Dave Busters 4Q14 Earnings Call Notes

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8 new stores opened

“We completed 2014 with a total of eight new store openings. This included three stores opened during the fourth quarter in Albuquerque, New Mexico, Clackamas which is a suburb of Portland, Oregon, and Greenville, South Carolina. All three are new markets and new states for Dave & Buster’s. Collectively, our entire 2014 class is performing extremely well and ahead of our expectations.”

16 new leases

“In addition to the five stores under construction, we have a well-developed real estate pipeline as an additional 16 signed leases that continues to build and provides us with great visibility over the next several years. And as we’ve done in our prior process, we will tailor our store size to the surrounding population size and other criteria, including daytime traffic, number of businesses, proximity to nationally recognized anchored tenants that have a regional draw. However, over the next couple of years, we anticipate being more heavily weighted towards those larger stores.”

Beef and chicken prices are still high

“So we are seeing some benefit in those areas that you just mentioned, but the big culprit for us right now is beef, followed by chicken. So we’re not seeing moderation in the price of that. And I think a little bit of chicken is just because beef gives them some cover to keep prices higher than you would think they might be given the input costs, which in some measure are driven by fuel prices and some of that, should be dropping. So, but we’re just not seeing it yet in the pricing.”

You can change the menu a little but not too much when it comes to chicken and beef

“I mean we do have some ability to manage that, Andy. I mean in the past when we — when, like for example, last year, shrimp really spiked high, we did some things to try to moderate our usage on shrimp. But in terms of that, we are subject to that, what the guest is buying, we have a very broad menu, beef and chicken are popular, it’s not like we’re going to be able to take those off.”

Not overly concerned with healthcare cost increase in 2015

“we think we have absorbed some of the healthcare cost increase. We expect a little bit of an increase year over year this year. Obviously new stores are going to cause the number to move up some, but we’re not overly concerned about the healthcare benefit increase for next year, for 2015.”

Err on the side of building a store too large

” I would also say that if there is a store that’s on the cusp, we are erring on the side of building a larger store as opposed to a smaller store. ”

No impact in Texas from lower oil prices

“so far so good. We’re seeing very low impact. And again we’re in, primarily in Texas, in the bigger markets, so we’re in more towards in Dallas, we’re in also Austin, San Antonio, two stores in Houston, but we’re just really not seeing very much impact at all to anything going up from an oil patch standpoint, despite some of the layoffs and whatnot in Houston. So, so far so good is our outlook.”