Dive Brief:

• Dave & Buster's Entertainment has entered into an agreement to purchase Main Event from Ardent Leisure Group Limited and RedBird Capital Partners for $835 million, the company announced Wednesday. Dallas-based Main Event is a family entertainment concept with 50 locations in the U.S. that was founded in 1998.
• Main Event CEO Chris Morris will be named CEO of Dave & Buster's upon closing, which is expected to occur later this year. The all-cash transaction has already been unanimously approved by both boards of directors. 
• This acquisition reflects Dave & Buster's recovery since the start of the pandemic, which led to high double-digit drop offs in same-store sales at the chain and layoffs of over 1,000 employees.

Dive Insight:

After a quiet first quarter, Dave & Buster's kicked off Q2 2022 with the largest acquisition of the year so far. Main Event, which provides bowling, laser tag, arcade games and virtual reality experiences, is expected to mesh with Dave & Buster's business model, the company said. 

"From a strategic fit perspective, Main Event's business model, footprint and asset quality aligns well with Dave & Buster's," Kevin Sheehan, Dave & Buster's board chair and interim CEO, said in a press release. "Main Event targets a different demographic, families with younger children, while Dave & Buster's has primarily targeted young adults."

Although Dave & Buster's has experimented with smaller storefronts of 15,000 to 20,000 square feet in the past, it tends to fill spaces of 25,000 to 43,000 square feet. By contrast, Main Event targets real estate of 48,000 to 75,000 square feet, which could open additional opportunities to reach larger audiences. 

Sheehan added that Main Event's footprint also works well with Dave & Buster's current markets, and said both brands have growth opportunities. The company said team members at both companies will be able to have expanded career opportunities within and across both brands. 

The acquisition shows that Dave & Buster's hasn't given up on the eatertainment model, which suffered during the last two years following dining room restrictions. As diners have returned to restaurants in droves, Dave & Buster's same-store sales were down 10% for fiscal year 2021, which ended Jan. 30, 2022, compared to fiscal year 2019. Same-store sales in 2021 marked a significant rebound compared to the end of fiscal year 2020 as well, when the brand's sales were down 70%. During the company's Q4 2021, its same-store sales were up 7.6% for the first half of the quarter. But the rise of the omicron COVID-19 variant in mid-December drove the last half of the quarter's same-store sales down 12.2%, Sheehan said during the company's year-end earnings call. 

Main Event survived the pandemic by offering bowling valets (employees who help bowlers select and sanitize every ball that is tried), bowling ball stickers so guests knew which ball was theirs and color-coded laser tag to allow for social distancing. The chain also reduced the number of arcade games, among other measures, according to Forbes.

The acquisition will also help Dave & Buster's fill its open CEO position following CEO Brian Jenkins' retirement in September. Main Event CEO Chris Morris has over two decades of experience with multi-site businesses, including over six years in the family entertainment business, according to a press release. During his four years at Main Event, Morris helped expand its footprint by 30% and more than doubled EBIDTA. 

"Chris is a proven and successful transformational leader who is capable of taking the combined organization to the next level. It is clear Main Event has a strong culture that shares many values in common with our own," Sheehan said