Dive Brief:

• Dave & Buster’s has sold $100 million of common stock to Jeffries, which will have the option to purchase up to $15 million more in stock for up to 30 days, according to a press release. 
• The company plans to use the proceeds of this offering to strengthen its balance sheet, which has been impacted by the COVID-19 outbreak, and could be used for general corporate purposes and/or repayment of outstanding debt. 
• This announcement comes three weeks after Dave & Buster's $75 million at-the-market equity offering through Jeffries. 

Dive Insight:

Eatertainment establishments like Dave & Busters are particularly hard hit by the pandemic because their business models rely on dine-in traffic and replicating the experience through off-premise is much more difficult. The potential investment could be a band-aid for the chain as it awaits the reopening of states and easing of dining restrictions. 

During the pandemic Dave & Busters had to temporarily close all of its 137 locations, furloughed 15,000 hourly employees, reduced store management and corporate staff by roughly 90%, reduced compensation for senior executives by half and suspended cash compensation to its board of directors. In April, it said it had nearly $650 million in debt and roughly 15 weeks of operating cash.

Over half of Dave & Buster’s revenue, or $791 million, came from "amusement" and other revenue compared to $563 million in food and beverage revenue in fiscal year 2019 ending Feb. 2, 2020. With no dine-in traffic, no amount of off-premise orders could recoup the lost amusement revenue. Punch Bowl Social is also devastated by the pandemic, facing foreclosure in March. Texas-based FreeRange Concepts, which owns The Rustic, Bowl & Barrel and Mutts Canine Cantina, reported a decline in sales of 99%.

For Dave & Buster’s, the chain was already struggling, reporting comp sales declines of 2.6% for fiscal year 2019 ending Feb. 2, 2020. In 2019, it revised 75% of its menu, adding premium and healthier items and started testing smaller 17,000-square-foot locations to try and improve its growth opportunities.

With states lifting dine-in restrictions, Dave & Buster’s will have to act fast to try and bring customers back, but how it implements and messages safety protocols could be critical in luring traffic back into its locations.