Dave Busters Entertainment Inc
For the period ended Nov 5, 2024. Filed Dec 10, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Nov 5, 2024 · Filed Dec 10, 2024
PLAY$7.81-4.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-08-06; filed 2024-09-10.
0001628280-24-040032
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-11-05; filed 2024-12-10.
0001628280-24-050625
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 167 previous paragraphs and 167 current paragraphs.
89 unchanged; 58 reworded; 19 added; 14 removed; 6 previous and 1 current paragraphs rearranged.
Tables are not compared: 15 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
•Third quarter revenue of $453.0 million decreased 3.0% from the third quarter of 2023.
Current report
Three Months Ended November 5, 2024 (the “third quarter of 2024”) Compared to the Three Months Ended October 29, 2023 (the “third quarter of 2023”)
Current report
Pre-opening costs of $5.2 million in the third quarter of 2024 increased to $4.0 million in the third quarter of 2023 due to the timing of costs in our pipeline of new stores for each period.
Current report
Loss on debt refinancing was $15.2 million in the third quarter of 2024 as a result of an amendment to our Credit Facility. See further discussion at Note 4 to the unaudited consolidated financial statements.
Current report
Benefit from income taxes
Current report
Pre-opening costs of $12.6 million in the 2024 period was comparable to $12.7 million in the 2023 period primarily due to the similar cadence of new store openings.
Current report
Loss on debt refinancing was $15.2 million in the 2024 period and $11.2 million in the 2023 period as a result of amendments to our Credit Facility in the respective periods. See further discussion at Note 4 to the unaudited consolidated financial statements.
Current report
Credit Facility
Current report
The Company has a senior secured credit agreement (the "Credit Facility") including a revolving credit facility (the "Revolving Credit Facility") and a term loan facility (together with the Revolving Credit Facility, the “Credit Facility”). On November 1, 2024, D&B Inc. entered into an amendment with its banking syndicate, which amended the Credit Facility (the "Fourth Amendment"). For discussion of prior amendments, see Note 7 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended February 4, 2024.
Current report
The Fourth Amendment, among other things:
Current report
•provides for a new tranche of term loans in an aggregate principal amount of $700.0 (the “Incremental Term B Loans”) with a maturity date of November 1, 2031, and
Current report
•increased the Revolving Credit Facility by $150.0 to a total $650.0 and extended the maturity to November 1, 2029.
Current report
The proceeds from the Incremental Term B Loans were primarily used to:
Current report
•redeem the $440.0 of outstanding senior secured notes (see 7.625% Senior Secured Notes below), and
Current report
•pay down $200.0 of the term loans outstanding under the Credit Facility immediately prior to the Fourth Amendment (the “Existing Term B Loans”).
Current report
On November 1, 2024, using the proceeds from the Fourth Amendment to the Credit Facility discussed above, the Company redeemed the remaining $440.0 outstanding principal amount of the Notes.
Current report
Term Loans — Immediately prior to the Fourth Amendment, the Company had $35.1 of unamortized debt issuance discounts and debt issuance costs. In connection with the Fourth Amendment described above, certain lenders exited the syndicate and were replaced by new syndicate members. The term loans, in the aggregate, were increased, a portion of the term loan facility was deemed extinguished, and a portion was determined to be modified. As a result, $4.1 of unamortized costs were written off and $8.2 of new fees were expensed on the modified portion resulting in a total charge of $12.3 included in loss on debt refinancing on the consolidated statements of comprehensive income. The remaining unamortized issuance discounts and new issuance discount and costs immediately subsequent to the refinancings were deferred and are amortized into interest expense, net over the remaining term of the Existing Term B Loans and the Incremental Term B Loans.
Current report
Revolving Credit Facility — Immediately prior to the Fourth Amendment, the Company had $3.8 of unamortized debt issuance costs. In connection with the Fourth Amendment described above, certain lenders exited the syndicate and were replaced by new syndicate members. The Revolving Credit Facility was increased in size, a portion of the Revolving Credit Facility was deemed extinguished, and a portion was determined to be modified. As a result, $0.6 of unamortized costs were written off and included in loss on debt refinancing on the consolidated statements of comprehensive income. The remaining unamortized issuance discounts and new issuance costs immediately subsequent to the refinancings were deferred and are amortized into interest expense, net over the remaining term of the Credit Facility.
Current report
The Notes — Immediately prior to paying down the Notes, the Company had $2.3 of unamortized debt issuance costs. The Notes were deemed fully extinguished, and all such costs were included in loss on debt refinancing on the consolidated statements of comprehensive income.
Removed paragraphs (14)
Previous report
•Second quarter revenue of $557.1 million increased 2.8% from the second quarter of 2023.
Previous report
Adjusted EBITDA and Adjusted EBITDA Margin
Previous report
Store Operating Income Before Depreciation and Amortization and Store Operating Income Before Depreciation and Amortization Margin
Previous report
Thirteen Weeks Ended August 6, 2024 (the “second quarter of 2024”) Compared to the Thirteen Weeks Ended July 30, 2023 (the “second quarter of 2023”)
Previous report
Adjusted EBITDA
Previous report
Capital Additions
Previous report
Pre-opening costs of $4.1 million in the second quarter of 2024 were comparable to $4.0 million in the second quarter of 2023 because we had a similar number of stores in the development pipeline.
Previous report
Adjusted EBITDA
Previous report
Capital Additions
Previous report
Pre-opening costs decreased to $7.4 million in the 2024 period compared to $8.7 million in the 2023 period primarily related to the cadence of new store openings during the 2024 period compared to the 2023 period.
Previous report
Provision for income taxes
Previous report
June 29, 2022 Credit Facility
Previous report
Over the next twelve months, we intend to extend the maturity of these obligations either by amending our Credit Facility or issuing new notes. We may redeem the outstanding Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any. If redeemed prior to November 1, 2024, we would be required to pay an additional premium of approximately 1.9% of the then outstanding balance.
Previous report
(5)Represents non-cash reductions to our deferred entertainment revenue liabilities. These costs, which are included in entertainment revenues on the consolidated comprehensive income statement, are considered an "other non-cash charge reducing net income" as defined in our Credit Facility.
Reworded paragraphs (58)
Previous wording
•Comparable store sales decreased 6.3% compared to the same calendar period in 2023. The same calendar period compares the 93 days of the second quarter from May 6, 2024 through August 6, 2024 to the 93 days of the prior year from May 8, 2023 through August 8, 2023. See further discussion of comparable store sales below at Revenues.
Current wording
•Comparable store sales decreased 7.7% compared to the same calendar period in 2023. The same calendar period compares the 91 days of the third quarter from August 7, 2024 through November 5, 2024 to the 91 days of the prior year from August 9, 2023 through November 7, 2023. See further discussion of comparable store sales below at Revenues.
Previous wording
•Net income totaled $40.3 million, or $0.99 per diluted share, compared with net income of $25.9 million, or $0.60 per diluted share in the second quarter of 2023.
Current wording
•Net loss totaled $32.7 million, or $0.84 per diluted share, compared with net loss of $5.2 million, or $0.12 per diluted share in the third quarter of 2023.
Previous wording
•Adjusted EBITDA of $151.6 million increased 8.1%, or $11.3 million, from the second quarter of 2023.
Current wording
•Adjusted EBITDA of $68.3 million decreased 16.3%, or $13.3 million, from the third quarter of 2023.
Previous wording
New store openings. Our ability to expand our business and reach new customers is influenced by the opening of additional stores in both new and existing markets. The success of our new stores is indicative of our brand appeal and the efficacy of our site selection and operating models. For the twenty-six weeks ended August 6, 2024, we opened six new stores (five Dave & Buster's branded stores and one Main Event branded store).
Current wording
New store openings —Our ability to expand our business and reach new customers is influenced by the opening of additional stores in both new and existing markets. The success of our new stores is indicative of our brand appeal and the efficacy of our site selection and operating models. For the nine months ended November 5, 2024, we opened nine new stores (seven Dave & Buster's branded stores and two Main Event branded stores).
Previous wording
In addition to the results provided in accordance with GAAP, we provide non-GAAP measures which present operating results on an adjusted basis. These are supplemental measures of performance that are not required by or presented in accordance with GAAP and include Adjusted EBITDA, Adjusted EBITDA Margin, Credit Adjusted EBITDA, Store Operating Income Before Depreciation and Amortization and Store Operating Income Before Depreciation and Amortization Margin (defined below). These non-GAAP measures do not represent and should not be considered as an alternative to net income or cash flows from operations, as determined in accordance with GAAP, and our calculations thereof may not be comparable to similarly titled measures reported by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
Current wording
In addition to the results provided in accordance with GAAP, we provide non-GAAP measures which present operating results on an adjusted basis. These are supplemental measures of performance that are not required by or presented in accordance with GAAP and include Adjusted EBITDA, Credit Adjusted EBITDA and Store Operating Income Before Depreciation and Amortization (defined below). These non-GAAP measures do not represent and should not be considered as an alternative to net income or cash flows from operations, as determined in accordance with GAAP, and our calculations thereof may not be comparable to similarly titled measures reported by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
Previous wording
Although we use these non-GAAP measures to assess the operating performance of our business, they have significant limitations as an analytical tool because they exclude certain material costs. For example, Adjusted EBITDA does not take into account a number of significant items, including our interest expense and depreciation and amortization expense. In addition, Adjusted EBITDA excludes certain other costs which may be important in analyzing our GAAP results. Because Adjusted EBITDA does not account for these expenses, its utility as a measure of our operating performance has material limitations. Our calculations of Adjusted EBITDA adjust for these amounts because they do not directly relate to the ongoing operations of the currently underlying business of our stores and therefore complicate comparison of the underlying business between periods. Nevertheless, because of the limitations described above, management does not view Adjusted EBITDA, Adjusted EBITDA Margin, Credit Adjusted EBITDA, Store Operating Income Before Depreciation and Amortization or Store Operating Income Before Depreciation and Amortization Margin in isolation and also uses other measures, such as revenues, gross margin, operating income and net income to measure operating performance.
Current wording
Although we use these non-GAAP measures to assess the operating performance of our business, they have significant limitations as an analytical tool because they exclude certain material costs. For example, Adjusted EBITDA does not take into account a number of significant items, including our interest expense and depreciation and amortization expense. In addition, Adjusted EBITDA excludes certain other costs which may be important in analyzing our GAAP results. Because Adjusted EBITDA does not account for these expenses, its utility as a measure of our operating performance has material limitations. Our calculations of Adjusted EBITDA adjust for these amounts because they do not directly relate to the ongoing operations of the currently underlying business of our stores and therefore complicate comparison of the underlying business between periods. Nevertheless, because of the limitations described above, management does not view Adjusted EBITDA, Credit Adjusted EBITDA or Store Operating Income Before Depreciation and Amortization in isolation and also uses other measures, such as revenues, gross margin, operating income and net income to measure operating performance.
Previous wording
We define “Adjusted EBITDA” as net income, plus interest expense, net, loss on debt refinancing, provision for (benefit from) income taxes, depreciation and amortization expense, (gain) loss on property and equipment transactions, impairment of long-lived assets, share-based compensation, currency transaction (gains) losses and other costs. “Adjusted EBITDA Margin” is defined as Adjusted EBITDA divided by total revenues.
Current wording
We define “Adjusted EBITDA” as net income, plus interest expense, net, loss on debt refinancing, provision for (benefit from) income taxes, depreciation and amortization expense, (gain) loss on property and equipment transactions, impairment of long-lived assets, share-based compensation, currency transaction (gains) losses and other costs.
Previous wording
We define “Credit Adjusted EBITDA” as Adjusted EBITDA plus certain other items as defined in our Credit Facility (see Liquidity and Capital Resources below for additional discussion and reconciliation). Other adjustments include (i) entertainment revenue deferrals, (ii) the cost of new projects, including store pre-opening costs, and (iii) other costs and adjustments as permitted by the debt agreements. We believe the presentation of Credit Adjusted EBITDA is appropriate as it provides additional information to investors about the calculation of, and compliance with, certain financial covenants in the Credit Facility.
Current wording
We define “Credit Adjusted EBITDA” as net income plus certain items as defined at Adjusted EBITDA above, as well as certain other adjustments as defined in our Credit Facility (see Liquidity and Capital Resources below for additional discussion and reconciliation). These other adjustments include (i) increases in entertainment revenue deferrals, (ii) the cost of new projects, including store pre-opening costs, and (iii) other costs and adjustments as permitted by the debt agreements. We believe the presentation of Credit Adjusted EBITDA is appropriate as it provides additional information to investors about the calculation of, and compliance with, certain financial covenants in the Credit Facility.
Previous wording
Depreciation and Amortization Margin” is defined as Store Operating Income Before Depreciation and Amortization divided by total revenues. Store Operating Income Before Depreciation and Amortization Margin allows us to evaluate operating performance of each store across stores of varying size and volume.
Current wording
We define “Store Operating Income Before Depreciation and Amortization” as operating income, plus depreciation and amortization expense, general and administrative expenses and pre-opening costs. Store Operating Income Before Depreciation and Amortization allows us to evaluate operating performance of each store across stores of varying size and volume.
Previous wording
On May 6, 2024, the first day of the second quarter of fiscal 2024, the Company changed its fiscal year to end on the Tuesday after the Monday closest to January 31 st. The change was made to improve labor and operational efficiencies by ending the Company's periods outside of the busier weekend timeframe. As a result of this change, the second quarter and fiscal year 2024 have two additional days added to its normal 13-week quarter and 52-week year. The third and fourth quarters of fiscal 2024 will end on November 5, 2024 and February 4, 2025, respectively.
Current wording
On May 6, 2024, the first day of the second quarter of fiscal 2024, the Company changed its fiscal year to end on the Tuesday after the Monday closest to January 31 st. The change was made to improve labor and operational efficiencies by ending the Company's periods outside of the busier weekend timeframe. As a result of this change, the second quarter and fiscal year 2024 have two additional days added to its normal 13-week quarter and 52-week year. The fourth quarter of fiscal 2024 will end on February 4, 2025.
Previous wording
(2)We reclassified$0.9 to cost of entertainment and$2.6 to cost of food and beverage, respectively, from other store operating expenses for the second quarter of 2023 to be consistent with the presentation for thesecond quarter of 2024. We determined that reclassifying the expenses, which are primarily related to inventory items provided to customers during promotions and events, results in a clearer presentation of the cost of goods sold.
Current wording
(2)We reclassified $1.0 to cost of entertainment and $2.6 to cost of food and beverage, respectively, from other store operating expenses for the third quarter of 2023 to be consistent with the presentation for the third quarter of 2024. We determined that reclassifying the expenses, which are primarily related to inventory items provided to customers during promotions and events, results in a clearer presentation of the cost of goods sold.
Previous wording
The following table reconciles Net income to Adjusted EBITDA for the periods indicated:
Current wording
The following table reconciles Net loss to Adjusted EBITDA for the periods indicated:
Previous wording
(4)The amount for the second quarter of 2024 primarily consisted of $7.2 million of one-time, third-party consulting fees, $0.1 million of severance costs and a $3.1 million gain on property and equipment transactions. The amount for the second quarter of 2023 primarily consisted of losses on property and equipment transactions. The third-party consulting fees are not part of our ongoing operations and were incurred to execute two related, discrete, and project-based strategic initiatives aimed at transforming our marketing strategy and one discrete, project-based initiative to transform our supply chain operational efficiency. They are included in general and administrative expenses on the consolidated statement of comprehensive income. The transformative nature, narrow scope, and limited duration of these incremental consulting fees are not reflective of the ordinary course expenses incurred to operate our business.
Current wording
(4)The amount for the third quarter of 2024 primarily consisted of $1.3 million of one-time, third-party consulting fees, $0.3 million of severance costs and a $0.4 million gain on property and equipment transactions. The amount for the third quarter of 2023 primarily consisted of losses on property and equipment transactions. The third-party consulting fees are not part of our ongoing operations and were incurred to execute two related, discrete, and project-based strategic initiatives aimed at transforming our marketing strategy and one discrete, project-based initiative to transform our supply chain operational efficiency. They are included in general and administrative expenses on the consolidated statement of comprehensive income. The transformative nature, narrow scope, and limited duration of these incremental consulting fees are not reflective of the ordinary course expenses incurred to operate our business.
Previous wording
Total revenues for the second quarter of 2024 increased $15.0 million, or 2.8%, to $557.1 million compared to $542.1 million for the second quarter of 2023. Entertainment revenues for the second quarter of 2024 increased by $14.9 million, or 4.1%, to $375.7 million from $360.8 million in the second quarter of 2023. Food sales increased by $3.1 million, or 2.5%, to $128.2 million in the second quarter of 2024 from $125.1 million in the second quarter of 2023. Beverage sales decreased by $3.0 million, or 5.3%, to $53.2 million in the second quarter of 2024 from $56.2 million in the second quarter of 2023.
Current wording
Total revenues for the third quarter of 2024 decreased $13.9 million, or 3.0%, to $453.0 million compared to $466.9 million for the third quarter of 2023. Entertainment revenues for the third quarter of 2024 decreased by $7.4 million, or 2.5%, to $294.6 million from $302.0 million in the third quarter of 2023. Food sales decreased by $3.0 million, or 2.7%, to $106.6 million in the third quarter of 2024 from $109.6 million in the third quarter of 2023. Beverage sales decreased by $3.5 million, or 6.3%, to $51.8 million in the third quarter of 2024 from $55.3 million in the third quarter of 2023.
Previous wording
(2)Our noncomparable store count includes two stores that were closed during the second quarter of 2024.
Current wording
(1)Our noncomparable store count includes two stores that were closed during the second quarter of 2024.
Previous wording
The increase in revenue is primarily attributable to $26.9 million of incremental sales from new stores, an increase in other revenues and deferrals of $7.6 million and the impact of two additional days due to the shift in the period end from Sunday to Tuesday, partially offset by a $19.5 million decrease in comparable store sales. The decrease in comparable store revenues is due primarily to a reduction in demand relative to a more robust consumer environment in the prior year period.
Current wording
The decrease in revenue is primarily attributable to a $43.3 million decrease in comparable store sales, partially offset by $15.9 million of incremental sales from new stores, an increase in other noncomparable revenues of $0.7 million, and $12.8 million in changes in entertainment revenue deferrals. The decrease in comparable store revenues is due primarily to a reduction in demand relative to a more robust consumer environment in the prior year period. The changes in entertainment revenue deferrals reflect breakage on unredeemed game play credits and tickets corresponding to guest redemption patterns over time. See Revenue Recognition at Note 1 to the unaudited consolidated financial statements for discussion of revenue recognition associated with play credits and tickets.
Previous wording
The $19.5 million, or 3.9%, comparable store revenue decrease presented in the table above is on a fiscal period basis. Due to the 53rd week in fiscal 2023, the second quarter of 2024 ended approximately one week later than the second quarter of 2023. Additionally, the second quarter of 2024 includes two additional days of revenue due to the adjusted calendar discussed in the footnote to the table above. Comparable store revenues based on the same calendar period adjusts for these impacts and compares the 93 day period from May 6, 2024 through August 6, 2024 to the 93 day period from May 8, 2023 through August 8, 2023. Comparable store revenues based on the same calendar period decreased 6.3%.
Current wording
The $43.3 million, or 10.2%, comparable store revenue decrease presented in the table above is on a fiscal period basis. Due to the 53rd week in fiscal 2023, the third quarter of 2024 ended one week later than the third quarter of 2023. Comparable store revenues based on the same calendar period adjusts for these impacts and compares the 91-day period from August 7, 2024 through November 5, 2024 to the 91-day period from August 9, 2023 through November 7, 2023. Comparable store revenues based on the same calendar period decreased 7.7%.
Previous wording
The total cost of products was $81.8 million for the second quarter of 2024 compared to $87.1 million for the second quarter of 2023. The total cost of products as a percentage of total revenues decreased to 14.7% for the second quarter of 2024 compared to 16.1% for the second quarter of 2023.
Current wording
The total cost of products was $67.8 million for the third quarter of 2024 compared to $76.4 million for the third quarter of 2023. The total cost of products as a percentage of total revenues decreased to 15.0% for the third quarter of 2024 compared to 16.4% for the third quarter of 2023.
Previous wording
Cost of entertainment was $32.9 million in the second quarter of 2024 compared to $35.3 million in the second quarter of 2023. The cost of entertainment, as a percentage of entertainment revenues, decreased to 8.8% for the second quarter of 2024 from 9.8% in the second quarter of 2023. The decrease was primarily attributable to price increases.
Current wording
Cost of entertainment was $25.1 million in the third quarter of 2024 compared to $30.5 million in the third quarter of 2023. The cost of entertainment, as a percentage of entertainment revenues, decreased to 8.5% for the third quarter of 2024 from 10.1% in the third quarter of 2023. The decrease was primarily attributable to price increases.
Previous wording
Cost of food and beverage products was $48.9 million for the second quarter of 2024 compared to $51.8 million for the second quarter of 2023. Cost of food and beverage products, as a percentage of food and beverage revenues, decreased to 27.0% for the second quarter of 2024 from 28.6% for the second quarter of 2023. The decrease was primarily attributable to food and beverage menu price increases, continued supply chain and ingredient optimization, and the mix of products sold with our new menu.
Current wording
Cost of food and beverage products was $42.7 million for the third quarter of 2024 compared to $45.9 million for the third quarter of 2023. Cost of food and beverage products, as a percentage of food and beverage revenues, decreased to 27.0% for the third quarter of 2024 from 27.8% for the third quarter of 2023. The decrease was primarily attributable to food and beverage menu price increases, continued supply chain and ingredient optimization, and the mix of products sold with our new menu.
Previous wording
Total operating payroll and benefits was $131.2 million in the second quarter of 2024 compared to $127.0 million in the second quarter of 2023. The total cost of operating payroll and benefits as a percentage of total revenues was 23.6% in the second quarter of 2024 compared to 23.4% in the second quarter of 2023. This increase is primarily due to employee retention tax credits recognized in the prior year, partially offset by labor management efficiencies.
Current wording
Total operating payroll and benefits was $120.9 million in the third quarter of 2024 compared to $119.9 million in the third quarter of 2023. The total cost of operating payroll and benefits as a percentage of total revenues was 26.7% in the third quarter of 2024 compared to 25.7% in the third quarter of 2023. This increase is primarily due to additional stores in the current year and employee retention tax credits recognized in the prior year, partially offset by labor management efficiencies.
Previous wording
Other store operating expenses was $167.6 million in the second quarter of 2024 compared to $165.6 million in the second quarter of 2023. The increase is primarily due to higher occupancy costs for new stores and repairs & maintenance costs, partially offset by gains from the disposal of assets and lease terminations. Other store operating expense as a percentage of total revenues decreased to 30.1% in the second quarter of 2024 compared to 30.5% in the second quarter of 2023. This decrease in expense as a percentage of total revenues was due primarily to the gains on property and equipment transactions.
Current wording
Other store operating expenses was $171.7 million in the third quarter of 2024 compared to $167.7 million in the third quarter of 2023. Other store operating expense as a percentage of total revenues increased to 37.9% in the third quarter of 2024 compared to 35.9% in the third quarter of 2023. The increase is primarily due to higher occupancy costs for new stores and repairs & maintenance costs.
Previous wording
General and administrative expenses decreased to $30.4 million in the second quarter of 2024 compared to $32.2 million in the second quarter of 2023. The decrease in general and administrative expenses was driven primarily by lower share-based and incentive compensation in the current year, partially offset by increased consulting and other costs related to discrete, one-time initiatives. General and administrative expenses as a percentage of total revenues decreased to 5.5% in the second quarter of 2024 compared to 5.9% in the second quarter of 2023 for the same reasons.
Current wording
General and administrative expenses decreased to $27.2 million in the third quarter of 2024 compared to $28.4 million in the third quarter of 2023. The decrease in general and administrative expenses was driven primarily by lower share-based and incentive compensation in the current year, partially offset by increased consulting and other costs related to discrete, one-time initiatives. General and administrative expenses as a percentage of total revenues decreased to 6.0% in the third quarter of 2024 compared to 6.1% in the third quarter of 2023 for the same reasons.
Previous wording
Depreciation and amortization expense increased to $57.5 million in the second quarter of 2024 compared to $49.1 million in the second quarter of 2023, primarily due to new store openings.
Current wording
Depreciation and amortization expense increased to $53.9 million in the third quarter of 2024 compared to $51.9 million in the third quarter of 2023, primarily due to new store openings and store remodels.
Previous wording
Interest expense, net increased to $33.9 million in the second quarter of 2024 compared to $32.9 million in the second quarter of 2023 due primarily to incremental interest expense associated with sale-leaseback transactions, partially offset by a decrease in interest rates on our Credit Facility. See further discussion of the Company's debt activity and failed sale-leaseback transaction at Note 4 and Note 3, respectively, to the consolidated financial statements.
Current wording
Interest expense, net increased to $32.9 million in the third quarter of 2024 compared to $28.9 million in the third quarter of 2023 due primarily to a decrease in interest income and incremental interest expense associated with sale-leaseback transactions and borrowings outstanding under our Credit Agreement, partially offset by a decrease in interest rates on our Credit Facility. See further discussion of the Company's debt activity and failed sale-leaseback transaction at Note 4 and Note 3, respectively, to the unaudited consolidated financial statements.
Previous wording
The effective tax rate for the second quarter of 2024 was 20.4%, compared to 21.5% for the second quarter of 2023. The current year tax provision includes higher excess tax benefits associated with share-based compensation and lower permanent differences compared to the prior year.
Current wording
The effective tax rate for the third quarter of 2024 was 21.8%, compared to 49.5% for the third quarter of 2023. The third quarter of 2024 year tax provision included lower excess tax benefits associated with share-based compensation and higher permanent differences compared to the third quarter of 2023.
Previous wording
Twenty-Six Weeks Ended August 6, 2024 (the “2024 period”) Compared to the Twenty-Six Weeks Ended July 30, 2023 (the “2023 period”)
Current wording
Nine Months Ended November 5, 2024 (the “2024 period”) Compared to the Nine Months Ended October 29, 2023 (the “2023 period”)
Previous wording
(2)We reclassified $1.8 to cost of entertainment and $5.7 to cost of food and beverage, respectively, from other store operating expenses for the 2023 period to be consistent with the presentation for the 2024 period. We determined that reclassifying the expenses, which are primarily related to inventory items provided to customers during promotions and events, results in a clearer presentation of the cost of goods sold.
Current wording
(2)We reclassified $2.8 to cost of entertainment and $8.3 to cost of food and beverage, respectively, from other store operating expenses for the 2023 period to be consistent with the presentation for the 2024 period. We determined that reclassifying the expenses, which are primarily related to inventory items provided to customers during promotions and events, results in a clearer presentation of the cost of goods sold.
Previous wording
(4)The amount for the 2024 period primarily consisted of $9.0 million of one-time, third-party consulting fees, $0.9 million of severance costs and a $3.4 million gain on property and equipment transactions. The amount for the 2023 period primarily consisted of a $1.7 million impairment charge related to assets removed from service and a $0.7 million loss on property and equipment transactions. The third-party consulting fees are not part of our ongoing operations and were incurred to execute two related, discrete, and project-based strategic initiatives aimed at transforming our marketing strategy, and one discrete, project-based initiative to transform our supply chain operational efficiency. They are included in general and administrative expenses on the consolidated statement of comprehensive income. The transformative nature, narrow scope, and limited duration of these incremental consulting fees are not reflective of the ordinary course expenses incurred to operate our business.
Current wording
(4)The amount for the 2024 period primarily consisted of $10.3 million of one-time, third-party consulting fees, $1.2 million of severance costs and a $3.0 million gain on property and equipment transactions. The amount for the 2023 period primarily consisted of$2.0 million of one-time, third-party consulting fees, a $1.7 million impairment charge related to assets removed from service and a $1.6 million loss on property and equipment transactions. The third-party consulting fees are not part of our ongoing operations and were incurred to execute two related, discrete, and project-based strategic initiatives aimed at transforming our marketing strategy, and one discrete, project-based initiative to transform our supply chain operational efficiency. They are included in general and administrative expenses on the consolidated statement of comprehensive income. The transformative nature, narrow scope, and limited duration of these incremental consulting fees are not reflective of the ordinary course expenses incurred to operate our business.
Previous wording
Total revenues for the 2024 period increased $5.8 million, or 0.5%, to $1,145.2 million compared to $1,139.4 million for the 2023 period. Entertainment revenues for the 2024 period increased by $7.5 million, or 1.0%, to 761.4 from $753.9 million in the 2023 period. Food sales increased by $2.6 million, or 1.0%, to $263.8 million in the 2024 period from $261.2 million in the 2023 period. Beverage sales decreased by $4.3 million, or 3.5%, to $120.0 million in the 2024 period from $124.3 million in the 2023 period.
Current wording
Total revenues for the 2024 period decreased $8.1 million, or 0.5%, to $1,598.2 million compared to $1,606.3 million for the 2023 period. Entertainment revenues for the 2024 period increased by $0.1 million to 1,056.0 from $1,055.9 million in the 2023 period. Food sales decreased by $0.4 million, or 0.1%, to $370.4 million in the 2024 period from $370.8 million in the 2023 period. Beverage sales decreased by $7.8 million, or 4.3%, to $171.8 million in the 2024 period from $179.6 million in the 2023 period.
Previous wording
(1)During the 2024 period we adjusted our period close from Sunday to Tuesday of each week (see further discussion at Note 1). This adjustment had the effect of adding 56 store operating weeks for our comparable stores and seven weeks for our noncomparable stores for the 2024 period.
Current wording
(1)During the 2024 period we adjusted our period close from Sunday to Tuesday of each week (see further discussion at Note 1). This adjustment had the effect of adding 56 store operating weeks for our comparable stores and nine weeks for our noncomparable stores for the 2024 period.
Previous wording
The increase in revenue is primarily attributable to $55.8 million of incremental sales from new stores and an increase of $7.8 million in other revenues and deferrals, partially offset by a $57.8 million decrease in comparable store sales. The decrease in comparable store revenues is due primarily to a reduction in demand relative to a more robust consumer environment in the prior year period.
Current wording
The decrease in revenue is primarily attributable to a $101.1 million decrease in comparable store sales and a decrease of $2.7 million in other noncomparable revenues, partially offset by $71.7 million of incremental sales from new stores and $24.0 million in changes in deferred entertainment revenue. The decrease in comparable store revenues is due primarily to a reduction in demand relative to a more robust consumer environment in the prior year period. The changes in entertainment revenue deferrals reflect breakage on unredeemed game play credits and tickets corresponding to guest redemption patterns over time. See Revenue Recognition at Note 1 to the unaudited consolidated financial statements for discussion of revenue recognition associated with play credits and tickets
Previous wording
The $57.8 million, or 5.4%, comparable store revenue decrease presented in the table above is on a fiscal period basis. Due to the 53rd week in fiscal 2023, the 2024 period ended approximately one week later than the 2023 period. Additionally, the 2024 period includes two additional days of revenue due to the adjusted calendar discussed in the footnote to the table above. Comparable store revenues based on the same calendar period adjusts for this shift in weeks and compares the period from February 5, 2024 through August 6, 2024 to the period from February 6, 2023 through August 8, 2023. Comparable store revenues based on the same calendar period decreased 6.0%.
Current wording
The $101.1 million, or 6.8%, comparable store revenue decrease presented in the table above is on a fiscal period basis. Due to the 53rd week in fiscal 2023, the 2024 period ended approximately one week later than the 2023 period. Additionally, the 2024 period includes two additional days of revenue due to the adjusted calendar discussed in the footnote to the table above. Comparable store revenues based on the same calendar period adjusts for this shift in weeks and compares the period from February 5, 2024 through November 5, 2024 to the period from February 6, 2023 through November 7, 2023. Comparable store revenues based on the same calendar period decreased 6.4%.
Previous wording
The total cost of products was $169.1 million for the 2024 period and $181.4 million for the 2023 period. The total cost of products as a percentage of total revenues decreased to 14.8% for the 2024 period compared to 15.9% for the 2023 period.
Current wording
The total cost of products was $236.9 million for the 2024 period and $257.8 million for the 2023 period. The total cost of products as a percentage of total revenues decreased to 14.8% for the 2024 period compared to 16.0% for the 2023 period.
Previous wording
Cost of entertainment decreased to $66.1 million in the 2024 period compared to $70.5 million in the 2023 period. The cost of entertainment, as a percentage of entertainment revenues, decreased to 8.7% for the 2024 period from 9.4% in the 2023 period. The decrease was primarily attributable to price increases.
Current wording
Cost of entertainment decreased to $91.2 million in the 2024 period compared to $101.0 million in the 2023 period. The cost of entertainment, as a percentage of entertainment revenues, decreased to 8.6% for the 2024 period from 9.6% in the 2023 period. The decrease was primarily attributable to price increases.
Previous wording
Cost of food and beverage products decreased to $103.0 million for the 2024 period compared to $110.9 million for the 2023 period. Cost of food and beverage products, as a percentage of food and beverage revenues, decreased to 26.8% for the 2024 period from 28.8% for the 2023 period. The decrease was primarily attributable to food and beverage menu price increases, continued supply chain and ingredient optimization, and the mix of products sold with our new menu, partially offset by promotional pricing to drive traffic and loyalty engagement.
Current wording
Cost of food and beverage products decreased to $145.7 million for the 2024 period compared to $156.8 million for the 2023 period. Cost of food and beverage products, as a percentage of food and beverage revenues, decreased to 26.9% for the 2024 period from 28.5% for the 2023 period. The decrease was primarily attributable to food and beverage menu price increases, continued supply chain and ingredient optimization, and the mix of products sold with our new menu, partially offset by promotional pricing to drive traffic and loyalty engagement.
Previous wording
Total operating payroll and benefits increased to $272.8 million in the 2024 period compared to $257.6 million in the 2023 period. The total cost of operating payroll and benefits as a percentage of total revenues was 23.8% in the 2024 period compared to 22.6% in the 2023 period. This increase is primarily due to additional stores in the current year and employee retention tax credits recognized in the prior year, partially offset by labor management efficiencies.
Current wording
Total operating payroll and benefits increased to $393.7 million in the 2024 period compared to $377.5 million in the 2023 period. The total cost of operating payroll and benefits as a percentage of total revenues was 24.6% in the 2024 period compared to 23.5% in the 2023 period. This increase is primarily due to additional stores in the current year and $9.6 million in employee retention tax credits recognized in the prior year, partially offset by labor management efficiencies.
Previous wording
Other store operating expenses increased to $343.7 million in the 2024 period compared to $331.6 million in the 2023 period. The increase is primarily due to higher occupancy costs related to new store openings, marketing costs primarily from the first quarter of the year, maintenance costs, utilities and supplies, partially offset by gains on asset disposals and lease terminations and favorable self-insurance experience rates. Other store operating expense as a percentage of total revenues increased to 30.0% in the 2024 period compared to 29.1% in the 2023 period. This increase as a percentage of total revenues was primarily due to marketing costs, repairs and maintenance costs, utilities and supplies, partially offset by gains on asset sales and lease terminations and favorable self-insurance experience rates.
Current wording
Other store operating expenses increased to $515.4 million in the 2024 period compared to $499.3 million in the 2023 period. The increase is primarily due to higher occupancy and utilities costs related to new store openings, marketing costs, and IT costs related to newly implemented store and enterprise technology systems, partially offset by gains on asset disposals and lease terminations and favorable self-insurance experience rates. Other store operating expense as a percentage of total revenues increased to 32.2% in the 2024 period compared to 31.1% in the 2023 period. This increase as a percentage of total revenues was due primarily to the reasons above.
Previous wording
General and administrative expenses decreased to $61.9 million in the 2024 period compared to $63.6 million in the 2023 period. The decrease in general and administrative expenses was driven primarily by lower share-based and incentive compensation in the current year, partially offset by increased consulting and other costs related to discrete, one-time initiatives. General and administrative expenses as a percentage of total revenues decreased to 5.4% in the 2024 period compared to 5.6% in the 2023 period due primarily to the reasons noted above.
Current wording
General and administrative expenses decreased to $89.1 million in the 2024 period compared to $92.0 million in the 2023 period. The decrease in general and administrative expenses was driven primarily by lower share-based and incentive compensation in the current year, partially offset by increased consulting and other costs related to discrete, one-time initiatives. General and administrative expenses as a percentage of total revenues decreased to 5.6% in the 2024 period compared to 5.7% in the 2023 period due primarily to the reasons noted above.
Previous wording
Depreciation and amortization expense increased to $120.3 million in the 2024 period compared to $98.0 million in the 2023 period, primarily due to new store openings and remodels and the acceleration of depreciation for two store closures.
Current wording
Depreciation and amortization expense increased to $174.2 million in the 2024 period compared to $149.9 million in the 2023 period, primarily due to new store openings and remodels and the acceleration of depreciation for two store closures.
Showing the first 40 of 58 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
In July 2024, the Company entered into a sale and master lease agreement (a "sale-leaseback") with an unrelated third party. Under this agreement, the Company sold two of its store properties, including land, buildings and certain improvements, at a sale price of $44.8 and then leased the assets back through the sale-leaseback transaction.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Previous report — wording carried elsewhere
We define “Store Operating Income Before Depreciation and Amortization” as operating income, plus depreciation and amortization expense, general and administrative expenses and pre-opening costs. “Store Operating Income Before
Previous report — wording carried elsewhere
Store Operating Income Before Depreciation and Amortization
Previous report — wording carried elsewhere
(1)During the second quarter of 2024 we adjusted our period close from Sunday to Tuesday of each week (see further discussion at Note 1). This adjustment had the effect of adding 56 store operating weeks for our comparable stores and seven weeks for our noncomparable stores for the second quarter of 2024.
Previous report — wording carried elsewhere
Store Operating Income Before Depreciation and Amortization
Previous report — wording carried elsewhere
The table below reflects accrual-based capital additions. Capital additions do not include any reductions for accrual-based leasehold improvement incentives (“Payments from landlords”).