Over the last 26 years Dave and Buster's has grown from a single store in Texas to one of the coin-op industry's leading us operators. Simon Liddle takes a look at how it is meeting the challenges of today's market

Synergy is a word commonly used in business today, but back in the 1970s the idea of bringing together a restaurant with an entertainment and game funhouse was nothing short of revolutionary.

US-based operator Dave and Buster’s traces its origins back to two separate businesses owned by Buster Corley and Dave Corriveau, which were located within a few feet of each other at the old Missouri Pacific train station in Little Rock, Arkansas.

Corley ran a popular casually elegant eatery known as Buster’s Restaurant, while Corriveau’s Slick Willy’s World of Entertainment, which offered billiards and games for big kids, also enjoyed a brisk trade. Having noted that customers would often make the short journey from one business to the other, the two entrepreneurs chose to combine their interests and invested in the first Dave and Buster’s dining and entertainment venue in Dallas, Texas, which opened its doors in 1982.

Adding a second Dallas venue just six years later, the company began another phase of expansion by establishing locations all across the country, starting with Marietta, Georgia in 1992. Continuing to add to its chain of stores each year, the company then acquired nine Jilian’s restaurants and entertainment complexes, as well as its brand name and trademarks, in 2005, and re-branded seven as D&B Grand Sports Cafes.

With a workforce of 8,400 and a presence in more than 50 locations across the US, as well as a store in Canada, Dave and Buster’s growth has mirrored that of the coin-op industry itself, and operations manager Cory Haynes believes the sector has come on in leaps and bounds in recent years.

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"When we opened in 1982 our midway game room was 3,000sq.ft with roughly 25 machines. We now have, on average, 13,000sq.ft with 160 plus machines in operation in each of the 50 plus locations," he said.

Each of its stores offers customers "great food and big fun served up by the friendliest people in town" - a combination that has helped to cement Dave and Buster’s place as one of the leading operators within the coin-op industry. It continues to provide food and fun to the American public, something that Haynes lists among the firm’s greatest achievements of the last 26 years.

Offering a broad range of coin-op gaming experiences to its players, such as cranes, redemption games and sports-themed arcade machines, the company currently works with a host of manufacturers, including, Bay Tek, LAI, Sega and Skee-Ball.

Another significant moment in the evolution of Dave and Buster’s gaming operations was the 1996 launch of its PowerCard programme, enabling customers to store currency on their cards for its Million Dollar midway games. These cards mean players no longer have to carry around coins or dollar bills in order to play games and can store their winning tickets until they choose to cash them in for prizes. The programme also provides the opportunity for the company to reward its most loyal customers by offering a 10 per cent discount on game play for life when cardholders accumulate 1,200 chips. Such players are deemed Gold Members.

The last 26 years have brought major changes for the company, which became a publicly held business trading on the New York Stock Exchange in 1999 before reverting back to being private again following a merger with WS Midway Acquisition, an affiliate of Wellspring Capital Management, in 2006.

During this time, there has been huge growth within the redemption sector of the business and while this trend looks set to continue over the coming years, Dave and Buster’s is keen to move with the times and bring its customers the very latest technology to meet their requirements.

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"Everything seems to be headed towards redemption and big screen video, those things you cannot necessarily get at home," explained Haynes. "We will follow the redemption trend while maintaining the best video presentation possible.

"The redemption player expects higher quality merchandise and brand names."

Just as the company has to contend with the increasingly sophisticated tastes of players who continue to choose to move towards the types of games that offer features not available in the home, current economic conditions also pose significant challenges for the industry and require new business ideas and strategies.

"It has made for tricky times, we have had to put value-added programmes in place. Ones that allow our guests to experience all components of Dave and Buster’s," remarked Haynes.

During such difficult times, the company aims to keep its offering fresh in its stores’ midway area, dining rooms and bar areas, while also seeking original ideas at reasonable costs from machine manufacturers - and according to Haynes, both the amusement element of its business and the dining side work well together.

Visitors to its venues can enjoy dining and gaming offers, such as the eat and play combo that allows customers to choose from a special menu and receive a $10 game card for just $15.99, and such strategies are clearly proving successful despite increasingly difficult market conditions.

During the second quarter of this year ended August 3, the company recorded a 3.5 per cent increase in total revenues, compared with the corresponding three-month period in 2007. Comparable store sales were up 1.2 per cent, total food and beverage revenues increased by 2.1 per cent, and revenues from its amusements and other segments rose by five per cent. Adjusted EBITDA, excluding startup costs and other non-recurring charges, increased by 9.8 per cent to $20.7m, up from $18.9m in 2007.

Commenting on the figures, chief executive officer Steve King said: "I’m proud of our performance during the second quarter. We achieved positive comparable store sales in the face of a softening consumer environment.

"Our operations team was able to make significant progress on our margin initiatives and we delivered adjusted EBITDA growth of 10 per cent."

So, with a number of new store openings in the pipeline for the new year, what has been the key to Dave and Buster’s success over the last 26 years?

"If I told you that you would know our secret," said Haynes.