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Dave & Buster’s Idea Proposal

Dave & Buster’s Idea Proposal
 

Research Question: Will Dave and Buster’s store remodels and heightened promotional strategies continue to drive higher-than-anticipated growth?

Report Available: Nov. 19, 2015

 

Blueshift’s initial research shows PLAY in the midst of a remarkable growth run that may not stop until the company reaches a 200 store count objective. But its recent quarter’s growth figures were so good that some are questioning whether the higher-than-expected growth is sustainable.

 

Observations

  1. PLAYsurprised in its Q2, beating both revenue and earnings estimates by a healthy margin. Comparable store sales increased 11%. The company also raised its revenue outlook for the year. PLAY plans to openeight or nine stores for the year, and has signed leases for 16 store openings in 2016, one of which may be located in Las Vegas. The company sees international expansion on its horizon as well.
  2. PLAY’s games and amusements segment is now 54.4% of total revenue, and has continually captured a higher percentage of the total for several quarters. Remodels and the addition of sports lounges in existing stores were strengthening its position and attracting more guests. PLAY squeezed in three gaming promotions in Q2 which helped contribute to the strong growth. Strong menu innovation was also credited for lifting sales figures.
  3. Although much of PLAY’s increased traffic could be contributed to solid business strategy, the timing of promotions and a change in media strategy may be isolated catalysts that caused PLAY’s Q2revenue to jump much higher than expected. Another timing concern was PLAY’s series of secondary offerings throughout 2015, which were brought on by its largest shareholder, private equity firm Oak Hill Capital Partners. There was also some recent insider selling from multiple executives in October, which raised a few eyebrows.

 

 

Will PLAY’s store remodels, modified media strategy, and increased promotions continue to boost sales above already lofty expectations? Or was the recent spike an anomaly? To gain insight into PLAY, Blueshift will gather data and issue a market research report from independent sources in the following areas: Food and beverage supply chain, Gaming supply chain, Store personnel, Industry specialists, and Online customer survey.

 

Companies: Dave and Busters (PLAY), Buffalo Wild Wings (BWLD), Bandai Namco Holdings (TYO:7832), Chanticleer Holdings (HOTR), Luby (LUB), RCI Hospitality Holdings (RICK), Round One Corp (TYO:4680), Ardent Leisure Group (ASX:AAD)