Benchmark Upgrades Dave & Buster’s on Expectations for First Same-Store Sales Increase in Over Three Years

Benchmark has raised its outlook for Dave & Buster’s Entertainment, Inc. (NASDAQ: PLAY), predicting that the restaurant and arcade chain will post positive same-store sales in the current quarter for the first time in roughly 13 quarters. The investment firm on 16 January moved its rating to Buy from Hold and set a price objective of $30, citing operational improvements and a recent promotion aimed at boosting guest traffic.

Dave & Buster’s operates large-format venues that combine full-service dining, bars, arcade games and live sports viewing. Same-store sales—also known as comparable-store or “comp” sales—are a closely watched metric that measures revenue performance at locations open for at least a year. The company has faced declining comps for more than three years, reflecting shifting consumer spending, competitive pressure and uneven post-pandemic foot traffic. Benchmark now anticipates a turning point in the fiscal first quarter ending in early May, driven by initiatives designed to widen the customer base and lift check averages.

The firm’s improved stance is anchored in two primary factors. First, management has stepped up execution in food and beverage operations, an area that historically accounted for a significant share of guest complaints and operational bottlenecks. According to Benchmark’s research, menu streamlining and kitchen process upgrades have helped reduce ticket times and errors, leading to better customer satisfaction and higher in-store spending. Second, the company expanded its Half Price Games promotion on 4 January, offering game credits at a 50 percent discount during select hours. Benchmark expects the broader scope and timing of the offer to attract incremental visits, particularly from families and value-focused consumers seeking indoor entertainment during winter months.

Benchmark’s $30 price target implies notable upside from Dave & Buster’s recent trading range in the high-teens to low-twenties. The firm also pointed to cost discipline and a moderated capital-expenditure profile as additional supports for earnings growth. Management has concentrated expansion spending on high-return remodels rather than new builds, a shift intended to maximize free cash flow while still refreshing the guest experience at aging units.

While Benchmark sees an imminent inflection, other analysts remain cautious. On 5 January, Truist Securities reduced its price target on Dave & Buster’s to $18 from $23 and maintained a Hold rating. Analyst Jake Bartlett highlighted a mixed operating backdrop for restaurants in calendar 2026. Temporary tailwinds such as the distribution of tax refunds and favorable weather could boost discretionary spending early in the year, Bartlett wrote, but are likely to be offset by slowing job growth, fading consumer confidence and ongoing commodity inflation. He also noted that the casual-dining segment continues to face intense competition from quick-service chains and growing off-premise dining options.

Industry-wide data support that caution. The National Restaurant Association’s most recent survey showed that nearly half of operators expect weaker traffic in the first half of the year compared with the same period in 2025, citing higher menu prices and consumer budget constraints. Nevertheless, entertainment-oriented concepts such as Dave & Buster’s have historically enjoyed some insulation from pure-play dining trends, as the arcade and sports components add reasons for guests to visit beyond meals.

Dave & Buster’s has approximately 160 locations in North America and has articulated a long-term goal of reaching 250 domestic units. Since late 2024, management has emphasized enhanced loyalty initiatives and data-driven marketing to improve visit frequency. In addition, the company continues to explore international franchising opportunities, a strategy expected to require limited capital outlay while broadening brand visibility. These measures arrive amid efforts to fortify the balance sheet; the company has been deleveraging following acquisitions and pandemic-related borrowings. According to its latest quarterly filing with the U.S. Securities and Exchange Commission, net debt stood at just under $1.2 billion, and management has expressed a preference for using free cash flow to reduce leverage before resuming share repurchases.

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From an operational standpoint, management has also intensified focus on guest mix. The company is testing differentiated pricing tiers during peak and off-peak periods to smooth traffic patterns, a practice common in theme parks but less prevalent in casual dining. Early test results have suggested improved margins during high-demand evenings without materially affecting weekday visitation. Furthermore, strategic partnerships with video game publishers have aimed to introduce exclusive content in arcades, a differentiator that could limit direct competition from at-home gaming alternatives.

Benchmark’s view that comparable-store sales will turn positive this quarter contrasts with consensus expectations, which currently call for a low-single-digit decline. Should the company achieve the projected upswing, it would mark the first positive comp since fiscal 2022, when stimulus-related spending briefly boosted in-venue volumes. The prospect of such an inflection looms large for investors seeking evidence that Dave & Buster’s can regain consistent growth without relying solely on new unit openings.

In the near term, investors and analysts will be watching for January and February traffic trends, often indicative of first-quarter performance. Management is scheduled to release fiscal fourth-quarter results in late March, at which time updated guidance may clarify whether momentum from the Half Price Games promotion is sustainable. Until then, the divergence in analyst opinions underscores the uncertainty of the restaurant-entertainment landscape as consumer spending remains in flux.

Crédito da imagem: Benchmark Research