Dave & Buster's, Main Event Seek Top Billing in Family Entertainment Industry

The two skyrocketing companies offer similar amenities, but have little overlap when it comes to customer demographics.

July 12, 2022 Ben Coley

Dave & Buster’s recently completed $835 million purchase of Main Event is far from a head scratcher. The objective is obvious—form a multi-brand platform that headlines the family entertainment center industry in North America.

The two sides operate in a market that’s predicted to reach nearly $10 billion in 2025, up from $7.7 billion this year. That’s inclusive of growth among all demographics, from families with children ages zero to 8, to adults over 25. Combined, Dave & Buster’s (primarily young adults) and Main Event (mostly families and children) capture the full scope of all those visitors.

“This industry has strong tailwinds and has seen rapid growth historically, and is expected to see strong growth going forward, as well,” said CEO Chris Morris Tuesday during an investor update. “Recent earnings announcements by not only Dave & Buster’s, but other companies in the sector clearly highlight the growth continuing in 2022.”

Dave & Buster’s first announced the transaction in early April, with Morris—chief executive of Main Event since 2018—serving as the leader of the new entity. The $835 million price tag is a 9x multiple of Main Event's 12-month adjusted EBITDA. Dave & Buster's used cash on hand and committed bank financing to fund the acquisition. Kevin Sheehan, who worked as interim CEO since Brian Jenkins retired in the fall, will continue in his role as chair of the board.

“In addition to all the value creation opportunity presented by this combination, another benefit of the transaction was our introduction to [Morris], who will be a great fit to succeed me as CEO of Dave & Buster’s,” Sheehan said. “After only a few meetings with him over the course of the transaction, I was quickly convinced he would be a great leader for the company.”

A look at Dave & Buster's Leadership Overhaul

Together, the two concepts have 200 locations, 13 percent same-store sales growth, $1.9 billion in revenue, $522 million in adjusted EBITDA, 24,000 employees, and roughly 9 million worth of retail square footage. Coming along with Main Event is The Summit, a three-unit eatertainment chain based in Colorado.

The merger is expected to result in $20 million worth of synergies—$7 million (cost of goods sold, store-level labor, and repair and maintenance) and $13 million (corporate labor, corporate operating expenditure, and marketing). All of this should be achieved in the first 12–18 months; the process is aided by the fact both companies were headquartered in the Dallas market.

Here’s how the two brands break down individually:

In terms of net revenue, Dave & Buster’s expanded from $867 million and 81 stores in 2015 to $1.36 billion and 136 units in 2019—that represents a CAGR of 7 percent. During a COVID-ridden 2020, net revenue plummeted to $437 million, but numbers have since bounced back to $1.49 billion in the 12 months ending in April. Adjusted EBITDA is now at $418 million, well above the $308 million seen in 2019.

Main Event’s trajectory in the past few years was even greater. Looking at net revenue, the chain experienced a CAGR of 20 percent between 2015-2019, growing from $144 million and 20 locations to $297 million and 42 stores. In the wake of COVID’s impact, numbers have recovered—and then a lot more—to $422 million and 51 outlets in the 12 months ending in May. Adjusted EBITDA stands at $104 million, compared to $53 million in fiscal 2019.

Through Q2 thus far (May–July), Main Event’s same-store sales rose 27 percent versus 2019, while Dave & Buster’s comps are up 10 percent. Every store from either brand is four-wall EBITDA positive.

Dave & Buster's

Sixty percent of Dave and Buster's customers are young adults.

Dave & Buster’s entertainment business mixes 66 percent, and that comes from a customer base that’s 60 percent adult and split evenly between male and female. The brand has 148 locations and is based in 41 states, with an average store size of 40,000 square feet. For Main Event, amusement accounts for 71 percent of sales, including a significant amount of birthday business from the large number of families with younger children. There are 52 centers in 17 states, with an average square footage of 55,000 square feet.

Dave & Buster’s is known for its 150-plus redemption and simulation games and live sports, while Main Event offers a range of activities—bowling, laser tag, mini golf, gravity ropes, virtual reality, karaoke, and other games.

“We’ve co-existed in markets for decades, and so we’re very comfortable growing both brands and know that both brands can cohabitate,” Morris says. “We have countless data points to show that. I think what’s important to know is, yes there’s overlap in terms of the amusement and games side of the business, but the experiences at the core are different. … That’s something that we’re going to continue to reinforce as we move forward.”

Dave & Buster’s estimates 10–12 openings in the next 12–18 months and is looking to expand with new, smaller prototypes that range from 15,000–25,000 square feet. The company recently opened a roughly 20,500-square-foot location in Augusta, Georgia, which earned more than $900,000 in its first two weeks. Main Event has a roughly 50,000-square-foot model, and is targeting six to eight openings in the following year to year and a half.

Sheehan noted existing Dave & Buster’s locations that are too big could potentially be converted to Main Event. This would allow Dave & Buster’s to build more medium- and smaller-sized outlets in the same market. The combined company will also leverage Dave & Buster’s scale to open whitespace opportunities for Main Event in key regions, like Southern California and the Northeast.

Morris said there will be no changes in marketing for either brand. He added entertainment centers cast a wide net, but brands have to stand for something and can’t be all things to all people. Meaning, Main Event won’t disregard its adult consumers, but at the same time, it’s going to keep leaning into its strength, which is families with children ages 7–15. The same holds true for Dave & Buster’s.

“The experience at Dave & Buster’s is today and will continue to be different than the experience at Main Event,” Morris said. “It’ simply a focus and it’s the type of entertainment offerings that we’ll roll out in the years come, but we will never go too far that we alienate a core group of customers.”