Dave & Buster's Entertainment, Inc. Q2 FY2027 earnings call

• Strategic Framework: Management is executing a "Back-to-Basics" strategy focused on three pillars: capturing existing demand through specific occasions (seasonal/cultural), ensuring entertainment relevance (new games/IP), and delivering consistent value and execution.
• Leadership Changes: The executive team has been strengthened with new appointments including Amanda Busby (COO), Jeremy Tucker (CMO), Kevin Fish (CTO/Digital), Rachel Morgan (CLO/Corp Sec), and Aldo Rosales (Chief Strategy/Revenue Mgmt).
• Marketing & Relevance: Under new CMO Jeremy Tucker, the company is shifting from disconnected tent-pole campaigns to targeted, middle-to-lower funnel media strategies aligned with consumer calendars. Over 70% of guests say new games would incentivize visits; 10 new IP-themed games (e.g., Mandalorian, Stranger Things) were launched this year.
• Food & Beverage Strength: F&B sales have grown for five straight quarters, driven by menu return to basics and better execution of the "Eat & Play Combo." Watch experiences (sports) are a key driver, with high attach rates for food and alcohol during game viewing.
• Operational Execution: New COO Amanda Busby is raising field standards, focusing on speed of service, game uptime, and staff training to improve guest experience and repeat visitation.
• Remodels & Capital Discipline: Six remodels completed in FY '26 continue to outperform non-remodel locations. Net CapEx is paced under $200 million for FY '26, with a focus on highest-return projects. Two additional remodels scheduled for H2 FY '26.
• Cost Savings: A dedicated cost-saving initiative has identified $15 million in savings, with management targeting at least double that amount in the coming months, primarily in G&A, IT efficiency, and insurance.

Total revenue was $544.1 million, a decline from $557.4 million in the prior year period. Same-store sales declined 2.9%, showing sequential improvement from June (down 5%) and July (down 1.6%). Adjusted EBITDA was $98.9 million with an 18.2% margin, down from $129.7 million (23.3% margin) in Q2 FY '25. GAAP net loss was $12.5 million ($0.36 per diluted share). Food and beverage comparable sales grew 7.6%, marking five consecutive quarters of positive growth. Special events also showed growth for seven consecutive quarters.

• Same-Store Sales: Management expects continuing improvement in same-store sales trends and significantly better top-line performance over the remainder of the year and beyond, citing improved trends in July and the first five weeks of Q3.
• Financial Growth: CEO Darin Harper stated confidence that same-store sales, revenue, and EBITDA will grow in the near term as a result of current initiatives.
• Capital Expenditures: Net CapEx is expected to be under $200 million in FY '26. For FY '27, management indicated net CapEx could be $150 million or less, dependent on capital allocation priorities between core business investments and new store development.
• New Store Development: Plans to open 4 new domestic stores in the balance of FY '26 and 5 in FY '27. Development pace is being tightened until same-store sales turn decisively positive.

• Macroeconomic Sensitivity: The lower-end consumer segment is impacted by inflation and energy prices (diesel over $6/gallon), which affects spending power.
• Entertainment Category Decline: Game-centric comps have declined for approximately eight quarters, with weakness accelerating in recent quarters despite promotional efforts.
• Execution Risk: Inconsistent value messaging and operational execution (speed of service, game uptime) have historically hindered guest frequency and retention.
• Regulatory/Legal: Standard forward-looking statement risks regarding uncertainties that could cause actual results to differ from expectations, as detailed in SEC filings.

Q: Andy Barish (Jefferies) asked if there were strategic shifts beyond the 'Back-to-Basics' plan. / A: Darin Harper confirmed the strategy remains sound but emphasized deeper articulation through 'occasions,' leveraging IP partnerships for relevancy, and simplifying the value message. He highlighted the new CMO’s focus on middle-to-lower funnel marketing tied to cultural moments and the new COO’s focus on field execution standards.

Q: Jordan Bender (Citizens) inquired about future CapEx levels given the slowdown in new store openings. / A: Management indicated net CapEx could fall to $150 million or less in FY '27. CFO Cory Hatton explained that while ~$95-$100 million is required for maintenance/core CapEx (games/tech), the reduction comes from pulling back on new store development to prioritize cash flow and core portfolio efficiency.

Q: Brian Vaccaro (Raymond James) questioned the margin pressure in Q2 despite improving comp trends. / A: Cory Hatton attributed the margin noise largely to a $10 million non-cash deferred revenue adjustment in the prior year that did not recur in Q2. He noted that without this item, the spread between comp declines and total revenue declines was minimal, suggesting no material change in store-level investment requirements.

Q: Eric Wold (Texas Capital) asked about the impact of increased dwell time from game pricing changes on F&B attach and margins. / A: Darin Harper confirmed guests spend similar amounts but stay longer, creating opportunities for higher F&B attachment via combos. Cory Hatton added that while F&B currently drives gaming customers, the long-term goal is to reverse this flow, using superior F&B offerings to drive more frequent visits that include high-margin gaming.

Q: Michael Hickey (StoneX) asked about evidence that the game-centric model isn't broken despite persistent declines. / A: Darin Harper cited consumer research showing the offering remains stable and appealing, but the company has underinvested in innovation and relevancy. He argued that other concepts succeed in similar environments, indicating the issue is execution and modernization (IP, collectibles) rather than the model itself.