Just last month, we reported that Dave & Busters ($PLAY) was reeling from $100 million in rental expenses while attempting to avoid hostile takeovers with a "poison pill" strategy that kept individual investors from owning more stock in the chain than others. A year before that, however, we reported that the chain showed positive foot traffic indicators and a healthy future. It's that latter, earlier, data that likely makes Dave & Buster's an attractive investment for Jefferies LLC.
Today, Jefferies infused a $100 million investment in Dave & Buster's via a common stock purchase with an option to buy another $15 million over 30 days, as reported by NRN's Joanna Fantozzi. The deal will keep Dave & Buster's running for some time as it awaits a post-pandemic world.
All 137 Dave & Buster's locations closed on March 20, but before that happened the chain was seeing healthy foot traffic.
Right up to that March 20 shutdown, Dave & Busters was picking up massive amounts of Facebook "Were Here" counts, which acts as a proxy for foot traffic. It measures the number of selfies and status updates posted from business locations. On March 20, that number peaked at around 10.1 million, up from 9 million a year ago.
But right after that date, the chain's "were here" count flatlined as locations were shut down by the global pandemic. Shortly after, the restaurant's stock price tumbled.
It seems that Jefferies sees an opportunity here. That is, whenever things get back to normal, and it's safe to open Dave & Busters' locations once again, Jefferies sees a healthy business that brings a lot of traffic and subsequent revenue. As such, that stock price looks like a good buy assuming things return to normal. The $100 investment provides a bridge for the chain and Jefferies stands to gain, assuming that what we're seeing now is the stock's low.
About the Data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales, and app ratings - and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.
Further Reading:
- Dave and Buster's earnings call does not reflect its future, this data shows why
- Dave and Busters poised for solid earnings with healthy hiring and retail outlay
- Applebee's is beating TGI Friday's and Chili's in the Happy Hour War
