Good afternoon, and welcome to the Dave & Buster's Second Quarter 2025 Earnings Conference Call. This event is being recorded. I would now like to turn the conference over to Cory Hatton, Vice President, Head of Entertainment Finance, Investor Relations and Treasurer. Please go ahead.

Thank you, operator, and welcome to everyone on the line. In connection with today's call, you can find our earnings release, 10-Q and a supplemental deck titled September 2025 Investor Update that has been posted to the Events and Presentations section of our Investor Relations website. Joining me in the room and on today's call are Tarun Lal, our Chief Executive Officer; and Darin Harper, our Chief Financial Officer. After our prepared remarks, we will be happy to take your questions. This call is being recorded on behalf of Dave & Buster's Entertainment, Inc. and is copyrighted. Before we begin the discussion on our company's second-quarter 2025 results, I'd like to call your attention to the fact that in our prepared remarks and responses to questions, certain items may be discussed, which are not entirely based on historical fact. Many of these items should be considered forward-looking statements relating to future events within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Information on these risks and uncertainties have been published in our filings with the SEC, which are available on our website. In addition, our remarks today will include references to financial measures that are not defined under generally accepted accounting principles. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP measure contained in our earnings release this afternoon. And with that, let me turn the call over to Tarun.

Thank you, Cory. Good afternoon, everyone, and thank you for joining our call today. I am deeply honored to take the helm and collaborate with this talented team to drive innovation, growth, and the company’s next chapter. Our brand strengths and unique national footprint provide a powerful platform to deliver meaningful social connections at scale. I have spent a lot of time over the past six months researching the space and analyzing this business, including meeting with many key members of the team and the Board, and this is prior to joining while I evaluated this opportunity. This prework has allowed me to align quickly on areas of success as well as missteps and develop my own views on the clear focus areas of near-term opportunity. Importantly, this largely aligns with the strategic plan put in place by Kevin Sheehan, our Interim CEO and the current Nonexecutive Chair of our Board. Just a little bit about my past experience. I officially joined this iconic brand in July with more than 30 years of leadership experience at Yum!, including recent roles as President of the KFC U.S. business, being the Global COO of KFC and Managing Director across key international markets. I have overseen marketing, operations, and development in multiple geographies across the world. I've built and developed high-performing teams and together with them, have led multiple successful turnarounds in key markets. As a team, we drove strong same-store sales and profitability and catalyzed breakthrough development of new stores. I'm disciplined and tenacious and strongly believe that executional excellence behind a few big strategic priorities can unlock significant value creation. To that end, I'm confident that my extensive U.S. and global experience uniquely positions me to drive strategic and operational excellence and financial success at Dave & Buster’s. Dave & Buster’s is a phenomenal business with very addressable challenges that I'm very confident we can overcome as a team. In my first several weeks here on the job, I've invested time training in stores and have gained what I believe is a solid understanding of our products. I've also developed a better appreciation of our team member and guest experiences. I have traveled across the country and witnessed firsthand the pride and dedication of our teams out in the field. The field, which is where the majority of our teams, our products, and our customers are, is the best training ground. There is no better way to learn than from the ground up. My manager and trainer in my training store was Garrett, who graciously invested time with me and taught me everything from the most popular games to cooking the most popular items like wings and burgers and making some of the guests' favorite cocktails like the million-dollar margarita. Spending time with our guests and team members reminded me that Dave & Buster's is more than just a business. It's a place where people connect, celebrate and create lasting memories. I truly believe that the strength of our brands and the passion of our people give us a foundation to reach far beyond what we've already achieved. I look forward to shaping a vision that not only drives growth but also deepens our role as a destination where joy and connection thrive. As you may recall, the management presented a formal investor plan a few years ago that I studied in detail. My conclusion is that the principles and initiatives outlined in that strategy are generally right. However, the true measure of success depends not only on the strength of the ideas, but on the quality and consistency of execution. I believe there has been a very clear executional failure that will be rectified. My intention is to build on the sound foundations of that plan, assess where we can raise the bar, and provide a clear focus that will allow us immediate and long-term growth and value creation, which we will get into a lot more detail with my presentation later on in the call. My immediate focus is clear: reinforce our guest-first culture, deliver memorable experiences, and drive meaningful growth in sales, cash flow, and shareholder value. We have significant key strengths. We are a true category of one with no peer at our scale. Our $1 million midway appeals broadly across demographics, driving repeat visits while our unique ability to serve multiple occasions, play, watch, eat, and drink creates meaningful social connections that keep guests coming back. Our challenges are also clear: sharpening brand distinctiveness, improving retail marketing, strengthening value perception, and delivering an excellent customer experience across both food and beverage and games. Tackling these areas will be critical to unlocking the full potential of our business. With that, and before getting into more details on my initial observations and strategic plan updates, I would like to turn the call over to Darin, our CFO, to walk us through the financial results of our second quarter. Darin?

Thank you, Tarun, and good afternoon, everyone. Overall, our financial position remains strong, supported by a business model that consistently delivers high returns on new investments, strong unit economics, disciplined cost control, and solid free cash flow generation. The leadership team and Board are focused on executing our priorities to drive top-line growth and sustained cash flow. We are confident in the strategies available to improve operating performance and enhance shareholder value. Now, let's take a closer look at our financials. In the second quarter of fiscal 2025, comparable store sales decreased by 3% compared to the same period last year. We mentioned in our last call that comps for the first five weeks of the quarter were down 2.2% from the previous year. During the second half of the quarter, we were negatively impacted by the July 4 holiday falling on a Friday this year as opposed to a Thursday last year.

We seem to have lost the connection with the speakers. We'll try to reconnect shortly. Ladies and gentlemen, the speakers have rejoined us. Please continue.

All right. Sorry for that technical delay, everyone. Picking up where I left off. We're confident we are focused on the right priorities in the second half of 2025. And as a reminder, we are lapping particularly soft numbers in the balance of the year. During the second quarter, we generated revenue of $557 million, net income of $11 million or $0.32 per diluted share, adjusted net income of $14 million or $0.40 per diluted share, and adjusted EBITDA of $130 million, resulting in an adjusted EBITDA margin of 23%. As a reminder, reconciliations of all non-GAAP financial measures can be found in today's press release. We generated $34 million in operating cash flow during the second quarter, ending the quarter with $12 million in cash and $443 million in total liquidity, combined with the availability under our $650 million revolving credit facility, net of $14 million in outstanding letters of credit. Year-to-date, we have generated $130 million of operating cash flow. We ended the quarter with net total leverage ratio of 3.2x as defined under our credit agreement. Year-to-date, in 2025, we have invested a total of $193 million in capital additions on a gross basis or approximately $110 million on a net basis when factoring in payments from landlords. Details of which can be found in our table in our 10-Q filing. As we mentioned to you before, we are focused on converting our significant operating cash flow to free cash flow through more strict management of capital spend, eliminating ineffective and inefficient spending. We're committed to demonstrating our ability to generate free cash flow while continuing to invest in double-digit new store growth, new gains, other high ROI initiatives, and a more diligent remodel program. In the quarter, we closed on a sale-leaseback transaction for the real estate of two open and operating Dave & Buster's stores and entered into a build-to-suit takeout commitment for additional real estate assets of future Dave & Buster's and Main Event stores with an institutional real estate investor. In the quarter, we received approximately $77 million in funds related to these properties. We are pleased with the outcome, the executional abilities of our team, and the support of our real estate partners to close on this important transaction for our company. This transaction significantly enhances a long-term partnership with a very large real estate capital provider, solidifies a long-term funding vehicle for our robust pipeline of future new store openings, monetizes our real estate at attractive valuations underwritten to reflect our successful track record of new store openings, and future earnings power of our superior 4-wall economics, and ultimately provides a significant amount of liquidity for us to continue to make accretive investments to grow our business. Our new store development continues to deliver strong returns, and we have a solid pipeline of upcoming store openings. In the second quarter, we opened three new Dave & Buster's stores in Freehold, New Jersey; Wilmington, North Carolina; and Reno, Nevada. Already in the third quarter, we have opened one additional Dave & Buster's store in Spokane, Washington and two additional Main Event locations in Taylor, Michigan, and Norman, Oklahoma. This takes our new store openings year-to-date to eight, and we now expect a total of 11 new store openings in fiscal 2025, the midpoint of our previously guided range of 10 to 12 new stores. With the opening of our second international franchise location in India in August, we expect five more international openings over the next six months. As a reminder, we have secured agreements for over 35 additional stores in the coming years. We see international franchising as a driver of highly efficient incremental growth, monetizing our brand around the world with minimal investment and risk.

Thank you, Darin. Now I would like to walk through a short presentation to put some structure around my initial observations and the ultimate framework for our go-forward plan. So starting with a bit more detail on my initial observations, many of which should be stating the obvious to you as investors. We have a very strong iconic brand with excellent brand recognition at Dave & Buster's and of course, associated with that very strong brand awareness. Our customers love us. We provide a fun-filled customer experience and receive strong guest satisfaction scores, which translates into a loyal customer base. We have an exceptional business model with best-in-class scale and unit economics along with highly compelling new store economics. We made specific execution missteps that resulted in lack of awareness of our offerings and inconsistent operational execution. We have high confidence that we will improve performance in the near term by executing on focused improvements. Our value proposition remains highly attractive, and our back-to-basics approach has shown meaningful progress. I genuinely see our stock as materially undervalued in the public markets with significant upside potential. I'm truly excited with this opportunity to work together with an outstanding team and Board to unlock significant shareholder value in the near term. Moving to the next slide. In reviewing our performance, it became very clear where our approach was falling short. Starting with what was not working column on the left. So in marketing, we moved away from TV completely, and we had an unfocused promotional strategy going from a few targeted promotions to way too many promotions. In food and beverage, we leaned too heavily on appetizers and shareable and cut most of our highest revenue menu items. Operationally, we moved too fast, creating disruptions and breakdowns in communication between corporate and the field and a loss of focus on training. In games, we pulled back almost entirely on new games introductions, reducing them by almost 80%, along with a very complex pricing structure. These missteps limited our ability to drive traffic, sales, and brand relevance. Our remodel program, while moving the needle, also missed the mark, overspending against plan with a prototype that underperformed potential with limited marketing support. Finally, poor capital expenditure discipline translated to significantly lower than normalized cash flow generation. Now turning the right-hand side of what has worked. Recently, we have made meaningful progress in several areas. In marketing, we reintroduced TV advertising and sharpened promotions with fewer, more focused offerings. In food and beverage, we improved attach rates with our Eat & Play combo and through stronger positioning of entrées and a revamped and successfully tested new menu. Operationally, we have simplified our initiatives, which I will touch on more in a later slide, and we have rebuilt our corporate field communication as well as our training teams, which I'm particularly passionate about given my background as an operator. In games, we have moved quickly to introduce 10 new titles in '25. With remodels, we have controlled spending, and we have a new prototype that we will be getting out in the market very soon that we are encouraged will drive better results at a fraction of the cost, and we will couple it with better marketing support to drive awareness with traffic to really showcase the newness of the asset. Finally, on cash flow, we have pursued a more capital-light new store financing, as Darin mentioned earlier, that will bring down upfront expenditure, and we have successfully cut low ROI and wasteful capital expenditures now. Together, these actions are strengthening our performance and positioning us for sustained growth. Moving to the next slide. On the back of the things that are working, on this next slide, we demonstrate progress made so far. Our back-to-basic strategy with Kevin drove a material improvement in same-store sales. It's still short of where we ultimately want to be but has been a significant stabilizer. Our food and beverage and special events business are turning solidly positive, driven by our winning promotions, menu revamp, and investment in field sales managers. Our company continues to benefit from the recent and significant improvements in our special events business, which drives awareness, subsequent trips, and deeper brand engagement. While our overall same-store sales special events revenue has been up 6% year-to-date, the Dave & Buster's brand comparable special events revenue was up nearly 10% year-over-year and 20% over 2023 in the second quarter. We continue to achieve sizable 40%-plus returns on our new stores, and we have opened 22 since the start of fiscal 2024. While we did not execute our remodel program to date as we did like, these new assets are outperforming non-remodel stores by 700 basis points, which continues to highlight the opportunity to do more remodels at an appropriate cost and with the right elements. Moving to the next slide. As you all know, our company unveiled a comprehensive strategic plan at our Investor Day in 2023. I believe this plan had the right ideas. We just attempted to implement too much at the same time. I strongly believe that focus on prioritized execution is key. The areas that I am most focused on at the moment are: one, marketing, where we look to drive incremental traffic by improving consideration and frequency by improving the overall marketing message through an optimized media mix and leverage our large national sports viewing platform; two, food and beverage, improve all aspects of the menu and attach and spend per customer; three, operations, continue to repair communication between the corporate and the field, reemphasize training and reenergize the focus of the field to provide a high-quality guest experience. Four, games, introduce a marketable lineup of 10 or more new games each year. We scrambled in fiscal 2025, 2026 and beyond will be awesome. We will push harder to include exclusive titles and more culturally relevant IP. And finally, five remodels, modernize and refresh the look and feel of units and improve the layout to increase traffic and overall productivity. Moving to the next slide, what are the immediate near-term goals? I want to take this opportunity to make it very clear, and this is internally too, that my near-term goals are to grow same-store sales and generate and grow free cash flow now. We will do this by narrowing our focus to the five areas outlined on the prior page. And I'm just reminding relaunching our marketing engine by implementing an effective integrated marketing strategy and continuing to press on the success of local store sales managers and simplifying our value messages. Two, transform our food and beverage offerings with the launch of our Back to Basics menu nationwide this quarter; three, improving operations with a renewed focus on delivering an exceptional guest experience; four, refreshing our games offering to continue to introduce over 10 new marketable games to the midway each year; and finally, revamping our remodel program with a new prototype and appropriate marketing support. I also wanted to share with you all that we are not waiting to make changes and implement our refocused strategy. We are making changes and implementing them real-time. So coming up, we have a strong fall campaign, and we are excited to have launched our new fall season pass, giving guests unlimited daily gameplay, exclusive food and beverage discounts, and three value-packed options to choose from. Building on the success of our summer pass, this program creates even more reasons to visit Dave & Buster's throughout the season. With everyday value and experiences that bring people together, we are reinforcing Dave & Buster's as a go-to destination for fun this fall. We're also putting the final touches on our winter pass that we will debut in the fourth quarter. Our recently launched football watch offering complete with specials like 10 for 10 wings, continued enhancements to the leaderboard competition on our arcade floors while continuing to run our very popular evergreen promotions of the $19.99 Eat & Play combo sets us up for good momentum. Capping off the fall football festivities is our latest midway challenge, the 2-minute drill, where we invite football fans and gamers to compete for national and local leaderboard positions each week, looking to break single-season passing records over the course of the season. We will be debuting our new back-to-basics menu in October and are doubling down on the rollout of our very profitable human crane to additional Dave & Buster's and the main event stores. We will also be launching our revised remodel program in the coming weeks. Moving to the next slide. I wanted to touch briefly on our financial position and leave you with a few key takeaways from my position. We have strong cash flow and a strong balance sheet. This business will generate cash flow, and here is the profile of the cash flow generation. We have a very strong balance sheet with no near-term maturities and significant liquidity to invest in our strategy. Moving to the next slide. I also wanted to touch briefly on our current valuation. Comparing against our broad peer group, there's no other way to say it than this business is extremely undervalued today. Based on the strength of our brand, the basic economics of the business, the strong cash flow generation, and the significant potential of the business, I'm very confident we are worth a lot more than we are today, which leads me to my final point in the presentation. As you all know, I personally signed up to a compensation package tied to a near-term achievement of $675 million of annual EBITDA. As you can see from this page, and as you all know well, I think the point is important to make, nonetheless, there is very meaningful upside in the price of our stock and the value of our business based on very achievable financial results in the near term. I'm personally highly motivated and aligned to drive this business forward, and I look forward to our shared success. And with that, operator, please open the line for questions.

The first question is from Jeff Farmer with Gordon Haskett.

And welcome to Tarun. Good to have you on board. I might have missed this, but in the release, you noted that 3Q same-store sales to date are consistent with what you saw exiting Q2. The call did cut out, but did you guys mention those numbers more specifically, what those same-store sales trends look like?

No, we did not. We didn't quantify those. However, with five weeks into Q2 last year down 2.2%, and we reported a 3% decline for the quarter, you can get an idea of what the second half looked like. Our trends in Q3 are quite consistent with that.

Okay. I only bring it up because you mentioned July was sort of a little bit of a low watermark with the calendar shift. So I didn't know if things have gotten a little bit better. So I'll move on from that. Again, in the prepared remarks, you did call out value perception as one of the challenges that Dave & Buster's is facing. Can you just elaborate on that and what you think some of the opportunities are with value perception?

Yes. Thank you for the question and for the welcome. We have a very strong value proposition. I just think that we have marketed in a way that has confused our customers. And so we are currently working on simplifying the messaging and that messaging should go out as we execute our next marketing window. So I think it's not about not having the right value. I just think that both our retail marketing and our general communication has created confusion on the value ladders, and we know how to fix this now.

The next question is from Andy Barish with Jefferies.

Welcome. This was the first quarter where same-store sales were close, but margins missed. I'm trying to understand how things are shaping up. I know the food mix is higher, which affects margins negatively. Tarun, do you think some reinvestment in the business is necessary? I'm trying to gauge what that means for the fourth quarter margins. I know the third quarter is typically the low point of the year. I'm just looking to understand your thoughts on near-term margins in the business.

Yes. In the quarter, we experienced several factors at play. When analyzing our cost structure and year-over-year cost increases, one-third of the increase in raw dollars is attributed to new units. Another third is due to credits from the previous year and other one-off items like insurance adjustments and franchise tax impacts on EBITDA from last year. There were also some unusual legal costs this quarter. The remaining third involved reinvestments in the game room floor and stores in preparation for the summer of games, ensuring our experience and games were in good condition. We believe this is likely a peak cost level, and the second half of the year will not reach these heights. Additionally, we incurred some extra marketing costs during the quarter. Looking ahead to the second half of the year, we expect the EBITDA margin to be more stable compared to last year, mainly due to anticipating better top-line performance and not repeating last year's exceptional items or one-off costs that affected the quarter.

Got you. Very helpful. And then can you just kind of give us a sense of sort of getting back on marketing and value with Eat & Play, where that has kind of mixed of late versus maybe versus historical levels or something kind of give us a sense of how the back to basics is working?

We have seen a positive response to the EPC, maintaining an opt-in rate of about 8% to 10%, which is an improvement over historical levels. This success can be attributed to several factors. Firstly, our offers within the Eat & Play combo have been well-received, with food upgrades making up 30% of our EPC mix. Additionally, we have started offering the Eat & Play combo at the kiosk, which allows us to present a valuable offer to guests who primarily come to play games, boosting our attach rate. Overall, we are pleased with our performance, observing significant upgrades on the Power Card, including options for all-you-can-play and a $75 card upgrade, which together account for nearly one-third of our Eat & Play combo opt-ins. This value message resonates well with our guests and our operators enjoy implementing it.

The next question is from Andrew Strelzik with BMO.

My first one, Tarun, maybe if you take a step back, you mentioned in some of the prepared remarks some of the prior turnarounds that you led in your prior roles. And I guess I was wondering if you could maybe compare or contrast what you're seeing at Dave & Buster's with that prior experience. And I guess I'm wondering, in particular, it's such a different type of brand, different type of concept than in your prior roles. So I guess where do you see the similarities that you can draw on and maybe some of the differences that might take a little bit more learning?

That's a great question, Andrew. In my opinion, when it comes to business transformations, there are often more similarities than differences. From a short-term perspective, the brand seems to have lost its distinctiveness, and there's a value perception at play. If you can effectively communicate that value in the short term with a clear message, you can achieve some same-store sales growth. However, what's crucial in the medium to long term is two things. First, it's important to have the right capabilities and a guest-first culture focused on truly understanding our customers. Second, ensuring the brand positioning is clear so that consumers fully grasp what the brand represents is vital. In those aspects, there's a strong parallel between my previous experiences and the challenges at Dave & Buster's. The key difference I see is that there is added complexity at Dave & Buster's due to the combination of food and beverage offerings and a significant entertainment aspect that serves as an anchor for the business. It's a different product for me to comprehend, which is why I've dedicated so much time in the field, learning from the ground up. To sum up, while the product is where the real distinction lies, I believe that most transformations have more similarities than differences.

Okay. That's helpful context. And then maybe I wanted to dig in a little on your comments about the poor CapEx discipline and I'm curious about some of the ways you plan to evolve that. But in particular, I'd love to hear your thoughts on new store growth and continuing to open double-digit new stores at a time when you are trying to affect a lot of change and the comps have been under pressure. And I know the 40% returns, we've heard that number a lot over time. I think the investment community probably has a hard time with that number just given the performance over the last several years. So just would love to get your perspective on the CapEx evolution here and the new store growth.

So Andrew, let me first request Darin to respond to one part of the question, then I'll share my thoughts on this too. Darin?

Yes. The 40% return is a significant year 1 cash-on-cash return that benefits us. We still have the capability to identify excellent sites, staff them properly despite focusing on our core business, and form strong partnerships for our capital needs. We believe we can continue to open these locations at a net CapEx of $9 million to $10 million each. As we have previously mentioned, we can adjust our investment levels based on the business's requirements. Given our current returns, the pipeline we have ahead, and our competitive positioning for the medium and long term, we remain very optimistic about this area. So Tarun, do you have any additional thoughts?

Thank you, Darin. To add to that, I believe that achieving 6% to 7% growth is not a distraction for us. Our main focus remains on increasing same-store sales. The core business is definitely our priority. If we consider international markets, which I've dedicated a lot of time to, there are significant growth opportunities. However, my main focus is still on the U.S. core business. I am confident that we can grow our core business and achieve 6% to 7% growth through net new unit additions without losing our focus. My confidence comes not only from my past experiences but also from spending considerable time in the field, where I see that this kind of growth really excites and energizes the team. Growth fosters a sense of success and serves as a strong motivator. We will maintain this level of growth until we feel more secure in our position and have regained our sales momentum, at which point we can consider adjusting our targets.

The next question is from Jake Bartlett with Truist Securities.

Welcome, Tarun. I look forward to hearing from you over the next few years. My question is about the strategic game pricing. We conducted a review and noticed a significant change in pricing over the last few months, where it appears to have consolidated into a single tier. Previously, there were multiple pricing tiers, and now it looks like there is just one level of pricing across the board. Additionally, the average price per ticket seems to be considerably lower than it was under the previous plan. My questions are: first, what impact is this having on near-term results, especially considering we have positive food and beverage same-store sales but negative overall same-store sales? Is this pricing change contributing to that? Secondly, what prompted this shift? Earlier, there were discussions about value, and this appears to be a significant move towards that direction, so I'd like to understand the thought process behind it.

Yes, I'll address that. Referring to Tarun's comment about the value proposition and perception among our guests, game pricing was a significant focus. Looking back to last year, the brand increased both rate card and game level pricing without investing in the midway, which created an unfavorable value proposition for guests. Starting in April, we began testing various rate card optimizations, concentrating on the entry point and the number of chips provided, with clear objectives regarding value. Our goal with game level pricing was to allow guests to spend the same amount while extending their time in the midway, as we learned from consumer research that longer experiences enhance enjoyment. Additionally, we aimed to manage margins through strategic win pricing. We've conducted several tests in recent weeks and months, and we're seeing growth in average card loads while providing a better value to guests. This is an area we will continue to refine and optimize, and we still see potential for regional pricing adjustments. However, for the sake of simplicity in rollout and messaging, we prioritized this focus.

The next question is from Eric Wold with Texas Capital Securities.

I just want to dig in a little bit on the kind of the same-store sales trends in the quarter. I know you kind of gave us the down 2.2% in the first five weeks. I know in the last call, you talked about some optimism around the Memorial Day holiday and kind of what you're seeing in June with some positive days in June. Maybe a little kind of what you saw kind of as you went into July, other than the calendar shift and maybe some comparisons with an earlier school start versus last year. Was there any shift in terms of spending habits or kind of the way the consumer is reacting that you kind of was different from what you were seeing in the last call, kind of really shift in terms of the way the consumer is spending once you were in the store? I know you don't break out attendance versus spend. But kind of once they were in there, were you seeing any kind of shift in terms of their habits once they're in the locations?

No, we didn't notice any change in spending; it remained consistent. As we work on finding the right messaging in this environment, we believe our experiences with the Eat & Play combo messaging and the summer of games had a stronger impact on our guests compared to the later summer leaderboard initiative. These insights are valuable, and we plan to build on them and optimize in the second half of the year.

The next question is from Brian Mullan with Piper Sandler.

I wanted to come back to the marketing conversation. I don't want to belabor it, but just ask in maybe a different way. Tarun, I'm wondering if you could give your assessment, does this business need to significantly increase the dollar amount of marketing investments in order to really drive traffic back to the stores? I understand you're going back on TV, you're changing the messaging. Those are good things. But was there enough spend even prior to when the brand went off TV?

I don't believe we need to change the run rate of investments in marketing just now. We have tried a different media mix, which is working. We will continue to further refine it to make the spend more effective. But I don't believe that we need to increase the dollar amount of spend at this point of time.

The next question is from Brian Vaccaro with Raymond James.

Congratulations on your new role, Tarun. I just wanted to follow up on the pricing changes that you mentioned earlier. I know it can be tough to quantify, but I guess, can you level set what level of check versus traffic growth we're seeing reflected in the down 3% comp this quarter? Maybe how that compares? Is there a meaningful change in check that we should be mindful of? And also as we think about the second half, how average check could trend given some of these changes that you've made?

Yes, Brian, we didn't provide much detail on that. However, I can share that some initiatives we've undertaken in the food and beverage sector, particularly with the Eat & Play combo, are contributing to check growth. More importantly, regarding the second half of your question, I believe this trend will continue to benefit us. In October, we will launch a new menu across all locations that will reintroduce several fan favorites. After testing, we've observed encouraging check growth from this initiative, which is not primarily driven by price increases, but rather by encouraging guests to choose entrées and other menu items that enhance our check totals. Additionally, the changes we've made to game pricing are expected to support us as well. Therefore, I am optimistic that we will experience positive momentum in check growth during the latter half of the year.

The next question is from Mike Hickey with the Benchmark Stone Company.

Welcome aboard here. Just a quick one on your strategic plan. We appreciate that you feel it was sound and it was just missed execution. And when you look back on the plan, I think one of the bigger takeaways for investors at the time was that you're targeting $1 billion in adjusted EBITDA. And if I heard you correctly, it looks like your comp plan is tied to $675 million in adjusted EBITDA, which is a pretty big disconnect from the original strategic plan. Could you just explain that and if the $675 million is the new target?

So Mike, I'm not aware of the timeline for the $1 billion. We can certainly connect separately on that topic. However, I'm confident that the $675 million is a target we can achieve within the timeline we have committed to. From my perspective and the team's perspective, $675 million is the new EBITDA target.

The next question is from Dennis Geiger with UBS.

Tarun, welcome. I'm curious if you could spend a few more minutes maybe just talking about how you think about maybe the brand-specific missteps, but more so the macro currently and the competitive environment and kind of really just looking ahead and thinking about the macro and how you think about the competitive environment broadly, perhaps relative to your plans? I'm sure the focus is to play your game and execute against the plans that you've outlined. But just how you think about those two dynamics within that context?

Yes. Thank you, Dennis. So Dennis, yes, there are macro headwinds, absolutely for all businesses. But these come in cycles and businesses should be prepared for them. Consumers are looking for value for their money and brands and companies that deliver that prosper even in tough macro environments. So as I shared earlier, one of our priorities is simplifying our marketing message, simplifying our promotions, and making it easy for guests to understand what the real value is. And essentially, with value, remember, it's all about trust. It's not how much you're paying only. It's about the value that you're actually receiving from the brand. So I really believe that a key part of the pivot that we are making is kind of really simplifying the messages and making it really transparent for our customers on what they are getting for the money they are spending. So that clearly is one key part of the pivot on marketing. I think the second part is really making sure that our brand comes across as being distinctive. And there are two components to that. One is the product. As I talked about earlier, we are kind of working on collaborations and partnerships that will give us IP rights that will allow us to offer unique games that only D&B and Main Event can offer. So that's one part that what is the product you're offering to your consumer. I think the second piece within that is how do you communicate that? And there's so much of communication going on now on both traditional media and the digital medium that if you're not distinctive and you don't stand out, you're basically wasting your dollars. So I think that's the second part of what we are working towards now.

This concludes our question-and-answer session. I would like to turn the conference back over to Tarun Lal for any closing remarks.

Thank you, operator, and thank you all for joining. In closing, our business is built on a strong foundation, a resilient model, two brands that resonate with customers and experiences that foster loyalty. We delivered solid returns, disciplined operations, and sustainable cash flow. Our leadership team, operators, and Board are focused on driving growth and maximum value. We are confident in the opportunities ahead to further enhance performance and create long-term value for our shareholders. I look forward to meeting you in person and speaking with you again soon. Have a great evening. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.