Demand for Dave & Buster’s experiential dining is proving strong | Bot To News


Interactive entertainment restaurant operator Dave & Buster’s Entertainment, Inc. (NASDAQ: PLAY) Decreasing both inflationary pressures and falling consumer discretionary spending proves possible. They’re kind of the last man standing when it comes to stand-alone video game arcades and dining.

When theaters catch up AMC Entertainment Holdings, Inc. (NYSE: AMC ), Cinemark Holdings, Inc. (NYSE: CNK ) And Cineworld Group PLC (OTCMKTS: CNNWF) With the migration to streaming movies at home struggling to get back to pre-pandemic levels, Dave & Buster’s is absolutely an experience that can only be had away from home.

They pioneered the concept of big, bold, flashy, bright, action-packed carnival-like video game entertainment with a sports bar, pool tables, skeeball and a restaurant packed into a huge coliseum-sized space. The moment you step into Dave & Buster’s, it’s as if you’ve stepped into another world.

It’s the experience factor that has boosted their business back through pre-pandemic levels. Instead of retreating during normalization, pent-up demand has actually stabilized at a higher base, demonstrating that consumers will still spend on truly experiential entertainment and dining.

A beautiful union

On June 29, 2022, Dave & Busters acquired Dallas, TX-based dining and entertainment franchise Main Event Entertainment for $835 million. As the complementary businesses target the entire demographic of customers, from children to Gen-X-ers, they expect to generate up to $25 million in spending synergies. Dave & Buster’s has been around for over 40 years and understands the concept of generational customers.

Gen-X-ers who grew up with them now have children they can bring to restaurants. While Dave & Buster’s sports bar and caters more to the older gaming crowd, Main Event caters to families and younger kids. This makes the union between Dave & Buster’s and Main Event a logical and cohesive fit.

Truly experienced

Unlike movie theater chains, movie studios including Dave & Buster’s don’t rely on third-party content suppliers. The Walt Disney Company (NYSE: DIS) , Comcast Corporation (NASDAQ: CMCSA ) Or Warner Bros. Discovery, Inc. (NYSE: WBD ) For large releases to draw people to their locations. It’s even worse when they’re competing with the same studios for eyeballs as they release their movies on streaming even faster now. While the cinema experience can always be emulated at home with affordable 4K LED TVs and sound bars, Dave & Buster’s should be enjoyed away from home. It is truly an experiential dining concept that has stood the test of time and economic background.

Demand for Dave & Buster's experiential dining is proving strong

Descending triangle looms

The weekly candlestick chart on PLAY STOCK shows gradually lower highs on bounces against a flat low on the decline. This sets up a descending triangle, where the lower high is an unstoppable force against the immovable material of the flat lows near the $30.50 base. As the range approaches the high point, the stock will eventually make a new 52-week low at the $30 level or break through the bearish trend line.

The 20-period exponential moving average (EMA) is at $37.46 and the weekly 50-period MA is at $38.59. The weekly stochastic is starting to pull back after its Q3 2022 earnings release as sales volume was higher. A market structure high (MSH) below $36.02 is a sell trigger and a market structure low (MSL) is a buy trigger above $33.26, which is an upper support level during earnings selling.

Bullback support areas are $33.26 weekly MSL trigger, $30.92 triangle support, $29.60 swing low, $28.05, $25.52 and $23.96.

Record sales and cost savings will grow

On December 6, 2022, Dave & Buster’s released its third quarter fiscal 2022 results for the quarter ended October 2022. The company posted earnings per share (EPS) of $0.04 excluding non-recurring items. Revenue rose 51.3% year-over-year (YoY) to $481.21 million and beat consensus analyst estimates of $470.78 million. Compared to the pre-Covid quarter in the same quarter of 2019, pro forma comparable sales at Dave & Buster’s and consolidated flagship event locations increased 13.3% and 17.5%, respectively.

Dave & Buster’s is already realizing $17 million in annual cost synergy savings of $25 million. The company opened 3 new locations in California. The company ended the quarter with cash flow of $599.3 million, $108.2 million in cash and $491.1 million in $500 million revolver.

Dave & Buster’s CEO Chris Morris commented, “We are pleased to announce strong financial results for the third quarter. We delivered record revenue driven by double-digit sales growth, resulting in record Adjusted EBITDA.” He concluded, “The future is incredibly bright for this new company, and I’m excited to share our progress with you over the next few years.”

A sneak peak at Q4 2022

As per recent custom, Dave & Buster’s has provided an overview of the first five weeks of Q4 2022. Comparable store sales in the period were up 3.1% and 9.2% over Q4 2019. Declined year-on-year (-2.4%), but increased by 15.7% over Q4 2019. Pro forma special events comparable sales were up 65.3% YoY, but down (-21.7%) vs. Q4 2019.

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