Dave & Buster’s ($PLAY): Eat. Play. Decline.
Eight straight quarters of comp declines, a revolving CEO door, and a “back to basics” plan with no margin for error.
🚨 Something new is coming. Join the early access list — limited spots.
Nobody gets excited about Dave & Buster’s anymore.
Their numbers tell the pathetic story: same-store sales down 8 consecutive quarters. Their term loans limping back to the low 90s after hitting mid-80s. Even debt investors (who only care about getting repaid) are keeping one eye on the exit.
The previous management team performed a masterclass in corporate self-destruction. Seriously.
They obliterated their TV marketing entirely. Confused already-indifferent customers with a bewildering avalanche of overlapping promotions. Executed their most popular menu items. And inexplicably stopped investing in new arcade games - the beating heart of their entire business model.
It’s like watching a restaurant remove its most popular dishes while firing the chef and doubling prices. Suicidal business strategy doesn’t begin to describe it.
Meanwhile, the entertainment landscape transformed completely while D&B remained frozen in 2005.
The new players - guys like Flight Club and Electric Shuffle - all deliver specialized, tech-driven experiences in spaces a third the size. They can open in thriving entertainment districts people actually want to visit, not dying malls where Dave & Buster’s has anchored its mammoth stores like concrete shipwrecks.
New interim CEO Kevin Sheehan is frantically performing CPR on the brand with “back to basics” strategies, resurrecting the Eat & Play Combo, crawling back to TV advertising, and finally introducing new games. But when your brand-new locations get demolished with poor ratings and customers raging about ice-cold food, your problems are terminal, not cosmetic.
Will Dave & Buster’s evolve beyond the increasingly irrelevant arcade-sports-bar concept before extinction? Or are we witnessing the slow-motion collapse of the last arcade giant?
I. Background
The concept started in the 1980s - combine an arcade with a sports bar and restaurant. A grown-up Chuck E. Cheese where you could drink beer, play video games, and eat wings. D&B expanded aggressively through the ‘90s and 2000s, becoming the dominant player in the space.
Today they operate over 200 massive venues – typically 35,000-50,000 square feet, located mostly in shopping malls and retail centers across America.
The company went public in 2014 and initially thrived. But even before COVID, they were showing signs of trouble with slowing same-store sales. The pandemic nearly killed them entirely.
Initially, Dave & Buster’s rode out COVID with a major cash infusion and impressive margin gains. Then they bought Main Event, ramped new-store capex, bought back nearly half a billion in stock, and watched comps go negative.