Dave Busters And Main Event Post Strong Financials Reflecting An Overall Healthy FEC Sector In US

Entertainment centers for families and young adults are not just holding their own -- they are thriving. According to financial reports by two FEC leaders, the away-from-home entertainment sector is experiencing something of a boom. In August, Australia's Ardent Leisure Group reported that full-year results for its Main Event Entertainment division, a U.S. based 20-unit FEC chain, were up 63.8% over the previous year.

"Main Event was again the standout division, where U.S. dollar EBITDA (earnings before interest, taxes, depreciation, and amortization) grew 63.8%, driven by a strong performance from both constant and new centers," said Ardent chairman Neil Balnaves.

In its 2015 fiscal year, ended June 15, Main Event had revenue of $143.6 million, compared with $89.2 million in 2014, according to Ardent. Main Event opened six new facilities so far this year, and is planning another seven openings in 2016, followed by eight more in 2017. | SEE STORY

Ardent and Main Event's management teams are exploring additional new sites, according to Ardent's new chief executive, Deborah Thomas. So it's possible that Main Event could double in size by the end of 2017.

Headquartered in Dallas, Main Event's indoor recreational centers, which feature arcade games, range in size from 48,000 square feet to 75,000 square feet. They operate bowling lanes, laser tag arenas and ropes courses, along with several dining options. Stores are now located in Arizona, Georgia, Illinois, Oklahoma and Texas, with 2016's expansion targeting Kentucky, Missouri, Ohio and Tennessee.

The news is also good for Dave & Buster's Entertainment Inc., also headquartered in Dallas. On Sept. 8, the company announced that its second-quarter revenues jumped almost 20%, compared with the same period last year. Quarterly earnings of total revenues increased 19.8% to $217.3 million, compared with last year's $181.4 million. Same-store sales increased 11%, compared with a 5.7% improvement in last year's second quarter.

"Dave & Buster's is enjoying an incredible year and we are once again delighted to be raising our annual guidance," said chief executive Steve King. "During the second quarter, we generated a double-digit comparable store sales gain and have now exceeded the competitive industry benchmark for 13 consecutive quarters."

The company has opened five new stores in 2015. "Our long-term target for North American development is in excess of 200 stores, which we intend to achieve through approximately 10% annual growth in our store base," King said.

The company, known as the arcade for grownups, operates 73 stores in 30 states and Canada. One of its newest stores opened in Edina, MN, with another set to open soon in Buffalo, NY. Additional stores are planned for Houston, Phoenix and Springfield, VA (outside of Washington).

The adult-entertainment chain is also sprucing up existing locations. It has remodeled three locations and has opened D&B Sports lounges at five more.

Where Ardent is focusing Main Event's growth beyond the Southwest, the 33-year-old Dave & Buster's is now looking outside U.S. borders for its next great expansion opportunity. "We are making progress in realizing our international opportunities, and are extremely close to signing a multi-store agreement for licensed development," King said.

According to industry sources, the positive performances at FECs are in large part due to their abilities to draw the key demographic of 20-somethings. Viewed as viable entertainment alternatives to bars, bowling centers and movie theaters, they are comparably priced destinations for dates or small groups.

Motley Fool reported this month: "It's hard to ignore the diversions when entering a Dave & Buster's. From the classy throwback billiard and shuffleboard tables to the sea of modern videogames that include supersized versions of hot apps and ticket-spewing redemption games, it's a unique concept -- at least in the sense of a chain that has grown to 77 different locations. The games are a big part of the model, accounting for more than 54% of the revenue mix in its latest quarter. That's important because games carry higher margins without the commodity pricing fluctuations. Dave & Buster's naturally isn't as susceptible to wild price swings in food costs as traditional eateries, and that's just another reason to warm up to the stock, which has soared 166% since going public at $16 just 11 months ago."

In the children's entertainment and eatery sector, Chuck E. Cheese's had sales of $469 million during the first half of this year, compared with $440 million for the same period last year, according to parent company CEC Entertainment Inc. While the sales increase is largely attributed to CEC's acquisition of Peter Piper Pizza one year ago, the company saw a 3% improvement in same-store sales. There are 590 Chuck E. Cheese's locations.