KNAPP HIGH-END Steakhouse
In March 2022, HIGH-END STEAKHOUSES increased 34.0% comp sales in 2022 VS. 2021.
The comp sales run rate for the first two weeks is 43.1%, and the comp sales run rate for the last two weeks of March 2022 is 26.2%. The run rate for the first two weeks of March 2022 for comparable restaurant "traffic" results is 32.0%, and the run rate for the last two weeks of March 2022 for comparable restaurant "traffic" is 17.1%.
HIGH-END STEAKHOUSES WEEKLY USA LEVEL DATA
COMP SALES COMP COVERS
Week ending MARCH 06 43.1% 32.6%
Week ending MARCH 13 43.1% 31.5%
Week ending MARCH 20 24.9% 17.1%
Week ending MARCH 27 27.5% 17.1%
MONTH OF MARCH 2022 34.0% 24.0%
PLAY acquires the main Event
PLAY is a SHORT
I don't know anything about the concept of Main Event. Still, the press release says, "Main Event is one of the fastest-growing family entertainment brands in the country, with 50 operating locations in 17 states. Main Event offers the most fun under one roof with state-of-the-art bowling, laser tag, hundreds of arcade games, and virtual reality, making it the perfect place for families to partake in shared and memorable experiences." PLAY is paying $835 million or 9x Main Event's 12-month Adjusted EBITDA as of December 31, 2021. PLAY is trading at 10x NTM EV/EBITDA, and Main Event CEO Chris Morris will be named CEO of the combined entity upon closing.
The press release says that Main Event will continue to operate as a distinct brand, suggesting that there will be few synergies. In the restaurant space, with transactions like this, the only real synergies come from merging back-office functions, which are a small part of the total operating costs. The press release also noted that "Main Event has expanded its center footprint by over 30% and more than doubled EBITDA." With PLAY operating 143 stores, management will make the case that there is the opportunity to double the Main Even Store Base, thus the line "the Company expects the acquisition to be accretive both from an earnings and growth perspective." With EBITDA more than doubling, it sounds like the timing for a sale is perfect.
Dave & Buster's expects to utilize cash on hand ($26 million) and borrow over $800 million from committed bank financing to fund the acquisition. Deutsche Bank Securities Inc., JPMorgan Chase Bank, N.A., and BMO Capital Markets Corp. are the joint lead arrangers and joint book-runners for the committed financing. PLAY current has $430 million in debt, and we estimate that EBITDA will decline from $351 in FY21 to $337 million in FY22. The best EBITDA year the company had before the pandemic was $308 million in FY2019. Is the Dave & Busters brand more profitable in a post-pandemic era? There have NEVER been successful "transformational" transactions in the restaurant space and now PLAY is leveraging up to buy an entertainment brand heading into a recession!
Sound like a better deal for the sellers.
