Dave & Buster's Entertainment Q1 2026 Earnings Report

Dave & Buster's Entertainment EPS Results

• Actual EPS: $0.76
• Consensus EPS: $0.96
• Beat/Miss: Missed by -$0.20
• One Year Ago EPS: $0.99

Dave & Buster's Entertainment Revenue Results

• Actual Revenue: $567.70 million
• Expected Revenue: $572.12 million
• Beat/Miss: Missed by -$4.42 million
• YoY Revenue Growth: -3.50%

Dave & Buster's Entertainment Announcement Details

• Quarter: Q1 2026
• Date: 6/10/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, June 10, 2025
• Conference Call Time: 5:00PM ET

Dave & Buster's Entertainment, Inc. owns and operates entertainment and dining venues for adults and families. Its venues offer a menu of entrees and appetizers, as well as a selection of non-alcoholic and alcoholic beverages; and an assortment of entertainment attractions centered on playing games and watching live sports, and other televised events. The company operates its venues under the Dave & Buster's name. As of April 02, 2019, it owned and operated 125 venues in 39 states, Puerto Rico, and Canada. The company was founded in 1982 and is headquartered in Dallas, Texas.

Dave & Buster's Entertainment Q1 2026 Earnings Call Transcript

Key Takeaways

• In Q1 fiscal 2025, same-store sales fell 8.3% year-over-year, though the decline steadily improved from February (-11.9%) to April (-4.3%) and has shown positive days in May and June.
• The company’s back to basics strategy—rebalancing marketing spend, reintroducing the popular Eat & Play combo, simplifying menu pricing and enhancing operator incentives—is driving a material recovery in top-line trajectory.
• Financial results reflect resilience with Q1 revenue of $568 million, adjusted EBITDA of $136 million (24% margin), operating cash flow of $96 million and a net leverage ratio of 3.1x under a $650 million credit facility.
• Store remodels are outperforming the system by over 700 basis points on average over the last three months, with 48 remodels nearing completion and further refinements planned.
• New unit growth remains a priority with four Dave & Buster’s opened so far this fiscal year, a target of 10–12 openings in FY 2025, and franchise agreements secured for 35+ international stores.

Presentation

[Operator]

Good afternoon and welcome to the Dave and Buster's First Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Corey Hatton, Head of Entertainment Finance, Investor Relations and Treasurer. Please go ahead.

[Cory Hatton, Head of Entertainment Finance, Investor Relations & Treasurer at Dave & Buster's Entertainment]

Thank you, operator, and welcome to everyone on the line. Joining me on today's call are Kevin Sheehan, our Board Chair and Interim CEO and Darren Harper, our CFO. After our prepared remarks, we will be happy to take your questions. This call is being recorded on behalf of Dave and Buster's Entertainment Incorporated and is copyrighted. Before we begin the discussion on our company's first quarter twenty twenty five results, I'd like to call your attention to the fact that in our prepared remarks and responses to questions, certain items may be discussed, which are not entirely based on historical fact.

[Cory Hatton, Head of Entertainment Finance, Investor Relations & Treasurer at Dave & Buster's Entertainment]

Any of these items should be considered forward looking statements relating to future events within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Information on these risks and uncertainties have been published in our filings with the SEC, which are available on our website. In addition, our remarks today will include references to financial measures that are not defined under generally accepted accounting principles. Investors should review the reconciliation of these non GAAP measures to the comparable GAAP measure contained in our earnings release this afternoon.

[Cory Hatton, Head of Entertainment Finance, Investor Relations & Treasurer at Dave & Buster's Entertainment]

And with that, let me turn the call over to Kevin.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

Thanks, Corey. Good afternoon, everyone, and thank you for joining our call today. I'm pleased to report that we are making good progress and our operating results significantly improved over the course of the first quarter. While performance in the quarter was nowhere close to where we want and expect to be, our back to basics strategy is working and is driving a material recovery in our top line trajectory. In the quarter, we unwound many clear mistakes and made high confidence changes to marketing, menu, operations, remodels and games investment.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

While we are still in the early innings, we are improving our execution every day and have a very clear roadmap of work to do to continue to drive improvements and meaningful growth in the business. The leadership team and our Board are as confident as ever that our current actions will lead to significantly improved revenue, adjusted EBITDA, free cash flow and shareholder value in the months ahead. As you all know, our financial position remains strong and we have an excellent business model with high returns on new unit investment, best in class store level economics, disciplined expense management and significant operating free cash flow generation. As we have discussed before, the current leadership team and the full Board are laser focused on managing this business to drive both revenue growth and free cash flow generation. Our team continues to be energized by the opportunities we see ahead to meaningfully improve the operating performance of the business and shareholder value.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

Our results in May were very encouraging with a particularly robust Memorial Day weekend of solidly positive sales to kick off the summer, and we expect this momentum to continue. Results so far in June continue to show improvement. In fact, we have produced positive same store sales in 11 of the last thirty days. Let me take a few minutes to update you on our progress on each of our back to basics plan and the changes we are making or plan to make to continue to unwind mistakes and deliver better execution and improve results. On marketing, we have rebalanced our media spend across channels, including getting back on TV, improved our creative and simplified our messaging.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

We have successfully reintroduced our historically successful and best in class eat and play combo, which has had really positive early results. We will continue to refine and sharpen our marketing strategies and lean into our historically most popular and effective promotions. We also recently introduced our ever summer pass, our guests to get unlimited gameplay and great food and beverage discounts each time they come to visit. Early feedback and results have been very encouraging. On operations, we have diagnosed many of the overwhelming factors for our operators that were requiring too many not fully tested or thought out changes to promotions, menu, service style, pricing, labor setup, remodels, all while cutting back on training and failing to properly engage with the store team.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

We've significantly scaled back, returned to our proven practices and have continued to spend significant time listening to our operators and their insights. To that end, we are actively rolling out a robust store manager incentive plan driven by same store sales growth that has positively shocked the system in a very morale boosting way by allowing our managers to become the true owners of their business. On the F and B front, our classic eat and play combo is a huge fan favorite and continues to perform very well with a double digit opt in rate given our strong promotion of this incredible value. The eat and play combo allows our guests to sample our menu offerings and try out new games, which keeps them coming back for more. We have also corrected many pricing issues and enhanced the menu layout and are hard at work on the introduction of a new menu bringing back our previously top selling entries, which we think will continue to drive check.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

This menu will be rolled out later this year after extensive testing. I should note, our food and beverage sales have markedly improved since April. On remodels, we are approaching the completion of 48 remodels and are continuing to see relative outperformance of these units versus the system. In particular, remodeled stores in the aggregate have outperformed the system by over 700 basis points over the last three months. As we've discussed, we launched remodels without proper prototype testing, operator input, store prioritization, local marketing or budget control.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

We remain confident in the remodel strategy and are actively refining the prototype with operator input, reprioritizing stores and tightened budget oversight. We continue to have a significant runway of opportunity to remodel and upgrade our system and are supremely confident that with proper execution and oversight, we will generate highly attractive ROIs and lead to meaningful increases in sales and cash flow. On games investment, we are racing to the summer with our summer of games that will be bigger and better than ever with the leaderboard competition across all of our Dave and Buster stores inviting guests to complete all summer long challenge with five new and existing racing themed games, Hot Wheels, NASCAR Pit Stop, Maverick, Cruisin' and Super Bikes for a chance to win a grand prize giveaway sweepstakes and other monthly prizes. In addition, we will also have more brand new titles like Super Punk and Pac Man Roller for the summer to further enhance the spring fallout of new games and solidify Archfinder's America's Top Arcade. Additionally, we have the human crane rolled out in 100 D and B stores, which is driving trial and excitement by being centrally located in the Midway with an incremental big opportunity to continue to introduce this experience to additional stores, including our main event stores.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

New store development continues to deliver strong returns and remains a key part of our strategy. In the first quarter, we opened two new Dave and Buster's stores in Killeen, Texas and Lansing, Michigan. And already in the second quarter, we have opened two D and B locations in Freehold, New Jersey and Wilmington, North Carolina. We also successfully relocated our Honolulu, Hawaii Dave and Buster's to the Premier Ala Moana Mall and while it cost us two weeks of missed sales in the quarter, I'm proud to report that the new location is performing phenomenally with the highest weekly sales ever recorded in the company's long history with week one sales exceeding $1,000,000 With the opening of the international franchise location in India in December, we expect at least seven more international openings over the next year. As of today, we have secured agreements for over 35 additional stores in the coming years.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

We see international franchising as a really nice driver of highly efficient incremental growth, monetizing our brands around the world with minimal investment and risk. With regards to our ongoing CEO search, the Board of Directors is finalizing their work to identify the permanent CEO. I remain 100% committed to continue to work closely with the Board and continue to operate the business and make the right decisions to drive performance above and beyond the improvements we've seen in the last few months. We will update you further when we have definitive news to report, which is all we will be saying about this topic on today's call given the sensitivity of ongoing discussions with candidates. Before I turn the call over to Darren, I just wanted to mention to you and importantly our team both in the field and in the support center.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

We are one team and we are fully focused and dedicated to not just getting this business on track, but making it even better than ever before. We plan to continue to demonstrate to you, the investment community, the power of these brands and this business model. Stay tuned as we continue on our journey to deliver the full power of this great company. Now to you, Darren, to walk us through the financial results of the first quarter.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

Thank you, Kevin, and good afternoon, everyone. Turning to a more detailed review of our financials. In our first quarter of fiscal twenty twenty five, comp store sales decreased 8.3% versus the prior year period. As Kevin mentioned, the first quarter was weighed down by a very soft February with comps down 11.9%. However, March saw an initial improvement with comps down 8.4% followed by April with comps down 4.3% to exit the quarter.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

Furthermore, through the five weeks of the second quarter, we are seeing further sequential improvement with comps down 2.2%. We believe this sequential improvement reflects the impact of the various initiatives we've been focused on this year and there remains a lot of work ahead. During the quarter, we generated revenue of $568,000,000 net income of $22,000,000 or $0.62 per diluted share, adjusted net income of $27,000,000 or $0.76 per diluted share and adjusted EBITDA of $136,000,000 resulting in an adjusted EBITDA margin of 24%. As a reminder, reconciliations of all non GAAP financial measures can be found in today's press release. Quick call out on the attribution of our adjusted EBITDA decline in the quarter versus the prior year period.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

With the cadence of our new store openings in late Q1 and early Q2, including our Hawaii relocation, we incurred a $2,700,000 increase in preopening expenses versus the prior year. We generated $96,000,000 in operating cash flow during the first quarter, ending the quarter with $12,000,000 in cash and $411,000,000 of availability under our $650,000,000 revolving credit facility, net of $14,000,000 in outstanding letters of credit. We ended the quarter with a total net total leverage ratio of 3.1 times as defined under our credit agreement. In the first quarter, we invested a total of 115,000,000 in capital additions on a gross basis or $110,000,000 on a net basis when factoring in payments from landlords. As we mentioned to you before, we are focused on converting our significant operating cash flow to free cash flow through more strict management and capital spend, eliminating ineffective and inefficient spend.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

We are committed to demonstrating our ability to generate free cash flow while continuing to invest in double digit new store growth, new gains, other high ROI initiatives and a more diligent remodel program. We reiterate our previously provided expectations for certain key cash flow items that are readily in our control in fiscal twenty twenty five, which ends on 02/03/2026. We continue to expect total capital expenditures to not exceed $220,000,000 This includes spend on net new store capital, remodels and other initiatives, games capital and maintenance capital. We further expect pre opening expense of approximately $20,000,000 and interest expense within the range of $130,000,000 to $140,000,000 for fiscal twenty twenty five. We are firmly committed to our high ROI and historically successful new store strategy with the opening of two new Dave and Buster's in the first quarter, one in Killeen, Texas and the other in Lansing, Michigan, both opening in the final weeks of the first quarter and one store relocation in Honolulu, Hawaii.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

As Kevin mentioned, quarter to date, we have opened two additional Dave and Buster's stores at Freehold, New Jersey and Wilmington, North Carolina, and we continue to expect a total of 10 to 12 new store openings in fiscal twenty twenty five. In relation to our new store growth strategy and expectations for net new store capital in fiscal twenty twenty five, we have nine owned real estate assets today at varying stages of development, ranging from open and operating stores to recently acquired land for future stores at attractive sites. We are in active discussions with potential partners to monetize this real estate to more efficiently fund our store development and more efficiently manage our cash flows. And with that, operator, please open the line for questions.

[Operator]

We will now begin the question and answer session. Our question today comes from Andy Barish with Jefferies. Please go ahead.

[Andy Barish, Managing Director at Jefferies]

Hey, guys. Good afternoon. Just wondering if at this stage you're able to kind of have some degree of predictability in terms of the trajectory of the same store sales in the business, maybe kind of how you're looking at it on a multi year stack basis or anything like that, that may be helpful for us to try to project the rest of the year and what's been kind of a difficult or moving target?

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

Andy, I think you just got to be a little fair as we're coming out of where we've been in the last couple of years. As we see it, we've got a load of opportunity here to drive top line sales. And you've heard me use the analogy many times in sports, who are in the or inning or in the beginning of the quarter of a basketball game, we've got a long way to go. So getting to the getting the business fixed into the right cadence is job one. And that's going to look like some outsized growth as we go through the next couple of years.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

But over the long term, what I've communicated to our team is this is a business should grow in the 3% kind of same store sales with another 1% or so on new stores. And then it behooves us to get another percent on incremental opportunities by getting into the expansion of the international, selling apparel that we're starting to sell on the website, having a catering operation that we're starting now as well. So lots of little side things that we could do. And then you take that growth in the revenues and then you discipline that with lean management and best in class cost controls to drive a much higher conversion to EBITDA. And then you manage your cash effectively, as Darren was talking about, very smartly.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

We need to prove to you guys that there's a powerful amount of cash generation in this business, and we will do that this year. And then you guys will start to see that we're taking that cash flow and intellectually managing it to drive shareholder value. We're in this for one purpose and is to drive this share price to heights it's never seen and should have been all along.

[Andy Barish, Managing Director at Jefferies]

Okay. Thank you, Kevin. And then, hey, Darren, it looks like CapEx is very front end loaded this year. Half of your annual CapEx here in the first quarter, you did, I think, most of the remodels that are going to happen this year. Can you just kind of give us a sense of what that sort of last batch look like or how much you spend?

[Andy Barish, Managing Director at Jefferies]

I imagine there was some spending upfront already for arenas and social bays and just trying to kind of get a breakdown of what that CapEx looks like without having read the Q yet. I guess that's that looks like it's out.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

Yes. That's right, Andy. Yes, very front end loaded, as you mentioned. And that was right in line with expectations because we had a lot of new stores coming online within Q4 and Q1, number one. Yes, we were sort of on the tail end of some more significant spending on the remodel side.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

And then we had a fair amount of capital with respect to games that supported our spring break of games and heading into summer of games. But yes, of the 115 gross spends, 53,000,000 that was related to new stores, about $20,000,000 for remodels and other initiatives, 30,000,000 on games and about $12,500,000 on maintenance CapEx. So look, we remain confident. Obviously, we reiterated our full year guidance and feel like that continues to be a good number for us to support everything that we need to do. Obviously, in that is our ongoing sale leaseback transactions with key partners that we feel very, very good about.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

And that's how we continue to see the balance of the year.

[Operator]

The next question is from Jeff Farmer with Gordon Haskett. Please go ahead.

[Jeff farmer, Managing Director at Gordon Haskett Research Advisors]

Great. Thanks. Two for you guys. Just drilling down on the improved same store sales trend. Can you share anything in terms of what that's looked like across things like dayparts, weekparts, young adults, families, geographies?

[Jeff farmer, Managing Director at Gordon Haskett Research Advisors]

Anything that sort of paints a little bit broader picture in terms of what you guys are seeing on the improved trend?

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

Yes. Yes, I'll take that. Yes. So we're really encouraged from where we're seeing the improvement. Number one, it's predominantly driven by improvement in traffic. And we're seeing that benefit entertainment and F and B both. Furthermore, we're seeing some nice check growth on the F and B side. And that's not through taking price, but it's through higher attach, coming from our eat and play combo, that we've been promoting. And as Kevin has said, we've double digit opt in for that, which is great. We are discounting less.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

And our operators are hyper focused on our peak hours right now and driving better F and B growth through speed of service, through server suggested, Furthermore, what we're really encouraged with is the strength that we're seeing on our weekends. Really throughout this calendar year, our weekend growth has far outpaced our weekday. And we're really encouraged by that because that's really focused on us driving a lot of this awareness through our media strategy, through our messaging, through our offer, and it's driving people in at these key peak times. We are seeing in the credit card data, it does appear as if some of the higher income is trading better, a bit of a trade down that we think we're being beneficiaries of. But then that middle consumer is performing really well also.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

So just a bit of color there that hopefully gives you a little bit of perspective on where we're seeing this improvement.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

Yes. Just your point is spot on because this is an area of importance to me as we look to regain some of our revenue in the late night dayparts and we're testing things with lunches and we're trying to push business into these underutilized time periods of the week. And that is going to remain a focus. But of course, as Darren pointed out, getting it right in the important peak periods is also extremely important. But we feel we have a good opportunity to push the time periods that we're busy further and further out.

[Jeff farmer, Managing Director at Gordon Haskett Research Advisors]

And then just one quick follow-up. Kevin, you mentioned the I think it's a new store manager incentive program. So can you just sort of level set us in terms where you were and what it looks like now?

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

Yes. I mean, I think we now have, in my opinion, and somebody could prove me wrong, a best in class GM program where we have a very competitive salary. We've got a strong bonus profile if we hit the right metrics. And we now have a long term incentive that will lock our people in and it will attract the best in breed of potential new general managers, whereas it works on a rolling three year basis. So every year you are rewarded based on your same store sales and it all starts with positive same store sales and the higher you get, the better your payoff.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

And then that amount is accrued for and it's going to be paid over three years. The pay payment, the year is paid right away and then the and roll into year two and then year three. And then in year two, you get the same sort of thing and you accrue an amount for year two and then you get a payment for 1 of it that year and then you get a from the year and then you push the year's program into years three and four. So I don't know if I said it clearly, but over a three year period, you're accruing on a three year basis where you could start to get some meaningful payouts. If you do the one thing that we care about immensely and that is to drive same store sales, get out of the general out of the store, get into the community, talk to the leaders of all the corporations, talk about why it's a great place to have a corporate event.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

If you're in the main event, so I talk about bowling leagues and civic associations. So we just think it's going to drive the behavior of the general manager to start to think more like a CEO of a business as opposed to, I think I said on the last call, stakes of coming in and making sure the lights are on, the team is there for the day and we've got the right food order and all the games are working. We now need to level set the business to a much higher level.

[Operator]

The next question is from Andrew Strelzik with BMO. Please go ahead.

[Andrew Strelzik, Equity Research Analyst at BMO Capital Markets]

Hey, thanks for taking the questions. My one on the improvement in the comp trends. Are you able to identify or unpack which of the initiatives that you've implemented have really been the biggest contributors that you saw kind of a step function, whether it's the marketing side or the ops side? And then when you talk about having a very clear road map moving forward over the next three or six months, what are some of the biggest opportunities that you think still remain?

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

Yes. So with respect to the sales question, I think we're very encouraged is

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

through improvement in the traffic side. And that's supported by brand tracker work that we have where our guests are telling us they are more aware, the promotions that we're on media with right now are top of mind. The message, new games is driving them to make a visit and it's impacted their perception, etcetera. So we're seeing a lot of consumer stats that are matching up well with that improvement in the traffic trend, number one. And then a lot of the things that we've also promoted again with the eat and play combo, really plussing that up, going back to what's really worked well with us on that front.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

Again, just seeing really good attachment on that, which is driving FoodCheck, And we're really pleased with that. So it's a number of things like that, that we feel we have really good confidence that while we're still in very, very early innings with this, we feel like we're getting the right momentum with it. And then in terms of where we continue to have opportunity, again, just going back we are in the early innings, I would say, to inning on the developments of these strategies. And we believe that there's more that we can do from a marketing standpoint, just even better optimizing our spend, getting the right messaging, continuing to improve on the mix. On the game side, further work that we can really do to tap into what our guests are telling us what they really want.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

And I think that the pivot from where some of the entertainment on the Store of the Future was to where we want to go, there's big opportunity there. There's continued opportunity to improve operations. And so those are all areas that we've now well positioned that the train on the tracks with that we can just continue to get momentum as we go through the year.

[Andrew Strelzik, Equity Research Analyst at BMO Capital Markets]

Okay. And maybe my follow-up. Over the last couple of years, were a lot of costs that were either optimized or taken out of the business. Is there any sense as you do this work that you might need to reinvest in the business to kind of drive that long term performance? Or any areas specifically where you feel like you need to lean in from an investment perspective?

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

Thanks.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

I mean, don't think anything stands out as being larger than life. Are going to benefit now from spending our money smarter. As was alluded to earlier, all the money that was spent on arenas and all that stuff is now going to be spent on initiatives that we test and make sure our guests love and then we'll roll it out and it will be much more efficient than some of the stuff that was done in the past. So I don't see that. And I think once we get the top line going the way it needs to go and which we should start to see hopefully a better place in the second quarter and a much better place in the third quarter that same store sales cures a lot of the sins and then we get back to building the business.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

And then we never have to we should forget, Darren and my background of lean management and wanted to make sure we're best in class. We're executing. Tony, who runs the operations, is always focused on the labor side of it and making sure we keep that top of mind and but provide a great guest experience for our guests when they come so that they come back and return and make sure the experience is right. And that's all the stuff that we're working on with the remodels and everything to bring the traffic back. We were silent for so long when you think about the fact that Darren talked about getting back into the marketing.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

We were marketing to digital people that weren't getting the reach and frequency that we're learning how to get right now. And the marketing still has a long way to go, but we're moving in the right direction. I'm excited because every time we go through a new marketing initiative, we find out we got to a certain percentage of what we thought we could get to, which leaves so much room for us to build in the future. So lots of opportunity, lots of excitement. And I think the cost will make sense out of that as we go forward as long as we get the same store sales, which we're all very confident with.

[Operator]

The next question is from Todd Brooks with The Benchmark Company. Please go ahead.

[Todd Brooks, Equity Research Analyst at The Benchmark Company LLC]

Hey, thanks for taking my questions. Two from me as well. on the gaming floor and the newness that's been flowed in over the course of this year, where do we stand for number of new cabinets after whatever has been flowed in for summer games? And then what's the outlook exiting the year? And there was kind of an earlier discussion that there were a couple of years where we didn't touch the game floor. So can we walk through the cadence of how you get the game floor back to the right balance and newness over the next six quarters here?

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

Yes, I can start with that. So total number of new cabinets that is being rolled out is eight, as well as two new attractions on top of that. The attractions being Human Crane and Cotton Candy. So if you include those two, you're looking at about 10 per location, which is fairly consistent with where the brand had been pre COVID. So we feel good about that.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

And again, it's games that have high appeal with our guests, good IP. We have exclusivity with the new Hot Wheels game, which has given us the ability to do a nice partnership with Mattel. We've got a sweepstakes associated with that to where the consumer with a new leaderboard concept that we rolled out can win a new car. And so that's creating a lot of buzz, and we're getting some really, really good impressions with that. So that gives you some perspective of what we've rolled out here. Look, in terms of where we go from here, I think there's a lot of learnings that we had with the remodel program on making sure that we focus on the right entertainment experience that fits well with the guest occasion, that kind of fits within the Power Card ecosystem. And that's where we've really driven a lot of the demand is that that's what guests are familiar with. That's the type of experience that they want. And we are currently actively working with our partners on finding the right types of attractions that aren't just ubiquitous attractions, but forms of entertainment that fit well with our guests, fit well with the occasion, but also address the need states from our guests of wanting to gamify their experience more and interact more with those that are in their group. So there's a number of things that we're working on that we're excited about that we'll look forward to sharing in the months ahead.

[Todd Brooks, Equity Research Analyst at The Benchmark Company LLC]

Okay, great. Thanks, Darren. And then if we're just looking at the same store sales result for the quarter, I know there's a lot of moving pieces and you said you were encouraged by the fact that it was predominantly traffic driven, the recent momentum. But can you give us any color looking back to Q1 of kind of a traffic check type of split to understand any sort of pricing changes that were made that might have impacted average check or just any sort of nuances that could add some more color to the same store sales result that was reported? Thanks.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

Yes, sure. We historically do not provide any specific details on traffic versus check. But I'd say when you look at the predominant impacts on that sales trend, most of that is coming from traffic. Going back, there was no discrete pricing that we took during the quarter. We did moderate some of the discounting, or perhaps said differently, we did not get as aggressive with discounting as the brand did last year.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

So for instance, we're rolling over 50% off food from the prior year. And obviously, we're now leaning into our Summer Games campaign rather than 50% food. That's going to be accretive to our F and B check. And so that's a portion of the story, but the majority is driven by just an improvement in traffic.

[Operator]

The next question is from Dennis Geiger with UBS. Please go ahead.

[Dennis Geiger, Executive Director - Equity Research at UBS Group]

Great. Thanks, guys. I wanted to ask from here, a lot of compelling initiatives to improve the trajectory. As we think about some of the ongoing challenges, Kevin, maybe framing up how you think about sort of macro as a headwind right now versus some of those brand specific or self inflected issues that you're clearly improving, but that maybe just take a little bit of time to work through? Is it more of the latter than sort of the macro that you were in, in your view as far as some of the lingering pressure that's still out there as you work through the fixes?

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

I think the work on the fixes is going to take us through a good portion of the year as we roll through this quarter. We're still benefiting from that, and we will continue to. We're starting to make new initiatives that are driving value. And I think what happens for us, because we've got so much power going behind the business right now, that you lose the impact to the economic landscape. We're aware of it.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

But because there's just so many things that we're working on that we feel pretty confident with that we'll ride through this period and hopefully come out the other side a much stronger company and doing, I would say, better than most in the industry because of the effort we're doing to make up for the past. I don't know if I answered that well, but

[Dennis Geiger, Executive Director - Equity Research at UBS Group]

No, that makes good sense. And maybe just on that, as you talk about getting through and getting to the other side, you gave some comments on the call. I think with respect to at a high level, right, as an algorithm, maybe long term, I think you spoke about 3% same store sales maybe longer term on the other side of this. And I probably heard it wrong, but maybe another 1% or so on new stores. Can you and then some other things to drive revenue growth you touched on.

[Dennis Geiger, Executive Director - Equity Research at UBS Group]

Can you correct me on the new store comment that you made and what that new store looks like longer term if you were directly speaking

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

I mean at the end of the day, this is a Kevin thing with my team and I believe in we should be best in class. And if we're all thinking like owners, like the new General Manager's program has set out to support, we should be looking to drive same store sales, positive growth anywhere from 3%. And as I said in their programs, do much better beyond 3%, to be honest. So we're driving the right behavior. So that's going to be the to me, the base business.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

And then we have the growth from the new stores, and that's going to add on to that and whatever the percentage is something between 12%, I suspect, as we get bigger and bigger. And then it is incumbent on us as a management team to be thoughtful about how do we deepen our relationship and how do we extend our business proposition based on the value of the Dave and Buster's and the Main Event brands. And so that I'm thinking about that encompassing international and some of the other things that we haven't announced that we're pushing to drive to extend our revenue opportunity. So it's an ongoing thing that I've used in many other companies along the way and just getting people rallied around the metrics that make sense and are important to me and the leadership and the Board kind of helps people understanding. And when I was saying to the guys before, the number of shares that we have outstanding, I'm blistering on everybody's forehead, 350,000 is zero zero of earnings per share or whatever the number is.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

And when you put it into that terms, all of a sudden people can understand, holy crow, I can make a difference. And that's what we're going to hold them to. Everybody's got to start thinking like owners of the business.

[Operator]

The next question is from Brian Mullen with Piper Sandler. Please go ahead.

[Brian Mullan, Director & Senior Research Analyst at Piper Sandler Companies]

Hey, thanks. Just a question on the game side. On the last play you referenced, I think the value proposition for the consumer perhaps testing some things that could extend the time of play. Can you just talk about those tests, anything you've learned so far, what you're measuring and looking to see and how you'd expect that to progress?

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

Yes, yes, absolutely. So a couple of things that we're doing there. One, as we think about this eat and play comp, one of the things that we added to it this year for the time in the brand is an all you can play option. And that is of all of our eat and play combos, we've got 30% of folks are upgrading to that all you can play option. And so it's very clear in our consumer research and feedback that we're getting is, hey, guests like the ability to know, hey, I can spend this much and have a known quantity of time of which to play.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

So that's one aspect. But probably the bigger thing that we are in a couple of phases of testing is on our kiosk, And that's testing a more simplified rate card structure for our guests. I think we all agree that last year, we kind of made it a little bit too confusing for the guests. So we're trying to simplify it, and bring back the right flow for the guest in terms of initial pricing and supercharges, etcetera. But along with that is testing bringing our game pricing down to extend the amount of time that they're in the Midway.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

That was something that we believe we might have overextended a little bit last year. And that's an area where, again, we're focused on getting the same amount, if not more from our guests, but giving them better value through the right gameplay. And so we're being very strategic with how we price redemption versus non redemption games to really give them the best experience possible, while managing our margins in the right way. So early days in that test, but there's we're pretty excited about the learnings that we've gotten so far.

[Brian Mullan, Director & Senior Research Analyst at Piper Sandler Companies]

Okay. Thank you for that. And then on the food side, on this call, you've talked about seeing some average checklists from Eat and Play, which is great. I wanted to ask about just separately,

[Brian Mullan, Director & Senior Research Analyst at Piper Sandler Companies]

I think you've talked about making some changes to the menu design or configuration. Have you taken any actions on that so far? Is that something you're still working on? And if you have, how is the consumer response been?

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

Yes. It's very important, by the way. So what we did when we got in, we thought that the menu didn't present to our guests the menu that we thought they wanted. So we reskinned the existing menu and just highlighted the opportunities for our guests that we think they want, and that's helped out on our ticket, and it's been successful. So that was part A.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

We could do that quickly by just reskinning the menu. Part two, which is the more evolution and we want to do this right and we want to do it one time, is we're bringing back the menu and the opportunities that were the most successful for the Dave and Buster's over its long history. And so we're going to showcase those entry entrees and beverages and desserts and shoot the color the pictures well and make sure that the menu is very appetizing. And then we're testing it in different versions that go into test in the next couple of weeks. And then we're going to learn from that and retest if we need to and roll out a menu towards the fall, hopefully, in time for when the business picks up in the fall.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

But we want to do it in a very measured way. We've included a lot of input at every stage from our operators, made sure they felt part of it. We wanted to make sure we understood that we weren't creating more complexity in the dining in the kitchen. So we're doing a lot of work to make sure we do this really well and really right the time.

[Operator]

The next question is from Jake Bartlett with Truist Securities. Please go ahead.

[Jake Bartlett, Senior Equity Research Analyst at Truist Securities]

Great. Thanks for taking the questions. I just wanted to start quickly with a clarification, another stab at the question, Kevin, that you made about unit growth. It's so different to think about 1% to 2% growth versus the 5% to 6% growth that we've seen in the last that's guided this year and we've seen recently. So is that the message that you guys are really rethinking the unit growth trajectory of this business and focusing I think that would mean you're focusing more on same store sales and free cash flow generation.

[Jake Bartlett, Senior Equity Research Analyst at Truist Securities]

But I just want to make sure, it seems like a really a big change, if that really kind of is what you're trying to communicate? And then I had a couple of follow ups.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

Jake, Darren. Yes, I'm glad you asked that question to clear Yes, think Kevin was kind of providing just sort of a high level summary view sort of internally. But no, we still plan on twelve ten to 14 new units a year for the foreseeable future, which obviously is a much higher percentage. So no, please don't read into that comment as a change in strategy and capital allocation respect to new stores.

[Jake Bartlett, Senior Equity Research Analyst at Truist Securities]

Great. I really appreciate that. And my other real questions are on what should we expect in the next month or two? I look at kind of the May and the performance is really strong and impressive to see that improvement. I want to understand better what is happening in June and July from here.

[Jake Bartlett, Senior Equity Research Analyst at Truist Securities]

The gains that were mentioned, I believe the new ones that came on have been in place throughout the last five weeks, so that those are kind of included. I think maybe Summer of Games marketing starts, but just to understand what changes from here to potentially, I would think, drive maybe an improvement from here?

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

Yes. So yes, as you noted, we our game rollout was sort of phased between spring break and summer. And so that is now fully loaded. We're continuing to finish rolling out human crane and activating that in 100 Dave and Buster's. So that's a key thing.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

We've launched our summer pass program as well about three weeks ago. Early days, we're really encouraged with that. Obviously, the pass model is something that consumers have a subset of our consumers have really said that they like. So we're pretty pleased with that initial performance as well. And we're launching our new leaderboard as well across Dave and Buster's associated with a subset of these new games, particularly our new Hot Wheels game that we're now promoting, again, with the sweepstakes to where you have the ability with your high scores to be the drawing for this new game. We'll also have place prizes throughout the location as well. Again, really strong impression with that campaign right now that we're really excited about.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

So I think it's continuing to drive that momentum, continuing to optimize that media spend, along the way. And now, as we've said, we've rolled out the new incentive model for our field, and we've got the field focused on a hospitality model and a separate incentive program to really drive food attached during this period of time as well. So there's a number of different things that we're focused on that are just continuing to drive a lot of what we've implemented, but plus it up. And then that gives us time to continue to develop our initiatives for heading into next year as well.

[Operator]

The next question is from Brian Vaccaro with Raymond James. Please go ahead.

[Brian Vaccaro, Managing Director - Equity Research at Raymond James Financial]

Hi, thanks and good evening. Just two quick ones on margins, if I could. obviously, in the first quarter, there was the sales deleverage in the margins. But can you unpack the other OpEx line a bit more for us? And are you expecting I think there was some higher adds and maybe some R and M, but are you expecting those to continue into the second quarter or rest of the year?

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

So part of that increase is, some incremental marketing spend that we had in the period as well. So we had about $4,700,000 incremental marketing spend, to help drive and promote these initiatives. So you do have that. And you've got the we do have some incremental R and M spend as well that was anticipated. A lot of that is focused on our game room floor to really drive and make sure that with the introduction of all these new games, we've got the games working, we've got things refreshed the right way.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

And so there's an element of that in that cost as well. And so I'd say, look, we don't anticipate the cadence of marketing to continue at that pace for the year. But some lines with R and M, we are sort of anticipating a little bit more spend this year versus the prior year. We feel like that's the right investment for us to drive our growth and get us to top line positivity.

[Brian Vaccaro, Managing Director - Equity Research at Raymond James Financial]

All right. And then if I could just follow-up on just the comps themselves and the trajectory here. Any color on walk in versus your events business? I know there's been some investments in new staff and team members to lead the special events business. So any color there?

[Brian Vaccaro, Managing Director - Equity Research at Raymond James Financial]

And then any color differences between Dave and Buster's and Main Event? Because I think a lot of these initiatives are focused on Dave and Buster's. So any differences worth noting there? Thanks again.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

Yes, sure. Yes, overall, we've seen from a special event side some good performance there that's outpaced our walk in the year. It's up slightly year over year. Overall, I'd say on balance, D and B and main event are continuing to perform similarly. But there are elements of areas that we're focusing on D and B that we're seeing some metrics, which again give us further confidence on the things that we're really focused on are driving the business forward.

[Darin Harper, Chief Financial Officer at Dave & Buster's Entertainment]

We are seeing some even greener shoots on aspects of the D and B business. But overall, nothing extraordinarily notable to call out.

[Operator]

This concludes our question and answer session. I would like to turn the conference back over to Kevin Sheehan for any closing remarks.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

Hey, thank you, operator, and thank you all for joining. In closing, our back to basics strategy is working, and we are driving a material recovery in our top line trajectory. We are seeing in real time that our compelling product offering and value proposition are driving renewed interest from our loyal guests and new guests this summer. We have a very strong business model with exceptional brand awareness, high guest satisfaction and affinity, national scale, high returns on new units, best in class unit economics, disciplined cost management and strong free cash flow. Our leadership team, our operators and our Board are fully focused on driving revenue growth and free cash flow.

[Kevin Sheehan, Interim CEO & Chair of the Board at Dave & Buster's Entertainment]

We're excited about the opportunities ahead to enhance performance and increase shareholder value. We look forward to speaking with you again soon, and have a great evening. Thank you.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Cory Hatton, Head of Entertainment Finance, Investor Relations & Treasurer
• Kevin Sheehan, Interim CEO & Chair of the Board
• Darin Harper, Chief Financial Officer

Analysts

• Andy Barish, Managing Director at Jefferies
• Jeff farmer, Managing Director at Gordon Haskett Research Advisors
• Andrew Strelzik, Equity Research Analyst at BMO Capital Markets
• Todd Brooks, Equity Research Analyst at The Benchmark Company LLC
• Dennis Geiger, Executive Director - Equity Research at UBS Group
• Brian Mullan, Director & Senior Research Analyst at Piper Sandler Companies
• Jake Bartlett, Senior Equity Research Analyst at Truist Securities
• Brian Vaccaro, Managing Director - Equity Research at Raymond James Financial