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Shopping Centers Today -> May 2001
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BIG KIDS ARE BIG BUSINESS FOR DAVE & BUSTER’S
By Gregory J. Gilligan
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You could call it a giant funhouse for big kids.
“It is a place that creates a lot of smiles on adults,” said David O. Corriveau, the co-founder of Dave & Buster’s, the chain of large, high-volume restaurant-entertainment complexes geared mostly for people over 21.
The concept behind Dave & Buster’s is similar to that of a Las Vegas casino, with people engaging in games, eating, drinking or simply people watching.
On many weekend nights, Dave & Buster’s attracts nearly 2,000 guests at each one of its 28 locations across the United States.
“You’ll hear the roar of the crowd,” Corriveau said.
The thunder might be coming from customers braving wild rapids in a virtual simulator of white-water rafting. Others compete head to head in electronically linked Formula One race car simulators. Some guests shoot a round of pool in the huge billiard room, while the Million Dollar Midway, as it is called, features the classic Skee-Ball and shuffleboard games.
In short, Dave & Buster’s allows adults to be kids. And, so long as they’re accompanied by an adult, it allows kids too.
“We are not Chuckie Cheese,” said Corriveau, the “Dave” behind the Dallas-based chain, referring to the company that allows parents to drop off their children for a few hours of entertainment. Corriveau is Dave and Buster’s co-chairman, co-CEO and president.
“We are a place where adults can easily satisfy their desire to do something more than eat, drink and stare at their dates,” he said. “We are a one-stop shop for food, drink and fun.”
Food is certainly an important part of the Dave & Buster’s theme. As well as an array of trendy dishes, it offers steak and seafood entrees, and mainstay appetizers, burgers and sandwiches. The food and beverage side of the business alone generates roughly $6 million annually per location, or nearly half of the $12.5 million that the average Dave & Buster’s unit produces each year.
While mixing food with entertainment in a large venue isn’t new, Dave & Buster’s has turned it into something of an art during the past two decades.
The idea came to them in the late 1970s when Corriveau and James W. “Buster” Corley operated establishments next to each other in Little Rock, Ark. Corriveau’s amusement parlor was called Slick Willy’s World of Entertainment, while Corley ran Buster’s Restaurant.
Customers went back and forth between the two places. So, Corriveau and Corley decided to merge their two businesses under one roof, and found that it worked. Taking it another step, they opened the first Dave & Buster’s in Dallas in 1982. It was a hit.
A second location, also in Dallas, opened six years later, and the company went public in 1995 with five locations.
Since then, the chain has expanded from coast to coast and internationally. It has locations in 13 states, with plans for three more this year (in Dallas, Honolulu and Cleveland). Three or four more domestic locations each are planned for 2002 and 2003.
There also are Dave & Buster’s in Taipei, Taiwan and Toronto, under licensing agreements. More international units are planned under similar deals for the Pacific Rim, Central Europe, the Middle East and Mexico.
The average size of a Dave & Buster’s also has grown to between 50,000 and 60,000 square feet, up from the 35,000-square-foot restaurant and entertainment complex that first opened in Dallas.
Each unit represents an investment of $8 million to $10 million.
“These are like the size of five restaurants,” Corriveau said.
The size and popularity of Dave & Buster’s units also has pushed revenues upward. The chain generated $332.3 million for the fiscal year that ended Feb.4, 2001, up 34% from the previous year.
Same-store sales rose 3.6%.
Earnings have increased, though profit has been under pressure in recent years with the rise of competition — there’s a new generation of large-scale entertainment/food competitors, including the ESPN Zone and Jillian’s — and over-rapid expansion. Profit for the fiscal year was up 24% to $12.2 million.
Yet, Dave & Buster’s has posted strong results even as other theme restaurants, such as Planet Hollywood, Hard Rock Cafe and Rainforest Cafe, have struggled or shut down locations.
Some of the clones serve mediocre food with a museum-like entertainment, Corriveau said. “What do you do when you go to places like that? You eat, drink and stare at the memorabilia on the walls.”
The company will survive, Corriveau said, because the Dave & Buster’s concept is solid.
At Dave & Buster’s, the key is providing interactive entertainment with tasty food. It hired a corporate chef a couple of years ago to create eclectic American dishes for the restaurants. The company also spends about $300,000 annually upgrading and adding games to keep the products fresh, Corriveau said.
To help boost entertainment sales, the company switched in 1998 from using tokens to an electronic payment system called the Power Card, and amusement sales rose 10%.
Location also is a big part of Dave & Buster’s strategy. The chain stays away from tourist areas, relying more on a customer base made up of local patrons; it wants regular customers, not out-of-towners who stop in once.
The company wants locations that have good highway visibility and easy access, in markets that offer high-income consumers, said Bryan Spain, the chain’s vice president of real estate development. The average Dave & Buster’s customer drives 22 minutes to get there, and visits 10 times a year.
The average age of a Dave & Buster’s patron is 33, with a household income of $61,000; about 60% of the customers are male. Dave & Buster’s are located mostly in the top 50 U.S. markets, although there are exceptions: The company opened a location in late 1999 in Providence, R.I.
“I had a lot of doubting Thomases about that location,” Spain said. “They weren’t sure it would work for us.”
But it has worked, generating roughly $15 million annually in sales, exceeding the company’s $12.5 million average unit and well above the $11 million initially projected for that location.
The company also has launched a smaller prototype, of about 35,000 to 40,000 square feet, designed for population areas under 1 million. Dave & Buster’s has opened six of these.
But not all of these have been successful, Corriveau admitted. The Columbus, Ohio, unit is the lowest performer, generating about $8 million in sales annually, he said.
Elsewhere, though, the chain’s success can rub off on surrounding business, and it is sometimes treated as an anchor tenant at malls. In the White Flint Mall in Bethesda, Md., for instance, Dave & Buster’s, The Cheesecake Factory and Borders bookstore opened in 1996, turning around a once ailing mall. “We’re a real draw,” Spain said.
“It’s a great concept,” said Steve Kieras, vice president for development at Taubman Centers, who landed a Dave and Buster’s for Dolphin Mall in Miami, which opened in March.
Real kids can have a good time, too. Kieras and others say Dave & Buster’s is family-friendly because there is something for people of all ages to do.
“It’s just a fun place.”
Gregory J. Gilligan covers the retail industry for The Richmond Times-Dispatch.
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