Hello and welcome to the Dave & Buster's Entertainment, Inc. Q2 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. I would now like to turn the conference over to Cory Hatton, Interim CFO. You may begin.

Thank you, Operator, and welcome to everyone on the line. Joining me on today's call is Darin Harper, our Chief Executive Officer. After our prepared remarks, we will take questions. This call is being recorded on behalf of Dave & Buster's Entertainment, Inc., and is copyrighted. Before we begin the discussion on our company's second quarter 2026 results, I'd like to call your attention to the fact that in our prepared remarks and responses to questions, certain items may be discussed which are not entirely based on historical fact. 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 these risks and uncertainties has been published in our filings with the SEC, 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. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP measure contained in our earnings release. And with that, let me turn the call over to Darin.

Thank you, Cory, and good evening, everyone. Before I get into our results, I want to start by saying how grateful I am for the trust that the board and this team have placed in me. I've spent almost 20 years in this industry and originally joined the company almost 10 years ago. and we have an obvious, actionable and enormous opportunity in front of us to improve this business and create meaningful value for our shareholders. The basic strategy that we are executing continues to bear fruit. We are experiencing ongoing growth in food and beverage sales as well as in special event sales. The same store sales of our remodels continue to outperform the system. and we are also encouraged by the results we saw from activations we executed around certain holidays and sporting events. Further, we improved same store sales in July and saw continued improvement in the third quarter to date. While we are not satisfied with the overall results, we are encouraged by these trends and the success of our strategies and we are confident that the actions now underway will restore traffic and sales growth. Same-store sales declined 2.9% in Q2, but July improved sequentially, with total company same-store sales down 1.6% versus down 5% in June. Additionally, same-store sales trends have further improved over the first five weeks of the third quarter, and we expect continuing improvement in trends and significantly better top-line performance over the remainder of the year and beyond. As CEO, we have further strengthened the executive leadership team. In late August, we announced recent appointments and promotions within our management team. Amanda Busby was recently appointed chief operations officer, and she joins other previously announced appointments of Jeremy Tucker, chief marketing officer, Kevin Fish, chief technology and digital officer, and Rachel Morgan, chief legal administrative officer and corporate secretary. Additionally, Aldo Rosales was promoted to Chief Strategy and Revenue Management Officer. All these individuals have significant and relevant experience and are highly incentivized and motivated to drive this business forward. I truly believe this is an incredibly robust leadership team and together we have strengthened our ability to elevate operations, drive sustainable revenue growth, accelerate digital innovation, and maintain the strong governance and discipline necessary to support long-term success and drive shareholder value. Our priorities going forward are clear, restore traffic and same-store sales growth and convert that progress into durable EBITDA growth and free cash flow generation. Before I get into updates on our back-to-basics plan, let me quickly take a moment to establish the framework for how we're approaching our priorities. We are predominantly an occasion-based business with high awareness, but we have not consistently been the obvious answer when a guest is planning one of those occasions, and our value and execution have not been dependable enough. Our guests come a couple times a year for a reason planned days in advance. When we're the obvious answer, we win decisively. So we're focused on three things, all within our control. Number one, the occasion, meaning we focus on capturing demand that already exists within personal, seasonal, and cultural calendars. Second, relevance, meaning our entertainment and F&B offerings are unmistakably appealing for that occasion. and lastly, consistent value and execution, meaning a singular and consistent value message that a guest can recall at the moment of consideration and a visit that delivers exceptional guest experience to drive another visit. I'll now provide an update on each pillar of our back to basics plan and how the strategic framework of occasion, relevancy and consistent value and execution informs our priorities within each. Let me start with marketing. because this is where the clearest evidence of progress showed up this quarter and where we believe tremendous opportunity exists when we focus on capitalizing on existing demand for an out of home occasion. First, as stated earlier, Jeremy Tucker joined us as CMO during Q2 Before Jeremy, we had gone more than a year without a CMO and several years without consistent marketing leadership. And the result was a frequently changing promotional calendar, significant media shifts and measurement challenges and messaging that did not always connect. Under Jeremy's leadership, I'm extremely confident we're now on the right path to addressing these challenges. Jeremy and I have been working very closely together, and we both recognize the enormous opportunity in marketing given the renewed focus on execution and capturing demand at the right time within our guests' personal, seasonal, and cultural moments. You'll hear more from us in the coming months with regard to how we're optimizing our media to more effectively capture consumer demand through better targeting, discoverability, media, flighting, and messaging. Combined with relevant in-store entertainment and watch experiences that align with existing seasonal cultural demand, we believe we are well positioned to drive meaningful traffic growth. Lastly, we also intend to simplify our messages and market, keeping a consistent evergreen value message with our guests that has strong recall at the point of consideration. Jeremy is building out the team and continuing to refine and evolve the strategy using the insights and learnings from all of our testing and research we've conducted over the last several months. Thank you for joining us today. including new games, games that they can play together, experiences targeted at guests, unique fandom, and in-culture collectibles. Recent research tells us that more than 70% of our guests say learning about new games or activities would incentivize them to come more, supporting the importance of innovating in our games and prize and merchandise. So far this year, we launched 10 new games and attractions. including Mandalorian and Grogu, John Wick, Stranger Things, Hot Wheels Speedway, Icy Slush Rush, Perfect Pump, and Odin's Hammer. And we have several exciting, additional exciting games we will announce in the coming months, including several bespoke entertainment offerings we are working on. This year was a step in the right direction to enhancing our relevancy, and we expect continued improvement in our new game strategy in FY27 and beyond. Thank you for watching. Furthermore, an additional area we are addressing is the strong cultural demand for collectibles, which we can deliver through multiple areas of our Midway. Our research and own experience clearly demonstrates that this is an obvious and ongoing area of demand amongst our consumer demographics. Our stores and our inherent gaming experience are perfectly suited to better capitalize on this significant opportunity. We are spending material time developing a thoughtful and prompt plan around this topic and expect to have more to discuss in the coming months. Together, entertainment relevancy in all that we do, games, experiences, including a strong watch and cultural events calendar, partnerships, and in-culture collectibles, along with clear, understandable value, can grow traffic and check. Food & Beverage continues to see significant success. Company-wide food and beverage comparable sales grew 7.6% in Q2. F&B has now been positive for five straight quarters, driven primarily by a return to the proven menu and better execution of the eat-and-play combo. We will continue to thoughtfully evolve the menu, focusing on execution consistency and designs to increase attached opportunity. We will raise awareness as to the quality of our F&B offerings and strategically take inflationary price increases on a consistent basis. Watch is also an important element of our F&B business. More than half our guests identify football, basketball, or baseball as sports they typically watch. And when guests watch sports at a food or bar venue, more than 90% order food and more than 80% order alcohol. Our 40-foot screens, broad menu, and game day F&B offers give us a differentiated platform. And there is low-hanging fruit for us to become more dependable in showcasing popular and increasingly localized sports to these natural customers who still don't often think of us as their go-to destination to watch sports out of the house. We have seen a lot of success when we create activations around popular watch occasions, including double-digit sales growth during World Cup matches activated in our stores. We believe we have significant opportunity to keep growing this part of the business. Fourth, operations. As previously discussed, consistent execution is critical to driving sales. Brand fundamentals are only as strong as the experience delivered in each location. Amanda, our new Chief Operations Officer, is raising standards through field leadership, training, and accountability. We are enabling our team members to succeed and better leverage our support center to support the field. The guest experience cannot exceed the team member experience, and we are building the culture and tools to make the standard real. This is another area where we are extremely excited about new leadership and highly confident in the team's strategic direction. Delivering a high quality guest experience is critical in driving repeat visitation. And we believe that Amanda and her team are already making significant improvements on that front and will continue to do so. Finally, remodels. We have completed six Dave & Buster's remodels in FY26 in Cincinnati, Jacksonville, San Antonio, Nashville, San Diego, and Miami. The current wave is continuing to outperform non-remodel locations, and two additional remodels are scheduled for the second half of the year in Frisco, Texas, and Westbury, New York. This is the investment we want focused, repeatable, and tied to a clear return threshold. The new prototype is materially more cost effective than the legacy program, and early results show we can preserve the highest impact guests and productivity elements while eliminating ineffective spend. Remodels can augment our traffic billing initiatives by making the experience more modern, easier to navigate, and more productive. That said, we will pace the program to performance, construction readiness, and returns, all while ensuring we allocate our capital toward its best and highest overall returns. Capital discipline remains central. We have invested $127.6 million of net capex year-to-date through Q2 and remain on pace to spend under $200 million in net capex in FY26, as we indicated earlier this year. We are scrutinizing every project against minimum return thresholds and prioritizing remodels, new games, and technology that improve the guest experience and unit economics. Our capital framework is straightforward. Protect liquidity, fund the highest return projects, improve cash conversion, and reduce leverage overtime. So in summary, we are encouraged by this high quality leadership team we've built, the improving top line trend we are seeing, and the numerous initiatives we have in place. As mentioned earlier, F&B sales have now grown for five consecutive quarters, and special events have grown for seven consecutive quarters. We also demonstrated an improved ability to grow sales during key seasonal and cultural moments by capturing demand in ways we haven't been as successful in doing in the past. We are investing capital more intelligently and net capex continues to decrease and cash flow conversion is improving. While acknowledging room for further progress, Q2 was an improvement compared to Q1. Encouragingly, Q3 has further improved since July. We have a clear map, capture existing demand, deliver relevant entertainment, make value clear, and execute consistently in every store. Our focus is converting these leading indicators into durable traffic, stronger guest frequency, and improved profitability, which will generate significant shareholder value in the near term. And with that, let me turn the call back over to Cory to walk through our financial results in more detail.

Thank you, Darren. I will now review the quarter and the actions we are taking to improve cash generation and margins. Game store sales sequentially improved 250 basis points from Q1 in the second quarter, improving to down 2.9% company-wide. Food and beverage remained strong, special events grew, and higher attach rates to F&B from our gaming customers supported the overall occasion. Adjusted EBITDA declined by approximately 31 million on a year-over-year basis during the quarter. Driven by a decline in same-store sales and a number of non-normalized items, without which adjusted EBITDA would have declined by approximately $16 million, including 1. A $10 million non-cash deferral adjustment last year that did not exist in Q2 of this year. 2. An impact of $3 million from higher-than-normal pre-opening expenses due to timing of new stores. and three, approximately two million of non-normalized growth and insurance expenses, which we have subsequently addressed and reduced. The non-cash deferrals will be a lower but still relevant headwind in Q3 of this year, after which there will be no more material adjustments to lap. Q2 revenue was 544.1 million versus 557.4 million in the prior year. Adjusted EBITDA was $98.9 million, an 18.2% margin versus $129.7 million and a 23.3% margin in Q2 FY25. Under GAAP, we reported a net loss of $12.5 million, or $0.36 per diluted share, versus net income of $11.4 million, or $0.32 per diluted share, in the prior year. Adjusted net loss was $9.5 million or $0.27 per diluted share versus adjusted net income of $13.9 million or $0.40 per diluted share in the prior year. Cash generation improved. Adjusted free cash flow was positive $19.5 million through Q2 FY26 versus negative $36.5 million through Q2 in the prior year period. A year-over-year improvement of approximately $56 million. Cash from operations was $160.6 million year-to-date, up from $129.8 million in the prior year. Net capital expenditures were $127.6 million for the six months ended August 4, 2026, versus $155.4 million in the prior year period. Despite softer sales, this conversion reflects our focus on capital discipline and cash generation. We are taking an aggressive and proactive approach to costs. As mentioned in prior quarters, we have hired a dedicated resource to help lead a comprehensive cost-saving initiative across the entire enterprise. That effort has already identified 15 million of savings, which will be realized over the next 12 months. However, we are not stopping there. We believe there are significant additional costs that can be removed from the business without having any impact to the customer experience. More to come on this, but we are targeting at least doubling the $15 million in the coming months. On development, we opened six new domestic stores in Q2 for a total of seven in the first half, five Dave & Buster's and two main events. We operate 250 company-owned stores, 184 Dave & Buster's and 66 main events, plus six international franchise stores. We are tailoring the new store pipeline and pacing development carefully. We plan to open four new domestic stores in the balance of FY26 and five in FY27. We plan to have extremely high standards for additional new stores until comps turn decisively positive, allowing us to deploy capital to higher return uses in the core business and set ourselves up to generate consistent free cash flow for the foreseeable future. As Darin mentioned, we completed six Dave & Buster's remodels year-to-date and plan on two more during the remainder of FY26. We also expect at least one additional international franchise store opening this year in Mexico City. We will execute remodel development as long as it continues to produce attractive returns and monitor uses of capital alongside other accretive opportunities. Our path is straightforward. Traffic recovery, cost discipline, and capital discipline will translate into improving free cash flow and deleveraging. We are encouraged by the strength in food and beverage, special events, and our remodel program, and we remain focused on converting those successes into sustained traffic, margin, and cash flow improvement. And with that, operator, please open the line for questions.

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. We ask that you please limit yourself to one question and one follow-up. Thank you. Your first question comes from Andy Barish with Jefferies. Your line is open.

Hey, guys. Congrats to both on the new roles. Darren, it doesn't sound like there's any big strategic directional changes, but maybe kind of behind the scenes, some differences in your management style and your background that may, you know, may drive some, you know, some changes. Would you be willing to kind of just talk about that as we look out for the next couple of quarters, please?

Sure. Thanks, Andy. Yeah, first, let me say that the bones of our back-to-basics strategy are sound, so you're not going to hear a materially different shift from that. What you will see, however, is a deeper articulation of how this comes to life. You know, so for instance, you heard me talk about occasions, and this is a critical component of how we're going to approach our marketing, both and many more. As we noted on the call, when we do this right and have done this right historically, we generate significant growth. So we're sort of behind the scenes. We're really going to be focused on that and how to do that at scale. And so what you're likely going to see is less... Big, disconnected tentpole campaigns and a greater focus on tapping into these seasonal cultural moments, likely through middle to lower funnel focus. So more to come on that, but Jeremy, our new CMO, is really building this out. Again, from a relevancy perspective, you're going to see us leverage our brand in business. and many more. from a value and execution standpoint, you're going to, I think, see more urgency and focus on a singular value message to the guest. And Amanda, our new CEO, is going to be focused on really raising the standards out in the field. So I think with all that, we want to move smartly, but we're going to move quickly. I'd say promptness is key. is a capstone here in terms of making sure we make smart decisions, make sure that we can measure those, quick test and learn, and then pivot and execute well. And I can't reiterate enough that the management team that we have here is phenomenal, so high confidence. So hopefully that provides you a little context, Andy.

Yeah, very helpful. And then if I could just double click on value, you noted some changes on the rate card and game pricing. I'm assuming that is going to be lower to reinforce value. Can you give us kind of a sense as you move through when that's going to be taking place and maybe Maybe the impact on, you know, on basket or check at this point in terms of what you're expecting out of that?

Most of that has already occurred, Andy, with changes that we've made over the last few months. And so it really has been, and it's come in various iterations, but the key focus is is simplifying the rate card to the guest. Aldo and team have done a great job designing that so that it's more legible. It's clear to the guest in terms of what they're getting when they're buying power cards. That was just significant feedback that we've got through all of our guest research. It's confusing. I don't know what to get. So we've done a lot of work there trying to simplify that entire guest experience on the kiosk or with the server and then furthermore, we adjusted our game pricing to allow the guests to play longer and have a longer dwell time in the midway. And we've seen, you know, 16, 20% plus increase in gameplay and dwell time. And we've really been managing that through smartly managing the redemption payout, our pricing in the win store. So net-net, we've really been able to accomplish this while maintaining basket as well as maintaining our margins. So I think we've done a great job there. And we're measuring our value scores all the time. And where we lost value over the last couple of years by taking too much price, we've gained that back and are in a really great position relative to our peers.

Thank you very much.

Your next question comes from Jordan Bender with Citizens.

Your line is open.

Hey, everyone. Thanks for the question. Darin, you know, we kind of laid out a few kind of inputs on the call around, you know, some of the renovations, some of the new store openings into next year. I guess from a high level, like, you know, we know what your net CapEx number is going to be this year, but as we think about that kind of going into the future and, you know, maybe some of this CapEx starting to slow, like, just how do you kind of envision the company and just some of that spend, as we start to head into 27 and beyond?

Yeah, good question, Jordan. What I'd say is, as we've communicated, our new stores are going to be pulled back as well as some other aspects of the business. I think we can conservatively look at a net capex number Thank you for joining us. We'll be right back. But what we've indicated to date, we could easily be at $150 million or less in net capex next year.

Yeah, just to chime in there a little bit, Jordan, I think to Darin's point, you know, there's a really kind of a core CapEx need for the business. You know, other companies might call it maintenance. With us, it includes games, which we want to continue to refresh. But that's about 95 to 100 million a year of, you know, kind of recurring CapEx spend. And I think what the market has kind of gotten away from is realizing a lot of the spend we've done over the last couple of years has been Deem to be growth and we haven't seen as much as that growth and I think we are now returning to a plan that's very much investing in the core business by pulling back on some of the new stores and evaluating the remodel program. It allows our development team to really focus on the existing portfolio, make it as efficient as possible, making the investments in maintenance and other things to bolster that same store sales number. We feel really good about deploying capital in those areas while pulling back in aggregate on total CapEx dollars, which will benefit our cash flow profile significantly.

Great, thanks for that. And then maybe just a follow-up on some of the cadence here. So you said June down 5, July down 1.6. I think your last call you said you were running some promotions around World Cup. Can you just kind of talk about the impact that World Cup had on your performance in June, if it contributed to that performance, and then if we kind of exited that into the third quarter here?

Yeah, so our World Cup promotion, overall, we were really pleased with our performance. And I'd say we even gained and executed on that activation better as the World Cup progressed, but we did lean into sort of a full activation within our four walls with a watch experience themed food, some re-skinned games, soccer games, some prize integration, and then we had some ticketed events as well. And so I'll say even for the For the final, we saw nice double-digit growth. We're a perfect occasion for that type of experience. And there was a lot that we learned, in fact, with sort of tapping into that cultural moment. So overall, we were... Well placed to capture it. And overall, I think especially as we got into later into the World Cup, we felt like it was incremental for us overall.

Great. Thank you very much.

Your next question comes from Brian Vaccaro with Raymond James. Your line is open.

Hi, thanks and good evening. I have a question on the operations front, and you talked about your new COO that's coming in. I was wondering if you could provide some more color just on how some of your most important internal ops metrics have trended in recent years, and what do they show as the clearest opportunities that could improve the guest experience and hopefully comps?

Yeah. Hey, Brian. Yeah. We have speed of service is really number one. Speed of service, game uptime, and then a few other metrics. But those are a lot of the key areas that the team has been... and so on. We have focused a lot of time on addressing that, ensuring that we have people staffed at the right time, at the right position, staffed to deliver on that. If it's the hostess, server, it's back of house, food runner, bartender. They all play a critical role in that. So we have seen, continue to see an increase in those metrics. And so we're pleased with the direction it's going. But we know we've got a long way to go to really deliver on that experience. Again, we've got... When you have a frequency of less than two times a year, and it's typically for an occasion, people are going out celebrating date night, night with the family, etc. You can't screw that up for the guest. And that really impacts our ability to get them to come back another visit. So we've made good progress, but there's more to come. and Amanda and team are hyper focused on that.

All right. Thank you for that. I guess my follow up was just on store margins in the quarter. You know, the pressure seemed to step up quite a bit versus the first quarter, despite same store sales declines improving versus the last quarter. So could you just talk about the level of, you know, or any areas of reinvestment that we could be seeing in the P&L during the second quarter? Or is it more really a factor of the sales were down to a level on sales and obviously entertainment or the amusement comps are higher margins. So when they're down, you're hitting sort of a base level of cost line that we're seeing. But any, you know, I guess so color on the second quarter and any directional comments on the second half? & Buster's Entertainment, Inc.

helpful insights there. If you look at the comp being down the way it was at 2.9, in total revenue being down 2.4, that spread of about 50 basis points is one of the lowest on records, largely attributable to that 10 million. It's just, I think, really making it challenging to judge the margins for this quarter at the store level that you're talking about. For that reason, I really don't think there's Material difference in the investment requirements or anything else that we feel like we need to reinvest in the stores, whether it's labor or any other op-ex. I feel like certain line items of that P&L, as we talked about from a cost-saving perspective, we're addressing very recently and it's going to be impactful here for the coming quarters to grow those margins accordingly.

Your next question comes from Eric Wold with Texas Capital Securities. Your line is open.

Thanks. Good afternoon. I want to talk a little bit more on the game side. You talked about some of the changes in pricing. I think you said it was somewhere in the mid-teen to 20% kind of increase in dwell time at the midway. Is the right way to think about that as you're seeing people hanging out longer with the same amount of and many more.

Yeah, that's right. They're spending the same amount but getting greater gameplay and thus greater dwell time in the box. So your intuition is exactly correct. There's a couple of benefits. Number one, we're providing a better value proposition to the guests. and their game card is lasting longer and is just having a better experience. But secondly, the longer they're in the box, hopefully the greater opportunity we have to get them to attach or spend more on F&B. So as we work through our defining how we measure that better, I think we'll have a better sense for how to do that. There are some things that Amanda and team are going to do & Buster's So there's more to unlock there for us, but our primary objective was to provide better value for the entertainment experience. Second is how can we attach more food? So more to come there, but we're pleased with the value that we've delivered to the guests.

And I think also chiming in there, Eric, I think the importance of what we've achieved with re-solidifying our menu as a really compelling offering and, you know, even for some guests on a standalone basis, the more that that gets out there and the more we're able to kind of fine tune the execution on that menu, which is a much better product offering than I think we've arguably ever had at Dave & Buster's, you're going to get more and more, you know, Call it higher frequency food and beverage occasions than once or twice a year gaming occasion. And as we see that attach rate, which we've solidified primarily from the games to the food and beverage to date, eventually our aspirations for that to work the other way as well will get more Food & Beverage occasions that transfer into a gaming customer, and that comes at a really high margin. And that's the kind of cornerstone of this offering from an entertainment model perspective that we're really trying to drive. And we're going to see some really good fruit from that effort as we proceed and get that work in both directions.

That's helpful. And kind of a follow-up still on the games. So obviously, game comps are still running negative. Maybe talk about what you've seen with the introduction of the 10 new games so far this year. Are you seeing a meaningful delta in kind of gameplay that you can kind of call out between the new games, I call it the older games, and when you put in new games, are you seeing any kind of beneficial lift on the remainder of the midway, or is it really focused on the new games being put into place?

Yeah, so when we look at introducing new games onto the game room floor, there's a number of different metrics that we look at to try to assess how they're performing and what they've done. We look at gameplay, we look at penetration, we look at reach, and some other operational metrics to really understand You know, how these are performing. And so, overall, we were really pleased with the 10 new games that we've put in to date. They are all performing really well in a lot of those measures that I gave, which demonstrates that That they're being used and the guest likes them. And some of them are addressing other attributes that we're going after in terms of more social games that groups can play together, etc. Thank you for joining us. and just a new game standalone is not going to be enough to do that. But we're getting some good learnings on some other areas that we think could unlock some interesting opportunities for us with regard to... where we're going to lean into from a merchandise collectible standpoint. And that has really driven incremental spend and we think will ultimately drive incremental traffic into our boxes.

Yeah, and I think that's a huge point there, Eric, that Darin just made in terms of what we've seen from these new games. I think a light bulb went off for us as a management team in terms of the customer demand for merchandise, as well as whether you get it directly from the game and the Case of a crane machine, or if you're collecting tickets and going to our win store, we have a lot of work to do in a really exciting way to get our win store in a much more competitive position than it's been, as well as with those merchandiser games like the claw machines, getting better inventory in there in a collectible nature to attract fandoms and the IP we're already cultivating. We just feel like we have a really big moment here to bring it into a really natural ecosystem that we already have built. And that's going to reap some really big rewards in the future for us and something we're very focused on.

Perfect. Thank you both.

Your next question comes from Mike Hickey of Stonex. Your line is open.

Thank you. Hey, Darin. Thanks for taking our questions.

Just on, I guess, the macro, your model's been vulnerable to headwinds on the macro, and now we're dealing with diesel over $6 a gallon. Looks like interest rates are going higher. We're going to go into Q4. Politics are going to be in our face. I can't imagine that's great for sentiment. What are you seeing? Thank you for joining us.

As we've communicated in the past, certainly that lower-end consumer has been impacted more. That's not unique to us, but that is a pressure we're facing now. I guess what I'd say, and I think you all have noted that we didn't discuss the economy at all in our prepared remarks. And the reason is, we believe all these areas that we're focused on, there's latent and significant opportunity there, notwithstanding the environment. And the reason I say that is... Other brands who are in the same economic environment we're in have performed better. And we know, because we've seen it with our own data, when we execute right, we can really drive the business. So are we going to operate in a difficult consumer environment? Yes. Do we still believe that we can drive the business? The answer is also yes, because there's so much latent opportunity there. But that's one reason why, when I discussed having a singular, consistent, evergreen value message, it's really important. Because we've bounced around with so many different messages over the last... Thanks for watching! especially our eat and play combo and half rice games on Wednesday and Sunday. For instance, those two. We really just want to beat that drum, be evergreen, be consistent so that when that occasion consideration comes to mind, the guest immediately is like, oh yeah, Dave and Buster's has great value. We can get an entree for $4.99. And that does not become a veto. So I think we feel like Despite the difficult environment, we can still execute and grow sales in it.

Thanks, Darin.

Last question from us. About eight quarters into year-over-year declines in your entertainment business.

It looks like over the last four or five quarters, that weakness has actually accelerated regardless of

What promo, what new games you're putting into the system. So I guess at this point, I'm curious what evidence you have that sort of game-centric model that really defines your business over time isn't broken at this point.

Yeah, what I'd say is...

Number one, through our own extensive consumer research on what guests are looking for, we know it's a remarkably stable offering that still appeals. And you see other concepts out there with similar type offerings that are able to grow Where we haven't delivered great is that ongoing innovation and ongoing relevancy in our game room floor. So the modality of kind of how consumers are using out-of-home entertainment has changed some, but our product, we have very high confidence that That experience is still very sought after, but we have to innovate more and we have to be more relevant for the guest. And tying back to the comment I made with respect to Our brand power and our access to partnerships, IP, exclusive items, those are absolutely things that we should be leveraging that we haven't as much as we can. That's a key element along with our ongoing entertainment investment. to drive our traffic, which will ultimately drive the entertainment category. Thanks, Dan.

Your next question comes from Andrew Streslick with BMO. Your line is open.

Hey, good afternoon. Thanks for taking the questions. I wanted first to ask about demographics and how the demographics for your business are kind of evolving as you've seen, you know, the F&B growth and the amusement declines pretty persistently here, and maybe how that's framing the initiatives On the amusement side of the business in particular, to try to drive traffic, not so much from an income cohort perspective, but whether it's age or families or otherwise.

Hey, Andrew. One thing that we have noticed between – I'll just talk about maybe the – The Occasions With Guests and Occasions With Kids and Occasions Without Kids. That Occasions Without Kids is where we've seen more of a decline. And so when you think about how that's impacting our strategy, we are an adult-first occasion, but families are welcome and we cannot alienate families. And so What you're seeing is our focus on where do we drive that appeal for the adult occasion. and again, in a way to not alienate families. For instance, let's take Halloween. This is an occasion that is clearly viewed as a family occasion, but it's also a large, highly social event. Thank you for joining us. When we look at our game selection, it's very much of, does this hold appeal for young adults? F&B, how we're looking at different cultural experiences, is this something that adults are focused on? So while 50% of our occasions approximately include kids, half of those occasions are still driven by an adult finding appeal in the Dave & Buster's offering. So that's probably the biggest sort of learning and how we're sort of approaching it through the different elements of the business.

Okay, all right, that's helpful. And I wanted to also ask about the cost saves, the $15 million, and then, you know, potentially doubling that. And I guess the question is, you've, you know, taken a lot of, the company's taken a lot of costs out of the business over the last several years, obviously trying to restore the momentum and make investments as well. So, number one, kind of where is that $15 million coming from? and number two, what gives you the confidence that you can balance both those cost saves and the reinvestment to better position the business? Thanks.

Yeah, hey, Andrew, I'll take that one. So with regards to the 15 that we've identified and have already executed on, so it's just a matter of kind of rolling over the quarters to come and letting them season into our P&L. We've been very selective here. It's not, you know, Totally changing the business or anything else. This is all very strategic on the margin in terms of identifying areas that don't impact the guests, largely kind of G&A, overhead, specific examples. There's a lot in our IT area that we're very focused on, just a plethora of systems that maybe a project started and we didn't get to the other side of it and Thank you for joining us. Thank you so much for joining us. Thank you for joining us. and these are going to be really impactful. I think above and beyond the 15 that we've executed on, there's, as I mentioned in the prepared remarks, at least double that, that is a clear line of sight, just a matter of Your next question comes from Dennis Geiger with UBS. Your line is open.

Thanks, guys. I wanted to ask a little bit more about the improvement that you saw into the quarter-to-date period and what you attribute that to. I know you guys touched on a bunch of initiatives with the World Cup at that point behind you. Anything you would flag there beyond anything on comparisons driving that improvement in the one-year momentum? And then as you talked about sort of continued improvement looking ahead, any thoughts with where this heads over the coming quarters? Thank you.

Sure, look, we're pleased with our quarter-to-date performance, but we don't want to let these last five weeks be indicative of where we're trying to guide. I think we've sharpened our marketing approach. We've thankfully not had any unusual lapse overall that have impacted the business. But I think we're just feeling good about... Jeremy's been in seat for a couple months now, or three months or so. We're starting to work with our partners better. We're getting a better line of sight into what's working from a media standpoint. We've gotten better with discoverability and some search. Still a long way to go. But there's some elements that we're pleased with. But We can't comment about what this looks like over the next few weeks or the next few periods, but we're just going to be hyper-focused on just continuing to drive the business as we articulated.

Makes sense. Thanks, Darin. Just one more, just on remodels. I know you said outperforming the broader system. Any additional insights there as far as what kind of sales uplift you've been seeing? Anything on kind of where the latest return profile sits? Anything that you want to share or able to share on the latest remodel performance side of things?

Sure, yeah, we're continuing to see outperformance in our remodels, as we've noted. I think as the overall system has performed better over the last couple periods or so, that delta between the two has contracted some. So it's too early to get any other sort of read on that. Yeah. I think as we continue to better hone our overall marketing efficiency for our base stores, that's certainly going to inform us from a remodel perspective. We've obviously spent a lot of time over the last few calls talking about what's worked and hasn't worked with the remodels and sort of what we've done from a marketing perspective. But I think I'm convinced there's more that we can do really from a local activation standpoint to let our guests know even more what's happening. But I think we've seen enough to also know that this reduced capital model that has been built can still yield just as good of results as the more expensive remodel program previously. so more to come there but as we proceed with any capital allocation decisions we're going to prioritize where we're going to get the best return over the near term and so whether that's entertainment, remodels, balance sheet, whatever we'll continue to make those decisions through that lens Thanks Tarun

And your final question will come from Jeff Farmer with Gordon Haskett. Your line is open.

Thanks for taking the call pretty late. Just two quick modeling questions, hopefully quick. Q2 same-store sales down 2.9, average weekly sales down more than 6%. So assuming that spread is new store productivity, how should we be thinking about that spread as we're moving forward in modeling the business?

Hey, Jeff. I think in terms of looking at that and looking at the numbers, you're looking at as well, if you do it on a per operating week basis, obviously the comp is in line with & Buster's Entertainment, Inc. & Buster's & Buster's Thank you for joining us.

are a reasonable benchmark, or we should be thinking about something sort of higher or lower than that?

No, we absolutely expect it to improve from there. I think we'll see how these six that opened just this quarter, some in the later parts of the quarter. So as we get into the third quarter, seeing some good traction on those new stores and, of course, correcting where we need to in terms of doing an additional Marketing Blast, and with Jeremy on board, he's getting very focused on those. And then I think from a kind of transition into the comp next year, we don't expect this to be a perennial challenge for us. We feel like we're making the right decisions in terms of site selection. And with the 11 new stores we're opening this year, going down to five next year, we think we're making the right capital allocation decisions. And This is all going to be an improving scenario.

I appreciate it. Thank you.

This concludes the question and answer session. I'll turn the call to CEO Darin Harper for closing remarks.

Thank you, Operator, and thank you, everyone, for joining us this evening. Dave & Buster's and Main Event are iconic brands with exciting and significant opportunity ahead. Clearly, Q2 is not where we want it to be, but it clarified both the challenges and the opportunity. Thank you for joining us. I want to reiterate that our strategy is working. We went from minus 5.4 in Q1 to minus 2.9 in the second quarter with sequential improvement of both July and the third quarter to date. As a result of all the initiatives we have in process, we expect same-store sales, revenue, and EBITDA to grow in the near term. This growth will be accompanied by significant cash flow generation and materially increased equity value. This concludes today's conference call. Thank you