Dave & Buster's Q2 2025: Contradictions Emerge on Same-Store Sales, Marketing Spend, and CapEx Strategy

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 15, 2025

Financials Results

• Revenue: $557M; YOY change not disclosed
• EPS: $0.32 per diluted share (GAAP); adjusted EPS $0.40; YOY comparison not disclosed

Guidance:

• Q3-to-date same-store sales trends consistent with late-Q2 levels.
• Expect second-half margin pressure to moderate as one-offs abate and mix improves.
• FY2025 new store openings expected to total 11 (midpoint of prior 10–12).
• Five additional international franchise locations to open over the next six months.
• Back-to-Basics menu launches in October; Winter Pass debuts in Q4.
• Continuing to introduce 10+ new marketable games annually.
• Remodel program relaunched with lower-cost prototype in coming weeks.
• Focus on growing same-store sales and free cash flow near term.

Business Commentary:

* Financial Performance and Same-Store Sales: - Dave & Buster's reported a 2% decrease in same-store sales for the first 5 weeks of the quarter and a 3% decrease for the entire second quarter of fiscal 2025 compared to the previous year. - The decline was attributed to the July 4 holiday falling on a Friday this year compared to a Thursday in the prior year.

• Marketing and Brand Perception:
• The company identified missteps in marketing efforts, including a lack of focus and clear communication of value, which negatively impacted brand awareness and customer perceptions.

• Efforts are being made to simplify promotional strategies and improve messaging to enhance brand distinctiveness and clarify value offerings.

• Operational Initiatives and New Store Growth:

• Dave & Buster's continues to prioritize new store development, with plans to open 11 new stores in fiscal 2025, contributing to a strong pipeline for future growth.

• The company maintains confidence in achieving 40% returns on new stores, driven by successful site selection and strategic partnerships.

• Pricing Strategy and Game Revenue:

• Dave & Buster's revised its gaming pricing structure, aiming to enhance value perception and increase average playtime for guests.
• The new strategy involves optimizing entry-level pricing and offering more time in the midway, which has shown positive results in guest engagement and dwell time.

Sentiment Analysis:

• Comparable store sales decreased 3% YOY. Revenue was $557M with adjusted EBITDA of $130M (23% margin). Management expects margin headwinds to moderate in 2H and noted Q3 trends are consistent with late-Q2. They reiterated confidence in levers to improve performance, plan 11 new stores in FY25 and five international openings, and emphasized the brand is 'extremely undervalued.'

Q&A:

• Question from Jeffrey Farmer (Gordon Haskett Research Advisors): Can you specify 3Q same-store sales trends mentioned as consistent with exiting Q2?
  Response: Management did not quantify; Q3 trends are consistent with late-Q2 levels.

• Question from Jeffrey Farmer (Gordon Haskett Research Advisors): Elaborate on value perception challenges and fixes.
  Response: Value is strong but messaging was confusing; they will simplify and clarify value ladders in upcoming marketing.

• Question from Andrew Barish (Jefferies LLC): Why did margins miss despite comps near expectations, and what’s the near-term margin outlook?
  Response: Q2 costs rose from new units, lapping prior-year credits, one-offs, repairs, and higher marketing; margin pressure should moderate in 2H.

• Question from Andrew Barish (Jefferies LLC): How is Eat & Play combo performing versus history?
  Response: EPC opt-in is 8–10% (above historical), 30% food upgrades, kiosk drives attach; ~1/3 upgrade to higher Power Card options.

• Question from Andrew Strelzik (BMO Capital Markets Equity Research): How do your prior turnarounds compare to Dave & Buster’s?
  Response: Playbook is similar—clarify value and brand, build guest-first culture; added complexity here is balancing games with F&B.

• Question from Andrew Strelzik (BMO Capital Markets Equity Research): Thoughts on CapEx discipline and continuing double-digit new store growth amid pressured comps?
  Response: New units target ~40% year-1 cash returns with $9–$10M net CapEx; plan to sustain 6–7% unit growth while focusing on core, with flexibility to adjust pace.

• Question from Jake Bartlett (Truist Securities, Inc.): Rationale and impact of simplifying game pricing and lowering average price per play?
  Response: Simplified pricing to improve value and dwell time; optimized rate cards and managed margins via win pricing; seeing higher average card loads; ongoing optimization.

• Question from Eric Wold (Texas Capital Securities): Any changes in consumer spending behavior through the quarter?
  Response: No material shift in in-store spending; earlier Eat & Play and Summer of Games resonated better than later leaderboard push—messaging being adjusted.

• Question from Brian Mullan (Piper Sandler & Co.): Do you need to significantly increase marketing spend to reaccelerate traffic?
  Response: No; keep spend level but refine media mix to boost effectiveness.

• Question from Brian Vaccaro (Raymond James & Associates, Inc.): How did check vs. traffic trend, and outlook for 2H check?
  Response: Check growth from EPC attach and entrée mix; October menu adds fan favorites; game pricing work should provide 2H check tailwinds.

• Question from Michael Hickey (The Benchmark Company, LLC): Is $675M adjusted EBITDA the new target vs. prior $1B goal?
  Response: $675M is the near-term EBITDA target tied to management incentives; timeline for $1B was not specified.

• Question from Dennis Geiger (UBS Investment Bank): How do macro and competition factor into the plan?
  Response: Despite macro headwinds, focus is on clear value messaging and distinctive offerings, including exclusive IP games, to win share.