Dave & Buster's 2026 Q3 Earnings Call: Shifting Strategies on Remodels, Pricing, and Marketing Amid Conflicting Timelines for Same-Store Sales

Date of Call: December 9, 2025

Financials Results

• Revenue: $448 million in Q3 2025
• EPS: Net loss of $1.22 per diluted share; adjusted net loss of $1.14 per diluted share

Guidance:

• Management expects momentum to continue into Q4 and into 2026 driven by marketing, menu, games and remodel initiatives.
• October comp was down ~1% and November performed similar to October; goal is to reach flat-to-positive same-store sales to expand margins.
• Complete systemwide rollout of Human Crane by year-end and debut in Main Event in Q1 2026; plan to introduce ~10 new games in 2026.
• Open 6 remodels in next 5 months (3 under construction) and 4 international openings in next 6 months.
• Focus on converting operating cash flow to free cash flow via disciplined CapEx and cost-efficiency initiatives.

Business Commentary:

* Back to Basics Strategy and Sales Improvement: - Dave & Buster's reported sequential improvement in same-store sales each month, with the final month of the quarter down only roughly 1%. - This improvement was driven by the execution of the Back to Basics plan, focusing on marketing, food, operations, games, and remodels.

• Food and Beverage Performance:
• Food and beverage comparable store sales showed positive results for the second consecutive quarter.
• The new menu and promotions like Eat & Play combo contributed to the improvement, with increased guest attachment and higher average checks.

• Marketing and Consumer Engagement:
• The company saw traction with smart value offers and combo promotions, resonating with consumers and driving repeat visitation.

• Optimization of marketing strategy and media mix, along with data-driven decision-making, improved consumer engagement.

• Operational Efficiencies and Cost Management:

• Dave & Buster's generated $58 million in operating cash flow during the third quarter, with $14 million in cash and $442 million in total liquidity.

• The company is focused on optimizing cost management processes and identifying material efficiencies, which is expected to support margin expansion.

• New Store Growth and Remodel Initiatives:

• The company opened new stores, including a domestic D&B store and three domestic Main Event stores, contributing to the annual target of 11 new domestic store openings.
• A new remodel prototype was introduced, expected to maximize guest experience and generate attractive ROIs, with three new remodels under construction set to open in the next five months.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management repeatedly stated they are "making substantive progress" on the Back to Basics plan with "sequential improvement in same-store sales each month" (final month ~down 1%). CFO noted revenue of $448M, adjusted EBITDA $59M (13% margin) and $58M operating cash flow, and emphasized confidence in margin expansion via cost initiatives and high-ROI remodels.

Q&A:

• Question from Eric Wold (Texas Capital Securities): With the marketing messages you've been switching and trialing recently, what has been resonating with the consumer—are they driven by promotional offers/discounting or by top-of-mind awareness marketing?
  Response: Smart value combo offers (Eat & Play packages) that bundle games and F&B resonated most in tests; launched in November and seeing strong traction.

• Question from Eric Wold (Texas Capital Securities): On the combo marketing and food/beverage comps, what are you seeing in the midway—time spent and spend per consumer trends?
  Response: Guests are spending more time and money in the Midway; new games pipeline and Human Crane rollout (70% installed, systemwide by year-end) are driving engagement and strong ROI (sub-one-year in tests).

• Question from Andrew Strelzik (BMO Capital Markets): Are refinements to the marketing media mix enough to change consumer perception, or are you evaluating increased marketing investment to broaden reach and reinforce updated messaging?
  Response: Focus is on data-driven media allocation across linear TV, CTV and digital to balance reach and conversion rather than just increasing spend; invest to convert reach into customers.

• Question from Andrew Strelzik (BMO Capital Markets): What were the biggest learnings finalizing the remodel prototype and is the ~700 bps remodel outperformance still holding directionally?
  Response: Yes, remodels still deliver ~700 bps uplift; key learnings: eliminate overinvested, non-impactful capital and concentrate on elements that directly drive guest experience to preserve ROI and lower CapEx.

• Question from Sharon Zackfia (William Blair & Company): As you look through the October quarter, did entertainment comps also improve as the quarter progressed?
  Response: Yes—entertainment comps showed sequential improvement in October (and into November); F&B has led recovery and entertainment focus should drive additional returns.

• Question from Sharon Zackfia (William Blair & Company): Should November be thought of as similar to October, and what comp level is needed to expand unit-level margins?
  Response: November performed similar to October (~down 1%); management believes reaching flat-to-positive same-store sales enables margin expansion and they are executing margin enhancement initiatives now.

• Question from Brian Vaccaro (Raymond James): The 2-year stack looks like it decelerated sequentially versus Q2—how do you view the underlying trend, and can you confirm November comp was similar to October (around -1%)?
  Response: 2-year stack showed some deceleration due to a softer start to the quarter, but monthly sequential trends improved; yes, November was similar to October (~down 1%).

• Question from Brian Vaccaro (Raymond James): How did walk-in versus corporate events perform in Q3 and how do holiday bookings look heading into Q4?
  Response: Special events grew mid-single-digits year-over-year; rollout of in-store sales managers drove stronger performance and pacing into the holiday period is favorable with anticipated continued YOY growth in Q4.

Contradiction Point 1

Remodel Program and Capital Efficiency

It involves changes in the remodel program strategy and expectations for capital efficiency, which are key to operational and financial planning.

What were the key learnings from finalizing the new remodel prototype? Is the aggregate remodel outperformance still approximately 700 basis points? - Unknown Analyst (for Andrew Strelzik, BMO Capital Markets)

2026Q3: The learning is that remodels work, and efficient investment in areas impacting guest experience is crucial. The 700 basis point outperformance from remodels remains the goal, with improved capital efficiency planned. - Tarun Lal(CEO)

Is the pace of the remodel program accelerated for next year compared to previous expectations? - Brian Mullan (Piper Sandler)

2024Q3: What we have found is that our remodel program is working... As I mentioned, focusing on our small box prototype and the lease terms that we have been able to find come on, we feel like we're able to get into markets that we were not able to get into previously. - Christopher Morris(CEO)

Contradiction Point 2

Pricing Strategy and Rollout

It involves the company's pricing strategy and the timeline for rolling out new pricing models, which directly impact revenue and consumer perception.

What factors are driving consumer engagement in your recent marketing efforts? Are they driven by promotional offers or top-of-mind awareness? - Eric Wold (Texas Capital Securities)

2026Q3: We are doing extensive work globally with our partners on the dynamic pricing options. It is not a price increase, but pricing adjustments in response to current inventory conditions or demand patterns. We expect to roll these out in 2024 and 2025 to some of our high-volume products. - Tarun Lal(CEO)

Could you clarify the current pricing rollout, including tiered pricing by geography and potential dynamic pricing in 2024, and how to assess their impact on current numbers and visibility for the next year? - Andrew Barish (Jefferies)

2024Q3: So when we look at the strategic pricing, we're in the process right now of running tests. We are very aware that we want to maintain a value proposition... We are very aware that regardless of that, we still have full conviction that the amounts that we laid out at Investor Day over the long-term period, call it that 3-year period, will be achieved... We'll see more things like dynamic pricing, and other intricacies to that effect would probably not hit until very late '24 or probably into '25 at this point. - Michael Quartieri(CFO)

Contradiction Point 3

Marketing Effectiveness and Consumer Perception

It highlights a shift in the company's approach to marketing and consumer perception, which is crucial for driving customer engagement and sales.

Is adjusting the marketing media mix sufficient to change consumer perception, or is increased investment needed? - Unknown Analyst (for Andrew Strelzik, BMO Capital Markets)

2026Q3: Refining media planning and mix is important, focusing on data-driven investments in linear TV, connected TV, and digital channels. - Tarun Lal(CEO)

Should marketing spending be increased to drive traffic back to stores? - Brian Mullan (Piper Sandler)

2025Q2: We are refining our media mix to make marketing spend more effective without increasing the overall amount of spend. - Tarun Lal(CEO)

Contradiction Point 4

Same-Store Sales Growth and Timing

It involves differing perspectives on same-store sales performance and the timing of expected improvements, which directly impacts financial expectations and strategic planning.

How do you view the 2-year stack trend, and was November's comp similar to October's ~1%? - Brian Vaccaro (Raymond James)

2026Q3: There was some deceleration in the 2-year stack, but sequential trends are positive. - Darin Harper(CFO)

How do recent same-store sales compare to historical levels, and what reinvestment is needed? - Andrew Barish (Jefferies LLC, Research Division)

2025Q2: We saw a mix of reinvestment in game room floor and marketing, which impacted margins. We anticipate a moderation in these costs for the second half of the year. - Darin Harper(CFO)