Dave and Busters 2Q17 Earnings Call Notes

Steve King

Reopened our stores in Houston

“I would like to express our deepest sympathy and concern for those affected by Hurricane Harvey. We want you to know that you are in our thoughts and prayers. We’re fortunate to have reopened our three stores in Houston last Friday and most of our employees are back at work.”

Hurricanes have been a tailwind historically

“I think the bigger issue quite honestly is that it’ll be more about how those communities are able to recover or whether people are going out and dining and going to entertainment plans and that sort of things, more so than it is kind of whether or not we’re prepared to handle the traffic. And I think just about everybody has said that each — one of these storms is unique. Houston is going to be, I believe unique in terms of house recovery at first. I would also say one last thing, over my career, hurricanes in the intermediate term have typically been a tailwind, but not in the short-term.”

Mentioned competitor main event and top golf

“We were probably a little bit surprised on the high side on how many units Main Event opened in the quarter. They opened five units, four of which were in our markets and two Topgolfs, both of which were in our market. So that headwind was a little more than I think we were expecting. It does look to us as that Main Event may be slowing down in the back half, but we don’t run those companies and it’s a little difficult to say. I do think from a cannibalization standpoint, we’re trying our best to think through kind of a good balance of new markets versus existing markets, so that we are not oversaturated with opening stores in existing markets. B”

Mall comps lower than system average

“mall stores represent about a third of our store base. And I think we’ve said it on couple of calls that have historically outperformed in terms of AUV and comp compared to the some average. However, after a pretty long period of outperformance, the first half of this year, mall comps were slightly lower than the system average. They’re still outperforming on a two-year and three-year stack basis. So, it’s little unclear to us whether this is just a tougher rollover or it’s something more substantive, but that’s what our data shows at this point.”

Big fights are not necessarily attractive economically

“First of all, Mayweather and McGregor greater happened in the third quarter. So, we are typically not commenting on that. But I’ll comment in general on that because we have seen a couple of those big kind of mega fights in the past. And I would say that in general, they are pretty expensive for us to put on in every store. And if they are happening in a timeframe where we are pretty busy anyway, so getting enough incremental to offset the cost is a pretty tough proposition for us. We remain committed to becoming and building awareness on our D&B sport. And so, we think it’s important for us to carry things like McGregor, Mayweather and how we covered in Mayweather, Pacquiao and all the rest of that. But it is hard on a Saturday night to be able to boost sales enough to make the economics of that overly attractive for us.”

Brian Jenkins

Increase in family mix leads to lower beverage comps

“And we think part of it is the family, I think question came up earlier. Part of that is driven by increase in family mix, which obviously has less penetration around alcoholic beverages and we think also food. That said, they are coming in to playing the games, games are driving — Amusement is still driving positive comps for us, but there is less propensity to buy food and bev. And it is — food and bev down across all day parts. So, it’s not just lunch and afternoon.