PLAY Earnings AMC
Dave & Buster's (PLAY) is scheduled to announce 4Q22 earnings results today, and like DRI, we don't expect a top-line disaster, but cost controls and inflation are front and center.
The new focus for PLAY is to move away from the core business - "Based on a thorough strategic review of the business, anchored in deep consumer research and spending considerable time learning directly from our operators, our core brand position for our Dave & Buster’s brand going forward will bring greater focus to executing adult occasions aged 21 to 39, who are visiting our locations to have a great time with their squad"
- The consensus EPS Estimate is $0.70 (+34.6% Y/Y); the consensus Revenue Estimate is $531.0M (+55% Y/Y)
- Comps 17.2% - Commentary exiting 3Q21 "Pro forma combined comparable store sales increased 3.1% compared to the same period in 2021 and 9.2% compared to the same period in 2019."
- Store-level operating income before D&A margin is 29.7% vs. 29.5% in 4Q21 and up from 23.9% sequentially. (Margins declined in both 2/3Q21)
- Operating margin 13.6% flat YoY - The pace of implementing these synergies accelerated in 3Q21
- The Placer traffic data showed traffic accelerating during the quarter, with November +2.6%, December +4.7%, and January +24.2%
- Since the end of the 4Q22, traffic has decelerated to -3.1% in February and estimates of -7.6% in March.
UBER Delisting Restaurants
Part of our SHORT case on DIN was the company growth algo depended on a strong Ghost kitchen strategy. UBER's new strategy flies in the face of DIN's strategy.
Uber Eats is delisting some of the delivery-only restaurants on its app to help weed out low-quality listings, as first reported by The Wall Street Journal. The company has confirmed that it’s introducing a new set of standards for virtual restaurants that should help cut down on listings that sometimes contain the same menu.
Consumers are ordering takeout and delivery less frequently
Since inflation started to climb in mid-2021, consumers have also reported less frequent off-premises orders. The share of U.S. adults ordering takeout at least once a week declined 9 points between May 2021 and February 2023. And this happened during a strong labor environment; what happens when job growth slows?
