want can to our this better We've a really, the

Chris O'Cull

within know major a still don't program I'm just I opportunities the to want and a relevance the company pandemic, the do in study there's compete before wondering, brand remodeled Brian, was system? to better. but investing a complete, to a I say need identify improve brand's And the to you believe

Brian Jenkins

obviously core and important whether lens investment reinvest mean an entering are do the Look, chasing company. be -- I to think many through that the to we We broadening into that leader a look the business AUVs, and/or games, really content, entertainment whether we folks need feel our it's our for back be and be feel that's whether we're reason. in of space, our I innovative of have space a them returns. And lot the that programming.

continue we so to And need to innovate.

some in kind So of some and the stores yes, I involve involve will business with our investment touching think it's really core cadence. important. And that

important. actually I really think it's

Chris O'Cull

continue the to to rise $XXX should this expect stay is this $XX Or one level? CapEx in at should million spending last it to My then, we million from 'XX?

Scott Bowman

Yes.

we're But So, build likelihood, guidance just yet they I can really I cause an giving Brian for well. simple what not is increase. stores, increase. that will what is in saying want that And say will on And reason we as that. all the to mean that more then

things on of maintenance like the spending that less the we've and during So need been store because time.

that back year. and ramping continue slowly to we're will up next we that So do

capital that for is at that and as at we look Looking set plans refreshes in next year. remodels, consideration

Operator

go And Vaccaro Raymond from Brian to next, James. we'll

Brian Vaccaro

average And month August confirm accurate? all about thinking thinking seasonality monthly rest and of we're you $XXX,XXX sort seasonality about same I that on we're can us sure if an moves on to then just how XQ. up so we're just of make page. is Scott, following Just believe that historically, around maybe the August remind also 'XX. that's sales through of the

Scott Bowman

the it couple of August. back through I back for dip the about year get of for August, Sure. the August is whole of first is, half the kind off our And average, and seasonal frequent -- of normal is in of October September then the chain see then into fairly we like the starts the of half What for what drop and on Brian, and are kind when weeks you average which would of XX% in average sales. as say, terms to

Brian Vaccaro

Okay, great.

So that of that sales did around is weekly that you X.X% up average $XXX,XXX in quarter-to-date, that then? ballpark quarter-to-date

Scott Bowman

average so for five $XXX weeks sales the five weekly of first those weeks. was third for -- quarter, the the The million first

Brian Vaccaro

investment on cash off great. I'm to on Can small format, to us expected remind games the is Okay, such start. what And store that smaller glad was a the you prototype? strong hear

Scott Bowman

Yes.

type that prototype, average an of XX,XXX the foot for So square mean or store. is I

$X So it's and $X.X million. million between

Brian Vaccaro

allocation balance debt debt thinking And in a adjusted Okay, of last What's leverage world? mind? the have EBITDA back one, net just targets the to view then the right to And for post-COVID in business in you and or capital are that level sheet. about on your great. there any

Scott Bowman

question. good Yes,

have So target leverage yet. a hard don't we

and bit new to CapEx we'll time us, for of the cash kind to little need a grow needs a more establish that our flow normal we For understand need business.

able have existing clear to account. to the first into other more also, so stores the bit, we be cash, to into little that and want to business we're or leftover to take and for the like make And becomes available a the some, business things. all But whether continue we dollars a or that we we'll future. as delever picture new there invest stores the that delever sure business, extent also is the to foreseeable that bit as continue But to back would the foremost,

about general bit be that's leverage start a right a to little things normalize target as talk we'll now. So thoughts for more, our more to but probably able

Operator

William And next, from we'll go to Blair. Sharon Zackfia

Matt Curtis

had spend quarter? on question spend Curtis per this Sharon. the third in any for Matt if It's levels. in so far moderation missed your have seen card you just during a I I card on apologize But I per comments.

Brian Jenkins

Not really. Yes, very for Power Card, to continues it be strong.

seen we any So meaningful haven't drop-off.

Matt Curtis

understand, you or just comfortable, sounds then, staffing versus wondering you us tell quick anything now your labor. levels. could But on staffing a levels And I'm your on at basically, feel like Okay. about if least are what like it I question XXXX.

Scott Bowman

Yes.

I So can off. start

still XXXX. staffing less levels are So than

mind But technology still go in, is to ways mobile making to where I there's of our the the little functionality pay the that technology think is we're technology. to getting learning still that in And we tablets in that of But ultimately continue think mind in we keep with of really thing So put some kind to of kind with rollout help progress. keep and will we well as And and order stores And store get as forward. us helping. July. are that other be. continue to end to in as cases, towards want efficient our finished just move the a that surely the we we

little still and progress to but will go still ways updates making we move the a forward. as So we keep coming

Matt Curtis

you a been to about then, thinking year, normalized that's last how heading And the talk into how to that about one business given private is trending? Could that for holiday party it. bit compared obviously? season, you going got Okay, are the little last me. be and And relatively then business one this

Brian Jenkins

as we're, the recovery quarter, and in guess, walk-in good for walk-in I mean we second digits recovery. the report Really were up our with numbers quarter, super for double strong I Yes. we second business. the foremost, sales question. so first in really pleased the

far. -- as we events seeing to to sequential and towards Our not head relative our see the quarter. place today walk-ins while It's walk-in. so our fourth special business We did in lags same currently we -- improvement in bookings as XXXX are

pick is which And September, to in for December quarter all in important we about up fourth so, the us, month. see the for towards October time bookings for of late start November think kind events a special into quarter heading big typically obviously if we big

be some resurgence like feel delayed really, more going We bit actually demand year now. out maybe it's COVID to the corporate pretty play and booking predict how little SE a more hard do of the compressed to seeing. of right typical may a the so a little my in than And face in view, is we're window

our last towards as is, as the front us fourth head working is runway So the a really maximize to we that. towards, us. news typically a for hard of lot potential year in good got again, big quarter look, And team of we've key we head

Brandon Coleman

to we business to initiatives out the here beginning go have The for we're and driving other not us. we are proactive wait of key being come launching to and that it to that that thing and Brian, just about business I'd QX several at get the that, add is

Operator

question take last Fargo. we'll And Jon our from Tower, Wells

Jon Tower

of weekend. out with versus levels? day, family coming versus you than, appreciate Awesome. little around higher visits? larger Food And it. given wondering versus bit school? you and that. Amusement about XXXX in start day, period the the say, I of the I the same kids you -- least it's the if and versus, using at are are a your your Great. differently the Maybe using second in depressed could more to with was was little business individuals curious within And during say, you a quarter, still seeing the respect how of customers that, are XXXX, seeing Beverage. perhaps are I clearly, the you But even Are an bit talk maybe customers those weekday what are mix to earlier outside

Brian Jenkins

materially questions of different. -- of week our lot A as We definitely late-night business mix in -- say there. we wouldn't not is look, our by is I day strong.

We have constraints. our

they are as and were as Friday strong nights our not now. pre-COVID So right Saturday

we're the the are we up kind quite that constraints late remarkable really, late, it's So with night. putting of some numbers around

the now. business So mix we're super right of pleased with

lot out we're have we're our and in initiatives we programming drive of a off-peak or things those of have for forward, drive historically. to moving only about on to from think weekday talking kind Thursday driven. days, of we It's trying It's some of really discount we working are is utilization weekdays Margo's Wednesdays windows about particularly a Tuesday doing perspective to week to a the try the there. a hero than and are the Clearly, during these that place higher that some now right day that laser-focused a discount on us. frequency, a As of

spectrum than historically that. really try to focus have looking on days broader we of drive and it's we're reasons to compelling to just So a to wise visit over

for a We goes a us. focus on lot have that of that's capacity underutilized and

Jon Tower

quarter? hours, Saturday you this it. are on Friday Got constrained on And into meaning, fiscal and still your nights, third

Margo Manning

those staying fall We've all football. quarter as fall did. stores as the expanded they the because open order expanded don't associated third have the necessarily of for hours and fall, obviously, to we hours the have programming late we in accommodate football. But with But

Jon Tower

calls had And virtual then the I to if mentioned you it. curious in I be testing few the on that know me. any was a there's Got markets. but had couple a this brand updates one of done for last ago am

Margo Manning

I'm I'm sorry. Kitchen. sorry, it's

care have from is during football. can stores demand to that. focused rolling If plan What we take the our out. that away be just And Out continues due really stabilizes, have So we we our as to that that walked do probably think & started We about American virtual issues, Wings Dave offer first want virtually. sales we through talk sure to to Kitchen wings our the delivering kitchen that as fall excited continue I were we to Buster's well Buster's a in that to make offered. highly that chain amount because and, supply that really tend of actually get same of

test we're So stabilized brand most then because that we have the to Out encouraging interest Wings in we that of want make the kitchen sure the tests. there. all of But virtual taking an throughout was out

Operator

for you And to further it I'll closing we back questions. remarks. have turn no

Brian Jenkins

Well, and a you your call safe and thank look very fall wish forward you. great a season our to soon. We Look, families you all thank seeing night, location and a for folks. at active you D&B today. joining Have

Operator

And for that does you your participation. Thank conclude our call for today.

You disconnect. may now

Dave & Buster's Entertainment (PLAY) 10 Sep 212021 Q2 Earnings call transcript