DAVE & BUSTERS, WINGSQUESTIONS.

Dave and Busters (PLAY:NASDAQ) is an American restaurant and entertainment business headquartered in Texas. They have 120 stores nationwide and plan to add more. The company opened one new store in Q3 ’18 which was in Harrisburg, PA. The company committed the ultimate sin for any company that is in the retail or serves consumers: they missed their comparable same store sales numbers. To be clear, their existing stores did not make as much money in this time period as they did in the last. This stock is off significantly on those results.

On the company’s conference call, one of the reasons cited for the downturn was the removal of the unlimited wings promotion that they had been running. This, apparently had a material effect on traffic and revenue. The promotion is back now and is on Monday, Sunday and Thursday nights to coincide with the NFL football games televised. This promotion was run for the first six weeks of the NFL season last year. Now it includes unlimited video game playing. The company seems to have a lot riding on this promotion.

The company is obviously a leading entertainment plus restaurant operation but I don’t understand the reliance on wings to drive traffic. I’m no wing connoisseur but they seem to be hard to screw up, other than price. Perhaps, its not about the wings but rather about the experience – meeting the crew to watch the game and have a few beers and as many wings as you like. With four small children, I can understand the value of having free video games if you want to pay attention to any event.

With the company planning to open more stores, you have to wonder about the effect of cannibalization and what an economy going into recession would do to a business such as this. It seems as though most retailers are relying on either promotions, coupons or deals to get people in the stores. No one offers value anymore.

Source: Company website

 

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