Dave and Busters FY 2Q16 Earnings Call Notes

Dave & Buster’s (PLAY) CEO Stephen King on Q2 2016 Results

Slowing of casual dining industry weighed on results

“You may recall that we called out cannibalization, competitive intrusion, and economic pressures related to the oil industry during the first quarter and these considerations continued into the second quarter as well. However, the macroeconomic environment and especially the casual dining industry also slowed relative to the first quarter and that also weighed our results.”

Planning on 10-11 openings per year

“As Brian mentioned, we have previously guided 9 to 10 openings, this year we’re now raising those expectations to between 10 and 11 openings. Of these 11 stores, 4 to 5 of those store openings are in markets, where we already have brand presence, and up to 6 store openings will be in new markets for Dave & Buster’s.”

Oil oriented geographies pressured still

“I mean, malls were actually better than the average. So that’s not a drag for us. And then I don’t know that we have exactly divided out Texas per se, but our oil oriented stores still remain under pressure, Oklahoma and Texas somewhat relative to remainder of the stores or the balance of the stores. Some of that once again is because of the fact that we did open a number of stores in Texas during the end of 2015 that are having an impact there as well.”

Labor inflation running above 2%

“I think given the wage pressure, it’s probably slightly above the 2%. I mean, I think in the long-term, we said that we need about 2% in order to begin the leverage margins it’s probably slightly above that in light of some of the margin pressure we’re seeing on labor. I mean, labor is — as Brian mentioned, we’re anticipating between 4% and 4.5% in the second half within that range also in the first half. So it’s a little more and without having kind of that fuel of e-ticket as well as some reduced reduction in cost of sales on the food side, the margin side gets a little harder.”