Making the leap from being a restaurant to a combined restaurant and entertainment facility presented a major branding challenge to Dave & Buster's before it became the largest such establishment in the U.S. with 100 stores, a distinction the company holds today.
|Stephen King, flanked by interviewer Carol Roth, takes a question from the audience at the Global Gaming Expo in Las Vegas.|
Stephen King, a keynote speaker at the Global Gaming Expo at the Sands Expo in Las Vegas last week, recognized this challenge when he joined the company in 2006 and was soon named CEO. During his talk, "Play: Dave & Buster's Path to Accelerated Growth," King detailed the various steps he took in addressing this challenge. He was interviewed on stage by Carol Roth, a TV host and entrepreneur.
"Having both (food and entertainment) opportunities is really important," King told his audience of hospitality, foodservice and gaming establishment listeners. "We're really an entertainment brand that has food and beverage as a complement."
Having already served 22 years with Carlson Restaurants Worldwide, the parent of TGI Friday's during its most aggressive growth period, King was well versed in the interactive technologies being deployed in the restaurant space. He immediately recognized the need to bring Dave & Buster's up to speed technologically.
"We had all of these tools that were available to us when I walked into Dave & Buster's," he said.
He saw, for instance, the need reduce the amount of time customers were spending to buy their gaming cards, which he addressed by introducing self-serve kiosks.
It was also important to make it easier for customers to leverage their loyalty rewards. King knew loyalty rewards encourage customers to buy more offerings once they're in the store.
In 2009, the company redesigned its loyalty kiosks to provide ticketless rewards points directly to the gamer's cards. It was a way to accommodate the needs of customers as they become more comfortable with interactive technology.
"Allowing members to register their card while they're in the store lets them begin earning rewards from the moment they leave the kiosk," Raechel Peters, Dave & Buster's CRM and email marketing specialist, told Kiosk Marketplace. About half of the company's new rewards members now register via the kiosks.
"Between both the power card kiosks and rewards kiosks, they allow customers to self serve when they need to purchase game play, check balances or register for rewards," Peters said. "This gives our staff the ability to focus more on other guest needs such as food and drink service, game assistance or questions/concerns of any kind."
New ownership steps in
When new owners took over Dave & Buster’s in 2010, they encouraged King to take whatever steps were needed to reposition the brand. In addition to changing menus and uniforms, he installed large TV screens to encourage sports viewing.
One of the most significant changes was moving the billiard tables to a less prominent space in the store to emphasize sports betting, a rapidly growing business.
"We thought there was an opportunity to create something much more relevant to our target (customer)," King said.
To make the stores appealing as fast as possible to an audience looking to engage in sports games and also be able to watch sports, King made these changes without the benefit of a lot of customer research.
"We jumped there before we had 100 percent clear data," he said.
The financial results confirmed the validity of these changes before the guest satisfaction surveys were completed. Sales and profits surpassed expectations. Earnings before interest, tax, depreciation and amortization have been consistently strong. In the most recent fiscal quarter, EBITDA increased 11.5 percent over the same quarter last year, according to a recent company financial report.
"It lifted the entire brand," King said, reflecting on the three-year period when the company spent $100 million on store renovations. "The model proved itself to be very cash flow positive."
"You can take big positions and big bets on things," he said. "I’m not sure the consumer would have told us to make the billiards area a sports book."
The success has allowed the company to add stores at a rate of 10 percent per year. This year, it will increase the number of stores by 15 percent.
In retrospect, King said he was fortunate that he was able to invest in different areas of the business simultaneously – interactive content, new stores and refurbishing stores.
Investing in interactive content is especially challenging, he said, since the impact is difficult to measure. But it is one of the most important areas since customers are becoming more comfortable with interactive technology.
To personalize its marketing, the company uses cable TV and Snap Marketing, King said. Snap offers lead generation, pay-per-click advertising, display advertising, email marketing, website design, social media, search engine optimization and data sourcing.
Serving the millennial audience, which has a propensity to use smartphones, will be a challenge for the company, King said. Experience has taught the company that in-store games do not transition well to the online space.
"That is an extraordinarily competitive space for mind share," King said. "It’s an amazing investment in content."
Casual experiences and content are being introduced to appeal to the Generation Z audience who, according to research done by Dave & Buster's, is more "chill" than its older, millennial counterparts, King noted.
In the meantime, King plans to continue the focus on interactive content. Proprietary content in particular offers a way for a retail establishment to differentiate itself.
"Shoot long and try to shoot where the puck is going," he said at the conclusion of his talk.
(Photo courtesy of Frank Mayer and Associates, Inc.)
Elliot Maras Elliot Maras is the editor of KioskMarketplace.com and FoodTruckOperator.com.