Story Stocks^®

Dave & Buster's is under pressure following a disappointing Q2 (Jul) earnings report. Revenue was flat yr/yr at $557.4 mln, missing estimates, while comps fell -3.0%, a sequential improvement from -8.3% in Q1. EPS also came in below expectations, underscoring ongoing operational and strategic challenges.

New CEO Tarun Lal, who took over in July 2025, is wasting no time diagnosing PLAY's issues and plotting a turnaround. With 25+ years at Yum! Brands (YUM) — most recently as President of KFC US — Lal brings deep operational expertise. He views Dave & Buster's as a "category of one" with significant untapped potential, despite what he called a series of "fixable" missteps.

Where PLAY went wrong:

• Marketing misfire: The brand exited TV entirely and diluted its messaging with too many promotions.
• F&B strategy misstep: A shift toward appetizers and away from high-revenue entrees hurt margins.
• Operational misalignment: Fast changes disrupted communication and hurt training.
• Games underinvestment: New game introductions were cut by ~80%, hurting traffic and relevance.

Positive early changes under Lal:

• TV ads are back, with more focused promotions.
• Stronger food strategy led to higher attach rates via the Eat & Play Combo and improved entrée positioning.
• 10 new game titles introduced in 2025 to refresh the arcade experience.
• Training and corporate-field communication have been rebuilt.
• International expansion is underway, with a second franchise opened in India and five more openings planned.

CEO Outlook: Lal made bold comments on valuation, calling the stock "extremely undervalued" relative to peers. He cited PLAY's strong brand equity, cash flow generation, and long-term economics as key strengths. His own compensation package is tied directly to stock performance, aligning his incentives with shareholders.

Briefing.com Analyst Insight:

While Q2 results were weak, new leadership is actively addressing past missteps. If Lal can execute, PLAY may have a credible path to a turnaround — but it remains a show-me story for now.