Q1 2022 Dave & Buster's Entertainment Inc Earnings Call
Good morning, and welcome to Dave and Busters first quarter 2022 earnings conference call all participants will be in listen only mode.
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I'd now like to turn the conference over to Michael Core Terry CFO . Please go ahead.
Thank you operator, and thank you all for joining US today joining me on today's call are Kevin Sheehan interim Chief Executive Officer, and Margo Manning Chief operating officer.
After our prepared comments, we will be happy to take your questions.
This call is being recorded on behalf of Dave <unk> Buster's Entertainment incorporated and is copyrighted.
Before we begin our discussion on the company's results I'd like to call to your attention. The fact that in our remarks or responses to questions certain items may be discussed which are not entirely based on historical facts.
Any of these items should be considered forward looking statements relating to future events within the meaning of the private Securities Litigation Reform Act of 1995.
All such forward looking statements are subject to risks and uncertainties.
Which could cause actual results to differ from those anticipated.
Information on the various risk factors and uncertainties have been published in our filings with the FCC, which are available on our website.
In addition, our remarks today will include references to financial measures that are not defined under generally accepted accounting principles.
Masters should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in our earnings announcement released this morning, which is also available on our website now I'll like to turn the call over to Kevin.
Thanks, Mike Good morning, everyone.
We're very pleased to report yet another quarter of outstanding financial results. We set records for revenue net income and adjusted EBITDA in the first quarter, reflecting both progress towards returning to a normalized operating environment and our success in driving topline growth.
So proud of our teams as they have enthusiastically welcomed that guests to our stores. We're excited about the trajectory of the business and in particular the next few months as we begin our summer of games rollout and other traffic driving initiatives that we are confident will drive even more visitation to our stores.
Illustrated by our first quarter results our teams continue to execute on our initiatives to drive organic growth.
<unk> profitability and produce significant cash flow for the business.
We have significant upside potential and with our continued focus on innovation growth and value creation, we can deliver on that potential.
As you can tell I'm very excited about the future of this company, we're optimistic about the state of the business and look forward to sharing our ongoing progress in coming quarters. At this time, Mike is going to cover the first quarter results after that our C. O O Margo Manning will update you on the operations.
Turn with some final comments life.
Thanks, Kevin our record first quarter results demonstrated our ability to drive revenue profitability.
And strong cash flow despite continued headwinds in the economy we.
We continue to benefit from a higher mix of amusements and a leaner operating model.
While we are still experiencing pressures from wage and commodity inflation, our margins continue to improve as we have offset inflationary cost with a more efficient labor model cost savings and efficiencies and thoughtful pricing actions.
In the first quarter comp store sales increased 10, 9% compared to the same period in 2019.
Our walk in sales continued to post strong comps up 14.7, while our special events business continued to lag down 34, 6% compared with 2019. However, this showed sequential improvement from the fourth quarter and we believe this part of our business is recovering.
When looking at our overall comp store sales by month in the quarter February was flat due to the Omnicom variant March was up 12, 5% as a substantial portion of the Covid restrictions were lifted in advance of the spring break season and April was up 21, 5%, which was helped by.
The return of our eat and play combo promotion.
Our uplift in comp store sales has continued during the first five weeks of Q2 as overall comps are up 12, 2%.
Regarding sales mix amusements, and other had a positive 23, 8% comp and was 66% of our overall mix compared with 59% of our mix. In 2019. This was mainly due to minimal discounting and a continued shift to higher denomination power cards.
F N b had a negative eight 1% comp compared with 2019, a substantial portion of which was due to the softness in the special events business, which we believe is starting to rebound.
Adjusted EBITDA for the quarter was a record $143 2 million or 45, 8% higher than the same period. In 2019. This reflects a 31, 8% adjusted EBITDA margin, which was 480 basis points higher compared to the same period in 2019.
The improved performance was primarily driven by the higher amusement mix and leverage on labor due to a more efficient model.
Net income of $67 million increased $24 5 million in the quarter compared with 2019.
The resulting in EPS of $1 35 per diluted share.
These results generated solid positive operating cash flow in the quarter. We ended the quarter with $139 1 million in cash and approximately 492, and a half million of liquidity under our $500 million revolving credit.
Net of any outstanding letters of credit.
As a result of our continued improvement in our operating results over the trailing 12 months, our net debt leverage ratio has decreased to 0.7 times.
Turning to capital spending we invested a total of $42 2 million in capital additions.
Net of tenant allowances and opened one new store in Sioux Falls, South Dakota this quarter.
We opened our Brooklyn Atlantic Center, which is directly across from the Barclays Center.
And Modesto, California locations in May and plan to open our Augusta, Georgia location later this month, making three new store openings in Q2.
In fiscal year 2022, we plan to open a total of eight new stores.
As you can tell we are very pleased with our first quarter results and the strong momentum we are seeing.
Through the first five weeks of the second quarter comp store sales increased 12, 2% compared to the same period in 2019 walk in comp stores increased 17, 8%.
While special event.
Comp store sales declined 27, 9% for that five week period.
We remain bullish on our business based on the traffic levels, we are seeing on a weekly basis.
The upcoming summer season, and the rollout of our summer games program with that we do remain mindful of the macroeconomic factors facing everyone. Today, we remain diligent in our continuous improvement philosophy watching.
Cost and capital spending closely to ensure we deliver the highest possible returns for our shareholders.
In summary, our team continues to execute on our initiatives to drive organic growth improve profitability and produce significant cash flow from the business. We are pleased with our progress and are well positioned to deliver improved financial results in fiscal year, 2022, and with that I'll turn it over.
Margaret.
Thank you, Mike and good morning, everyone. We continue with our commitment to simplify store operations, improving our guest experience and enhancing our food and beverage and entertainment offerings to drive sales and profitability.
In Q1, we brought back one of our most successful promotions are eaten play combo ran as a limited time offer for the length of April to capitalize on pent up demand from our more value oriented guests, we saw sequential comp store sales in France in both food and beverage throughout Q1.
With the top food item count turning positive.
Play combos campaign Windows.
May we completed the brand wide rollout of reservation capabilities to make it even easier for our guests to dine with US guests can now reserve a table in our dining rooms.
Please visit <unk> web site or via open table.
Our stabilized our stabilized staffing levels have put us in a better position to serve our guests. We are already seeing the benefits of our now fully implemented service model that allows our guests to choose their service experience the data pull from our guest satisfaction score showed our overall guest.
Satisfaction and net promoter scores hit a new high watermark in May.
Our new fabrics menu launched in January was designed to expand both reach and appeal with <unk>.
Sarah This new fabrics program was recently recognized at the annual five conference as the best overall program for multi unit operators.
In Q1, we started our efforts to revitalize our late night segment through a combination of marketing and programming effort.
Our late night happy hour initiatives, including reduced size as popular as $5 late night fights and an enhanced late night fight with live streaming D. J.
Clifford visuals, taking over our screens and our in store Airwave Q.
Q1 walk in comp sales during the late night segment, where a positive 9% versus 2019 and were significantly improved over the prior quarter with the late night happy hour programming fully established our marketing team is now poised to promote it this summer through digital channel.
To build awareness.
Our summer campaign launching in June positions, Dave investors ask the great indoors.
Includes activations across the marketing funnel to drive trial, if our 10, new arcade games, which are Dave even exclusively at D&B.
Our seven new food and beverage service also part of our summer as game lineup. We have introduced two new virtual reality titles based on Transformers and top gun Maverick, both of which are proprietary to G&A.
Transform our virtual reality games has multiple branching path and different endings, ensuring each player has a unique experience that leaves them wanting to play again and again.
Our top gun virtual reality game high bandwidth any blockbuster film and less Rguest take command of the weapons of an advanced fighter jet as they ride along with the best of the best.
Enrollment and then dig into the loyalty program continues to grow with Q1, saying 800000 additional downloads or at 23, 9% increase in downloads.
This increase in downloads combined with reactivation effort led to a 33, 2% increase in loyalty profiles, giving us a total of 365 million user profiles.
365 million, one 9 million are active in the last six months.
Development of our new website began late in Q1 and will launch late in Q3, bringing new special event capabilities.
Commerce programming cost and a platform that we can build upon with regular releases of new capabilities.
Let me wrap up by thanking the D&B team none of these results would be possible without your commitment to the guest experience and for bringing the friends for life and our story now I will turn the call back over to Kevin.
We are pleased with the record results, we delivered in the first quarter.
We're seeing guests returning to our stores our special events business is recovering and I am confident confident that in another few months, we will be in a much better place as the core business returns and we increase our efforts on corporate events.
And a logical extension, we've been able to offset inflationary pressures from labor and supply chain with more efficient labor model enabled by technology lean process improvements proactive menu price adjustments and more effective marketing investments as a result, we've improved margins, even though we've experienced some headwinds in our.
Business.
We are extremely excited to add made event to the David Busters team strong management team and strategic fit with our company provides an even for even more growth opportunities for both brands, which will benefit all stakeholders, we expect to close the transaction in a couple of weeks and we will schedule an investor.
Update shortly thereafter at that time, we will detail the compelling merits of the transaction our integration efforts and all of the value creation initiatives already being teed up.
As I've said before we haven't.
<unk> business model strong assets and a talented team we are optimizing the performance at our existing stores and are achieving best in class average unit volume store level margins and solid returns on our new stores. We are broadening our entertainment offering to include more immersive sports viewing experience.
Areas, including improvements to the watch environment and are looking forward to the addition of fantasy sports and the sports betting options in markets as permitted were optimistic about the summer games, which rollout and will be supported by significant marketing campaign.
We are progressing with our refresh remodel program to give our existing existing stores a fresh look and we're also evaluating relocation opportunities and some of our legacy markets, where we can open up new more efficient stores and capitalize on higher potential return locations and we continue to refine.
Our store layouts and sizes to optimize their market potential finally, our international efforts are starting to develop and we will begin to detail our efforts in coming quarters.
There is a lot happening at Dave <unk> Buster's and we are extremely excited about the meaningful upside potential for this company and our stakeholders.
Now before we open it up for questions I have some final comments, it's been my pleasure to serve in this role for the past nine months working together with this team we have accomplished much reopening all of our stores following the Covid shutdowns.
Our entertainment offering to include more immersive sports viewing experience.
Mensing, our refresh remodel program will give our existing stores, a fresh look a new beverage menu.
A nationwide partnership with both U F C and WWE to bring all of their pay per view.
Events to our locations.
A new D&B rewards program.
And a fantastic marriage with main event.
So today, we are on a path of strong organic growth at.
The improved margins and a strong balance sheet as reflected in our 0.7 net debt leverage ratio. All of these accomplishments are the result of the hard work and dedication of our team and I look forward to continuing my role as chairman of the board.
We have an outstanding organization and it will get even better following the acquisition of main event I'm looking forward to having Chris Morris joined as the new CEO of Dave <unk> Buster's.
He is an experienced leader and is excited to engage with our shareholders. In the months ahead under Chris's leadership I anticipate that our positive momentum will continue.
As we continue to make progress towards realizing our ultimate potential and now we can take your questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if.
If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw from the question queue. Please press Star then two our first question is from Jake Bartlett of truly Securities. Please go ahead.
Great. Thanks for taking the question first Kevin I'm, hoping you can build on your last comments there just in your experience at the helm of the company Youre looking at the company from a different perspective than your position on the board how is that perspective changed.
As you've dug in Arlington, Nitty gritty and what do you think the greatest opportunities are going forward.
Thanks, Jake I appreciate that question actually.
I think as.
Those of you that remember the very first call that I was on.
I looked at this as a great opportunity.
Steve and Brian were great Ceos, but sometimes when you get a new person coming in with a fresh perspective, it can change everything and I always talk to you guys about.
Taking a clean sheet of paper and.
Trying to determine the art of the possible not only on running the business, but on each and every opportunity and you heard me go on early on about Hey, what do we do with each day of the week, what do we do with the hours of the day, how do we spike the demand across the board and this enormous opportunities and we've taken advantage of quite a few.
I would say.
And if you look at it we're probably in the latter part of the second quarter as a football game, where we're going to get an opportunity with Chris coming in to take a half time huddle and re spirit, everybody and refocus and drive on all the initiatives that are still there, but if you think about we've got initiatives.
We haven't announced yet on Monday, we've got late nights that Mario talked about which is a huge opportunity to get back to where we were but not only that can make it a more interesting place to come we've got opportunities on what we're calling a date night. We think this is a big opportunity here is what what is there any more comfortable place to come.
On a on a date with someone and if you get forward be able to kind of go play games and recover and then come back after you play a little bit it would be more comfortable in your in your date evening, but this.
A load of those and as you know expanding into the international which we think is a big opportunity refreshing the stores enormous opportunities to take each and every one of our stores and say how do we take this and put all of the new brands that we have in our new stores. So that we can emulate those.
Into the stores. So there's just an enormous opportunity going forward. There is a lot of work going on today and I feel very confident that we've cured the organic growth opportunity and as Mike said to this day, our organic growth in this quarter continues and it continues in a very consistent way.
Which is very comforting.
And I joke with him as I saw the results. This morning, and it's just another day in that same linear kind of progression.
Once we get some of these other things going I see those as either in the way I've run businesses over the years.
As being juice to drive top line further or if we have any more.
Difficult operating environment because of the economy those would be the items that will offset any any erosion that we have to the running of rates that we have today. So there's a lot of opportunity I'm excited about it I'm handing the baton off to Chris and the business is in great shape. He's a good guy by the way I don't.
Want to insult him but.
He seems a lot like me.
<unk> out of the financial realm, and as many of you guys noted some finance you guys turned into great Ceos some don't.
<unk> got that same energy level and get it done unless move this forward that iPad over the years and so I think he's just going to do tremendous things with this brand and.
I'm excited to see it I'm, a big shareholder I can't wait to see him.
Turning that into huge value creation that we rightfully deserved. Thank you so much.
Great Great I appreciate all that color you Mike My follow up question is on what Youre seeing from the consumer you know, there's obviously some some commentary out there that the lower income consumer is pulling back on some spending and I would think discretionary spending and in terms of your brand what have you seen from that lower income consumer.
Building on that in terms of April and the the value in certain with the inserted with play it was that something that youre going to try to kind of increase or could turn that lever on a bit more as we go out throughout the quarter. So it's really what are you seeing from that lower income consumer at your at your concept and then and then how do you think youre going to respond to it.
Yes, it's funny, you say that because we're not seeing it at all at this point in my comments about even looking at Yesterdays revenue replace it's just very very consistent and orderly across the organization and so.
What I also said earlier about as we rollout these new programs. If there is any change in consumer spending, which we're not seeing at this point. These new initiatives will go to offset that.
And I expect that we're going to ride through this and then have the extra energy as we come through it.
So that's the way I look at it and then also they even little things like the events business that we talked about we still have another four percentage points that would improve top line as that comes back and we don't see any reason why that's not going to return to its normalized level as we get through into the fall in the late fall and then.
The energy that we've got around and this is something that is.
Margo and Mike and I had been working on with the team is we have this great proposition of that would be super for corporate accounts to come and have their events in our stores and it's a heck of a lot better than going to a smug hotel, where you're paying up the nose to have their event room and.
You buy a bottle of water, it's eight bucks kind of thing to come in having a joyful event and coming to Dave and Busters, and having the meeting and having food and then having everybody share in having a lot of fun out in our case. So we think there's a huge opportunity there too so.
That's just one area, but we have.
And the enormous number of opportunities that we are now.
You go from the point of where your freight would be successful to the point at which you start to see that you can be successful.
Like the tipping point and all of a sudden the inertia of this team you can see it it's very different and the equity program for the general managers. They are all seeing there opportunities. So they are driving they don't come to work and just operate the business I'm not saying they did that in the past, but theyre coming with the extra step in their motion that is going to drive that incremental.
As we move forward and then leave it to you guys anything else Yeah, I'm just going to add this is mark out of that.
With that stabilized staffing efforts one of the things that we've been able to really get back and feeling it in a pretty meaningful way is our local store marketing and SaaS, where our gains are going into their individual communities and looking specifically for opportunities that they can drive into the stores. So I think that with the ability to pull some of the levers.
For off peak to drive in more value oriented gas I think we're going to be well positioned to satisfy this summer.
Great. Thank you so much.
The next question is from Nicole Miller of Piper Sandler. Please go ahead.
Thank you good morning could you talk a little bit about the continued sequential improvement in the special events I was wondering about the why and how I'm curious if the Y at all would be tied to the box office. It seems to be some decent movies and I know I just hear anecdotally around my own self a lot of people.
Adding to the theater in that direction and it could be a good place to go before or after.
Nonetheless.
Is it improving meaning like who is coming in the exact same gas or is it a different profile doing something different at a different time.
So I'll jump in and then all of that here in July and one of the things that we have done over the past couple of months is we invest into our special event structure with a very specific objective and what we've done is bringing and stronger sales individuals that go out.
And are actively soliciting business and Kevin alluded to going after corporate business. So that's one of the things that we have a sales team very very focused on re engaging with past corporate business and uncovering new corporate message and we're starting to see some great traction with our outbound effort.
And so we're encouraged because we felt like we're sort of at the tip of the iceberg on what we're seeing there but in terms of the business coming we're seeing social business coming back and where we're most encouraged about the corporate business.
Do you have anything you want to yeah I think on.
Your point around the summer season with movies.
Located in the same center with a number of movie theaters. So we do get that extra draw of people coming out of the movie Theater. It's nine o'clock. It's a little early what do you guys want to do.
They are able to come in to Dave and Busters and enjoy a couple of games a cocktail.
A late dinner or do you have a few appetizers that point. So there is a good pick up of business there, but it's just like any other event. We've also done some things.
While we've kind of become a point of.
Of gathering before other events, whether that's a concert event or things to that effect. So we are seeing a little bit of pickup in that piece, which is really just about its summer time and people are getting back out and moving so.
And Mike just one thing on that you're starting a conversation with the big events business to see if we can transform that into a mutual benefit between the two companies and the other comment that Margo made on the corporate thing and I'd say the important distinction now on corporate.
And I remember this from when I was CEO of Norwegian cruise lines. There. There are the order takers and there are the people that go out and fight for new business and Theyre very different people. So we're delineating the type of person on the corporate accounts that are.
In receipt of getting orders for events and the ones that are going out and finding new events and I think thats going to make a big difference for us as we move forward.
Thank you and just a final follow up question more on the on the numbers I appreciate the detail around comp and certainly understand the message is continued improvement just from a modeling perspective could we get comps for <unk> 22 versus <unk> 21, So if you could share and if I if it's out there.
I just missed it I apologize, but the food and Bev comp again 2022 versus <unk> 21, and the same for amusement.
Yes, 71%.
71 that was on food and Bev or total.
Total.
So we started with.
Longer [laughter] no I know that I know, they're big numbers. It sounds like that is how the models kind of tick and tie.
70 worth total okay.
Alright, thank you.
Thank you.
The next question is from Andrew Barish of Jefferies. Please go ahead.
Hey, guys.
Just.
One for me also modeling wise just level setting on.
If you could give us the average weekly sales.
So.
What that's running.
But just.
Affecting much if any you know kind of seasonal.
Drop off versus the <unk> because historically.
You know average weekly sales do go down slightly in the <unk>, but obviously.
You know it feels like things are pretty strong right now and a lot of programs.
Still rolling out.
Yes, so just to give you a little bit of perspective, so in Q2.
Usually it's run about.
Let's just say for the first five weeks we were 186000.
Is are the average so far and.
And as we look further into the quarter, we expect that to pick up slightly because you are starting to now get into its full time summer season kids have graduated.
You do get that just normal I'm on vacation or the Staycation kids are done the school. So you do get a little bit of that pick up on an average basis throughout the course of the rest of the summer.
Got you and is that is that total or comp AWS Mike.
That's total there.
Okay.
And then.
Just secondly can you give us a sense of how the pricing increases have been received by the guests, particularly.
On the game.
That was something that you know was was relatively new to.
So the strategy was there any shifting around of gameplay that you saw because of pricing or anything you can share with us.
No there really wasn't much of a change I think.
The biggest impact was back in October when we increase the entry point.
At the kiosk level, which at the same time really wasn't necessarily a price increase because the consumers still got the same number of equal value of point in relation to the dollars that they were spending but they would just play the card and finished the card. So you would get that incremental revenue when we've changed some of the pricing at the game level.
It just means that the.
Card is being utilized faster.
The uptick there then is the opportunity or are they recharging.
And theres been a little bit of increases the recharges, but nothing of a significant nature.
And if youre asking about whats their SaaS between <unk> and non <unk> gains I'm not sure. If that's a question we didn't see anything significant there in terms of shipping in categories of gameplay.
Excellent Yeah, that's exactly what I was what I was thinking about Margot and then just finally can you give us a sense on a on the on the smaller prototype I think the Sioux Falls, what's your latest just kind of what Youre learning from there and how.
You know how.
Okay.
Yeah.
And then Andy are you are breaking up a little cat. So I'm not sure if I heard all of that but you're asking about the mini format and how its performing they're performing really well.
And I'll just give you from an operational perspective, they're a dream to manage just a slow really well from the gas really very easy for us to serve the gas because of the design layout and we're very happy with that and you'll see more of them.
The next question is from Chris I'll call of Stifel. Please go ahead.
Great. Thanks, Hey, guys. This is Patrick on for Chris first Michael I wanted to follow up on that last question.
But hoping you can help us understand just from a little bit wider perspective, the composition of the comp performance in the quarter and the breakdown between traffic and check just to get a better understanding of sort of what foot traffic is looking like relative to pre COVID-19 levels at this point.
From a traffic perspective, it is lower than what we've seen pre COVID-19.
But it's steadily improving if you remember right the company.
Basically let almost every employee goes close to every store and has been rebuilding that business ever since.
So we're finally at the point today, where we've got our full staffing model in place where up to full operating hours Margo touched a little bit on late night happy hour.
A great piece of business for us.
And so from that perspective, when we measure traffic and the fact that the number of items sold it is lower than what we've seen pre COVID-19, but the price of the check is more than offsetting that.
Okay. That's helpful. Thanks, and then obviously the labor line look stellar this quarter, which is great and I know, that's partly driven or maybe wholly driven by you know the.
The improved labor model that you guys have implemented but I'm also curious if theres a portion of that.
Just indicative of the fact that sales may have picked up even faster than you were expecting and so I'm curious if there's an underlying need potentially add labor hours going forward.
And just how we should think about that line as we as we think about how the rest of the year should book.
Yes, we are definitely benefiting from the mix shift into amusement. So if you think about amusement and its profit margin.
Very little labor is in there.
The machine tax and a few folks walking around making sure everyones.
Having a good time and attending to the games on the floor as opposed to the food and beverage where you've got servers bartenders.
Food runners the whole kitchen staff. So the labor model is dramatically different between those two pieces of the business and given the shift to 66% versus 59%.
We're definitely benefiting from that but at the same time, we did take that opportunity to introduce the tablets ex side and other labor efficiency.
Our initiatives on the F&B side, which has helped us be able to continue to serve those customers.
With a with a more efficient labor models. So we are benefiting from that as well.
Great. Thank you guys.
The next question is from Jeff Farmer of Gordon Haskett. Please go ahead great.
Great. Thank you on the late March earnings call. You had said that you were at roughly 95% of pre COVID-19 levels on the operating our front and the question. You. Just answered you said that you were closer to full operating hours. So I'm just curious what for how you define full and.
And when did that happen for you guys. When did you get to that quote unquote full level of operating hours.
This is marco in terms of getting back because that's all operating.
We did it in a phased fashion as the stores, we're getting back into the staffing levels that we needed we would flex hours back. So it's not like there's one date. When every store was back to the full operating hours, we hit it and it pays back in through the quarter.
But I'm gonna say by mid to early May we had all of the stores back to freight elevator hours.
And I'm doing that from memory, So I would give and take a couple of ways. I was just trying to remember just to remember the traffic lag that right you got to make sure everybody knows we're open those extended hours and Thats the initiatives that we're taking on right now to make sure that this is a place to be for late night as an example, but other time parts as well okay.
And then moving onto a separate topic loyalty you shared some color there.
Typically on.
Youre loyal member loyalty membership ranks, including the active ranks, but what I was looking for was.
In terms of I.
I guess what percent of your sales do these loyalty customers represent has there been any changes there to oil them loyalty members have a greater visit frequency anything of that nature that you can provide would be helpful to help us really gauge how impactful. This this loyalty program has been on your business.
I don't have that information with me I will tell you as we're building that program. It's a smaller percentage of the sales right now what we're excited about the opportunity to leverage that going forward and so you'll see more from us and me in the upcoming months as we have our marketing department and maximize that opportunity, yes, I mean, just the gift.
Especially when I when I walked in the door. It was just recently being launched.
Uh huh.
We cleaned up the <unk>.
Back end of it we kind of juiced, it and got it back out there. So the fact that we've got 365 million users.
And probably this thing has been rolling out for about less than six months is pretty remarkable for.
The company that we are in the type of client sales that we have so it is in the very early stages very early innings.
There'll be a lot more to come as our marketing team gets to use this asset.
As Kevin alluded when we start talking about organic growth. This is just one more arrow for us to have in our back pocket to utilize.
To drive organic growth.
And in times of when.
If the economy does slow.
This is another opportunity for us to be able to pull to bring more customers into offset that so.
Thank you for that and just just one more so it's been roughly 18 months since the company first reported.
I think it goes back to the September of 'twenty 'twenty earnings call don't hold me to that but that you guys were in discussions with a potential sports betting partner can you just help us understand are the hurdles to moving forward with partnership or anything else, we should be thinking about as it relates to a a partnership.
With a sports betting firm.
Yeah. So so actually knows the landscape for sports betting has changed quite a bit with some of the names that you you.
No that are in this space and how the reactions in the market has been to some of theirs.
<unk>, having said that we have broken down this whole sports betting fantasy sports and is also states with lottery.
Runs the sports betting aspect. So so we're on the path of now having it and we're not going to rush it but I think we're very very close and we've got Ah.
And then as they come in with three or four different agreements that together I think drive a really fantastic opportunity for this company.
We're spending in process millions of dollars just making sure. We've got all those the audio correct in all the sports sections of the stores.
And that will be all done before pre season. So we'll have the right sound systems will have the right.
Environment and then we will have this opportunity that should hopefully drive quite a bit of traffic and as I said early on once you get these people then for sports betting they're going to stay longer and that's the real economics is another opportunity on the traffic side they'll stay longer.
Another drink or two that have an appetizer and so the spending behavior will be exactly what we're hoping for and so I would say stay tuned and.
You will see this in short order so just looking at that.
<unk>.
Landscape, a little bit we've got main event probably.
Few weeks away, we've got sports betting coming so we've got a lot of very positive announcements for this company coming down the path.
Thank you.
The next question is from Andrew <unk> of BMO. Please go ahead.
Hey, good morning, Thanks for taking the questions. My first one I just wanted to follow up on the on the loyalty profiles question that was just asked and maybe from the angle of those that are not active it seems like it's a big percentage. So I'm curious is there anything that you guys are actively doing to bring those people back and maybe it's a function of you said, it's only been six months, maybe it's a function of the <unk>.
Frequency, but is there anything specifically that youre doing.
To motivate those are folks who are obviously prior customers.
To return.
Yeah, the great thing about the App is it allows you to have one on one communication.
And so that's the group and that's what our marketing team is now gearing up for.
They have the opportunity now to have the tool we're starting to gain the data as Margo said $1 9 million of that three six are.
Our active users. So they are on the app within the last six months.
And so now we've got a group of people to know specifically targets to get them back into a Dave and busters.
Okay great.
And then.
And maybe another demographic question.
You know I know early on in the recovery it was mostly the <unk>.
Kind of play together young adults I think is kind of a turn there.
The company has used historically versus kind of the families with children and then maybe it evened out at some point through I'm, just looking for an update on that and I'm trying to think through you know what what that could mean longer term.
For the amusement mix and now obviously with the announcement.
With main event.
And obviously skewing towards towards the younger customers are you seeing that lag in your stores or just just broader broader thoughts on which cohorts are driving the recovery. Thanks.
Okay.
I'll start that and then the Mark and Mike can take it over but that's the whole basis for the transaction. We found this diamond in the rough actually.
That enables us as we move past the closing date to differentiate the customer base a little bit.
Whereas made event will have more of the family's little kids and we'll have more of a family's teens and young adults and adults. So so as we move forward, we'll be able to get a little clearer on that definition, which should drive each of those populations of guests in a powerful way to.
Each brand.
Yeah, and I was going to say as you are moving into the summer months, you will see some seasonality come in and say you will see an influx of families. As we typically do you see that during this spring brakeman and that our guests faith in our stores.
Like I said, Frank How's that working.
Families that are coming in stores that skewed our families were seen adult kind of an historical EBITDA and then for most of our stores is the blend and so.
So we are to Kevin's point excited about the opportunity is be more prescriptive in more surgical in how we market to the adult and.
Leveraging the main event ability for us to capitalize on family.
So we're excited about that but right now you're seeing the guests face in its fullness returned to date investors.
Great. Thank you very much.
The next question is from Brian Vaccaro of Raymond James. Please go ahead.
Thanks, and good morning, I, just wanted to circle back on the quarter to date average weekly sales I'm, sorry, I think my phone broke up earlier in the Q&A.
Yeah.
Weekly sales was a 180 6K and then Mike could you also remind us what the normal historical seasonality looks like for the last eight weeks June and July compared to May.
So look so for 2019 numbers.
The first five weeks of the quarter were 186000.
And then as you transition into the last eight weeks those numbers increased to about 220000. So it was roughly about 118% or I should say.
An 18% increase up.
Okay, and then current quarter to date average weekly sales are up 10 or 12% versus the 186 can you tell us what the quarter to date in the current five weeks is.
Well, we've communicated what the comps are is up 12% 12, 2%.
Okay.
On the margin front I wanted to ask about labor Margo I was wondering if you could provide some more specifics maybe on the labor efficiencies that you've realized during COVID-19 and maybe just how the new service model compares to pre COVID-19, whether it be average number of salaried managers per store server hours and average station sizes or any.
Other metrics, you think might be worth highlighting.
In terms of the maintenance men park in stores, we have.
Slightly reduced in our management par pre COVID-19 and from an OE perspective.
I don't have a constantly.
Let me, let's say anyway.
Staffing levels, they're about 91.
90% of what we Werent breakout effect.
And I do want to keep in mind that we do have some pockets of markets that arent completely stopped yet so I'm talking about it holistically. So I just I just want to be mindful of that we are excited about the new service model. It was a phased rollout our factories Q1 every store was officially live on at the end of May.
And the early results I indicated or the results that we saw the stores have come on have been really promising as it as.
As it relates to the guest experience.
So you'll hear more about it as we get fully seated in it in the upcoming months.
Okay.
I guess elaborating on that a bit on in terms of the guest experience do you have any.
That's on an average table turns or getting food out of the window and also just maybe the percentage of of guests or sales on F&B that is occurring over the mobile digital ordering system.
In terms of the novel digital ordering I don't have that information right now we have the ability to track that is that a fair.
Fairly manual process and we're working to automate that I don't have the change in that Ah I will tell you in past when we news from that you mentioned the new service model, we solve that goes down to mid teens in terms as the number of guests that we're selecting the <unk> sign.
Options that you had more gas gravitate towards the full experience.
Although I don't have the current reporting on that so I'm, giving you information from one weightless intact.
Okay, Great. That's helpful. And then just one last one for me I wanted to ask about the other operating cost line can you help US bridge what drove the increase in spend there I think it was into the 120 low to mid $120 million range.
Compared to a quarterly spend that's been below a 110 in the last several quarters and then could you also just speak specifically to the marketing spend in the quarter and how you expect that to progress through the year. Thank you.
Well kind of speak on the marketing aspects of it. So it remember we did the in play combo.
Advertisement within the month of April .
So there was a nationwide campaign that went along with that.
That was roughly on lets say about $5 million in total marketing spend.
And so that was one of our largest campaigns then you'll get to a more normalized level of marketing throughout the rest of the year.
Yes.
And I'm not sure about the second part of your question can you clarify what you're asking for I mean that is an increase because we have more stores I'm not sure. What you are asking about can you rephrase that for me yeah. Yeah. It was just I mean, you could even look at it on a cost per operating week basis, if you'd like but it did seem like a pretty noticeable step up sequentially.
<unk> in other operating costs and part of it I appreciate the $5 million, Mike on the marketing side, but just curious if there were any other you know.
Costs that came back whether it would be repair and maintenance or anything that stood out.
Just thinking about the normalization in the cost structure of the business as we exit on micron.
Yes.
The other aspect that could.
That comes to mind that would have a.
Enough of if enough of an impact on an individual line item basis to cover on our call.
Would be outside services. So if you think about that sure youre cleaning crews and things to that effect and so when you're in a tight labor market, where you're trying to hire people back. It was more important for us from a operation standpoint to hire people for the front line to serve customers and then out.
Source some of that cleaning and back office type stuff security would be another one of those aspects. So.
That would have been probably the biggest contributor to that.
Great. That's very helpful. Thank you.
Which by the way is also an opportunity as we get through more normal staffing levels and as the.
We progressed forward in this environment for us to be able to then go look at bringing back in sourcing that.
As an opportunity to improve margins at that point, which we've actually already started to do.
Okay.
This concludes our question and answer session and today's conference. Thank you for attending today's presentation. You may now disconnect.
Okay.