Dave & Buster's Entertainment Q3 2026: Contradictions Emerge on Marketing Strategy, Same-Store Sales, Remodel Impact, and Value Perception

Date of Call: None provided

Financials Results

• Revenue: $448.0M; comparable store sales decreased 4% YOY (October down ~1% vs prior year); adjusted EBITDA $59M, adjusted EBITDA margin 13%; operating cash flow $58M; $14M cash and $442M total liquidity.
• EPS: Net loss $42.0M, $1.22 per diluted share (GAAP); adjusted net loss $39.0M, $1.14 per diluted share (adjusted).

Guidance:

• Expect continued momentum and improving same-store sales in the remainder of 2025 and into 2026 (October down ~1%, November similar).
• Plan to roll out 10 new games in 2026 and complete Human Crane rollout systemwide to drive traffic and repeat visitation.
• Remodel prototype optimized to increase traffic and ROI; three remodels under construction and six openings planned in next five months.
• Continue double-digit new store growth (11 domestic openings and one relocation in FY25) and international franchising (4 openings next six months; 35+ agreements secured).
• Focus on converting operating cash flow to free cash flow while investing in high-ROI initiatives.

Business Commentary:

* Back-to-Basics Plan and Sequential Improvement: - Dave & Buster's saw sequential improvement in same-store sales each month in Q3, with the final month down only roughly 1%. - This improvement was driven by the company's Back-to-Basics plan, focusing on marketing, food and beverage offerings, operations, games, and remodels.

• Food and Beverage Performance:
  
• Traffic in dining rooms was meaningfully up year over year, with October same-store food sales being the best month of the year.

• The improvement was due to the successful launch of the new menu and the Eat & Play Combo, which attracted more guests to dine in.

• Marketing Strategy and Consumer Engagement:

• Widespread implementation of new marketing strategies, such as simplified marketing and promo calendars and data-driven media mix optimization.

• This strategy has led to increased consumer engagement and positive same-store sales results for food and beverage during the quarter.

• Game Innovation and Rollout:

• Dave & Buster's plans to introduce 10 new games throughout the year, including successful IP-driven launches and the rollout of the Human Crane.

• This strategy aims to drive repeat visitation and enhance the overall guest experience, with a focus on leveraging cultural IPs for maximum awareness.

• Remodel Program and Cost Management:

• The company continues to optimize the remodel prototype, with three new remodels under construction and plans to open six more in the next five months.
• The focus is on modernizing and refreshing store units at an appropriate cost while maximizing traffic and productivity to generate attractive ROIs.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management: "we’re making substantive progress on our Back-to-Basics plan" and "we are confidently positioning Dave & Buster’s for sustained growth in same-store sales and cash flow." CFO highlighted strong operating cash flow ($58M) and confidence in margin expansion initiatives.

Q&A:

• Question from Eric Wold (Texas Capital Securities): With the marketing messages you've been trialing, what has resonated—promotional offers or top-of-mind awareness? And on the combo marketing and F&B comps, what are you seeing in terms of guest time and spend in the Midway?
  Response: Smart value combo offers (e.g., Eat & Play Combo) are resonating and driving guest acquisition and higher F&B attach; guests are spending more time and money in the Midway, and Human Crane rollout shows strong ROI.

• Question from Andrew Strelzik (BMO Capital Markets): Given Dave & Buster’s high brand awareness, are refinements to the media mix enough or will you increase marketing to broaden reach and reinforce messaging? And on the refined remodel prototype, what were the biggest learnings and is the ~700 bps remodel outperformance still holding?
  Response: Marketing will be more data-driven—balancing reach and conversion across TV/digital—and remodels continue to deliver ~700 bps uplift; the team eliminated ineffective spend to lower CapEx while preserving guest-impactful elements.

• Question from Sharon Zackfia (William Blair): Food is performing well—did entertainment comps also improve through October? Is November similar to October? And what comps are needed to expand unit-level margins?
  Response: Entertainment comps improved sequentially and November performed similar to October (roughly -1%); management believes margins can expand once comps reach flat to positive levels.

• Question from Brian Vaccaro (Raymond James): The two-year stack looks like it decelerated sequentially—how do you view the underlying trend and were November comps roughly -1% total? Also, how did walk-in versus corporate events perform and how are holiday bookings pacing?
  Response: Two-year stack decelerated due to a softer quarter start; November comps were roughly -1%; special events (corporate) grew mid-single-digits Y/Y and Q4 pacing looks strong with continued Y/Y growth expected.

Contradiction Point 1

Marketing Investment and Strategy

It involves differing perspectives on the necessity and impact of increased marketing investments, which are crucial for brand awareness and customer reach.

Can adjustments to the media mix alter consumer perception, or is more investment required? - Andrew Strelzik (BMO Capital Markets)

2026Q3: Refinements in media mix should be data-driven, balancing reach and conversion. Increased marketing investment may be necessary to maintain brand awareness, but equal emphasis on converting reach to customers is crucial. - Tarun Lal(CEO)

Is reinvestment needed given past cost optimizations? - Andrew Strelzik (BMO)

2025Q1: We'll benefit from spending money smarter. Top-line growth will drive results. Lean management will ensure costs are well-controlled. No large reinvestment areas stand out at this time. - Kevin M. Sheehan(CEO)

Contradiction Point 2

Same-Store Sales Growth and Trajectory

It involves differing expectations for same-store sales growth, which is critical for assessing the company's financial performance and growth prospects.

Did entertainment comps improve during the quarter, and what level of comps is needed for margin expansion? - Sharon Zackfia (William Blair)

2026Q3: Margin expansion is possible with flat or positive same-store sales growth. - Tarun Lal(CEO)

How do you assess the predictability of same-store sales trajectory on a multi-year basis? - Andrew Marc Barish (Jefferies)

2025Q1: We're in the early innings of fixing the business, and we expect outsize growth in the coming years. The long-term goal is for the business to grow at a 3% same-store sales rate with 1% from new stores, driven by lean management and cost control. - Kevin M. Sheehan(CEO)

Contradiction Point 3

Marketing Strategy and Media Mix

It involves the company's approach to refining its marketing strategy and media mix, which directly impacts consumer perception and business growth.

Is adjusting the marketing mix sufficient to shift consumer perception, or is additional marketing spending required? - Andrew Strelzik (BMO Capital Markets)

2026Q3: Refinements in media mix should be data-driven, balancing reach and conversion. Increased marketing investment may be necessary to maintain brand awareness, but equal emphasis on converting reach to customers is crucial. - Tarun Lal(CEO)

Does the business need to increase marketing investments to drive traffic? - Brian Mullan (Piper Sandler & Co.)

2025Q2: We don't believe we need to increase the marketing spend rate. We are refining our media mix to increase effectiveness, focusing on optimizing spend rather than increasing it. - Tarun Lal(CEO)

Contradiction Point 4

Remodel Impact and Strategy

It highlights differing views on the impact and strategic focus of remodels, which are crucial for improving guest experience and driving sales.

What were the key lessons from finalizing the remodel prototype? Is the aggregate remodel outperformance still at 700 basis points? - Andrew Strelzik (BMO Capital Markets)

2026Q3: The biggest learning was overinvesting in areas with no guest experience impact. The focus is now on areas that directly impact guest experience and repeat visits, saving capital. - Tarun Lal(CEO)

Are you accelerating the remodel program, and if so, why? - Brian Mullan (Piper Sandler)

2024Q3: We will rezone that entire store, creating more open seating, centralizing dining and gaming in the store. - Christopher Morris(CEO)

Contradiction Point 5

Value Perception and Pricing Strategy

It highlights differing perspectives on the effectiveness of pricing changes and their impact on value perception, which are critical for consumer engagement and financial performance.

What marketing messages are resonating with consumers, and what trends in consumer spending are you seeing in the Midway? - Eric Wold (Texas Capital Securities)

2026Q3: What is really working is smart value offers, such as combos that allow guests to enjoy both games and food & beverage at a perceived value. - Tarun Lal(CEO)

How has the game pricing strategy affected results and perceived value? - Jake Bartlett (Truist Securities, Inc.)

2025Q2: We adjusted pricing to improve guest value and increase dwell time. We simplified the rate card and game level pricing. The optimization efforts have resulted in improved guest satisfaction and average card loads. - Darin Harper(CFO)