Dave & Buster’s Entertainment (NASDAQ:PLAY) management said its “back to basics” turnaround strategy is showing improving trends in same-store sales and food and beverage performance, while the company posted a fourth-quarter fiscal 2025 comparable sales decline and a quarterly net loss.
Management points to improving same-store sales trends
Chief Executive Officer Tarun Lal said the company saw improvement in same-store sales over the last six fiscal months for the Dave & Buster’s brand when adjusting for a three-day disruption from Winter Storm Fern in January. Lal said the company “ended February roughly flat in same-store sales,” and added that in the first fiscal month of 2026 the company saw “roughly flat total company same-store sales, as well as growth in revenue and adjusted EBITDA.”
Fourth-quarter results: revenue of $530 million and adjusted EBITDA margin of 21%
For the fourth quarter, Harper reported:
- Total revenue: $530 million
- Net loss: $40 million, or $1.15 per diluted share
- Adjusted net loss: $12 million, or $0.35 per diluted share
- Adjusted EBITDA: $111 million
- Adjusted EBITDA margin: 21%
Harper said fourth-quarter margin pressure versus the prior year included a 110-basis-point impact from deferred revenue headwinds, 100 basis points from higher marketing costs, and deleverage from the comparable sales decline. He said the company faced an additional EBITDA headwind of $9 million tied to higher deferred revenue from the prior year, and expects the deferred revenue headwind to be about $10 million in total for fiscal 2026, decreasing in magnitude over the next couple of quarters.
Harper also said adjusted net loss in the quarter was affected by $24 million of incremental depreciation expense year over year, and the company expects depreciation and amortization expense in fiscal 2026 of about $75 million per quarter.
Food and beverage strength and value promotions highlighted
Lal called food and beverage one of the “earliest success stories” of the strategy, attributing gains to a menu reset toward pre-COVID offerings and improved execution around promotions like the Eat & Play Combo (EPC). Lal said comparable food and beverage sales grew about 7% in the fourth quarter, and that F&B same-store sales have been positive for the last six fiscal months through February 2026.
Lal said EPC guest opt-in rose during 2025, reaching “approximately 16% in Q4 2025” from “roughly 10% in Q1 2025.” He added that the share of guests who came to play games and also ate food improved by about 700 basis points year over year in the fourth quarter.
In the Q&A, Lal said recent value initiatives, including expanded half-price games and the season pass, were designed to be “minimal” in margin impact. “What we are seeing is that our consumers are spending the same amount of money on the games, but because they’re spending more time on the games floor, they’re actually consuming more food and beverage,” Lal said.
Harper noted that as food and beverage becomes a larger share of sales mix, gross margin can face “inherent pressure,” estimating that “every percentage point of sales mix into F&B… will have about 16 basis points” of pressure. He characterized the trade-off as incremental profit dollars despite mix pressure.
Games pipeline, remodels, and marketing reset
Both Lal and Harper emphasized a renewed focus on games and attractions, with Lal saying the company plans to introduce “at least 10 new games and attractions” across the portfolio in fiscal 2026, the most in a year since 2017. Lal cited titles tied to well-known intellectual property, including John Wick, Stranger Things, The Mandalorian, and Grogu, and said the Human Crane attraction has been rolled out across the system.
In response to questions about the amusement category and traffic, Lal acknowledged the company had underinvested in amusements for years and said the new games pipeline is intended to attract more foot traffic and repeat visits. Later, he said the company is also adding soccer-related content and tying initiatives to major watch occasions. He highlighted the FIFA World Cup as an opportunity to showcase the chain’s large-screen viewing experience and drive incremental traffic.
On remodels, Lal said the company recently opened three remodeled stores, has three under construction, and plans to open four additional remodels in the next nine months. Management reiterated that remodeled stores outperform non-remodeled stores by roughly 700 basis points. Harper said the company completed three “re-remodels” of its latest prototype early in fiscal 2026 and is under construction on three more locations.
On marketing, Lal said the company rebuilt its marketing and promotional calendar and is using data to balance television and digital channels. He cited a Valentine’s Day Human Crane promotion that he said generated “over 6 billion impressions” and meaningful earned media. Harper said fiscal 2026 “traditional media spend” is expected to be “very similar year over year,” with some non-traditional and non-working spend potentially down, and that the mix may tilt more toward digital as targeting improves.
Cash flow, capital spending discipline, and store growth plans
Management’s stated fiscal 2026 priorities include growing same-store sales and generating meaningful free cash flow. Lal said the company plans to spend “no more than $200 million” in capital expenditures during fiscal 2026 and reiterated an expectation for “over $100 million in free cash flow.” Harper repeated the free cash flow target and said the company expects net capex to be no greater than $200 million.
Harper said the company generated $103 million in operating cash flow in the fourth quarter, ending the period with $17 million in cash and $483 million in total liquidity, including availability under its $650 million revolving credit facility net of letters of credit.
For fiscal 2025, Harper said net capex was about $270 million after factoring in landlord payments. In the Q&A, he attributed much of the higher cash capex to $33 million of fiscal 2024 spending that carried into fiscal 2025, with additional variance related in part to a faster-than-planned Human Crane rollout.
On unit growth, Harper said the company opened two domestic Dave & Buster’s stores in the fourth quarter, bringing fiscal 2025 domestic openings to 11 plus one relocation. For fiscal 2026, he said the company expects to open 11 new stores—eight Dave & Buster’s and three Main Event—contributing about 280 incremental operating weeks. He provided a rough cadence including several openings from May through November.
Internationally, Harper said a fourth franchise location opened in the Dominican Republic, with three additional franchise openings expected “in the next few months” in Delhi, Perth, and Mexico City. He said the company has agreements for “over 35 additional international franchise stores” in coming years and views franchising as a capital-light growth driver.
Asked about pursuing double-digit unit growth amid recent same-store sales declines, both executives emphasized returns and capital discipline. Harper said new store development has continued to deliver “strong returns” and that the company is focused on investing “these dollars correctly.” Lal said there is no fixed store growth target and that the company would conserve capex and reinvest in the core business if new sites do not meet return expectations.
Management also said it is pursuing additional cost optimization. Harper said the company launched a “comprehensive initiative” to identify material cost savings and added a senior resource dedicated full-time to cost initiatives.
In closing remarks, Lal called the company “at an inflection point” and reiterated confidence that improving same-store sales, expanded free cash flow, and the strategy’s operational and product initiatives can drive improved results in fiscal 2026.
About Dave & Buster’s Entertainment (NASDAQ:PLAY)
Dave & Buster’s Entertainment, Inc operates a chain of combined restaurant and entertainment venues designed to appeal to families, young adults and corporate groups. Each location features a full-service restaurant and bar alongside an arcade gaming area with ticket-based redemption, virtual reality experiences and skill-based games. Many venues also include multiple large-screen televisions and a sports bar atmosphere, catering to fans who wish to watch live sporting events in a social setting.
The company was founded in 1982 by David Corriveau and James “Buster” Corley, opening its first location in Dallas, Texas.
