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What changed in Dave & Buster's Entertainment, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Dave & Buster's Entertainment, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+325 added−416 removedSource: 10-K (2023-03-28) vs 10-K (2022-03-29)

Top changes in Dave & Buster's Entertainment, Inc.'s 2023 10-K

325 paragraphs added · 416 removed · 236 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

80 edited+22 added−45 removed37 unchanged
Biggest changeAmong other key accomplishments, we: • progressed on our goals to improve representation of women and team members who are black, indigenous or people of color (BIPOC) in our corporate and field leadership each by 33% before the end of FY2025; • completed system-wide diversity, equity, and inclusion training; • emphasized our commitment to diversity and belonging throughout the year in internal and external communications, including social media; • achieved scores for overall engagement, diversity, inclusion, and fair treatment on our semi-annual Gallup Engagement Survey that exceeded the average for our industry and for all U.S. employers; and • were named to Forbes’ 2021 lists of America’s Best Large Employer, Best Employers for Diversity, and Best Employers for Women.
Biggest changeAmong other key accomplishments, we: • progressed on our goals to improve representation of women and team members who are black, indigenous or people of color (BIPOC) in our corporate and field leadership before the end of FY 2025; • enhanced our commitment to women in leadership through greater participation in membership and activity with Women’s Foodservice Forum; • emphasized our commitment to diversity and belonging throughout the year in internal and external communications, including social media and the expansion of our Diversity Council membership and activity.
Suppliers The principal goods used by us are redemption game prizes and food and beverage products, which are available from a number of suppliers. We currently purchase a significant amount of our amusement merchandise through a direct import program, a program in which we purchase WIN! merchandise and certain furniture directly from offshore manufacturers.
Suppliers The principal goods used by us are redemption game prizes and food and beverage products, which are available from a number of suppliers. We currently purchase a significant amount of our amusement merchandise through a direct import program, a program in which we purchase amusement redemption merchandise and certain furniture directly from offshore manufacturers.
We also execute periodic promotions, create in-store point-of-purchase materials and execute local marketing plans to address specific objectives in individual stores or markets. We work with external advertising, digital, media and design agencies in the development and execution of these programs.
We execute periodic promotions, create in-store point-of-purchase materials and execute local marketing plans to address specific objectives in individual stores or markets. We work with external advertising, digital, media and design agencies in the development and execution of these programs.
The target size of our future large format stores is expected to be between 30,001 and 45,000 square feet, the target size of our future medium format stores is expected to be between 25,001 and 30,000 square feet while our small format stores are below 25,001 square feet.
The target size of our future large format stores is expected to be between 30,000 and 45,000 square feet, the target size of our future medium format stores is expected to be between 25,000 and 30,000 square feet while our small format stores are below 25,000 square feet.
Our amusement team uses a proprietary system that is supported by a mobile application that identifies amusement issues and needed repairs to help ensure our games are operational and meeting our ideal playing standard. Complementing this program is our routine preventative maintenance program, designed to prevent game failure and extend the 11 Table of Contents functionality of our games.
Our amusement team uses a proprietary system that is supported by a mobile application that identifies amusement issues and needed repairs to help ensure our games are operational and meeting our ideal playing standard. Complementing this program is our routine preventative maintenance program, designed to prevent game failure and extend the functionality of our games.
We deliver high-quality offerings, including a wide variety of starters, one-of-a-kind burgers and handhelds, choice-grade steaks, pasta, and low calorie, vegetarian, and gluten friendly options. We believe our broad menu offers something for everyone and is appropriate for many different occasions. To ensure that we stay on-trend, we update our menus regularly with new food items or limited time offers.
We deliver high-quality offerings, including a wide variety of starters, one-of-a-kind burgers and handhelds, choice-grade steaks, pasta, and low calorie, vegetarian, and gluten friendly options. We believe our broad menus offer something for everyone and are appropriate for many different occasions. To ensure that we stay on-trend, we update our menus regularly with new food items or limited time offers.
We are focused on maintaining a streamlined beverage menu for ease of execution, while using quality ingredients including fresh juices, purees and house-made mixers. Beverage service is typically available throughout the entire store, allowing for multiple point of sale opportunities.
We are focused on maintaining a streamlined beverage menu for ease of execution, while using quality ingredients including fresh juices, purees and house-made mixers. Beverage service is typically available throughout the entire store, 2 Table of Contents allowing for multiple point of sale opportunities.
We define and calculate 5 Table of Contents cash-on-cash returns for an individual store as (a) Store Operating Income Before Depreciation and Amortization, excluding pre-opening expenses, national marketing expense allocation, non-cash charges related to asset disposals, currency transactions and changes in non-cash deferred amusement revenue, divided by (b) our net development costs.
We define and calculate cash-on-cash returns for an individual store as (a) Store Operating Income Before Depreciation and Amortization, excluding pre-opening expenses, national marketing expense allocation, non-cash charges related to asset disposals, currency transactions and changes in non-cash deferred amusement revenue, divided by (b) our net development costs.
Our third quarter, which encompasses the back-to-school fall season, has historically had lower revenues as compared to other quarters. 12 Table of Contents During fiscal 2020 and the first half of fiscal 2021, results also fluctuated due to the timing and frequency of temporary closures and operating restrictions as a result of state and local guidelines imposed due to the COVID-19 pandemic.
Our third quarter, which encompasses the back-to-school fall season, has historically had lower revenues as compared to other quarters. During the first half of fiscal 2021, results also fluctuated due to the timing and frequency of temporary closures and operating restrictions as a result of state and local guidelines imposed due to the COVID-19 pandemic.
We strive to maintain quality and consistency in each of our stores through the careful training and supervision of our team members and the establishment of, and adherence to, high standards relating to personnel 9 Table of Contents performance, food and beverage preparation, safety protocols, game playability and maintenance of our stores.
We strive to maintain quality and consistency in each of our stores through the careful training and supervision of our team members and the establishment of, and adherence to, high standards relating to personnel performance, food and beverage preparation, safety protocols, game playability and maintenance of our stores.
We believe that we have created an attractive and comfortable environment that includes a differentiated and interactive viewing experience for customers, and our goal is to build awareness of D&B Sports as “the best place to watch sports” and the “only place to watch the games and play the games.” Competitive Positioning The out-of-home entertainment market is highly competitive.
We believe that we have created an energetic environment that includes a differentiated and interactive viewing experience for customers, and our goal is to build awareness of D&B as “the best place to watch sports” and the “only place to watch the games and play the games.” Competitive Positioning The out-of-home entertainment market is highly competitive.
During fiscal 2020, due to the temporary closures, capacity restrictions and other operating limitations imposed in response to the COVID-19 pandemic, we substantially curtailed national cable television 10 Table of Contents media, which continues to be the largest portion of our advertising and marketing spend.
During fiscal 2020 and fiscal 2021, due to the temporary closures, capacity restrictions and other operating limitations imposed in response to the COVID-19 pandemic, we substantially curtailed national cable television media, which continues to be the largest portion of our advertising and marketing spend.
We also intend to extend our programming capabilities by offering more curated content and creating a calendar of ongoing and one-time events leveraging our investments in the best and latest audio-visual technology. • Align team and integrated experience.
We also intend to extend our programming capabilities at Dave & Buster's stores by offering more curated content and creating a calendar of ongoing and one-time events leveraging our investments in the best and latest audio-visual technology. • Align team and integrated experience.
For 62 of our stores, we have an enhanced Watch experience with huge cutting-edge LED “Wow Walls”, that differentiates Dave & Buster’s by delivering an elevated viewing experience and providing a platform for broader programming and marketing opportunities.
Most of our Dave & Buster's stores have an enhanced viewing experience with huge cutting-edge LED “Wow Walls”, that differentiates Dave & Buster’s by delivering an elevated viewing experience and providing a platform for broader programming and marketing opportunities.
Some of these establishments may exist in multiple locations, and we may also face competition on a national basis in the future from other concepts that are similar to our concept. We also face competition from increasingly sophisticated home-based forms of entertainment, such as internet and video gaming and home movie streaming and delivery.
Some of these establishments may exist in multiple locations, and we may also face competition on a national basis in the future from other similar concepts. We also face competition from increasingly sophisticated home-based forms of entertainment, such as internet and video gaming and home movie streaming and delivery.
We believe that our management team’s prior experience, combined with its experience at Dave & Buster’s provides us with insights into our customer base and enables us to create the dynamic environment that is core to our brand.
We believe that our management team’s prior experience, combined with its experience at Dave & Buster’s and Main Event, provides us with insights into our customer base and enables us to create the dynamic environment that is core to our brands.
While our menu appeals to a broad spectrum of customers, we continue to evolve it to reflect the changing tastes of our customers, with options for full meals as well as grabbing an appetizer to share with friends.
While our menus appeal to a broad spectrum of customers, we continue to evolve it to reflect the changing tastes of our customers, with options for full meals as well as grabbing an appetizer to share with friends.
We will also refresh our commitment to serving customers through an improved hiring, training and service model, and our team will help create fun and bring our new strategies to life. • Drive customer engagement.
We 4 Table of Contents will also refresh our commitment to serving customers through an improved hiring, training and service model, and our team will help create fun and bring our new strategies to life. • Drive customer engagement.
During 2019, we invested in connectivity and data infrastructure to modernize and upgrade the capacity of our store systems, continued work on new, customer-facing digital experiences, such as the launch of our new mobile application that supports in-store and off premise amusement entertainment, and deployed hand-held point-of-sale devices to a limited group of stores.
We have invested in connectivity and data infrastructure to modernize and upgrade the capacity of our store systems, continued work on new, customer-facing digital experiences, such as the launch of our new mobile application that supports in-store and off-premise amusement entertainment, and deployed hand-held point-of-sale devices in our stores.
Our “D&B Sports” areas offer an immersive viewing environment that provides customers with large, high- definition televisions, to watch community-focused sports programming and enjoy our full bar and food menu.
Our "Sports Watching" areas offer an immersive viewing environment that provides customers with large, high-definition televisions, to watch community-focused sports programming and enjoy our full bar and food menu.
Longer term, the number of openings will depend on many factors, including our ability to locate appropriate sites, negotiate acceptable purchase or lease terms, generate sufficient operating cash flows or utilize available cash to finance construction of leasehold improvements and pre-opening costs, obtain necessary local governmental permits, and recruit and train management and hourly team members.
In fiscal 2023 and beyond, the number of openings will depend on many factors, including our ability to locate appropriate sites, negotiate acceptable purchase or lease terms, generate sufficient operating cash flows or utilize available cash to finance construction of leasehold improvements and pre-opening costs, obtain necessary local governmental permits, and recruit and train team members.
We consider our tradename and our logo to be important features of our operations and seek to actively monitor and protect our interest in this property in the various jurisdictions where we operate.
We consider our tradenames and our logos to be important features of our operations and seek to actively monitor and protect our interest in this property in the various jurisdictions where we operate.
Such reports may also be obtained on the SEC’s website at www.sec.gov. Information on our corporate governance principles and practices can also be found on our website. 13 Table of Contents
Such reports may also be obtained on the SEC’s website at www.sec.gov. Information on our corporate governance principles and practices can also be found on our website.
Our food revenues, which include non-alcoholic beverages, accounted for approximately 68% of our food and beverage revenues and approximately 22.7% of our total revenues during fiscal 2021. Drink Each of our locations also offers full bar service, including a variety of beers, hand-crafted cocktails, and premium spirits.
Our food revenues, which include non-alcoholic beverages, accounted for approximately 68% of our food and beverage revenues and approximately 23% of our total revenues during fiscal 2022. Each of our locations also offers full bar service, including a variety of beers, hand-crafted cocktails, and premium spirits.
We have recently invested in developing and implementing new technology platforms that will allow us to digitally engage with our customers and team members and strengthen our marketing and analytics capabilities in an increasingly connected society.
We also invest in developing and implementing new technology platforms that will allow us to digitally engage with our customers and team members and strengthen our marketing and analytics capabilities in an increasingly connected society.
We also receive and maintain certain personal information about our customers and team members. We have systems and processes in place that focus on the protection of our customers’ credit card information and other private information we are required to protect, such as our employees’ personal information.
We accept electronic payment cards from our customers for payment in our stores. We also receive and maintain certain personal information about our customers and team members. We have systems and processes in place that focus on the protection of our customers’ credit card information and other private information we are required to protect, such as our employees’ personal information.
The key elements that drive our total customer experience and help position us from a competitive standpoint include the following: Strong, distinctive brand with broad customer appeal . We believe that the multi-faceted customer experience of “Eat Drink Play and Watch” at Dave & Buster’s, supported by our extensive marketing reach has helped us create a widely recognized brand.
The key elements that drive our total customer experience and help position us from a competitive standpoint include the following: Strong, distinctive brands with broad customer appeal . We believe that the multi-faceted customer experience at our stores, supported by our extensive marketing reach has helped us create a widely recognized brand.
In addition, we believe the more contemporary look of our stores has been one of the key drivers in attracting new developers and building our new store pipeline. We currently operate stores varying in size from 16,000 to 70,000 square feet.
In addition, we believe the more contemporary look of our stores has been one of the key drivers in attracting new developers and building our new store pipeline. Dave & Buster's Stores - Our Dave & Buster's stores vary in size from approximately 16,000 to 70,000 square feet.
We believe that our Midway games are the core differentiating feature of the Dave & Buster’s brand and staying current with the latest offerings promotes trial and provides an exciting environment to enjoy games with friends and family, especially with the latest multiplayer games and challenges.
We believe that our games and amusement activities are the core differentiating feature of our brands and staying current with the latest offerings promotes trial and provides an exciting environment to enjoy with friends and family, especially with the latest multiplayer games and challenges.
Many of our non-redemption games, which include our virtual reality, video, and simulation offerings, can be played by multiple customers simultaneously and include some of the latest high-tech games that are commercially available. These games represented approximately 26% of our amusement and other revenues in fiscal 2021.
Many of our non-redemption games, which include our virtual reality, video, and simulation offerings, can be played by multiple customers simultaneously and include some of the latest high-tech games that are commercially available. Other amusements, including billiards and bowling, represented the remainder of our amusement and other revenues in fiscal 2022.
Each quarterly period has 13 weeks, except in a 53-week year when the fourth quarter has 14 weeks. Fiscal 2021, 2020, and 2019 each contained 52 weeks. We refer to our fiscal years as 2021, 2020, and 2019 throughout this report.
Each quarterly period has 13 weeks, except in a 53-week year when the fourth quarter has 14 weeks. Fiscal 2022, 2021, and 2020 each contained 52 weeks. We refer to our fiscal years ended January 29, 2023, January 30, 2022 and January 31, 2021 as "fiscal 2022", "fiscal 2021", and "fiscal 2020", respectively, throughout this report.
We believe our store model offering entertainment, food, and beverage provides certain benefits in comparison to traditional restaurant concepts, which is reflected in our historically higher revenue per store, higher comparable store operating income margins, and higher comparable Store Operating Income Before Depreciation and Amortization Margins (defined in Item 7.
We believe our store models offering entertainment, food, and beverages options provide certain benefits in comparison to traditional restaurant concepts, which are reflected in our historically higher revenue per store, higher comparable store operating income margins, and higher comparable Store Operating Income Before Depreciation and Amortization Margins (defined in Item 7.
We utilize a voluntary tool to help manage privacy risk by independently benchmarking our cyber security program to the NIST Cybersecurity Framework, using an independent third party, and we share the results of our annual audit with our Audit Committee. Food Preparation, Quality Control and Purchasing We strive to maintain high food quality standards.
We utilize a voluntary tool to help manage privacy risk by independently benchmarking our cyber security program to the National Institute of Standards and Technology ("NIST") Cybersecurity Framework, using an independent third party, and we share the results of our annual audit with our Audit Committee.
Other amusements, including billiards and bowling, represented the remainder of our amusement and other revenues in fiscal 2021. Watch Sports-viewing is another key component of the entertainment experience at Dave & Buster’s. All our stores have multiple large screen televisions and high-quality audio systems providing customers with a venue for watching live sports and other immersive programming.
Sports-viewing is another key component of the entertainment experience at Dave & Buster’s. All our stores have multiple large screen televisions and high-quality audio systems providing customers with a venue for watching live sports and other immersive programming.
Our Store Teams Our typical store team consists of a General Manager supported by an average of six to seven additional management positions per store. Management team members handle various departments within the store including responsibility for hourly team members. A typical store employs approximately 86 hourly team members, most of whom work part-time.
Our Store Teams Our typical store team consists of a General Manager supported by an average of six to seven additional management positions per store. Management team members handle various departments within the store including 6 Table of Contents responsibility for hourly team members.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures”). Our entertainment offerings have low variable costs, generating a gross margin of 90.1% for fiscal 2021. With approximately 66.5% of our revenues from entertainment, we have less exposure than traditional restaurant concepts to food costs, which represented approximately 7% of our total revenues in fiscal 2021.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures”). Our entertainment offerings have low variable costs, generating a gross margin of 91.0% for fiscal 2022. With 65.5% of our fiscal 2022 revenues from entertainment, we have less exposure than traditional restaurant concepts to food costs.
As of January 30, 2022, we operated 112 large format stores, 21 medium format stores and 11 small format stores. We believe that the smaller store format allows us to reduce capital investment risk per store. For the smaller format, we have reduced the back-of-house space and optimized the customer facing area dedicated to video and redemption games.
We believe that the smaller store format allows us to reduce capital investment risk per store. For the smaller format, we have reduced the back-of-house space and optimized the customer facing area dedicated to video and redemption games.
Our current strategy is built on the following key components: Drive our comparable store sales. We intend to differentiate our brand from other food and entertainment alternatives and drive our comparable sales, in a competitive landscape, through the following strategies: • Offer novel food & drink to bring people together.
We intend to differentiate our brands from other food and entertainment alternatives and drive growth in our comparable sales, in a competitive landscape, through the following strategies: • Offer novel food & drink to bring people together.
Racial minorities make up over 61% of our U.S. workforce, and we are proud of our diversity, which is summarized below: Male Female Total White 19.7 % 18.7 % 38.4 % Hispanic 15.8 % 13.3 % 29.1 % Black or African American 14.8 % 13.0 % 27.8 % Asian/American Indian/Pacific Islander 2.3 % 1.8 % 4.1 % Two or more races 0.4 % 0.2 % 0.6 % Total 53.0 % 47.0 % 100.0 % In fiscal 2021, we strengthened our commitment to diversity, equity, and inclusion.
Racial minorities make up approximately 65% of our U.S. workforce, and we are proud of our diversity, which is summarized below: Male Female Total White 16.8 % 18.6 % 35.4 % Hispanic 14.5 % 16.2 % 30.7 % Black or African American 12.8 % 14.1 % 26.9 % Asian/American Indian/Pacific Islander 1.7 % 2.2 % 3.9 % Two or more races 1.4 % 1.7 % 3.1 % Total 47.2 % 52.8 % 100.0 % In fiscal 2022, we strengthened our commitment to diversity, equity, and inclusion.
We are proud of our store leadership teams’ experience and carefully monitor store management team retention rates, which for us has consistently tracked in the top quartile of the upscale casual dining industry.
We are proud of our store leadership teams’ experience and carefully monitor store management team retention rates, which for us has consistently tracked in the top quartile of the upscale casual dining industry. Attracting Talent We seek to hire experienced leaders and team members and offer competitive wage and benefit programs.
We will not do business with organizations that employ or condone unfair labor practices anywhere in the world. We partner with suppliers who share our commitment to ethical business conduct, fair labor practices, proven environmental, health, and safety practices, and environmental sustainability. We also specifically condemn human trafficking and abuse of child labor.
We partner with suppliers who share our commitment to ethical business conduct, fair labor practices, proven environmental, health, and safety practices, and environmental sustainability. We also specifically condemn human trafficking and abuse of child labor.
Most of our games are activated by game play credits on cards or other RFID devices (collectively, “Power Cards”). A customer purchases a Power Card with game play credits or “chips” at an automated kiosk, through our mobile application, or from one of our team members.
Most of our games are activated by game play credits on cards or other RFID devices. A customer purchases a card with game play credits or “chips” at an automated kiosk, through our mobile application, or from one of our team members. Our amusement and other revenues accounted for approximately 65% of our total revenues during fiscal 2022.
Historically, our average one-year and five-year cash-on-cash returns were approximately 35% and 25%, respectively.
We expect our average one-year and five-year cash-on-cash returns to be approximately 35% and 25%, respectively.
We also volunteer our time and talents. In addition, we invest in helping our own team members during their times of greatest need. The D&B H.E.A.R.T. (Helping Employees at Rough Times) Fund is an independent non-profit established to create an employee assistance fund for the benefit of team members who suffer catastrophic events resulting in severe economic hardship.
The D&B H.E.A.R.T. (Helping Employees at Rough Times) Fund was an independent non-profit established to create an employee assistance fund for the benefit of team members who suffer catastrophic events resulting in severe economic hardship. The Main Event Family Fund was also an independent non-profit established employee assistance fund for the benefit of Main Event team members.
We also plan to improve efficiency by simplifying execution, allowing us to deliver dishes hotter and faster to drive an improved customer experience. For our beverage offering, we plan to update the offering based on customer research, and plan to streamline the selection to improve execution efficiency.
We also strive to improve efficiency by simplifying execution, allowing us to deliver dishes hotter and faster to drive an improved customer experience. We continually update our offerings based on customer research, and optimize our selections to improve execution efficiency.
Our team members share a deep commitment to four culture pillars that describe the relationships our team members have with our customers and each other. We are devoted to our “You Got It” service philosophy that calls us to provide exceptional service to our customers and to each other every day.
Our team members share a deep commitment to values that describe the relationships our team members have with our customers and each other. We are devoted to our service philosophy that calls us to provide exceptional service to our customers and to each other every day. Our attitude encourages intensity, hard work, and having fun.
These systems are designed to enable our games’ functionality, improve operating efficiencies, provide us with timely access to financial and marketing data and reduce store and corporate administrative time and expense. We believe our management information systems are sufficient to support our business plans. Information systems projects are prioritized based upon strategic, financial, regulatory and other business advantage criteria.
Information Technology and Cyber Security We utilize several proprietary and third-party management information systems. These systems are designed to enable our games’ functionality, improve operating efficiencies, provide us with timely access to financial and marketing data and reduce store and corporate administrative time and expense. We believe our management information systems are sufficient to support our business plans.
We aim to enhance our combination of food, beverage, and entertainment offerings through our service philosophy of providing a high quality and consistent customer experience through dedicated training and development of our team members and a corporate culture that encourages employee engagement.
We aim to enhance our food, beverage, and entertainment offerings through our service philosophy of providing a high quality and consistent customer experience through dedicated training and development of our team members and a corporate culture that encourages employee engagement. Strategy Our current strategy is built on the following key components: Drive growth in comparable store sales.
We believe that our high margin beverage offering is complementary to each of the Eat, Play and Watch aspects of our brand. Our alcoholic beverage revenues accounted for approximately 32% of our total food and beverage revenues and approximately 10.8% of our total revenues during fiscal 2021.
We believe that our high margin beverage offering is complementary to the other offerings at each of our stores. Our alcoholic beverage revenues accounted for approximately 32% of our total food and beverage revenues and approximately 11% of our total revenues during fiscal 2022.
We understand that supporting our communities includes being good environmental stewards and striving to conduct business in a sustainable and environmentally responsible manner. In addition, we strongly encourage team members to give back to the communities we serve. Although our Company invests time and resources in many charitable causes, we have two main causes we focus our efforts to support.
We understand that supporting our communities includes being good environmental stewards and striving to conduct business in a sustainable and environmentally responsible manner. 7 Table of Contents In addition, we strongly encourage team members to give back to the communities we serve.
We conduct regular evaluations with each manager to discuss prior performance and future performance goals. We hold an annual General Manager conference in which our General Managers share best practices and receive an update on our business strategies.
We conduct regular evaluations with each manager to discuss prior performance and future performance goals and continuously evaluate our staffing to proactively plan for growth. We hold an annual General Manager conference in which our General Managers share best practices and receive an operating plan they will execute to drive performance.
The Midway in each of our stores is an area where we 3 Table of Contents offer a wide array of amusement and entertainment options, some of which are exclusive to Dave & Buster’s on a permanent or temporary basis. Each of our stores typically has approximately 145 redemption and simulation games as well as our proprietary virtual reality platform.
The Midway in each of our stores is an area where we offer a wide array of amusement and entertainment options, some of which are exclusive to our Dave & Buster's and Main Event brands on a permanent or temporary basis.
Central to this effort is continued investment in our mobile application platform, which is used to enhance existing customer satisfaction and attract new customers by providing periodic exclusive offers and discounts and providing a convenient way to purchase Power Cards. During the fourth quarter of fiscal 2021, we launched an enhanced loyalty program.
Central to this effort is continued investment in our mobile application and web platforms, which are used to enhance existing customer satisfaction and attract new customers by providing periodic exclusive offers and discounts and providing a convenient way to purchase gaming cards.
We aim to offer our customers a value proposition comparable or superior to many of the separately available dining and entertainment options. We are continuously working with game manufacturers and others to create new games and attractions that include content that is exclusively available at Dave & Buster’s on a permanent or temporary basis.
We are continuously working with game manufacturers and others to create new games and attractions that include content 3 Table of Contents that is exclusively available at our Dave & Buster’s and Main Event stores on a permanent or temporary basis.
After a store has been opened and is operating smoothly, the store managers supervise the training of new team members. Corporate Responsibility Our core value of “Better Together” calls each of our team members to care for each other, our customers, and the communities we serve.
After a store has been opened and is operating smoothly, the store managers supervise the training of new team members. Corporate Responsibility Our core values call for each of our team members to care for each other, our customers, and the communities we serve. We will not do business with organizations that employ or condone unfair labor practices.
These stores generated revenues of approximately $6.9 million, $2.9 million, and $18.6 million in fiscal 2021, 2020, and 2019, respectively, representing approximately 0.5%, 0.7%, and 1.4%, respectively, of our consolidated revenues. During fiscal 2021 and fiscal 2020, our Canadian stores were only able to operate a combined 48 and 39 weeks, respectively.
These stores generated revenues of approximately $21.4 million, $6.9 million, and $2.9 million in fiscal 2022, 2021, and 2020, respectively. During fiscal 2021, our Canadian stores were only able to operate a combined 48 weeks as a result of the COVID-19 pandemic. Our Canadian stores were open throughout fiscal 2022.
Within each store, the Kitchen Manager is primarily responsible for ensuring the timely and correct preparation of food products per the recipes we specify. We provide each of our stores with various tools and training to facilitate these activities. Foreign Operations We own and operate two stores outside of the United States in the Canadian province of Ontario.
Our systems are designed to protect the safety and quality of our food supply throughout the procurement and preparation process. Within each store, the Kitchen Manager is primarily responsible for ensuring the timely and correct preparation of food products per the recipes we specify. We provide each of our stores with various tools and training to facilitate these activities.
In addition to our own routines, we leverage a third-party vendor to help ensure quality beverage operations, responsible alcohol service and loss prevention. Our workforce management platform also allows management to quickly add or reduce labor based on real-time business needs and historically assisted our managers in optimizing hourly labor based on anticipated sales volumes.
Our workforce management platform also allows management to quickly add or reduce labor based on real-time business needs and historically assisted our managers in optimizing hourly labor based on anticipated sales volumes.
We will focus on delivering personalized messaging that connects with the customer to drive incremental visitation and will focus our advertising on communicating the emotional side of our brand promise.
We will focus on delivering personalized messaging that connects with the customer to drive incremental visitation and will focus our advertising on communicating the emotional side of our brand promise. In addition, we will continue to leverage our customer relationship management program and our growing loyalty database by delivering more targeted individualized offers and creative content.
Our managers have daily routines focused on driving consistent execution in food, beverage, and amusements. We utilize a customized food and beverage analysis program that determines the theoretical food and beverage costs for each store and provides additional tools and reports to help us identify opportunities, including waste management.
We utilize a customized food and beverage analysis program that determines the theoretical food and beverage costs for each store and provides additional tools and reports to help us identify opportunities, including waste management. In addition to our own routines, we leverage a third-party vendor to help ensure quality beverage operations, responsible alcohol service and loss prevention.
In particular, our leaders work to develop and maintain strong communications and relationships with our team members. 8 Table of Contents Our Leadership Team We are led by a strong senior management team averaging over 20 years of experience with national brands spanning casual dining, entertainment, and other consumer-centric industries.
Our Leadership Team We are led by a strong senior management team with a wealth of experience with national brands spanning casual dining, entertainment, and other consumer-centric industries.
In the future, we plan to shift some funding to other forms of media, including investments in social and digital video, and test new types of programmatic display and digital audio. To enhance our marketing efforts, we also conduct digital initiatives including search engine marketing and optimization, mobile campaigns, and website improvements.
We utilize several forms of media, including investments in linear TV, connected TV, social and digital video, and test new types of programmatic display and digital audio, and have several digital marketing initiatives including search engine marketing and optimization, mobile campaigns, and website improvements.
To ensure our quality standards are met, we negotiate directly with independent producers of food products. We provide detailed quality and yield specifications to suppliers for our purchases. Our systems are designed to protect the safety and quality of our food supply throughout the procurement and preparation process.
We plan to implement these new systems over the next two years. Food Preparation, Quality Control and Purchasing We strive to maintain high food quality standards. To ensure our quality standards are met, we negotiate directly with independent producers of food products. We provide detailed quality and yield specifications to suppliers for our purchases.
Each store is overseen by a Regional Operations Manager, Regional Operations Director, Senior Regional Operations Director or Vice President of Operations (collectively, “Regional Management”) who directly or indirectly report to our Chief Operating Officer.
There is a defined structure of development and progression of job responsibilities within the supporting management positions to ensure that an adequate succession plan exists within each store. Each store is overseen by a Regional Operations Director, Senior Regional Operations Director or Vice President of Operations (collectively, “Regional Management”) who directly or indirectly report to our Chief Operating Officer.
Intellectual Property We have registered the trademarks Dave & Buster’s ® , Power Card ® , Eat & Play Combo ® , Eat Drink Play ® , and Eat Drink Play Watch ® , and have registered or applied to register certain additional trademarks with the United States Patent and Trademark Office and in various foreign countries.
Wage inflation and other macro-economic pressures could result in increasing expenses, as suppliers may seek to pass higher costs on to us. 9 Table of Contents Intellectual Property We have registered the trademarks Dave & Buster’s ® , Power Card ® , Eat & Play Combo ® , Eat Drink Play ® , Eat Drink Play Watch ® , Main Event ® , Main Event Entertainment ® , and Eat.Bowl.Play ® and have registered or applied to register certain additional trademarks with the United States Patent and Trademark Office and in various foreign countries.
Play The games in our Midway are a key aspect of the Dave & Buster’s entertainment experience, which we believe is the core differentiating feature of our brand.
Amusement and Entertainment Game play is a key aspect of the entertainment experience at each of our stores, which we believe is the core differentiating feature of our brands.
We believe this “opportunity to win” creates a fun and highly energized social experience that is an important aspect of the Dave & Buster’s in-store experience and cannot be easily replicated at home.
Redemption games offer our customers the opportunity to win tickets that are redeemable at a retail-style space in our stores with prizes ranging from branded novelty items to high-end electronics. We believe this “opportunity to win” creates a fun and highly energized social experience that is an important aspect of the in-store experience and cannot be easily replicated at home.
We believe these initiatives encourage customers to participate more fully across our broad range of food, beverage, and entertainment offerings. Vibrant, contemporary store design that integrates entertainment and dining. We continue to enhance the Dave & Buster’s brand through our store design.
We believe these initiatives encourage customers to participate more fully across our broad range of food, beverage, and entertainment offerings. Store models generate favorable store economics and strong returns.
We have a high degree of awareness of our brand as a dining and entertainment venue, and a broad customer appeal with an attractive target demographic. Our primary target is adults 21-39, who make up over 60% of our customers. We focus primarily on the adult social occasion, which accounts for approximately 58% of our visits.
We have a high degree of awareness of our brands as a dining and entertainment venue, and a broad customer appeal with an attractive target demographic. The primary target for our Dave & Buster’s locations is adults 21-39, while our Main Event branded stores primarily focus on families with children. Multi-faceted customer experience highlights our value proposition.
The Dave & Buster’s Rewards Program is a customer recognition program that rewards members primarily for their game chips played. Eligible members have the ability to level-up by playing game chips, and members are rewarded with free game play or food offers based on their level.
Eligible members have the ability to level-up by playing game chips, and members are rewarded with free game play or food offers based on their level. As our loyalty program continues to grow, it provides an important method for maintaining customers’ connection with the D&B brand and further driving customer satisfaction.
Our new games in combination with new food and beverage offerings and focused attention to the customer experience help us to retain and generate customer traffic.
Our new games in combination with new food and beverage offerings and focused attention to the customer experience help us to retain and generate customer traffic. Our value proposition is enhanced by marketing initiatives, including free game play that often features the introduction of our new games, game play dollar volume discounts, and eat and play promotional offers.
Eat We strive to differentiate our food with quality, flavorful offerings guided by an “Inspired American Kitchen” identity. This identity is rooted in enhanced flavors and quality ingredients across a condensed number of menu items that enables our customers to explore new flavors while offering a balanced selection of familiar dishes.
These offerings are rooted in enhanced flavors and quality ingredients across a condensed number of menu items that enables our customers to explore new flavors while offering a balanced selection of familiar dishes. Our menus simplify execution and, along with recent kitchen enhancements, allow us to deliver dishes to customers hotter and faster to drive an improved customer experience.
Our current menu offerings are designed to provide a differentiated food and beverage offering based on an “Inspired American Kitchen” identity. We aim to improve overall food quality, and to offer a wide variety of items including starters and shareable items, one-of-a-kind burgers and handhelds, choice-grade steaks, pasta, and low calorie, vegetarian, and gluten friendly options.
Our current menu offerings are designed to provide a differentiated food and beverage offering based on an “Inspired American Kitchen” identity at our Dave & Buster's locations and a "Family Kitchen" at our Main Event locations. We aim to offer a wide variety of items for our guests.
The first is our long-standing partnership with Make-A-Wish, which we have proudly supported in a national partnership since April 2012. To date, we have given over $15.0 million to this worthy cause, and we participate in several events throughout the year both in our stores and at our store support center to raise money for Make-A-Wish.
Through fiscal 2022, we have given over $17 million to this worthy cause, and we participate in several events throughout the year both in our stores and at our store support center to raise money for Make-A-Wish. We also volunteer our time and talents. In addition, we invest in helping our own team members during their times of greatest need.
ITEM 1. Business Dave & Buster’s Entertainment, Inc. (“D&B Entertainment”) is a leading owner and operator of high-volume entertainment and dining venues (“stores”) that operate under the name “Dave & Buster’s.” We offer our customers the opportunity to “Eat Drink Play and Watch” all in one location.
ITEM 1. Business Dave & Buster’s Entertainment, Inc. (“D&B Entertainment”) is the owner and operator of 204 venues in North America that offer premier entertainment and dining experiences to its guests.
The General Manager and the management team are responsible for the day-to-day operation of the store, including the hiring, training, and development of team members, as well as financial and operational performance. There is a defined structure of development and progression of job responsibilities within the supporting management positions to ensure that an adequate succession plan exists within each store.
A typical Dave & Buster’s store employs approximately 115 hourly team members, and a typical Main Event store employs approximately 95 team members, most of which who part-time. The General Manager and the management team are responsible for the day-to-day operation of the store, including the hiring, training, and development of team members, as well as financial and operational performance.
We believe that the smaller format maintains the dynamic customer experience that is the foundation of our brand and allows us flexibility in our site selection process. Human Capital Management Our team members are the heart of our Company, and they help us run the fun in our stores every day.
We believe that the smaller format maintains the dynamic customer experience that is the foundation of our brand and allows us flexibility in our site selection process. Main Event Stores - Our Main Event stores vary in size from approximately 37,500 to 78,000 square feet. The target size of our future stores is between approximately 40,000 and 55,000 square feet.
The foreign activities of these stores are subject to various risks of doing business in a foreign country, including currency fluctuations, changes in laws and regulations and economic and political stability. We do not believe there is any material risk associated with the Canadian operations or any dependence by the domestic business upon the Canadian operations.
At January 30, 2022, less than 2.0% of our long-lived assets were located outside of the United States. The foreign activities of these and future stores outside the United States are subject to various risks of doing business in a foreign country, including currency fluctuations, changes in laws and regulations and economic and political stability.
Included in our total team members are 186 store hourly team members on leave while the Company’s two Canadian stores were temporarily closed at the end of fiscal 2021. Our Better Together culture pillar binds us to a shared commitment to attract, retain, engage, and develop a team that mirrors the diversity of the customers we serve.
Our values bind us to a shared commitment to attract, retain, engage, and develop a team that mirrors the diversity of the customers we serve.
We also believe that the Dave & Buster’s brand has significant growth opportunities, as internal studies and third-party research suggests a total store potential in the United States and Canada in excess of 230 stores (including our 144 stores as of the end of fiscal 2021). In fiscal 2021, we opened five new stores, including one store that was relocated.
Invest domestically in our brands. We believe that the Dave & Buster’s and Main Event brands have significant domestic growth opportunities in the United States and Canada. In fiscal 2022, we opened seven new Dave & Buster's stores and opened one Main Event store since the Main Event Acquisition was completed.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe rely heavily on various information technology systems, including point-of-sale, kiosk and amusement operations systems in our stores, data centers that process transactions, communication systems and various other software applications used throughout our operations. Some of these systems have been internally developed or we rely on third party providers and platforms for some of these information technology systems and support.
Biggest changeRisks Related to Information Technology and Cyber Security Information technology system failures or interruptions may impact our ability to effectively operate our business. We rely heavily on various information technology systems, including point-of-sale, kiosk and amusement operations systems in our stores, data centers that process transactions, communication systems and various other software applications used throughout our operations.
Our revenues and operating results may fluctuate significantly due to various risks and unforeseen circumstances, including increases in costs, seasonality, weather, acts of violence or terrorism and other factors outside our control. Certain of the regions in which our stores are located have been, and may in the future be, subject to natural disasters, such as earthquakes, floods, and hurricanes.
Our revenues and operating results may fluctuate significantly due to various risks and unforeseen circumstances, including increases in costs, seasonality, weather, acts of violence or terrorism and other factors outside our control. Certain regions in which our stores are located have been, and may in the future be, subject to natural disasters, such as earthquakes, floods, and hurricanes.
The choice of forum provision in our certificate of incorporation does not waive our compliance with our obligations under the federal securities laws and the rules and regulations thereunder. Moreover, the provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act or by the Securities Act.
The choice of forum provision in our certificate of incorporation does not waive our compliance with obligations under the federal securities laws and the rules and regulations thereunder. Moreover, the provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act or by the Securities Act.
Adoption of these laws, or adverse interpretation of existing laws, could require our existing stores in these jurisdictions to alter the mix of games, modify certain games, limit the number of tickets that may be won by a customer from a redemption game, change the mix of prizes that we may offer at our WIN! area or terminate the use of specific games, any of which could adversely affect our operations.
Adoption of these laws, or adverse interpretation of existing laws, could require our existing stores in these jurisdictions to alter the mix of games, modify certain games, limit the number of tickets that may be won by a customer from a redemption game, change the mix of prizes that we may offer at our redemption area or terminate the use of specific games, any of which could adversely affect our operations.
We may not be able to compete favorably in the highly competitive out-of-home and home-based entertainment and restaurant markets, which could have a material adverse effect on our business, results of operations or financial condition. The out-of-home entertainment market is highly competitive.
We may not be able to compete favorably in the entertainment and restaurant markets, which could have a material adverse effect on our business, results of operations or financial condition. The out-of-home entertainment market is highly competitive.
In addition, as each of our leases expires, we may choose not to renew, or may not be able to renew, such existing leases if the capital investment required to maintain the stores at the leased locations is not justified by the return required on the investment.
In addition, as each of our existing leases expires, we may choose not to renew, or may not be able to renew, if the capital investment required to maintain the stores at the leased locations is not justified by the return required on the investment.
We are also subject to various federal, state, and local laws and regulations that govern numerous aspects of our business, including the following: • the Fair Labor Standards Act and other federal, state and local laws and regulations that govern employment practices and working conditions, including minimum wage rates, wage and hour practices, gratuities, overtime, labor practices, various family leave mandates, discrimination and harassment, immigration, workplace safety and other areas; • the Americans with Disabilities Act and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations and other areas; • the Patient Protection and Affordable Care Act as amended by the Health Care and Education Affordability Reconciliation Act of 2010 (“PPACA”) and uncertainties surrounding future changes to or replacement of our health insurance system; • preparation, sale and labeling of food, including the federal regulations of the Food and Drug Administration, which oversees the safety of the entire food system, including inspection and mandatory food recalls, menu labeling and nutritional content, and additional requirements in certain states and local jurisdictions; • environmental laws and regulations governing, among other things, discharges of pollutants into the air and water as well as the presence, handling, release and disposal of and exposure to hazardous substances; and • other environmental matters, such as climate change, the reduction of greenhouse gases, water consumption and animal health and welfare.
We are subject to various federal, state, and local laws and regulations that govern numerous aspects of our business, including, but not limited to, the following: • the Fair Labor Standards Act; federal, state and local laws and regulations that govern employment practices and working conditions, including minimum wage rates, wage and hour practices, gratuities, overtime, labor practices, various family leave mandates, discrimination and harassment, immigration, workplace safety and other areas; • the Americans with Disabilities Act and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations and other areas; • the Patient Protection and Affordable Care Act as amended by the Health Care and Education Affordability Reconciliation Act of 2010 (“PPACA”) and uncertainties surrounding future changes to or replacement of our health insurance system; • preparation, sale and labeling of food, including the federal regulations of the Food and Drug Administration, which oversees the safety of the entire food system, including inspection and mandatory food recalls, menu labeling and nutritional content, and additional requirements in certain states and local jurisdictions; • environmental laws and regulations governing, among other things, discharges of pollutants into the air and water as well as the presence, handling, release and disposal of and exposure to hazardous substances; and • other environmental matters, such as climate change, the reduction of greenhouse gases, water consumption and animal health and welfare.
We cannot assure that we would have sufficient funds to repay outstanding amounts under the credit facility or the indenture governing the senior secured notes and any acceleration of amounts due would have a material adverse effect on our liquidity and financial condition. 18 Table of Contents The success of our longer-term growth strategy depends in part on our ability to open and operate new stores profitability, and on our ability to optimize our existing stores.
We cannot assure that we would have sufficient funds to repay outstanding amounts under the credit facility or the indenture governing the senior secured notes and any acceleration of amounts due would have a material adverse effect on our liquidity and financial condition. 13 Table of Contents The success of our longer-term growth strategy depends in part on our ability to open and operate new stores profitability, and on our ability to optimize our existing stores.
We could also be required to pay a substantial damage award, take a royalty-bearing license, discontinue the use of third-party products used within our operations and/or rebrand our products and services as a result of any such claims. 25 Table of Contents Risks Related to Our Corporate Structure, Our Stock Ownership and Our Common Stock The market price of our common stock is subject to volatility.
We could also be required to pay a substantial damage award, take a royalty-bearing license, discontinue the use of third-party products used within our operations and/or rebrand our products and services as a result of any such claims. 19 Table of Contents Risks Related to Our Corporate Structure, Our Stock Ownership and Our Common Stock The market price of our common stock is subject to volatility.
Our ability to meet our business strategy plan is dependent upon, among other things, our ability to: • increase gross sales and operating profits at existing stores with food, beverage, game and entertainment options desired by our customers; 14 Table of Contents • evolve our marketing and branding strategies to appeal to our customers; • innovate and implement technology initiatives to provide a unique digital customer experience; • identify adequate sources of capital to fund and finance strategic initiatives; • grow and expand operations; and • improve the speed and quality of our service.
Our ability to meet our business strategy plan is dependent upon, among other things: our ability to increase gross sales and operating profits at existing stores with food, beverage, game and entertainment options desired by our customers, evolve our marketing and branding strategies to appeal to our customers, innovate and implement technology initiatives to provide a unique digital customer experience, identify adequate sources of capital to fund and finance strategic initiatives, grow and expand operations, and improve the speed and quality of our service.
If third parties misappropriate or infringe our intellectual property, the value of our image, brand and the goodwill associated therewith may be diminished, our brand may fail to achieve and maintain market recognition, and our competitive position may be harmed, any of which could have a material adverse effect on our business, including our revenues.
If third parties misappropriate or infringe our intellectual property, the value of our image, brands and the goodwill associated therewith may be diminished, our brands may fail to achieve and maintain market recognition, and our competitive position may be harmed, any of which could have a material adverse effect on our business, including our revenues.
If one or more of our stores were the subject of unfavorable publicity and we are unable to quickly and effectively respond to such reports, our overall brand could be adversely affected, which could have a material adverse effect on our business, results of operations and financial condition.
If one or more of our stores were the subject of unfavorable publicity and we are unable to quickly and effectively respond to such reports, our overall brands could be adversely affected, which could have a material adverse effect on our business, results of operations and financial condition.
If in the future, we experience a security breach, we could become subject to claims, lawsuits or other proceedings for purportedly fraudulent transactions arising out of the theft of credit or debit card information, compromised security and information systems, failure of our employees to comply with applicable laws, the unauthorized acquisition or use of such information by third parties, or other similar claims, and such claims, lawsuits or other proceedings could have a material and adverse effect on our operations, results of operations, and financial condition.
If in the future, we experience a security breach, we could become subject to claims, lawsuits or other proceedings for purportedly fraudulent transactions arising out of the theft of credit or debit card information, compromised security and information systems, failure of our team members to comply with applicable laws, the unauthorized acquisition or use of such information by third parties, or other similar claims, and such claims, lawsuits or other proceedings could have a material and adverse effect on our operations, results of operations, and financial condition.
In the event that a third party, such as a competitor, private equity firm or activist investor makes an unsolicited takeover proposal or proposes to change our governance policies or board of directors or makes other proposals concerning the Company’s ownership structure or operations, our review and consideration of such proposals may be a significant distraction for our management and employees and may require us to expend significant time and resources away from our primary operations.
In the event that a third party, such as a competitor, private equity firm or activist investor makes an unsolicited takeover proposal or proposes to change our governance policies or board of directors or makes other proposals concerning the Company’s ownership structure or operations, our review and consideration of such proposals may be a significant distraction for our management and team members and may require us to expend significant time and resources away from our primary operations.
We regard our intellectual property as having significant value and being important to our marketing efforts. We use a combination of intellectual property rights, such as trademarks and trade secrets, to protect our brand and certain other proprietary processes and information material to our business.
We regard our intellectual property as having significant value and being important to our marketing efforts. We use a combination of intellectual property rights, such as trademarks and trade secrets, to protect our brands and certain other proprietary processes and information material to our business.
Changes in the price or availability of commodities for which we do not have short- 21 Table of Contents term supply contracts could have a material adverse effect on our profitability. Expiring contracts with our food suppliers could also result in unfavorable renewal terms and therefore increase costs associated with these suppliers or may necessitate negotiations with other suppliers.
Changes in the price or availability of commodities for which we do not have short-term supply contracts could have a material adverse effect on our profitability. Expiring contracts with our food suppliers could also result in unfavorable renewal terms and therefore increase costs associated with these suppliers or may necessitate negotiations with other suppliers.
Also, the unplanned loss of a major distributor could adversely affect our business by disrupting our operations as we seek out and negotiate a new distribution contract. Further, a significant percentage of our WIN! merchandise inventory is directly or indirectly sourced outside the United States and changes in trade policy and tariffs could negatively impact our costs.
Also, the unplanned loss of a major distributor could adversely affect our business by disrupting our operations as we seek out and negotiate a new distribution contract. Further, a significant percentage of our amusement inventory is directly or indirectly sourced outside the United States and changes in trade policy and tariffs could negatively impact our costs.
Because we employ a large workforce, any wage increases and/or expansion of benefits mandates will have a particularly significant impact on our labor costs. Our vendors, contractors and business partners are similarly impacted by wage and benefit cost inflation, and many have or will increase their price for goods, construction, and services to offset their increasing labor costs.
Because we employ a large workforce, any wage increase and/or expansion of benefits mandates will have a particularly significant impact on our labor costs. Our vendors, contractors and business partners are similarly impacted by wage and benefit cost inflation, and many have or will increase their price for goods, construction and services in order to offset their increasing labor costs.
Unsolicited takeover proposals, governance change proposals, proxy contests and certain proposals/actions by activist investors may create additional risks and uncertainties with respect to the Company’s financial position, operations, strategies and management, and may adversely affect our ability to attract and retain key employees. Any perceived uncertainties may affect the market price and volatility of our securities.
Unsolicited takeover proposals, governance change proposals, proxy contests and certain proposals/actions by activist investors may create additional risks and uncertainties with respect to the Company’s financial position, operations, strategies and management, and may adversely affect our ability to attract and retain key members of our team. Any perceived uncertainties may affect the market price and volatility of our securities.
Our fourth amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: • any derivative action or proceeding brought on our behalf; • any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or stockholders to our company or our stockholders; • any action asserting a claim arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; or • any action asserting a claim arising pursuant to any provision of our certificate of incorporation or bylaws (in each case, as they may be amended from time to time) or governed by the internal affairs doctrine.
Our fourth amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: any derivative action or proceeding brought on our behalf; any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, team members or stockholders to our company or our stockholders; any action asserting a claim arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; or any action asserting a claim arising pursuant to any provision of our 20 Table of Contents certificate of incorporation or bylaws (in each case, as they may be amended from time to time) or governed by the internal affairs doctrine.
Changes in consumer preferences and buying patterns could negatively affect our results of operations. The success of our stores depends in large part on leased locations. Our locations are primarily located near high density retail areas such as regional malls, lifestyle centers, big box shopping centers and entertainment centers.
Changes in consumer preferences and buying patterns could negatively affect our results of operations. The success of our stores depends in large part on leased properties primarily located near high density retail areas such as regional malls, lifestyle centers, big box shopping centers and entertainment centers.
If we are required to materially increase the estimated liability recorded in our financial statements with respect to unredeemed gift cards, our net income could be materially and adversely affected. Our Power Cards may raise similar concerns to gift cards in terms of the applicability of state abandoned and unclaimed property laws.
If we are required to materially increase the estimated liability recorded in our financial statements with respect to unredeemed gift cards, our net income could be materially and adversely affected. Our game play cards may raise similar concerns to gift cards in terms of the applicability of state abandoned and unclaimed property laws.
Negative publicity may also result from criminal incidents, data privacy breaches, scandals involving our employees or operational problems at our stores. Regardless of whether the allegations or complaints are valid, unfavorable publicity related to one or more of our stores could affect public perception of the entire brand.
Negative publicity may also result from criminal incidents, data privacy breaches, scandals involving our team members or operational problems at our stores. Regardless of whether the allegations or complaints are valid, unfavorable publicity related to one or more of our stores could affect public perception of the entire brand.
Should this happen, other jurisdictions that have historically mandated higher wages and greater benefits than what is required under federal law may seek to further increase wages and mandated benefits.
Should this occur, other jurisdictions that have historically mandated higher wages and greater benefits than what is required under federal law may seek to further increase wages and mandated benefits.
To date we have not remitted any amounts relating to unredeemed gift cards to states based upon our assessment of applicable laws. The analysis of the potential application of the abandoned and unclaimed property laws to our gift cards is complex, involving an analysis of constitutional and statutory provisions and factual issues.
To date, we have not remitted any amounts relating to unredeemed gift cards to states based upon our assessment of applicable laws. 18 Table of Contents The analysis of the potential application of the abandoned and unclaimed property laws to our gift cards is complex, involving an analysis of constitutional and statutory provisions and factual issues.
Also, although our hiring practices comply with the requirements of federal law in reviewing employees’ citizenship or authority to work in the United States, increased enforcement efforts with respect to existing immigration laws by governmental authorities may disrupt a portion of our workforce or our operations at one or more of our stores, thereby negatively impacting our business.
Also, although our hiring practices comply with the requirements of federal law in reviewing the citizenship of our team members or their authority to work in the United States, increased enforcement efforts with respect to existing immigration laws by governmental authorities may disrupt a portion of our workforce or our operations at one or more of our stores, thereby negatively impacting our business.
Events beyond our control, including the impact of COVID-19, may affect our ability to comply with our covenants. If we default under the credit facility or the indenture governing the senior secured notes, because of a covenant breach or otherwise, all outstanding amounts thereunder could become immediately due and payable.
Events beyond our control may affect our ability to comply with our covenants. If we default under the credit facility or the indenture governing the senior secured notes, because of a covenant breach or otherwise, all outstanding amounts thereunder could become immediately due and payable.
Our business may be adversely affected by the risk of legal proceedings brought by or on behalf of our customers, employees, suppliers, shareholders, government agencies or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation.
Our business may be adversely affected by the risk of legal proceedings brought by or on behalf of our customers, team members, suppliers, shareholders, government agencies or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation.
Alcoholic beverage control regulations relate to numerous aspects of the daily operations of each store, including minimum age of patrons and employees, hours of operation, advertising, wholesale purchasing, inventory control and handling and storage and dispensing of alcoholic beverages.
Alcoholic beverage control regulations relate to numerous aspects of the daily operations of each store, including minimum age of patrons and team members, hours of operation, advertising, wholesale purchasing, inventory control and handling and storage and dispensing of alcoholic beverages.
Future outbreaks of contagious diseases or other adverse public health developments in the United States or worldwide could have similar impacts on our business. The COVID-19 pandemic had a material adverse impact on our business in fiscal 2020, and, during fiscal 2021, continued to have a significant adverse impact on our business and results of operations.
Future outbreaks of COVID-19, other contagious diseases or other adverse public health developments in the United States or worldwide could have similar impacts on our business. The COVID-19 pandemic had a material adverse impact on our business and results of operations in fiscal 2020 and 2021.
Our substantial indebtedness could have important consequences to us, including: • making it more difficult for us to satisfy our obligations with respect to our debt, and any failure to comply with the obligations under our debt instruments, including restrictive covenants, could result in an event of default under the agreements governing our indebtedness increasing our vulnerability to general economic and industry conditions, including as a result of disruption caused by the global COVID-19 pandemic; • requiring a substantial portion of our cash flow from operations to be dedicated to the payment of obligations with respect to our debt, thereby reducing our ability to use our cash flow to fund our operations, lease payments, capital expenditures, selling and marketing efforts, product development, future business opportunities and other purposes; • exposing us to the risk of increased interest rates as some of our borrowings are at variable rates; • limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, strategic acquisitions, and general corporate or other purposes; and 17 Table of Contents • limiting our ability to plan for, or adjust to, changing market conditions and placing us at a competitive disadvantage compared to our competitors who may be less highly leveraged.
Our substantial indebtedness could have adverse consequences to us, including: • making it more difficult for us to satisfy our obligations with respect to our debt, and any failure to comply with the obligations under our debt instruments, including restrictive covenants, could result in an event of default under the agreements governing our indebtedness increasing our vulnerability to general economic and industry conditions; • requiring a substantial portion of our cash flow from operations to be dedicated to the payment of obligations with respect to our debt, thereby reducing our ability to use our cash flow to fund our operations, lease payments, capital expenditures, selling and marketing efforts, product development, future business opportunities and other purposes; • exposing us to the risk of increased interest rates as some of our borrowings are at variable rates; • limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, strategic acquisitions, and general corporate or other purposes; and • limiting our ability to plan for, or adjust to, changing market conditions and placing us at a competitive disadvantage compared to our competitors who may be less highly leveraged.
If we are unable to successfully design and execute our business strategy plan, including growing comparable store sales, our revenues and profitability may be adversely affected. Our ability to increase revenues and profitability is dependent on designing and executing effective business strategies.
Risks Related to our Growth and Operating Strategy If we are unable to successfully design and execute our business strategy plan, including growing comparable store sales, our revenues and profitability may be adversely affected. Our ability to increase revenues and profitability is dependent on designing and executing effective business strategies.
Consumer demand for our products and our brand value could diminish significantly if any such incidents or other matters erode consumer confidence in us or our products, which would likely result in lower revenues. 16 Table of Contents We are subject to risks associated with leasing space subject to long-term, non-cancelable leases, and risks related to renewal.
Consumer demand for our products and the value of our brands could diminish significantly if any such incidents or other matters erode consumer confidence in us or our products, which would likely result in lower revenues. We are subject to risks associated with leasing space subject to long-term, non-cancelable leases, and risks related to renewal.
In addition, the final determination of any tax audits or related litigation could be materially different from our historical tax 27 Table of Contents provisions and accruals.
In addition, the final determination of any tax audits or related litigation could be materially different from our historical tax provisions and accruals.
Public companies in the restaurant industry have been the target of unsolicited takeover proposals in the past.
Public companies including those in the restaurant industry have been the target of unsolicited takeover proposals in the past.
We rely on third-party service providers for certain key elements of our operations including credit card processing, telecommunications, and utilities. Our reliance on systems operated by third parties also presents the risk faced by the third party’s business, including the operational, cyber security, and credit risks of those parties.
Any failure of these systems could significantly impact our operations. We rely on third-party service providers for certain key elements of our operations including credit card processing, telecommunications, and utilities. Our reliance on systems operated by third parties also presents the risk faced by the third party’s business, including the operational, cyber security, and credit risks of those parties.
As a result, we are challenged to evolve our food and beverage menu offerings to appeal to these changing customer preferences, while maintaining our brand character and retaining popular menu items.
As a result, we are challenged to evolve our food and beverage menu offerings to appeal to these changing customer preferences, while maintaining the character of our brands and retaining popular menu items.
At the peak of the COVID-19 outbreak, all our stores were closed. As stores re-opened, the Company experienced same-store sales declines due to modified operating hours, occupancy restrictions, and reduced customer traffic.
At the peak of the COVID-19 outbreak in fiscal 2020, all of our stores were closed. As stores re-opened, the Company experienced comparable store sales declines due to modified operating hours, occupancy restrictions, and reduced customer traffic.
Many of the entities operating these businesses are larger and have significantly greater financial resources, have a greater number of stores, have been in business longer, have greater name recognition and are better established in the markets where our stores are located or are planned to 15 Table of Contents be located.
Some of the entities operating these businesses are larger and have greater financial resources, have a greater number of stores, have been in business longer, have greater name recognition or are better established in the markets where our stores are located or are planned to be located.
Prolonged volatility or significant disruption of global financial markets due in part to the COVID-19 pandemic could have a negative impact on our ability to access capital markets and other funding sources, on acceptable terms or at all, and impede our ability to comply with our recently re-instated debt covenants or our ability to obtain additional waivers or amendments, if necessary, and the Company could also incur additional impairment charges of our long-lived assets or impairments of goodwill or other intangibles, which may have a significant or material impact on our financial results.
Additionally, prolonged volatility or significant disruption of global financial markets due to a resurgence of COVID-19 or the emergence of another unforeseen pandemic could have a negative impact on our ability to access capital markets and other funding sources, on acceptable terms or at all, and impede our ability to comply with debt covenants or our ability to obtain additional waivers or amendments, if necessary, and the Company could also incur additional impairment charges of our long-lived assets, goodwill or other intangibles, which may have a significant or material impact on our financial results.
We compete for customers’ discretionary entertainment dollars with providers of out-of-home entertainment, including localized attraction facilities such as movie theatres, sporting events, bowling alleys, sports activity centers, arcades and entertainment centers, nightclubs, and restaurants as well as theme parks.
We compete for customers’ discretionary entertainment dollars with providers of out-of-home entertainment, including location-based entertainment facilities such as movie theaters, sporting events, bowling alleys, sports activity centers, arcades and entertainment centers, nightclubs, and restaurants as well as theme parks.
Changes in our tax expense or an increase in our tax liabilities, whether due to changes in applicable laws and regulation, the interpretation or application thereof, or a final determination of tax audits or litigation, could materially adversely affect our financial performance.
Changes in our tax expense or an increase in our tax liabilities, whether due to changes in applicable laws and regulation, the interpretation or application thereof, or a final determination of tax audits or litigation, could materially adversely affect our financial performance. Failure of our internal control over financial reporting could harm our business and financial results.
Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with generally accepted accounting principles in the United States.
Our management is responsible for establishing and maintaining effective internal control over financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with generally accepted accounting principles in the United States.
A significant financial reporting failure or material weakness in internal control over financial reporting could result in substantial cost to remediate and could cause a loss of investor confidence and decline in the market price of our stock.
A significant financial reporting failure or material weakness in internal control over financial reporting could result in substantial cost to remediate and could cause a loss of investor confidence and decline in the market price of our stock. ITEM 1B. Unresolved Staff Comments Not applicable. 21 Table of Contents
If we are not able to renew the leases at rents that allow such stores to remain profitable as their terms expire, the number of such stores may decrease, resulting in lower revenue from operations, or we may relocate a store, which could subject us to construction and other costs and risks, and, in either case, could have a material adverse effect on our business, results of operations and financial condition.
If we are not able to renew the leases at rents that allow such stores to remain profitable as their terms expire, the number of such stores may decrease, resulting in lower revenue from operations, or we may relocate a store, which could subject us to construction and other costs and risks, and, in either case, could have a material adverse effect on our business, results of operations and financial condition. 12 Table of Contents Our financial performance and the ability to successfully implement our strategic direction could be adversely affected if we fail to retain, or effectively respond to a loss of, key management.
These statutes generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated individual. Recent litigation against restaurant chains has resulted in significant judgments and settlements under dram shop statutes.
These statutes generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated individual. In many instances litigation of these claims results in significant judgments and settlements under dram shop statutes.
If we are unable to attract and retain a satisfactory number of qualified management and operating personnel, labor shortages could delay the planned openings of new stores or adversely impact the operation of our existing stores.
Our ability to attract and retain qualified management and operating personnel has become more challenging due to an increasingly competitive job market. If we are unable to attract and retain a satisfactory number of qualified management and operating personnel, labor shortages could delay the planned openings of new stores or adversely impact the operation of our existing stores.
However, based on our analysis of abandoned and unclaimed property laws, we believe that our Power Cards are not stored value cards and such laws do not apply, although there can be no assurance that states will not take a different position, which may have an adverse effect on our results of operations and financial condition. 24 Table of Contents Litigation, including allegations of illegal, unfair, or inconsistent employment practices, may adversely affect our business, results of operations or financial condition.
However, based on our analysis of abandoned and unclaimed property laws, we believe that they are not stored value cards and such laws do not apply, although there can be no assurance that states will not take a different position, which may have an adverse effect on our results of operations and financial condition.
A cyber incident (generally any intentional or unintentional attack that results in unauthorized access resulting in disruption of systems, corruption of data, theft or exposure of confidential information or intellectual property) that compromises the information of our customers or employees could result in widespread negative publicity, damage to our reputation, a loss of customers, , additional costs, litigation claims, legal or regulatory proceedings, fines or penalties, remediation costs, a negative impact on team member morale, or other impacts to our business. 19 Table of Contents Our existing cyber security policy includes cyber security techniques, tactics, and procedures, including continuous monitoring and detection programs, network protections, annual employee training and awareness and incident response preparedness.
A cyber incident (generally any intentional or unintentional attack that results in unauthorized access resulting in disruption of 14 Table of Contents systems, corruption of data, theft or exposure of confidential information or intellectual property) that compromises the information of our customers or team members could result in widespread negative publicity, damage to our reputation, a loss of customers, additional costs, litigation claims, legal or regulatory proceedings, fines or penalties, remediation costs, a negative impact on team member morale, or other impacts to our business.
Such proposals may create uncertainty for our employees, additional risks and uncertainties with respect to the Company’s financial position, operations, strategies, and management, and may adversely affect our ability to attract and retain key employees.
Such proposals may create uncertainty for our team members, additional risks and uncertainties with respect to the Company’s financial position, operations, strategies, and management, and may adversely affect our ability to attract and retain key members of our team. Any perceived uncertainties as to our future direction also may adversely affect the market price and volatility of our securities.
Any perceived uncertainties as to our future direction also may adversely affect the market price and volatility of our securities. 26 Table of Contents Our fourth amended and restated certificate of incorporation, which was effective June 9, 2017, designates specific courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a judicial forum of their choice for disputes with us.
Our fourth amended and restated certificate of incorporation designates specific courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a judicial forum of their choice for disputes with us.
Although we have operational safeguards in place, those technology systems and solutions could become vulnerable to damage, disability, or failures due to theft, fire, power outages, telecommunications failure or other catastrophic events. Any failure of these systems could significantly impact our operations.
Some of these systems have been internally developed or we rely on third party providers and platforms for some of these information technology systems and support. Although we have operational safeguards in place, those technology systems and solutions could become vulnerable to damage, disability, or failures due to theft, fire, power outages, telecommunications failure or other catastrophic events.
While nearly all our stores have now re-opened, we expect that our operations will continue to be impacted by the continuing effects of COVID-19, including resurgences and variants of the virus.
In fiscal 2022, all our stores have now re-opened and we do not expect that our operations will be materially impacted by the continuing effects of COVID-19.
Changes in senior management could expose us to significant changes in strategic direction and initiatives. A failure to maintain appropriate organizational capacity and capability to support leadership excellence or a loss of key skill sets could jeopardize our ability to meet our business performance expectations and growth targets.
A failure to maintain appropriate organizational capacity and capability to support leadership excellence or a loss of key skill sets could jeopardize our ability to meet our business performance expectations and growth targets. Although we have employment agreements with all members of senior management, we cannot prevent members of senior management from terminating their employment with us.
Risks Related to the Restaurant and Entertainment Industries Our success depends upon our ability to recruit and retain qualified store management and operating personnel while also controlling our labor costs.
Additionally, an increasing number of government and industry groups have established laws and standards for the protection of personal and health information. Risks Related to the Restaurant and Entertainment Industries Our success depends upon our ability to recruit and retain qualified store management and operating personnel while also controlling our labor costs.
Although we do not anticipate any material difficulties occurring in the future, the failure to receive or retain a liquor license, or any other required permit or license, in a particular location, or to continue to qualify for, or renew licenses, could have a material adverse effect on operations and our ability to obtain such a license or permit in other locations.
Although we do not anticipate any material difficulties occurring in the future, the failure to receive or retain a liquor license, or any other required permit or license, in a particular location, or to continue to qualify for, or renew licenses, could have a material adverse effect on operations and our ability to obtain such a license or permit in other locations. 17 Table of Contents We are also subject to amusement licensing and regulation by the states, counties, and municipalities in which our stores are located, due to operating certain entertainment games and attractions, including skill-based games that offer redemption prizes.
If we do not maintain the required level of PCI compliance, we could be subject to costly fines or additional fees from the card brands that we accept or lose our ability to accept those payment cards. Additionally, an increasing number of government and industry groups have established laws and standards for the protection of personal and health information.
We are required to maintain the highest level of PCI DSS compliance at our store support center and stores. If we do not maintain the required level of PCI compliance, we could be subject to costly fines or additional fees from the card brands that we accept or lose our ability to accept those payment cards.
As part of our marketing efforts, we use a variety of digital platforms including search engines, mobile, online videos and social media platforms such as Facebook ® , Twitter ® and Instagram ® to attract and retain customers.
As part of our marketing efforts, we use a variety of digital platforms including search engines, mobile, online videos and social media platforms to attract and retain customers. We also test new technology platforms to improve our level of digital engagement with our customers and employees to help strengthen our marketing and related consumer analytics capabilities.
Depending upon its magnitude, a natural disaster could severely damage our stores, which could adversely affect our business, results of operations or financial condition. Our store support center, company-owned distribution center, game repair facility and our data center, as well as our backup data facility, are all located in the Dallas, Texas area.
Depending upon its magnitude, a natural disaster could severely damage our stores, which could adversely affect our business, results of operations or financial condition. Additionally, a natural or man-made disaster at our store support center, game repair facility, data center, or backup data facility could significantly impact our ability to provide services and systems to our stores.
A natural or man-made disaster could significantly impact our ability to provide services and systems to our stores. We currently maintain property and business interruption insurance through the aggregate property policy for each of our stores.
We currently maintain property and business interruption insurance through the aggregate property policy for each of our stores.
Consumers value readily available information concerning goods and services that they have or plan to purchase and may act on such information without further investigation or authentication. Many social media platforms immediately publish the content their subscribers and participants post, often without filters or checks on accuracy of the content posted.
The use of social media and similar platforms allow individuals access to a broad audience of consumers and other interested persons. Consumers value readily available information concerning goods and services that they have or plan to purchase and may act on such information without further investigation or authentication.
Unfavorable publicity or a failure to respond effectively to adverse publicity, could harm our business. Our brand and our reputation are among our most important assets. Our ability to attract and retain customers depends, in part, upon the external perception of our Company, the quality of our food service and facilities and our integrity.
Our ability to attract and retain customers depends, in part, upon the external perception of our Company, the quality of our food service and facilities and our integrity.
The opportunity exists for dissemination of information, including inaccurate information, to spread quickly. Inaccurate or adverse information concerning our Company may be posted on such platforms at any time. The harm may be immediate without affording us an opportunity for redress or correction. Such platforms also may be used for dissemination of trade secret information, compromising valuable company assets.
Many social media platforms immediately publish the content their subscribers and participants post, often without filters or checks on accuracy of the content posted. Inaccurate or adverse information concerning our Company may be posted on such platforms at any time and may spread quickly. The harm may be immediate without affording us an opportunity for redress or correction.
Pursuing the wrong remodel and any delays, cost increases, disruptions or other uncertainties related to those opportunities could adversely affect our results of operations. Risks Related to Information Technology and Cyber Security Information technology system failures or interruptions may impact our ability to effectively operate our business.
Pursuing the wrong remodel and any delays, cost increases, disruptions or other uncertainties related to those opportunities could adversely affect our results of operations. The COVID-19 pandemic had a material adverse impact on our business, results of operations, liquidity and financial condition.
Our inability to effectively use and monitor social media could harm our marketing efforts as well as our reputation, which could negatively impact our sales and financial performance.
These initiatives may not prove to be successful and may result in expenses incurred without the benefit of higher revenues or increased engagement. Our inability to effectively use and monitor social media could harm our marketing efforts as well as our reputation, which could negatively impact our sales and financial performance.
Our financial performance and the ability to successfully implement our strategic direction could be adversely affected if we fail to retain, or effectively respond to a loss of, key management. Our future success is substantially supported by the contributions and abilities of senior management, including key executives and other leadership team members.
Our future success is substantially supported by the contributions and abilities of senior management, including key executives and other leadership team members. Changes in senior management could expose us to significant changes in strategic direction and initiatives.
Our operations are susceptible to the changes in cost and availability of commodities and other products, which could negatively affect our operating results. Our profitability depends in part on our ability to anticipate and react to changes in commodity and other product costs.
Our profitability depends in part on our ability to anticipate and react to changes in commodity and other product costs.
In addition, we periodically scan our environment for any vulnerabilities, perform penetration testing and engage third parties to assess effectiveness of our security measures.
Our existing cyber security policy includes cyber security techniques, tactics, and procedures, including continuous monitoring and detection programs, network protections, annual team member training and awareness and incident response preparedness. In addition, we periodically scan our environment for any vulnerabilities, perform penetration testing and engage third parties to assess effectiveness of our security measures.
To the extent that our actual financial results do not meet or exceed our guidance, the trading prices of our securities may be materially adversely affected. General Risk Factors Changes in tax laws and resulting regulations could result in changes to our tax provisions and subject us to additional tax liabilities that could materially adversely affect our financial performance.
Accordingly, both state and federal courts have jurisdiction to entertain claims under the Securities Act. General Risk Factors Changes in tax laws and resulting regulations could result in changes to our tax provisions and subject us to additional tax liabilities that could materially adversely affect our financial performance.
In addition, unfavorable weather conditions during the winter and spring seasons could have a significant adverse impact on our results. During fiscal 2020, results also fluctuated due to the timing and frequency of temporary closures and operating restrictions due to state and local guidelines imposed due to the COVID-19 pandemic.
In addition, unfavorable weather conditions during the winter and spring seasons could have a significant adverse impact on our results.
We could also be strictly liable, without regard to fault, for certain environmental conditions at properties we formerly owned or operated as well as at our current properties.
We could also be strictly liable, without regard to fault, for certain environmental conditions at properties we formerly owned or operated as well as at our current properties. Further, more stringent and varied requirements of local and state governmental bodies with respect to zoning, land use, and environmental factors could delay or prevent development of new stores in certain locations.
It remains difficult to predict the full impact of the COVID-19 pandemic on the broader economy and how consumer behavior may change, and whether such change is temporary or permanent. Social distancing, telecommunicating and reductions in travel may become the new normal.
However, it remains difficult to predict future outbreaks, including new variants of COVID-19, or similar public health threats and their impact on our business or the broader economy and how consumer behavior may change, and whether such changes would be temporary or permanent.
Further, if we are not effective in addressing social and environmental responsibility matters or achieving relevant sustainability goals, consumer trust in our brand may suffer.
The inappropriate use of social media vehicles by our customers or team members could increase our costs, lead to litigation, or result in negative publicity that could damage our reputation. Further, if we are not effective in addressing social and environmental responsibility matters or achieving relevant sustainability goals, consumer trust in our brands may suffer.
We also face competition from increasingly sophisticated home-based forms of entertainment, such as internet and video gaming and home movie streaming and delivery. Our failure to compete favorably in the competitive out-of-home and home-based entertainment and restaurant markets could have a material adverse effect on our business, results of operations and financial condition.
We also face competition from increasingly sophisticated home-based forms of entertainment, such as internet and video gaming and home movie streaming and delivery.
In summary, the dissemination of information via social media and similar platforms may harm our business, prospects, financial condition, and results of operations, regardless of the information’s accuracy. The inappropriate use of social media vehicles by our customers or employees could increase our costs, lead to litigation, or result in negative publicity that could damage our reputation.
Such platforms also may be used for dissemination of trade secret information, compromising valuable company assets. In summary, the dissemination of information via social media and similar platforms may harm our business, prospects, financial condition, and results of operations, regardless of the information’s accuracy.
We utilize a voluntary tool to help manage privacy risk by independently benchmarking our cyber security program to the NIST Cybersecurity Framework, using an independent third party, and we share the results of our annual audit with our Audit Committee.
We utilize the voluntary NIST Cybersecurity Framework to help manage privacy risk by independently benchmarking our cyber security program and leverage an independent third party to perform the assessment. We also have additional cyber security controls as part of mandatory compliance frameworks that we are subject to, including annual SOX and Payment Card Industry (“PCI”) Data Security Standard ("DSS") audits.
Further, more stringent and varied requirements of local and state governmental bodies with respect to zoning, land use, and environmental factors could delay or prevent development of new stores in certain locations. 23 Table of Contents If new immigration legislation is enacted, such laws may contain provisions that could increase our costs in recruiting, training and retaining employees.
If new immigration legislation is enacted, such laws may contain provisions that could increase our costs in recruiting, training and retaining team members.
Removed
Risks Related to our Growth and Operating Strategy The COVID-19 pandemic has disrupted and is expected to continue to disrupt our business, which has had a material adverse impact on our business, results of operations, liquidity and financial condition and could continue for an extended period of time.
Added
We may fail to effectively integrate or operate our past or future acquisitions. We recently acquired Main Event as part of our expansion effort and may acquire more businesses in the future.
Removed
In addition, the COVID-19 pandemic has required and may continue to require us to make controversial decisions about precautionary measures, such as vaccinations, showing proof of vaccinations and face coverings, that could impact our results, including by impacting our brand, our employee retention and satisfaction, and the willingness of customers to patronize our stores.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur former corporate office in Dallas, Texas, is no longer being used, and our plan is to transfer or eliminate inventory in our adjacent warehouse facility by the end of our third quarter of fiscal 2022, when the lease expires.
Biggest changeWe also lease the former Main Event corporate office in Plano, Texas, which is no longer being used. The lease for this property expires in April 2029, and the Company is working to sublease the property. As of the end of fiscal 2022, we owned the building or site for four of our 204 operating stores and leased the remainder.
The table below shows the locations of our operating stores as of January 30, 2022: Location Total Alabama 2 Alaska 1 Arizona 4 Arkansas 2 California 17 Colorado 2 Connecticut 2 Florida 9 Georgia 4 Hawaii 1 Idaho 1 Illinois 4 Indiana 2 Kansas 3 Kentucky 2 Louisiana 1 Maryland 5 Massachusetts 3 Michigan 3 Minnesota 2 Missouri 1 Nebraska 1 Nevada 1 New Hampshire 1 New Jersey 3 New Mexico 1 New York 12 North Carolina 4 Ohio 6 Oklahoma 2 Oregon 1 Pennsylvania 7 Rhode Island 1 South Carolina 3 Tennessee 4 Texas 13 Utah 1 Virginia 4 Washington 2 Wisconsin 3 Puerto Rico 1 Ontario, Canada 2 Total 144 29 Table of Contents
We had the follow locations as of the end of fiscal 2022: Location Total Alabama 3 Alaska 1 Arizona 7 Arkansas 2 California 20 Colorado 6 Connecticut 2 Delaware 1 Florida 12 Georgia 8 Hawaii 1 Idaho 1 Illinois 6 Indiana 2 Kansas 4 Kentucky 3 Louisiana 2 Maryland 6 Massachusetts 3 Michigan 3 Minnesota 2 Missouri 4 Nebraska 1 Nevada 1 New Hampshire 1 New Jersey 3 New Mexico 2 New York 13 North Carolina 4 Ohio 8 Oklahoma 4 Oregon 1 Pennsylvania 7 Rhode Island 1 South Carolina 3 South Dakota 1 Tennessee 6 Texas 35 Utah 1 Virginia 4 Washington 3 Wisconsin 3 Puerto Rico 1 Ontario, Canada 2 Total 204 22 Table of Contents
As of the end of fiscal 2021, we lease the building or site of all but three of our 144 operating stores, and we own land related to one future site. Our leases typically have initial terms ranging from ten to twenty years and most include options to extend the leases for one or more 5-year periods.
We own land related to five future sites, of which three are expected to open in fiscal 2023. Our leases typically have initial terms ranging from ten to twenty years and most include options to extend the term for one or more 5-year periods.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeRefer to Note 10 of Notes to Consolidated Financial Statements for a summary of legal proceedings.
Biggest changeRefer to Note 12 of Notes to Consolidated Financial Statements for a summary of legal proceedings. ITEM 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+3 added−1 removed0 unchanged
Biggest changeIssuer Purchases of Equity Securities There were no repurchases of our common stock during fiscal 2021 or fiscal 2020. 31 Table of Contents Performance Graph The following performance graph depicts the total returns to shareholders for the past five fiscal years from January 29, 2017, through January 30, 2022, relative to the performance of the NASDAQ Composite Index, Standard & Poor’s (“S&P”) SmallCap 600 Index and S&P SmallCap 600 Consumer Discretionary Index.
Biggest changeThere were no repurchases of our common stock during fiscal 2021. 23 Table of Contents Performance Graph The following performance graph depicts the total returns to shareholders of our stock for the past five fiscal years, relative to the performance of the NASDAQ Composite Index, Standard & Poor’s (“S&P”) 600 Small Cap Index and S&P 600 Hotels Restaurants and Leisure Index.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Dividend Policy The Company’s common stock trades under the symbol PLAY and is listed on the NASDAQ Global Market (“NASDAQ”). The number of shareholders of record of the Company’s common stock as of March 18, 2022 was 413.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Dividend Policy The Company’s common stock trades under the symbol PLAY and is listed on the NASDAQ Global Market (“NASDAQ”). The number of shareholders of record of the Company’s common stock as of March 17, 2023 was 374.
This does not include persons whose stock is in nominee or “street name” accounts through brokers. On December 6, 2021, our Board of Directors approved a share repurchase program with an authorization limit of $100,000, expiring at the end of fiscal 2022.
This does not include persons whose stock is in nominee or “street name” accounts through brokers. On December 6, 2021, our Board of Directors approved a share repurchase program with an authorization limit of $100,000, which expired at the end of fiscal 2022. There were no dividends declared in fiscal 2022 or fiscal 2021.
Future decisions to pay cash dividends or repurchase shares continue to be at the discretion of the Board of Directors and will be dependent on our operating performance, financial condition, capital expenditure requirements and other factors that the Board of Directors considers relevant. There were no dividends declared in fiscal 2021 or fiscal 2020.
Future decisions to pay cash dividends or repurchase shares continue to be at the discretion of the Board of Directors and will be dependent on our operating performance, financial condition, capital expenditure requirements and other factors that the Board of Directors considers relevant.
All indices shown in the graph have been set at a base of 100 as of January 29, 2017 and assume an investment of $100 on that date and the reinvestment of dividends paid since that date.
All returns assume a base investment of $100 at the beginning of the five fiscal years (February 4, 2018 — the end of our fiscal year 2017) and the reinvestment of dividends paid, if applicable, since that date.
Removed
The stock price performance shown in the graph is not necessarily indicative of future price performance. 1/29/2017 2/4/2018 2/3/2019 2/2/2020 1/31/2021 1/30/2022 Dave & Buster’s Entertainment, Inc. $ 100.00 $ 87.04 $ 93.69 $ 80.58 $ 62.08 $ 64.43 S&P 600 Small Cap 100.00 114.08 114.48 122.07 150.36 162.87 S&P 600 Consumer Discretionary 100.00 118.78 121.04 126.46 212.55 203.87 NASDAQ Composite 100.00 127.91 128.32 161.66 230.90 243.26 ITEM 6.
Added
Issuer Purchases of Equity Securities During fiscal 2022, the Company repurchased 764,988 shares at an average cost per share of $32.70 for a total cost of $25,015.
Added
The performance shown in the graph is not necessarily indicative of future price performance. 2/4/2018 2/3/2019 2/2/2020 1/31/2021 1/30/2022 1/29/2023 Dave & Buster's Entertainment, Inc. $ 100.00 $ 108.21 $ 94.05 $ 72.70 $ 75.46 $ 88.90 S&P 600 Small Cap $ 100.00 $ 98.95 $ 103.85 $ 125.99 $ 134.80 $ 132.34 S&P 600 Hotels Restaurants & Leisure (1) $ 100.00 $ 109.81 $ 117.42 $ 166.01 $ 122.54 $ 128.09 NASDAQ Composite $ 100.00 $ 100.32 $ 126.38 $ 180.51 $ 190.18 $ 160.50 (1) Due to the limited number of publicly traded companies in our industry, we were unable to identify a suitable peer group for comparison to our market performance.
Added
In lieu of a peer group, we selected the S&P 600 Hotels Restaurants and Leisure index, of which our stock was a member during fiscal 2022. ITEM 6. Reserved 24 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

68 edited+47 added−99 removed14 unchanged
Biggest changeFiscal Year Ended Fiscal Year Ended January 30, 2022 January 31, 2021 Food and beverage revenues $ 436,637 33.5 % $ 159,501 36.5 % Amusement and other revenues 867,419 66.5 277,011 63.5 Total revenues 1,304,056 100.0 436,512 100.0 Cost of food and beverage (as a percent of food and beverage revenues) 119,123 27.3 45,207 28.3 Cost of amusement and other (as a percent of amusement and other revenues) 85,848 9.9 29,698 10.7 Total cost of products 204,971 15.7 74,905 17.2 Operating payroll and benefits 287,263 22.0 117,475 26.9 Other store operating expenses 402,661 30.9 299,464 68.6 General and administrative expenses 75,501 5.8 47,215 10.8 Depreciation and amortization expense 138,329 10.6 138,789 31.8 Pre-opening costs 8,150 0.6 11,276 2.6 Total operating costs 1,116,875 85.6 689,124 157.9 Operating income (loss) 187,181 14.4 (252,612 ) (57.9 ) Interest expense, net 53,910 4.2 36,890 8.4 Loss on debt extinguishment / refinancing 5,617 0.4 904 0.2 Income (loss) before provision (benefit) for income taxes 127,654 9.8 (290,406 ) (66.5 ) Provision (benefit) for income taxes 19,014 1.5 (83,432 ) (19.1 ) Net income (loss) $ 108,640 8.3 % $(206,974) (47.4 )% Change in comparable store sales 199.1 % (70.2 )% Company-owned stores at end of period (1) 144 140 Comparable stores at end of period (1) 113 114 (1) As of the end of fiscal 2021, all 144 of our stores were open except for our two comparable stores in Canada.
Biggest changeFiscal Year Ended January 29, 2023 Fiscal Year Ended January 30, 2022 Food and beverage revenues $ 678,333 34.5 % $ 436,637 33.5 % Amusement and other revenues 1,286,094 65.5 867,419 66.5 Total revenues 1,964,427 100.0 1,304,056 100.0 Cost of food and beverage (as a percent of food and beverage revenues) 193,742 28.6 119,123 27.3 Cost of amusement and other (as a percent of amusement and other revenues) 115,122 9.0 85,848 9.9 Total cost of products 308,864 15.7 204,971 15.7 Operating payroll and benefits 470,729 24.0 287,263 22.0 Other store operating expenses 600,568 30.6 402,661 30.9 General and administrative expenses 137,837 7.0 75,501 5.8 Depreciation and amortization expense 169,302 8.6 138,329 10.6 Pre-opening costs 14,619 0.7 8,150 0.6 Total operating costs 1,701,919 86.6 1,116,875 85.6 Operating income 262,508 13.4 187,181 14.4 Interest expense, net 87,363 4.4 53,910 4.2 Loss on debt extinguishment / refinancing 1,479 0.1 5,617 0.4 Income before provision for income taxes 173,666 8.8 127,654 9.8 Provision for income taxes 36,531 1.9 19,014 1.5 Net income $ 137,135 7.0 % $ 108,640 8.3 % Change in comparable store sales 24.8 % 199.1 % Company-owned stores at end of period (1) 204 144 Comparable stores at end of period (1) 113 113 (1) We opened eight new stores and acquired 52 stores as a result of the Main Event Acquisition (see Note 2, Business Combinations , to the Consolidated Financial Statements) during fiscal 2022.
Due to the limitations of store operations during the COVID-19 pandemic, the comparable store base for fiscal 2021 is defined as stores open for a full 18 months before the beginning of fiscal 2020 and excludes two stores that the Company elected not to reopen after they were closed in March 2020 due to local operating limitations and one store in Cary, North Carolina that was closed and relocated during the fourth quarter of fiscal 2021.
Due to the limitations of store operations during the COVID-19 pandemic, the comparable store base for fiscal 2021 and fiscal 2022 is defined as stores open for a full 18 months before the beginning of fiscal 2020 and excludes two stores that the Company elected not to reopen after they were closed in March 2020 due to local operating limitations and one store in Cary, North Carolina that was closed and relocated during the fourth quarter of fiscal 2021.
Strategy Our strategy is built on four key components, including offering the latest entertainment to enjoy together, novel food & drink to bring people together, creating an aligned team and integrated experience, and driving customer engagement. For further information about our strategy, refer to “Item 1. Strategy”.
Strategy Our strategy is built on four key components, including offering the latest entertainment to enjoy together, novel food & drink to bring people together, creating an aligned team and integrated experience, and driving customer engagement. For further information about our strategy, refer to “Item 1.
Nevertheless, because of the limitations described above, management does not view 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. Adjusted EBITDA and Adjusted EBITDA Margin .
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.
These are supplemental measures of performance that are not required by or presented in accordance with GAAP and include Adjusted EBITDA, Adjusted EBITDA Margin, Store Operating Income Before Depreciation and Amortization and Store Operating Income Before Depreciation and Amortization Margin (defined below).
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).
We consider the following policies to be the most critical in understanding the judgment that is involved in preparing the consolidated financial statements. Accounting for amusement operations . Amusement revenues are primarily recognized upon utilization of game play credits on Power Cards purchased and used by customers to activate video and redemption games.
We consider the following policies to be the most critical in understanding the judgment that is involved in preparing the consolidated financial statements. Accounting for amusement operations . Amusement revenues are primarily recognized upon utilization of game play credits on gaming cards purchased and used by customers to activate video and redemption games.
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 entitled 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.
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.
We estimate the amount of deferred revenue based upon credits and tickets remaining on Power Cards, historic game play credit and ticket utilization patterns and estimates of the standalone selling prices of game play credits and the customer material right. The standalone selling price of the customer material right is estimated using an equivalent chip cost plus margin approach.
We estimate the amount of deferred revenue based upon credits and tickets remaining on gaming cards, historic game play credit and ticket utilization patterns and estimates of the standalone selling prices of game play credits and the customer material right. The standalone selling price of the customer material right is estimated using an equivalent chip cost plus margin approach.
In determining the recoverability of the asset value, an analysis is performed at the individual store level, since this is the lowest level of identifiable cash flows and primarily includes an assessment of historical cash flows and other relevant factors and circumstances, including the maturity of the store, changes in the economic environment, unfavorable changes in legal factors or business climate and future operating plans.
In determining the recoverability of the asset value, an analysis is performed at the individual store level, since this is the lowest level of 35 Table of Contents identifiable cash flows and primarily includes an assessment of historical cash flows and other relevant factors and circumstances, including the maturity of the store, changes in the economic environment, unfavorable changes in legal factors or business climate and future operating plans.
If the carrying amount is not recoverable, we record an impairment charge, if any, for the excess of the carrying amount over the fair value, which is estimated based on discounted projected future operating cash flows of the store over the remaining service life using a risk adjusted discount rate that is commensurate with the inherent risk. Recent accounting pronouncements.
If the carrying amount is not recoverable, we record an impairment charge, if any, for the excess of the carrying amount over the fair value, which is estimated based on discounted projected future operating cash flows of the store over the remaining service life using a risk adjusted discount rate that is commensurate with the inherent risk.
We assess the potential impairment of our long-lived assets related to each store to be held and used in business, including property and equipment and right-of-use (“ROU”) assets, on an annual basis or whenever events or changes in circumstances indicate that the carrying values of these assets may not be recoverable.
We assess the potential impairment of our long-lived assets related to each store, including property and equipment and right-of-use (“ROU”) assets, on an annual basis or whenever events or changes in circumstances indicate that the carrying values of these assets may not be recoverable.
The more significant inputs used in determining our estimate of the projected undiscounted cash flows included future revenue growth and projected margins as well as the estimate of the remaining useful life of the assets.
The more significant inputs used in determining our estimate of the projected undiscounted cash flows include future revenue growth and projected margins as well as the estimate of the remaining useful life of the assets.
Our calculations of Adjusted EBITDA adjust for these amounts because they vary from period to period and do not directly relate to the ongoing operations of the currently underlying business of our 34 Table of Contents stores and therefore complicate comparison of the underlying business between periods.
Our calculations of Adjusted EBITDA adjust for these amounts because they vary from period to period and 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.
We traditionally expect our new store sales volumes in year two to be 10% to 20% lower than our year one targets, and to grow in line with the rest of our comparable store base 35 Table of Contents thereafter.
We traditionally expect our new store sales volumes in year two to be 10% to 20% lower than our year one targets, and to grow in line with the rest of our comparable store base thereafter.
In addition, Adjusted EBITDA excludes pre-opening and 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.
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.
However, because this measure excludes significant items such as general and administrative expenses and pre-opening costs, as well as our interest expense, net and depreciation and amortization expense, which are important in evaluating our consolidated financial performance from period to period, the value of this measure is limited as a measure of our consolidated financial performance.
However, because this measure excludes significant items such as general and administrative expenses and pre-opening costs, as well as our interest expense, net, loss on debt extinguishment/refinance and depreciation and amortization expense, which are important in evaluating our consolidated financial performance from period to period, the value of this measure is limited as a measure of our consolidated financial performance.
Our operating cash flows result primarily from cash received from our customers, offset by cash payments we make for products and services, employee compensation, operations, and occupancy costs. Cash from operating activities is also subject to changes in working capital.
Our operating cash flows result primarily from cash received from our customers, offset by cash payments we make for products and services, team member compensation, operations, occupancy, and other operating costs. Cash from operating activities is also subject to changes in working capital.
Fiscal 2021, 2020 and 2019, which ended on January 30, 2022, January 31, 2021, and February 2, 2020, respectively, each contained 52 weeks. All dollar amounts are presented in thousands, unless otherwise noted, except share and per share amounts.
Fiscal 2022, 2021 and 2020, which ended on January 29, 2023, January 30, 2022, and January 31, 2021, respectively, each contained 52 weeks. All dollar amounts are presented in thousands, unless otherwise noted, except share and per share amounts.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read together with our audited consolidated financial statements and related notes included herein.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read together with our audited consolidated financial statements and related notes included herein. This discussion may contain forward-looking statements.
Our comparable store base consisted of 113, 114, and 99 stores as of the end of fiscal 2021, 2020 and 2019, respectively. 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.
Our comparable store base consisted of 113 stores as of the end of fiscal 2022 and 2021. 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.
Refer to Note 1 of Consolidated Financial Statements for information regarding new accounting pronouncements.
Recent accounting pronouncements Refer to Note 1 of Notes to the Consolidated Financial Statements for information regarding new accounting pronouncements.
We have deferred a portion of amusement revenues for the estimated unfulfilled performance obligations based on an estimated rate of future use by customers of unused game play credits and the material right provided to customers to redeem tickets in the future for prizes.
Redemption games allow customers to earn tickets, which may be redeemed for prizes. We have deferred a portion of amusement revenues for the estimated unfulfilled performance obligations based on an estimated rate of future use by customers of unused game play credits and the material right provided to customers to redeem tickets in the future for prizes.
The Company’s Notes and credit facility contain restrictive covenants that, among other things, place certain limitations on our ability to incur additional indebtedness, make loans or advances to subsidiaries and other entities, pay dividends, acquire other businesses or sell assets.
Our debt agreements contain restrictive covenants that, among other things, place certain limitations on our ability to incur additional indebtedness, make loans or advances to subsidiaries and other entities, pay dividends, acquire other businesses or sell assets.
Key Measures of Our Performance We monitor and analyze several key performance measures to manage our business and evaluate financial and operating performance. These measures include: Comparable store sales. Comparable store sales are a comparison of sales to the same period of prior years for the comparable store base.
Strategy”. 25 Table of Contents Key Measures of Our Performance We monitor and analyze several key performance measures to manage our business and evaluate financial and operating performance, including: Comparable store sales. Comparable store sales are a comparison of sales to the same period of prior years for the comparable store base.
Future decisions to pay cash dividends or repurchase shares continue to be at the discretion of the Board of Directors and will be dependent on our operating performance, financial condition, capital expenditure requirements and other factors that the Board of Directors considers relevant.
Future decisions to pay cash dividends or repurchase shares continue to be at the discretion of the Board of Directors and will be dependent on our operating performance, financial condition, capital expenditure requirements and other factors that the Board of Directors considers relevant. There were no dividends declared in either fiscal 2022 or fiscal 2021.
Non-GAAP Financial Measures In addition to the results provided in accordance with generally accepted accounting principles (“GAAP”), we provide non-GAAP measures which present operating results on an adjusted basis.
We currently plan to open sixteen stores in fiscal 2023. Non-GAAP Financial Measures In addition to the results provided in accordance with generally accepted accounting principles (“GAAP”), we provide non-GAAP measures which present operating results on an adjusted basis.
Our total and comparable store counts as of the end of fiscal 2021 exclude a store in Cary, North Carolina, which was closed on January 2, 2022, and relocated prior to the end of our fiscal year. As of the end of fiscal 2020, 107 of our 140 stores were open and 84 of our 114 comparable stores were open.
Our total and comparable store counts as of the end of fiscal 2021 exclude a store in Cary, North Carolina, which was closed on January 2, 2022, and relocated prior to the end of our fiscal year.
For purposes of recognizing revenue, the total amount collected from each customer is then allocated between the two performance obligations based on the relative standalone selling price of each obligation. 49 Table of Contents Accounting for impairment of long-lived assets.
For purposes of recognizing revenue, the total amount collected from each customer is then allocated between the two performance obligations based on the relative standalone selling price of each obligation. Accounting for acquisitions.
We define “Adjusted EBITDA” as net income (loss), plus interest expense, net, loss on debt extinguishment or refinancing, provision (benefit) for income taxes, depreciation and amortization expense, loss on asset disposal, impairment of long-lived assets, share-based compensation, pre-opening costs, currency transaction (gains) losses and other costs. “Adjusted EBITDA Margin” is defined as Adjusted EBITDA divided by total revenues.
Adjusted EBITDA and Adjusted EBITDA Margin . We define “Adjusted EBITDA” as net income (loss), plus interest expense, net, loss on debt extinguishment/refinance, provision (benefit) for income taxes, depreciation and amortization expense, loss on asset disposal, impairment of long-lived assets, share-based compensation, currency transaction (gains) losses and other costs.
Adjusted EBITDA is presented because we believe that it provides useful information to investors and analysts regarding our operating performance. By reporting Adjusted EBITDA, we provide a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.
By reporting Adjusted EBITDA, we provide a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.
Although there is no assurance that our cost of products will remain stable or that federal, state, or local minimum wage rates will not increase beyond amounts currently legislated, the effects of any supplier price increase or wage rate increases might be partially offset by selected menu price increases if competitively appropriate.
There is no assurance that our cost of products will remain stable or that federal, state, or local minimum wage rates will not increase beyond amounts currently legislated, however, the effects of any supplier price increase or wage rate increases might be partially offset by selective price increases if competitively appropriate. 27 Table of Contents Fiscal 2022 Compared to Fiscal 2021 Results of operations.
Store Operating Income Before Depreciation and Amortization and Store Operating Income Before Depreciation and Amortization Margin. We define “Store Operating Income Before Depreciation and Amortization” as operating income (loss), plus depreciation and amortization expense, general and administrative expenses and pre-opening costs.
We define “Store Operating Income Before Depreciation and Amortization” as operating income (loss), plus depreciation and amortization expense, general and administrative expenses and pre-opening costs. “Store Operating Income Before Depreciation and Amortization Margin” is defined as Store Operating Income Before Depreciation and Amortization divided by total revenues.
General We are a leading owner and operator of high-volume venues in North America that combine dining and entertainment for both adults and families under the name “Dave & Buster’s”. Founded in 1982, the core of our concept is to offer our customers the opportunity to “Eat Drink Play and Watch” all in one location.
General We are a leading owner and operator of high-volume venues in North America that combine dining and entertainment for both adults and families under the “Dave & Buster’s” and “Main Event” brands. The core of our concept is to offer our customers quality dining and various forms of amusement all in one location.
Generally, our stores have returned to pre-pandemic operating hours and are open seven days a week, with normal hours of operation typically from 11:00 a.m. to midnight, with some stores open for extended hours on weekends.
Generally, our stores are open seven days a week, with normal hours of operation generally from between 10:00 to 11:30 a.m. until midnight, with stores typically open for extended hours on weekends.
Cost of amusement and other increased to $85,848 in fiscal 2021 compared to $29,698 in fiscal 2020. The costs of amusement and other, as a percentage of amusement and other revenues, decreased 80 basis points to 9.9% for fiscal 2021 from 10.7% in fiscal 2020.
Cost of amusement and other increased to $115,122 in fiscal 2022 compared to $85,848 in fiscal 2021. The costs of amusement and other, as a percentage of amusement and other revenues, decreased 90 basis points to 9.0% for fiscal 2022 from 9.9% for fiscal 2021.
“Store Operating Income Before 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.
Store Operating Income Before Depreciation and Amortization Margin allows us to evaluate operating performance of each store across stores of varying size and volume.
Unless otherwise specified, the meanings of all defined terms in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are consistent with the meanings of such terms as defined in the Notes to Consolidated Financial Statements.
See Cautionary Statement Regarding Forward-Looking Statements and Risk Factors for a discussion of the uncertainties and risks associated with these statements. Unless otherwise specified, the meanings of all defined terms in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are consistent with the meanings of such terms as defined in the Notes to Consolidated Financial Statements.
Store Operating Income Before Depreciation and Amortization The following table reconciles Operating income (loss) to Store Operating Income Before Depreciation and Amortization for the periods indicated: Fiscal Year Ended Fiscal Year Ended January 30, 2022 January 31, 2021 Operating income (loss) $ 187,181 14.4 % $ (252,612 ) -57.9 % General and administrative expenses 75,501 47,215 Depreciation and amortization expense 138,329 138,789 Pre-opening costs 8,150 11,276 Store Operating Income Before Depreciation and Amortization $ 409,161 31.4 % $ (55,332 ) -12.7 % Capital Additions The following table reflects accrual-based capital additions.
Store Operating Income Before Depreciation and Amortization The following table reconciles Operating income to Store Operating Income Before Depreciation and Amortization for the periods indicated: Fiscal Year Ended January 29, 2023 Fiscal Year Ended January 30, 2022 Operating income $ 262,508 13.4 % $ 187,181 14.4 % General and administrative expenses 137,837 75,501 Depreciation and amortization expense 169,302 138,329 Pre-opening costs 14,619 8,150 Store Operating Income Before Depreciation and Amortization $ 584,266 29.7 % $ 409,161 31.4 % Capital Additions The following table reflects accrual-based capital additions.
In connection with the early extinguishment of a portion of the Notes, the Company recorded a loss on extinguishment of $5,617 during fiscal 2021. In connection with the debt refinancing in fiscal 2020, the Company recorded a charge of $904. These events are explained further in Note 5 to the Consolidated Financial Statements.
Additionally, in connection with the June 29, 2022 debt refinancing, the Company recorded a loss of $1,479 in fiscal 2022, which is explained in Note 7 to the Consolidated Financial Statements. The Company recorded a loss on extinguishment of $5,617 during fiscal 2021 in connection with the early extinguishment of a portion of the Notes then outstanding.
Provision (benefit) for income taxes The effective tax rate for fiscal 2021 was 14.9%, compared to a benefit of 28.7% for fiscal 2020.
Provision for income taxes - The effective tax rate for fiscal 2022 was 21.0%, compared to 14.9% in fiscal 2021.
The total cost of products as a percentage of total revenues decreased 150 basis points to 15.7% for fiscal 2021 compared to 17.2% for fiscal 2020. Cost of food and beverage products increased to $119,123 compared to $45,207 for fiscal 2020.
The total cost of products as a percentage of total revenues was consistent at 15.7% for fiscal 2022 and fiscal 2021. Cost of food and beverage products increased to $193,742 compared to $119,123 for fiscal 2021.
Our brand appeals to a relatively balanced mix of male and female adults, as well as families and teenagers. We believe we appeal to a diverse customer base by providing a highly customizable experience in a dynamic and fun setting. Our stores average 40,000 square feet and range in size between 16,000 and 70,000 square feet.
We believe we appeal to a diverse customer base by providing a highly customizable experience in a dynamic and fun setting. Our Dave & Buster’s stores average 40,000 square feet and range in size between 16,000 and 70,000 square feet. Our Main Event stores average 54,000 square feet and range in size between 37,500 and 78,000 square feet.
Working capital at any specific point in time is subject to many variables, including seasonality, the timing of cash receipts and payments, and vendor payment terms. Cash flow from operating activities increased $332,352 in fiscal 2021 compared to fiscal 2020 driven primarily by the impact of approximately 3,200 more store weeks.
Working capital at any specific point in time is subject to many variables, including seasonality, the timing of cash receipts and payments, and vendor payment terms.
Debt and Derivatives On October 27, 2020, the Company issued $550,000 aggregate principal amount of 7.625% senior secured notes (the “Notes”). Interest on the Notes accrues from October 27, 2020, payable in arrears on November 1 and May 1 of each year, commencing on May 1, 2021.
During fiscal 2020, the Company issued $550,000 aggregate principal amount of 7.625% senior secured notes (the “Notes”). Interest on the Notes is payable in arrears on November 1 and May 1 of each year. The Notes mature on November 1, 2025, unless earlier redeemed, and are subject to the terms and conditions set forth in the related indenture.
While fiscal 2020 and fiscal 2021 were unusual years with the impact of COVID-19, historically in the first year of operation, new store operating margins (excluding pre-opening expenses) typically benefit from honeymoon sales leverage on occupancy, management labor and other fixed costs.
As a result of the substantial revenues associated with each new store, the number and timing of new store openings will result in significant fluctuations in quarterly results. New store operating margins (excluding pre-opening expenses) during the first year of operation historically benefit from honeymoon sales leverage on occupancy, management labor and other fixed costs.
We opened five new stores during fiscal 2021, including our relocated Cary, North Carolina store, and we opened six new stores during fiscal 2020. 37 Table of Contents Reconciliations of Non-GAAP Financial Measures Adjusted EBITDA The following table reconciles Net income (loss) to Adjusted EBITDA for the periods indicated: Fiscal Year Ended Fiscal Year Ended January 30, 2022 January 31, 2021 Net income (loss) $ 108,640 8.3 % $ (206,974 ) -47.4 % Interest expense, net 53,910 36,890 Loss on debt extinguishment / refinancing 5,617 904 Provision (benefit) for income tax 19,014 (83,432 ) Depreciation and amortization expense 138,329 138,789 EBITDA 325,510 25.0 % (113,823 ) -26.1 % Loss on asset disposal 1,392 577 Impairment of long-lived assets and lease termination costs 912 13,727 Share-based compensation 12,472 6,985 Pre-opening costs 8,150 11,276 Other costs (1) 3,289 (15 ) Adjusted EBITDA $ 351,725 27.0 % $ (81,273 ) -18.6 % (1) Primarily represents costs related to currency transaction (gains) or losses.
We opened five new stores during fiscal 2021, including our relocated Cary, North Carolina store. 28 Table of Contents Reconciliations of Non-GAAP Financial Measures Adjusted EBITDA The following table reconciles Net income to Adjusted EBITDA for the periods indicated: Fiscal Year Ended January 29, 2023 Fiscal Year Ended January 30, 2022 Net income $ 137,135 6.9 % $ 108,640 8.3 % Interest expense, net 87,363 53,910 Loss on debt extinguishment / refinancing 1,479 5,617 Provision for income tax 36,531 19,014 Depreciation and amortization expense 169,302 138,329 EBITDA 431,810 22.0 % 325,510 25.0 % Loss on asset disposal 769 1,392 Impairment of long-lived assets and lease termination costs 1,841 912 Share-based compensation 19,994 12,472 Merger and integration costs 25,257 — Other costs (1) 696 3,289 Adjusted EBITDA (2) $ 480,367 24.5 % $ 343,575 26.3 % (1) Fiscal 2021 includes a $3,230 severance obligation to the Company’s former Chief Executive Officer, who terminated his service in this position effective September 30, 2021.
Increased depreciation due to our 2020 and 2019 capital expenditures for new stores, operating initiatives, games and maintenance capital, was partially offset by other assets reaching the end of their depreciable lives.
The increase was due to incremental depreciation related to the Main Event acquisition of $33,798, partially offset by a net decrease in depreciation expense at Dave & Buster’s branded stores. The impact of assets reaching the end of their depreciable lives exceeded expense increases due to recent capital expenditures for new stores, operating initiatives, games, and maintenance capital.
Cost of food and beverage products, as a percentage of food and beverage revenues, decreased 100 basis points to 27.3% for fiscal 2021 from 28.3% for fiscal 2020. The impact of year-over-year cost increases in food products, primarily poultry, were offset by lower closure-related spoilage costs and food price increases effective midway through the third quarter of fiscal 2021.
Cost of food and beverage products, as a percentage of food and beverage revenues, increased 130 basis points to 28.6% for fiscal 2022 from 27.3% for fiscal 2021. The increase was due to unfavorable impacts of commodity cost increases, primarily in meat and dairy products, during fiscal 2022, and were partially offset by food price increases.
Other store operating expenses Other store operating expenses increased by $103,197, or 34.5%, to $402,661 in fiscal 2021 compared to $299,464 in fiscal 2020. The increase is primarily due to the impact of increased store weeks during fiscal 2021 on costs such as utilities, supplies, maintenance, and other services and an approximate $11,000 increase in marketing spend.
Other store operating expenses - Other store operating expenses increased to $600,568 in fiscal 2022 compared to $402,661 in fiscal 2021. The increase is primarily due to higher utilities, supplies, maintenance, marketing, and other services as well as $88,532 of costs related to Main Event.
The shift in mix from food and beverage sales to amusement sales of 300 basis points is due, in part, to reduced special events and less discounting of amusements, offset somewhat by food price increases effective midway through the third quarter of fiscal 2021.
Fiscal Year Ended January 29, 2023 January 30, 2022 Food sales 23.4 % 22.7 % Beverage sales 11.1 % 10.8 % Amusement sales 64.4 % 66.1 % Other 1.1 % 0.4 % The shift in mix from amusement sales to food and beverage sales is due, in part, to increased special events, and food price increases effective midway through the third quarter of fiscal 2021.
Financing Activities — Cash flow from financing activities primarily reflected: • In fiscal 2021, the Company had net repayments of $60,000 of its revolving credit facility and a repayment related to the early extinguishment of $110,000 principal of the Notes. • In fiscal 2020, prior to the debt refinancing, the Company drew down substantially all the available credit under our revolving credit facility, or approximately $100,000, and the Company received net proceeds of approximately $182,200 from the issuance of shares of our common stock in April and May 2020.
In fiscal 2021, the Company had net repayments of $60,000 of its revolving credit facility and a repayment related to the early extinguishment of $110,000 principal of the Notes. The Company received $5,124 of proceeds related to the exercise of stock options by employees of the Company.
The increase in revenue is attributable primarily to more store operating weeks in fiscal 2021 compared to the prior year due to temporary store closures during fiscal 2020, as a result of the COVID-19 pandemic. The table below represents our revenue mix for the fiscal years indicated.
Noncomparable store revenue increased $394,515 in fiscal 2022 compared to fiscal 2021 primarily due to the acquisition 52 stores as a result of the Main Event Acquisition and new store openings during the year. The table below represents our revenue mix for the fiscal periods indicated.
After November 1, 2022, the Company may redeem the Notes, in whole or in part, at certain specified redemption prices, plus accrued and unpaid interest, at the redemption date.
The early redemptions of the Notes resulted in a loss on extinguishment of approximately $2,300 related to a proportional amount of unamortized issuance costs. Beginning October 27, 2022, the Company may elect to further redeem the Notes, in whole or in part, at certain specified redemption prices, plus accrued and unpaid interest, at the redemption date.
This decrease is primarily due to favorable leveraging on management labor and benefits and lower labor hours due to labor efficiency initiatives and hourly labor staffing shortages, partially offset by increases in the hourly labor costs and higher incentive compensation, including referral and retention incentives implemented during the second quarter of fiscal 2021.
This increase is primarily due to hourly wage rate increases and an increase 30 Table of Contents in labor hours worked and management salaries as open positions were filled, partially offset by lower incentive compensation costs as fiscal 2021 included referral and retention incentives.
Food sales at comparable stores increased by $155,171, or 180.5%, to $241,127 in fiscal 2021 from $85,956 in fiscal 2020. Beverage sales at comparable stores increased by $72,108, or 160.6%, to $117,006 in fiscal 2021 from $44,898 in fiscal 2020.
Food sales at comparable stores increased by $76,377, or 31.7%, to $317,503 in fiscal 2022 from $241,127 in fiscal 2021. Beverage sales at comparable stores increased by $35,663, or 30.5%, to $152,670 in fiscal 2022 from $117,006 in fiscal 2021.
General and administrative expenses, as a percentage of total revenues, increased 570 basis points to 10.8% in fiscal 2020 compared to 5.1% in fiscal 2019, due primarily to unfavorable leverage on revenue decreases. Depreciation and amortization expense Depreciation and amortization expense increased by $6,329, or 4.8%, to $138,789 in fiscal 2020 compared to $132,460 in fiscal 2019.
General and administrative expenses, as a percentage of total revenues increased to 7.0% in fiscal 2022 compared to 5.8% in fiscal 2021 due to the reasons noted above. Depreciation and amortization expense - Depreciation and amortization expense increased to $169,302 in fiscal 2022 compared to $138,329 in fiscal 2021.
The Notes were issued by Dave & Buster’s, Inc. and are unconditionally guaranteed by Dave & Buster’s Holdings, Inc. and certain of Dave & Buster’s, Inc. existing and future wholly owned material domestic subsidiaries, which is substantially the same as the guarantors of the Company’s existing credit facility.
Because there were no borrowings outstanding under the revolving facility, the Company was not subject to the leverage ratio and/or interest coverage ratio requirements as of January 29, 2023. The Credit Facility is unconditionally guaranteed by Dave & Buster's Holdings, Inc. ("D&B Holdings") and certain of Dave & Buster's, Inc.'s ("D&B Inc’s") existing and future wholly owned material domestic subsidiaries.
The success of our new stores is indicative of our brand appeal and the efficacy of our site selection and operating models. During fiscal 2021, we opened five new stores, including our relocated Cary, North Carolina store. We currently plan to open eight stores in fiscal 2022.
The success of our new stores is indicative of our brand appeal and the efficacy of our site selection and operating models. During fiscal 2022, we opened seven new Dave & Buster's stores, added 52 stores as a result of the Main Event Acquisition on June 29, 2022, and opened one Main Event store since they were acquired.
Investing Activities — Cash flow from investing activities primarily reflects capital expenditures. • In fiscal 2021, the Company spent approximately $53,000 ($37,000 net of payments from landlords) for new store construction and operating improvement initiatives, $15,000 for game refreshment and $24,000 for maintenance capital. 48 Table of Contents • In fiscal 2020, the Company spent approximately $64,000 ($51,000 net of payments from landlords) for new store construction and operating improvement initiatives, $10,000 for game refreshment and $9,000 for maintenance capital • In fiscal 2019, the Company spent approximately $187,000 ($153,000 net of payments from landlords) for new store construction and operating improvement initiatives, $19,000 for game refreshment and $22,000 for maintenance capital.
These increases in cash flow from operating activities were offset by the payment of acquisition and integration costs of $25,257. Investing Activities — Cash flow from investing activities historically reflects primarily capital expenditures. In fiscal 2022, the Company spent $234,224 for new store construction and operating improvement initiatives, game refreshment and maintenance capital.
Nearly all our store workforce, except a small team of essential personnel, were furloughed in mid-March 2020. Hourly team members began to return as stores re-opened at reduced staffing levels. The total cost of operating payroll and benefits as a percentage of total revenues was 22.0% in fiscal 2021 compared to 26.9% in 2020.
The total cost of operating payroll and benefits as a percentage of total revenues was 24.0% in fiscal 2022 compared to 22.0% in fiscal 2021.
Comparable store amusement and other revenues in fiscal 2021 increased by $482,333, or 213.8%, to $707,952 from $225,619 in fiscal 2020.
Comparable store amusement and other revenues in fiscal 2022 increased by $152,762, or 21.6%, to $860,714 in fiscal 2022 from $707,952 in fiscal 2021. Cost of products - The total cost of products was $308,864 for fiscal 2022 and $204,971 for fiscal 2021.
Interest expense, net and Loss on debt extinguishment / refinancing Interest expense, net increased by $17,020 to $53,910 in fiscal 2021 compared to $36,890 in fiscal 2020 due primarily to an increase in the weighted average effective interest rate, offset partially by a decrease in average outstanding debt.
Interest expense, net and Loss on debt extinguishment / refinance - Interest expense, net increased to $87,364 in fiscal 2022 compared to $53,910 in fiscal 2021 primarily due to incremental acquisition-related debt of $850,000.
Eat and Drink are offered through a full menu of entrées and appetizers and a full selection of non-alcoholic and 33 Table of Contents alcoholic beverages. Our Play and Watch offerings provide an extensive assortment of entertainment attractions centered around playing games and watching live sports and other televised events.
Our amusement offerings provide an extensive assortment of entertainment attractions centered around playing games, bowling, and watching live sports and other televised events. Our brands appeal to a relatively balanced mix of male and female adults, as well as families and teenagers.
This decrease was driven primarily by lower ticket redemption activity as a percent of tickets issued during the first half of fiscal 2021, partially offset by higher freight costs. Operating payroll and benefits Total operating payroll and benefits increased by $169,788, or 144.5%, to $287,263 in fiscal 2021 compared to $117,475 in fiscal 2020.
This decrease was driven primarily by a change in prices at the game level implemented late in fiscal 2021 and in fiscal 2022. Operating payroll and benefits - Total operating payroll and benefits increased to $470,729 in fiscal 2022 compared to $287,263 in fiscal 2021.
The rate has increased due to the issuance of the Notes and the second amendment to the credit facility. As of January 30, 2022, we had letters of credit outstanding of $7,505 and an unused commitment balance of $492,495 under the revolving credit facility.
A portion of the revolving facility not to exceed $35,000 is available for the issuance of letters of credit. At the end of fiscal 2022, we had letters of credit outstanding of $8,905 and an unused commitment balance of $491,095 under the revolving facility.
Additionally, the early redemptions of the Notes resulted in a loss on extinguishment of approximately $2,300 related to a proportionate amount of unamortized issuance costs. For fiscal 2021 and fiscal 2020, the Company’s weighted average interest rate on outstanding borrowings was 10.34% and 5.40%, respectively.
For fiscal 2022 and fiscal 2021, the Company’s weighted average interest rate on outstanding borrowings was 9.6% and 10.3%, respectively. Amortization of debt issuance costs and original issue discount was $8,466, $4,244 and $2,184 for fiscal 2022, fiscal 2021 and fiscal 2020, respectively, and is included in “Interest expense, net” in the Consolidated Statements of Comprehensive Income (Loss).
This decrease was due primarily to favorable sales leveraging on occupancy costs and utilities and the absence of any impairment charges in fiscal 2021. General and administrative expenses General and administrative expenses increased by $28,286, or 59.9%, to $75,501in fiscal 2021 compared to $47,215 in fiscal 2020.
Other store operating expense as a percentage of total revenues decreased to 30.6% in fiscal 2022 compared to 30.9% in fiscal 2021. This decrease was due primarily to favorable sales leverage. General and administrative expenses - General and administrative expenses increased to $137,837 in fiscal 2022 compared to $75,501 in fiscal 2021.
The second amendment also terminated the term loan portion of the credit facility, triggering payment of $1,900 of lender debt costs, and the Company recorded a loss of $904 related to the unamortized debt costs associated with the term portion of the credit facility.
During the second quarter of fiscal 2022, the Company recognized a loss of $1,479, related to the write off of unamortized debt issuance costs associated with exiting creditors of the refinanced revolving facility.
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All dollar amounts are presented in thousands, unless otherwise noted, except share and per share amounts. 32 Table of Contents COVID-19 Pandemic In March 2020, a novel strain of coronavirus (“COVID-19”) outbreak was declared a global pandemic and a National Public Health Emergency.
Added
All dollar amounts are presented in thousands, unless otherwise noted, except share and per share amounts. The following discussion and analysis should be read in conjunction with the financial statements and accompanying notes included in this report.
Removed
Shortly after the national emergency declaration, state and local officials began placing restrictions on businesses, some of which allowed To-Go or curbside service only while others limited capacity in the dining room or Midway. By March 20, 2020, all our 137 operating stores were temporarily closed.
Added
Discussion regarding our financial condition and results of operations for fiscal 2021 compared with fiscal 2020 is included in Item 7 of our fiscal 2021 Annual Report on Form 10-K filed March 29, 2022.
Removed
On April 30, 2020, our first store re-opened to the public, and, by the end of fiscal 2020, 107 of our 140 stores were open and operating in limited capacity. The Company re-opened the remaining 33 stores that had been temporarily closed by August 1, 2021, the end of the second quarter of fiscal 2021.
Added
In the Financial Highlights section below, we discuss certain fiscal 2022 results in comparison to fiscal 2019 as that was the last full fiscal year of results that were not impacted by the COVID-19 pandemic.
Removed
During the fourth quarter of fiscal 2021, our two Canadian stores temporarily closed due to the resurgence, and shortly after the end of our fiscal year, these two stores re-opened with limited operations. By the end of March 2022, the Company expects all types of COVID-19 related restrictions to be lifted in all but three of our stores.
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Recent Events On June 29, 2022, the Company completed its acquisition (the “Main Event Acquisition” or “the Acquisition”) including 49 family entertainment centers under the Main Event brand and 3 family entertainment centers under the name The Summit (collectively referred to as “Main Event”), operating in 17 states.
Removed
These developments have had a material adverse impact on the Company’s revenues, results of operations and cash flows for fiscal 2020, and during fiscal 2021, continued to have a significant impact on our business and results of operations.
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Refer to Note 2, Business Combinations , to the Consolidated Financial Statements for further details. Financial Highlights • Revenue of $1,964,427 increased 50.6% compared with $1,304,056 in fiscal 2021 and increased 45.0% compared with fiscal 2019.
Removed
The ongoing effects of COVID-19 and its variants, including, but not limited to, consumer behavior, capacity restrictions, mask and vaccination mandates, wage inflation, our ability to continue to staff our stores and disruptions in the supply chain, will determine the impact to our operating results and financial position.
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Main Event branded stores contributed $288,778 of revenue during fiscal 2022. • Comparable sales at Dave & Buster’s branded stores increased 24.8% compared with fiscal 2021 and 11.6% compared with fiscal 2019. • Net income totaled $137,135, or $2.79 per diluted share, compared with net income of $108,640, or $2.21 per diluted share in fiscal 2021.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInflation Severe increases in inflation could affect the United States or global economies and have an adverse impact on our business, financial condition and results of operation.
Biggest changeThe impact on our annual results of operations of a hypothetical one-point interest rate change on the outstanding balance of credit facility as of January 29, 2023 would be approximately $8,500. Inflation Severe increases in inflation could affect the United States or global economies and have an adverse impact on our business, financial condition and results of operation.
If several of the various costs in our business experience inflation at the same time, such as commodity price increases beyond our ability to control and increased labor costs, we may not be able to adjust prices to sufficiently offset the effect of the various cost increases without negatively impacting consumer demand. 50 Table of Contents
If several of the various costs in our business experience inflation at the same time, such as commodity price increases beyond our ability to control and increased labor costs, we may not be able to adjust prices to sufficiently offset the effect of the various cost increases without negatively impacting consumer demand. ITEM 8.
Removed
Interest Rate Risk Outstanding borrowings on our revolving credit facility are based on variable rates, and we have historically elected to use LIBOR. Although our borrowing arrangements provide for alternative base rates other than LIBOR, those rates have historically been higher than those we paid based on LIBOR (which currently is subject to a floor of 1.00%).
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Interest Rate Risk In the second quarter of fiscal 2022, the Company elected SOFR as the alternative base rate for outstanding borrowings on the Credit Facility, which is based on variable rates. As of January 29, 2023, there was no balance outstanding on our revolving credit facility and $847,875 was outstanding under the term loan facility.
Removed
When LIBOR ceases to exist, we will likely need to agree upon a replacement index with our lenders, and the interest rate thereunder will likely change. As of January 30, 2022, there was no balance outstanding on our revolving credit facility.
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Financial Statements and Supplementary Data The consolidated financial statements required to be filed herein are set forth in Part IV, Item 15 of this report. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.

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