PLAY’s Adjusted EBITDA Declines But Sequential Sales Trends Show Improvement in Q3 2025
Sequential Sales Recover Despite Decrease in Overall Revenue
Dave & Buster's (NASDAQ: PLAY) posted a 1.1% year-over-year decrease in third-quarter revenue to $448.2 million, with comparable store sales dropping by 4% compared to Q3 last year. Net losses deepened to $42.1 million, versus $32.7 million in the prior year quarter, while Adjusted EBITDA fell from $68.3 million to $59.4 million.
Yet management highlighted a sequential improvement in same-store sales over the course of the quarter, culminating in the final month down only 1%. This was largely driven by a refreshed menu that supported positive same-store sales for food and beverage.
Food and Beverage Segment Shows Strength; Store Expansion Continues
Despite headwinds in entertainment revenues, food and beverage sales provided a bright spot, climbing to 37.7% of total revenues, up from 35% a year ago. The company's growth initiatives remain on track, with the addition of one new Dave & Buster’s store and three new Main Event locations in Q3. Two further Dave & Buster’s are slated for opening in Q4, for a total of 11 new stores plus one relocation in 2025. International franchise expansion also gained momentum, with a third franchise opening in the Philippines and plans for at least four more internationally in the next six months.
| Q3 2025 | Q3 2024 | Change (%) | |
|---|---|---|---|
| Total Revenue ($M) | 448.2 | 453.0 | -1.06 |
| Net Income (Loss) ($M) | -42.1 | -32.7 | — |
| Adjusted EBITDA ($M) | 59.4 | 68.3 | -13.06 |
| Comparable Store Sales (%) | -4.0 | — | — |
| Food & Beverage as % of Revenue | 37.7 | 35.0 | +2.7 pts |
| Entertainment as % of Revenue | 62.3 | 65.0 | -2.7 pts |
| Cash Flow from Ops ($M) | 58.0 | -7.2 | — |
Cost Management and Store-Level Efficiency Remain Priorities
Store operating income before depreciation and amortization declined from $93.3 million in Q3 2024 to $85.0 million, reflecting continued margin pressure from payroll, store expenses, and higher depreciation tied to recent investments. Operating costs represented 103.6% of revenue in Q3, compared to 98.6% a year ago. General and administrative expenses rose to 7.3% of revenue, versus 5.4% previously.
| Q3 2025 | Q3 2024 | |
|---|---|---|
| Operating Payroll & Benefits ($M) | 124.9 | 120.9 |
| Other Store Operating Expenses ($M) | 174.8 | 171.0 |
| Depreciation & Amortization ($M) | 63.0 | 53.9 |
| Store Op. Income Before Depreciation & Amortization ($M) | 85.0 | 93.3 |
Liquidity, Cash Flow and Balance Sheet Position Strengthen
PLAY generated $58.0 million in operating cash for Q3 and closed the quarter with $441.9 million of available liquidity. Cash and equivalents rose to $13.6 million, with overall assets of $4.13 billion. The company’s Net Total Leverage Ratio was 3.3x, reflecting continued commitment to debt management as store growth continues.
Management Perspective: Focus on Execution and Brand Revitalization
CEO Tarun Lal noted, “We saw sequential improvement in same-store sales each month, with the final month down only roughly one percent.” He expressed confidence that ongoing operational changes, refreshed food offerings, and investment in guest experience can drive meaningful value for guests and shareholders alike.
Key Takeaways for Investors
Despite top-line declines and increased net losses, PLAY’s sequential improvement in comparable sales, strength in the food and beverage segment, and strong operating cash flow point to green shoots as the back-to-basics plan gains traction. Expansion into international markets and robust liquidity further support future operational flexibility.
Investors may want to follow next quarter’s comparable sales trajectory, watch for further margin improvement, and assess management’s execution on expansion plans. While challenges remain, the progress in core metrics and commitment to growth may set the stage for a stronger performance ahead.
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