Dave & Buster's Entertainment Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jake Bartlett - Truist Securities - Analyst : My first was on the top line and so far you have your initiatives in place. It seems like you're feeling very confident in them. Same-store sales have decelerated, though, so it looks like macro headwinds are offsetting it. The question is, you expressed confidence in accelerating same-store sales in coming quarters and that your initiatives are going to do that. I guess how can you feel so confident given the macro headwinds? Maybe in that answer, you could talk about whether you see the macro headwinds building or decreasing or just staying consistent as well as whether you're seeing kind of improved or increased contribution from your initiatives in the last few months?

Question: Jake Bartlett - Truist Securities - Analyst : And just building on the commentary around the remodels. Last quarter and I think in prior quarters, you've been a little more specific. You said double-digits sales lift for the fully-loaded remodels. Is that true? I'm wondering whether the omission is conspicuous or not or whether it just the message remains the same, but anything changed there in terms of what lift you're getting from the remodels?

Question: Jake Bartlett - Truist Securities - Analyst : And last question for me, a pretty interesting or impressive feat to grow margins as you did, 170 basis points at the store level with such negative same-store sales. So the question, I just want to make sure there's nothing in there that's abnormal, that's not maybe enough non-recurring to be backed out, but just that will not happen or benefit you in the future or coming quarters. Anything in there that we should be wary about? I guess the idea, the real question is, can you drive, if we expect negative same-store sales for the next quarter or two, is it feasible to continue to drive restaurant level or store level margin expansion?

Question: Jeff Farmer - Gordon Haskett Research Advisors - Analyst : A little specific here, but I think on the last call you presented that presentation that showed that I think you had 33 of the 165 stores running at that highest price increase tier as of Q1. I'm just curious where that stands as of Q2 or currently in terms of the number of stores running at that highest pricing increase tier? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 9:00PM, PLAY.OQ - Q2 2024 Dave & Buster's Entertainment Inc Earnings Call

Question: Jeff Farmer - Gordon Haskett Research Advisors - Analyst : Unrelated, just in terms of trying to understand whether or not the demand headwinds are further mounting or you're seeing some stability. At the beginning, actually, when you reported the Q1, you pointed to low single-digit same-store sales declines through the first. I think it was four or five weeks of Q2. You finished the quarter down 6%. The math implies mid-to-high single-digit same-store sales declines over the balance of the quarter. So can you help us reconcile what went on there? It sounds like you have more initiatives that were kicking in, but the comps got softer. So, what was it, the demand headwinds that mounted? Just any color there would be helpful.

Question: Andy Barish - Jefferies LLC - Analyst : Just wanted to dig into the highest price tier that's performing well. I mean, does that show that that's a demographic that's also maybe a little higher than a broad cross section and that demos hanging in there better than what we've heard from pressures being seen at the lower end? Just trying to tease that one point out as an opener.

Question: Andy Barish - Jefferies LLC - Analyst : And then just checking in on the rest of the remodels this year, are a majority or all of those going to be fully programmed at this point? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 9:00PM, PLAY.OQ - Q2 2024 Dave & Buster's Entertainment Inc Earnings Call

Question: Andy Barish - Jefferies LLC - Analyst : And then just finally, on food costs, you said you were managing. I assumed there is still some of the 50% off kind of promotion discounting on food that you've used. How are you measuring the returns on that? Is it driving some of the incremental traffic you expected? And then does that continue as we move forward? Do you use it for certain times of the quarter or things like that like a boost when needed?

Question: Andy Barish - Jefferies LLC - Analyst : It does. And then just finally, I know, quarter-to-date, basically August. I mean, industry numbers got better. Are you willing to comment on how you started the 3Q?

Question: Jared Hludzinski - BMO Capital Markets Corp. - Analyst : This is Jared Hludzinski on for Andrew Strelzik. Thank you for taking the question. So you discussed the opportunity to accelerate the pace of remodels. But I'm wondering if there's an opportunity to improve returns based on what you've learned from existing remodels and if you could provide any color on how the company is prioritizing remodels through 2026 and whether that's based on store tenure or geography or somewhat? Thank you.

Question: Jared Hludzinski - BMO Capital Markets Corp. - Analyst : And then I just wanted to get an update on how you're tracking against the marketing optimization initiative relative to your expectation, any learnings that you can share with us? And then on loyalty, what would you attribute to the continued strength in membership growth. I believe you said it was up 25% this quarter and on what gives you confidence that this growth is sustainable going forward? Thank you.

Question: Brian Vaccaro - Raymond James & Associates, Inc. - Analyst : I wanted to ask a question just on the other operating cost line and obviously leverage that line despite the negative comps. I noted in the 10-Q that it disclosed some gain on some transactions. Could you quantify that? And then maybe more broadly, talk about other sources of year-on-year favorability you saw within that line.

Question: Brian Vaccaro - Raymond James & Associates, Inc. - Analyst : Yeah, I was going to ask you about that too, Darin. The extra sales on those two days is ballpark say maybe $12 million, $13 million. I guess sales days can change depending on seasonality and whatnot but. And just how to think about the flow through on those sales, because a lot of costs are accrued for either weekly or monthly, are you able to tighten any of that math up on the two extra days?

Question: Brian Vaccaro - Raymond James & Associates, Inc. - Analyst : Comps, I know it's tough to measure traffic, but could you just maybe give us a sense of how much price you'd estimate is reflected in your Q2 year-on-year comps and just level-set what your latest thinking is on potentially taking additional pricing in the second half, either F&B or amusements? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 9:00PM, PLAY.OQ - Q2 2024 Dave & Buster's Entertainment Inc Earnings Call