Dave & Buster's: Might Be A Bonus Life, But I'm Not Playing This Round

Summary

• Dave & Buster's faces declining comparable sales and average check growth despite increased foot traffic, driven by discretionary spending cuts and competition from in-home entertainment.
• The company is investing heavily in remodeling and new locations, but this strains free cash flow and necessitates more debt, posing future financial risks.
• Premium menu offerings and cross-selling strategies aim to boost average check growth, but the high cost perception among customers remains a challenge.
• Valuation models suggest D&B is slightly undervalued with a price target of $42-$43, leading to a 'Hold' rating amid uncertain turnaround prospects.

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Penny Drops: Dave & Buster's Comparable Sales Drop

As the lights flicker and the chips fall, Dave & Buster’s (NASDAQ:PLAY) is having to deal with its guests’ discretionary spending cuts. Operating a business model that

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.