The interim CEO said revenue generating opportunities are 'enormous.'
Dave & Buster’s has long-term plans to drive lunchtime business, ramp up promotional and corporate events, continue work on sports betting, and refresh its development strategies as it heads further into 2022, according to interim CEO Kevin Sheehan.
The executive said driving traffic and growth consistently and organically are the company’s main priorities, and that includes bolstering the afternoon daypart. Sheehan noted that Dave & Buster’s is leaving too much money on the table by not paying enough attention to lunch, and that revenue generating opportunities are “enormous.”
Theoretically, the chain should have no problem gathering traffic for the lunch daypart because of its entertainment business, something most lunch destinations don’t offer, Sheehan said.
But Dave & Buster’s also wants to attract guests with its food and beverage program. That’s why the brand worked so diligently to develop the “Inspired American Kitchen”and cut its food offerings by 33 percent. Among the new craft quality items are a Chimichurri Bowl, Fresh Burrata Mozzarella Bruschetta, Mushroom Stout Burger, Garlic Parmesan Truffle Fries, and Strawberry Shortcake.
Currently, 70 percent of the 143-unit chain’s business is gaming. Meanwhile, food and drink sales had a negative comp of 17 percent in the third quarter compared to 2019.
“We’re missing that opportunity,” he said. “They’re probably getting a slice of pizza or a hamburger somewhere else. Why can’t we figure out how to make that seamless for them to play and enjoy and have fun? We’ve tried it a couple times, but we did it in a clunky way. Now we need to figure out how to do it the right way.”
The “right way” Sheehan refers to is the implementation of tablets and a mobile web platform that require no contact and less labor, and the testing of a self-serve digital ordering experience for customers.
With a reimagined digital ordering process, customers wouldn’t have to go through so many steps to have what should otherwise be an easy lunch outing, he said.
“We’ve made it hard,” he said. “But there is a recipe for a huge success there and that changes everything.”
Sheehan is also seeking improvement in Dave & Buster’s promotional and corporate events.
He said there are tremendous opportunities to capture additional revenue by offering corporations a cheaper alternative for hosting events compared to other costly venues. Special events decreased 64 percent versus 2019 in the third quarter, mostly impacted by fewer corporate events. The company said softness of the special events business would likely continue into the fourth quarter.
Additionally, Dave & Buster’s wants more weekday business through key promotional offers.
Although he provided little detail, the interim CEO said Dave & Buster’s is working on a deal with another vendor to drive traffic during late-evening weekday hours. He said this potential partnership with the unnamed vendor falls in line with other programs the brand has put into play to make the dining and entertainment venue a more attractive destination for new customers.
Sheehan referred to the initiative as a “weekend warmup,” with focus on time slots like Thursday nights.
“We’re going to start to get a lot of traffic into the stores to get people understanding … you don’t only have to be there Friday and Saturday,” he said.
As it relates to sports betting, breaking into the world of gambling would be smart business for several reasons, according to Sheehan. Along with the additional revenue it would generate, it also ties into the brand’s desire to run more promotional events.
It’s no secret that Dave & Buster’s has been looking to bring in a partner to help the brand break into the world of sports betting and fantasy sports. During the brand’s Q3 earnings call, Sheehan said the company was “working very hard” to reach an agreement.
He echoed this sentiment during the presentation at the ICR Conference this month.
“We want to do a sports deal, we want to do the right deal,” he said. “Who has a better venue for sports than Dave & Buster’s?”
He said the real payoff would be getting new people through the doors who are enticed to stay longer and in turn would buy an “extra drink or an appetizer.”
“We want to get the right deal for the long-term,” he added.
Looking toward the future, Sheehan feels confident in the brand’s ability to grow, in particular because of a new unit design that brings “great returns” and is very “efficient and smart.”
He said Dave & Buster’s is planning on opening six to eight stores during 2022 domestically and hopes growth will return to pre-pandemic levels. Plans for international development will be separate.
Some of the company’s legacy stores will also see additional investments and revitalizations to elevate operations and profitability.
“That’s something we’re working really hard on,” Sheehan said. “It’ll be a multiyear process, but I would say we’re going to spend a little more investing in our business as opposed to investing in new ones.”
“We’ve got a healthy inventory of things that we’re working on for the next few years,” he added.
Same-store sales increased 1.1 percent compared to 2019 in the third quarter, excluding seven stores in markets with vaccine mandates. More specifically, a drop of 1.2 percent in August and lifts of 2.9 percent and 2.2 percent in September and October, respectively. Including those locations, comps decreased 0.4 percent.
For the first five weeks of Q4, comps rose 3.5 percent against 2019 and walk-in business lifted 14 percent.