Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) Q3 2023 Earnings Call Transcript

And as we focus on enabling a better service model, a better guest experience, we believe that, that will migrate more people into the mobile app, which will then improve our loyalty database platform. So there’s a number of different initiatives, both in the app itself as well as the service model and the way we engage with the guest at the store level. But that’s just one component of growing, achieving our goals for marketing and optimization and improving our ability to be better — get better return on our investment dollars for digital marketing.

Jeff Farmer: Okay. That’s helpful. And two other hopefully quick ones. First is just on staffing. A lot of that the restaurant companies, admittedly, you guys were not a restaurant company, but have this earnings season pointed to much better staffing levels, much lower turnover, turnover numbers driving some efficiencies, some labor efficiencies. As it relates to your model, anything that you guys can add as it relates to staffing?

Michael Quartieri: No. I think we’re seeing the same things. The — go back a year or 2 years ago where it was difficult to find staffing to get stores even remotely close to par, we’re effectively at par and managing our hours accordingly based on business levels.

Jeff Farmer: Okay. And then last one for me. I apologize for being long-winded here. But probably 3 or 4 years ago, arguably pre-COVID, a lot of focus with the Dave & Buster’s name as it relates to both cannibalization and competitive encroachment, and some of the cannibalization concern obviously disappears with the Main Event acquisition. But as you’re opening up those 16 boxes or stores this year, and you’re thinking about both of those 2 metrics or drivers of potential headwinds, cannibalization, competitive encroachment. Any update on how you guys are thinking about that or what you’ve seen?

Chris Morris : That’s obviously something that we take a close look at and we can tell you that there’s no significant concern at all in cannibalization, we were getting phenomenal returns on the 16 units that we’ve opened. We feel great about that. I think one of the advantages is now that we designed a smaller prototype, and we’re going into — that’s opened the door for markets that we were interested in pursuing because of the level of investment. And so as we’ve shrunk our prototype, that’s provided us access into new markets. And so that’s helped cannibalization. But when we’ve gone through and looked at our performance against the stores nearby, at this point in time, we’re not seeing anything at all that’s a concern. And we feel very confident in the white space opportunity that we laid out in Investor Day and achieving that without significant cannibalization.

Operator: Our next question comes from Brian Mullan with Piper Sandler.

Brian Mullan : Just a question on the remodel program. You shared some encouraging stats in the prepared remarks. Just a clarification. The pace for next year, specifically, is that accelerated versus your prior thinking? And then if so, any color on what made you decide to accelerate? It sounds like the test is going well, but I would also think you expect it to go well. So just any color would be great.

Chris Morris : So the answer is yes. We’ve now laid out a plan to be able to have — to be in a position to have 40 to 45 remodel stores done by the end of 2024, and that is an accelerated pace. However, we’re moving forward in a very controlled way, and we will only get to 40 to 45 if we continue to see the same level of results. And continue to not only hit, but exceed our return on investment thresholds. And so we’re being very controlled. But at the same time, we’re wanting to move fast in order to get maximize the opportunity that we see. The reason for that, yes, I mean, you’re absolutely right. We did expect the remodel program to be successful. However, we’re exceeding our own expectations, and our expectations were pretty high.

I think the thing that has us very encouraged is not only the results that we’re driving, but the underlying — the underpinnings of those results, so specifically, what’s leading to the improvement in the store. And we can point to the strategic initiatives, the strategic objectives that we had when we designed the remodel. So when we see our overall sales up double digits over prior year and up 30% over 2019, that’s encouraging. But when you’re — when you look at it and say we specifically designed the entertainment platform to bring news to the market and provide more variety to the guest. And we’re driving more entertainment revenue through that entertainment product. When we specifically designed it to give our sales team more opportunity to drive special events because now we have items that appeal to group activities and our special events are up 45%, that gives us confidence that we’re approaching it the right way.

We specifically designed the remodel program to drive throughput on the dining room because our belief is one of the reasons why we’ve seen a decline in our F&B mix is because we haven’t set our operators up for success. So we’ve addressed that in the remodel. We’ve reconfigured the dining room to set our operators up for success and drive that throughput. And even though we’ve grown our revenue in a very significant way, our F&B mix, our F&B revenues actually outpaced everything else that we’re doing. So that gives us confidence. And then the impact we’re having on the guest experience, our Net Promoter Scores are up 15 points. So that just, again, just bolsters our confidence. And so we’re feeling very good about what we’ve been able to achieve in Friendswood, and because we see those data points, we really believe that, that validates our strategies, and that gives us confidence to start to move faster, but at the same time, being very controlled, so we don’t get ahead of ourselves on the investment.