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Dave & Buster's Entertainment Inc (NASDAQ:PLAY)
Q3 2019 Earnings Call
Dec 10, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, everyone. Welcome to the Dave & Buster's Entertainment, Inc. Third Quarter 2019 Earnings Conference Call. Today's call is being hosted by Brian Jenkins, Chief Executive Officer. I'd like to remind everyone that this call is being recorded and will be available for replay beginning later today.

I would now like to turn the conference over to Mr. Scott Bowman, Chief Financial Officer. Please go ahead with your opening remarks.

Scott J. Bowman -- Senior Vice President and Chief Financial Officer

Thank you, Cody. And thank you all for joining us. Joining me on today's call are Brian Jenkins, Chief Executive Officer. After comments from Mr. Jenkins and myself, 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 our discussion on the company results, I'd like to call your attention to the fact that in our remarks and our responses to questions, certain items may be discussed, which are not entirely based on historical facts. Any 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 the various risk factors and uncertainties have been published in our filings with the SEC, which are available on our website at www.daveandbusters.com, under the Investor Relations section.

In addition, our remarks today will include references to EBITDA, adjusted EBITDA and store operating income before depreciation and amortization, which are 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 results contained in our earnings announcement released this afternoon, which is also available on our website.

Now I will turn the call over to Brian.

Brian A. Jenkins -- Chief Executive Officer and Director

Good afternoon, and thank you for joining our call today to discuss third quarter results and our outlook for the business. For the quarter, total revenue increased by 6% led by continued strong performance from our new stores. While we continue to drive meaningful progress in our business and overall strategy, our comp sales declined 4.1% in line with the run rate trends we shared on our last earnings call, as we continue to see softer comps in our Amusements business and impacts from increased competition across the markets we serve.

Now I'd like to turn to our near-term priorities, which we outlined on our Q2 earnings call, as we remain laser focused on the execution of these priorities and continue to make progress on many fronts. Although these initiatives will take time to be fully realized, we are encouraged by our progress to date and feel confident the actions we are taking will drive meaningful improvement, value creation and long-term success for the business.

Now, let me share some specific updates on these priorities. We are progressing well on our first priority of revitalizing our existing stores. We have rolled out our massive 43-foot Wow Wall LED TV screens to 35 stores through the end of the third quarter, and it rolled out another 13 Walls since the end of the quarter, surpassing our initial target of 35. We also completed other upgrades to reenergize our dining areas and to facilitate customer engagement. The Wow Wall screens gave us the capability to become the premier sports viewing destination in these markets, and provide a tremendous opportunity to increase guest frequency and food and beverage attachment over time.

We are seeing improvement in some of these stores already and now there is more opportunity ahead to fully realize the potential of these great assets. Our next step in this initiative involves the programming of content on these screens to maximize global interest and to generate greater incremental traffic and viewership. For example in select stores, we are now testing live activities around key sporting events such as professional and college football, which we expect to build community and drive increased store traffic.

Another important component of our revitalization initiative is refreshing our menu and games offering and we're excited about the opportunities in these areas. This work started with in-depth customer research, which has provided valuable insights to guide our strategic path forward. We know that our guests want new and novel food and beverage offerings as well as games that encourage social interactions and fun. For our menu offering, we are evaluating options based on this research along with input from an industry-leading consulting firm to help inform future changes.

As a first step, we will be testing a more accessible food offering in Arcade, which will feature new snackable menu options in select locations. For our core menu offering, we will continue to evaluate enhancements, including tests of a more simplified 30 item menu and the introduction of several new signature and shareable items. We will update the progress as we move forward.

From a games perspective, we are increasingly prioritizing games that encourage social interaction and fun among larger groups of people, including the planned introduction of new multiplayer arcade games, a test of new multiplayer virtual reality platform and the plan testing of physical [indecipherable] games in select locations. Through our focus on multiplayer games, we are building a robust social aspect into how we enable our guests to play.

Our second part building deeper guest engagement began with the successful launch of our new mobile app in October. Through the end of October -- November, we have recorded over 600,000 guest accounts through our new app, and generated over $14 million in Amusement revenue from the purchase of digital power cards on the app. To put that in perspective for you, we had less than 800,000 active guest accounts prior to the launch of the app. We're extremely excited about the long-term benefit of building our customer database, including the significant revenue, we expect to derive from the app over time. In the near term, we will be able to communicate to customers directly one-on-one directly through email, fax and push notifications to more effectively reach our guests. Longer term, our learnings from this platform will allow us to be much more targeted and will be supported by a significantly improved loyalty program to get our guests increased value and a [indecipherable] to return.

Looking forward, we will continue to add functionality to our app to connect more effectively with our guests and reduce friction in our stores. As an example, one of the exciting near term enhancements, we will be introducing pay at the table on the app for our guests in the first half of next year. This will be a significant leap forward in reducing friction for our guests and improving efficiency by streamlining the payment process. We also remain focused on our third priority, disciplined cost management. We have reduced cost in several areas and continue to realize operational efficiencies in our stores and corporate office and remain on track to achieve $15 million in annualized savings. As planned, these savings are helping fuel our growth as we reinvest these dollars into technology, business analytics and marketing, including digital efforts.

Turning to our fourth priority, we remain committed to deploying capital for the highest return opportunities and we continue to invest in high return stores, which we believe is vital in driving top line sales and return on invested capital. Since our last call, we have made significant progress and continue to optimize our store size, according to market potential. We are efficiently redesigning our store layouts by reducing the back-of-house and kitchen areas, while optimizing the sports viewing in arcade areas to provide the best overall guest experience.

We believe these initiatives will solidify opportunities for future growth and also allow us to maximize future margins. In fact, we have already revisited four previously underwritten stores in our 2021 class and have resized them to maximize margin and return potential, while preserving revenue capacity. As I mentioned last quarter, we will manage the pace of new store growth in order to maximize returns and to enable our teams to focus their efforts on advancing our store revitalization efforts. Although we will not give detailed 2020 guidance until our next earnings call, I will tell you that we expect new store unit growth to be slightly lower in 2020 as compared to the 2019 plans.

As always, we will continue to monitor the situation, ensure we are making the right business decision and we will remain open-minded about the pace of new unit growth in 2021 and beyond. Finally, after funding our new store growth and other high-return projects, our fifth priority is to continue returning capital to shareholders in the form of share repurchases and dividends. Year-to-date, we have returned more than $300 million to shareholders and expect repurchases, as dividends will continue to be an important pillar of our capital allocation plans in 2020 and beyond.

We will continue to carefully balance our long-term capital needs while maintaining a prudent balance sheet in terms of leverage. Over the past several months, we have dedicated significant time and effort to better understand our customer to help inform and shape our strategy. We believe this work will generate significant benefits and enhance shareholder value going forward. And we are encouraged by early signs, especially in our guest engagement initiative, which is advancing rapidly.

As we move forward, we will continue to make sound decisions based on a rigorous test and learn process to help ensure success as we expand on a larger scale. Additionally, these initiatives will serve as a solid foundation as we further refine our strategic plan through our annual planning process, which will be informed by much of the work that has already been completed or that will be completed in the coming months. We expect to share more details on this plan as a part of our next earnings call.

Before I turn the call over to Scott, I want to discuss the recent change within our IR department. As many of you know, during the quarter, our Senior Director of Investor Relations, Arvind Bhatia made a personal decision to pursue another professional opportunity. We would like to thank Arvind for his many contributions to Dave & Buster's and wish him all the best in his future endeavors. We are currently in the process of transitioning Investor Relations services to an outside advisory firm.

Now I'll turn the call over to Scott to discuss the quarter's highlights, our financial performance and 2019 updated guidance.

Scott J. Bowman -- Senior Vice President and Chief Financial Officer

Thank you, Brian, and good afternoon everyone. I'll begin by spending a few minutes discussing the highlights of the third quarter, followed by our financial performance and then finish with our full year guidance.

First, our key achievements in the third quarter. In Amusements, we launched our fifth proprietary VR title, called Terminator: Guardian of Fate, which quickly established itself as one of the most popular selections on our proprietary VR platform. We also expanded our [indecipherable] large format multi-player VR systems in to two additional stores during the quarter.

For the fourth quarter, we have already launched a new six player arcade racing game called Hot Wheels: King of the Road, and it is already a top trending game based on the design and competitive price. Flipside, it will be available exclusively at Dave & Buster's through the end of the calendar year. Finally, in keeping with the objective of delivering more competitive good games, we are in the process of rolling out a forward modern take on the classic ping pong called Pong Knock Out, which is a competitive multiplayer game that utilizes mechanical elements in place that [indecipherable] our key technology to deliver a title that is both nostalgic and [indecipherable] the moment. Our Amusements team has great confidence for our product planning for 2020 and we look forward to communicating future launches.

Within Food and Beverage, two of our recent offerings, the grilled chicken avocado ranch sandwich and Drunken New York strip have quickly moved to the top of the category. In addition, two items from our summer time, winter time only offerings, which [indecipherable] nighttime Hurricane have now moved their way onto the beverage menu on a premier basis. We know that our customers continue to expect more novel food and beverage offerings and will continue to enhance and innovate our menu.

In terms of our Q4 marketing campaigns, we launched our Unlimited Wings and $10 Power Card promotions on Sundays, Mondays and Thursdays to just add Dave & Buster's as a place to watch Pro-football. In October, we also launched a new mobile app, which included promotion to customers to download the app. In the first three months, the app resulted in $14 million of revenue and has been instrumental in growing our customer database. We are also testing other new offers in the app to optimize profitability redemption. And so far we're seeing great response.

Going forward, we'll continue to test new promotions to bring value to our guests leveraging technology and personalized messaging for guest engagement. With respect to new stores, we opened four new locations in the quarter and have opened one additional stores since the quarter-end. This brings our total to 15 new stores for the year and we expect to open one additional stores in the fourth quarter, or total 16 new locations for the full year. These store openings for the year will skew toward large format stores and the split between new and existing markets.

Looking ahead, we continue to see significant opportunity to have a strong pipeline in the available market to continue to grow our store base. We'll continue to evaluate these available markets and ensure that our store size matches the market opportunity. We've made significant progress in our efforts to make our in-store layoffs more efficiently, which will help preserve our strong returns. By the end of the year, we have planned to have 136 locations and continue to believe the long-term opportunity is 230 to 250 locations in the US and Canada.

Now let me turn to our financial highlights. During the third quarter, total revenues increased 6%, driven by strong contribution from our 35 non-comparable stores. This was partially offset by a 4.1% decrease in our comparable stores, which was consistent with our run rate at the time of our last earnings call and improved slightly as the quarter progressed. As we communicated on our last earnings call, we experienced weakness in Amusements, mainly due to the rollover of last year's VR launch. [Indecipherable] in food slightly toward the end of the quarter, but remained a headwind.

In addition, weather had an unfavorable impact of approximately 120 basis points on comps and competitive intrusion and cannibalization continue to be step headwinds. Looking at overall sales by category, Amusement and Other grew 7% and Food and Beverage grew 4.9%. Amusement and Other represented 58% of total revenues during the quarter, an increase of 50 basis points in mix from the prior year period.

Breaking down comp sales, our walk-in sales declined 4.6%, our special events were up slightly. In terms of category comp sales, Amusement and Other declined 3.9%, while Food and Beverage declined 4.4%. Within Food and Beverage, food declined 4.9% and the bar business declined 3.6%. Total cost of sales was $52.2 million in the quarter and increased 10 basis points as a percent of sales. This was mainly due to an increase in Food and Beverage while Amusement cost was flat as a percent of sales.

Food and Beverage cost was 60 basis points unfavorable as a percent of sales, mainly driven by the impact of our Unlimited Wings promotion and costs related to our shift to first fusions within our bar offerings. This decline was partially offset by the positive impact of 1.7% in food pricing and 1.9% in beverage pricing.

Cost of Amusement and Other as a percent of sales was flat compared to last year, driven by the positive impact of 1.9% in pricing and a shift to simulation games, offset by higher costs associated with the new RFID Power Card. Operating payroll and benefits expense as a percent of sales was 25.4%, or 10 basis points higher year-over-year due to the unfavorable impact of approximately 4% wage inflation, deleverage on comp stores and an impact of non-comp stores. Other store operating expenses were 300 basis points year-over-year. Higher occupancy costs were driven by higher rent costs associated with lease renewals and higher marketing costs were driven primarily by additional television and digital marketing to drive traffic and to promote our mobile app initiatives.

G&A expanses were $16.2 million, were up 8% from the prior year, reflecting increases to support a growing store base and increase in legal costs and higher consulting expenses. These costs were partly offset by tighter expense controls and reduction in incentive compensation expense. As a percent of sales, G&A increased 8 basis points.

EBITDA decreased 13.5% to $40 million and was 13.3% of sales, our diluted EPS was $0.02 per share versus $0.30 per share in the prior year. EBITDA was negatively impacted during the quarter that charges totaling $3.3 million related to ongoing litigation and corporate restructuring costs which translated into negative impact of $2.6 million on net income or $0.08 per diluted share. Additionally, in last year's third quarter, we got benefited from a $2.3 million insurance recovery related to our Puerto Rico store, which translated into a benefit of $1.4 million on net income or $0.03 per diluted share. Excluding the effects of these discrete items from both quarters, EBITDA declined 1.4% to $43.2 million from $43.8 million.

Shifting to the balance sheet, we had approximately $656 million of outstanding debt at quarter-end, resulting in leverage of approximately 2.3x EBITDA, which is within our targeted leverage range of 2.0x to 2.5x EBITDA. We repurchased approximately 2.4 million shares in the third quarter, for $97 million and had approximately $173 million remaining under the existing authorization at the end of the quarter. Additionally, we declared our fifth quarterly cash dividend of $0.16 per share during the quarter, which represented a 7% increase over the prior quarter.

Turning now to guidance. Based on recent trends, we are narrowing our fiscal year 2019 guidance as follows. Total revenues are expected to be in the range of $1.347 billion to $1.354 billion. This compares to prior guidance of $1.338 billion to $1.359 billion reflecting growth of 6% to 7% versus the prior year.

We now expect full year comps to be in the range of negative 3% to negative 2.5%. This compares to previous guidance of negative 3.5% to negative 3%. We are projecting net income to be in the range of $94 million to $98 million versus prior guidance of $91 million to $100 million. Guidance is based on an effective tax rate of 21.5% to 22% versus prior guidance of 22% to 22.5%. Finally, EBITDA is expected to be in the range of $275 million to $280 million versus prior guidance of $272 million to $282 million.

Thank you for your interest in Dave & Buster's. Now I will turn the call back over to Brian.

Brian A. Jenkins -- Chief Executive Officer and Director

Well, thank you, Scott. I'm confident we are on the right track to capitalize on our leadership position in a rapidly growing and highly competitive market. Just as we've done over the past 37 years, we will continue to succeed by investing in innovations that enable us to deliver unmatched entertainment, engagement and satisfaction for our guests. 2020 is setting up to be a year of exciting changes and new experiences for our customers. And our team is energized by the potential we see in our business.

I'd like to close by thanking the entire Dave & Buster's team for their focus and hard work as they strive to delight our guests every day. As always, we appreciate our shareholders for your continued support and interest in Dave & Buster's. Now we'd be happy to answer your questions. Cody, please open the lines for Q&A.

Questions and Answers:

Operator

Absolutely. [Operator Instructions] We'll take our first question from Andy Barish with Jefferies. Please go ahead.

Andy Barish -- Jefferies -- Analyst

Hey guys, just a couple things. First on the -- on the content, how do you see VR after kind of a year and a half now? Looking forward to 2020, is it going to continue to be sort of new titles or kind of harvesting a little bit of what you have? And how do you think it's performed in terms of driving incremental customer visits?

Brian A. Jenkins -- Chief Executive Officer and Director

Well, as we said in the call, most part of our pressure in the back half of this year has been the rollover of VR as the overall contributor to the business. It's not as powerful as it was when we first launched the platform, but we still like the platform. It does allow us to introduce proprietary content and so it is still in the mix of our plans as we head into 2020. And we will have, likely we'll have two titles that we will launch next year. And so I don't think you'll see us rolling out three a year on that platform. In fact, we're looking at two alternate platforms right now. We have two in test that are different form factor. So we are looking to widen that a little bit, and so we're not going to be just solely focused on the current platform it has.

Andy Barish -- Jefferies -- Analyst

Okay. And then just secondly on labor in the quarter, really kind of kept that in line and flattish. Is there anything sort of idiosyncratic to the quarter as you started looking at some of the cost cutting, or anything we should be aware of for the 3Q, especially given it's kind of a seasonally low quarter where you did hold the line pretty well on that expense considering the comp.

Brian A. Jenkins -- Chief Executive Officer and Director

Well, as we indicated on last quarter call, we did implement cost reductions in the quarter, in the prior quarter. And some of that was focused around off peak labor as well as some centralization in our special events sponsors. So yeah, we were, we were successful in accomplishing that. And as you mentioned our hourly labor was actually just slightly -- was actually slightly better on a year-over-year despite cost pressure and overall labor was just slightly worse and that's with some one-time charges related to that restructuring.

So the team just really did a fantastic job in implementing those cost reduction initiatives, and at the same time, our guest poll, guest sat scores really stayed right in line with the prior year. So it's a good outcome overall.

Andy Barish -- Jefferies -- Analyst

Thank you.

Brian A. Jenkins -- Chief Executive Officer and Director

You're welcome.

Operator

Thank you. We'll now move on to our next question from Nicole Miller with Piper Jaffray.

Nicole Miller -- Piper Jaffray -- Analyst

Thank you very much. Good afternoon. Two questions. The first is around the prepared commentary talking about the sports as an opportunity, and it kind of sounds like you're taking what you had remodeled previously kind of revitalizing it. And I was wondering if that's the way to think about it in essence, what are you activating? So are you activating the consumer discovering you or are you discovering a new or live consumer or something else altogether. Thank you.

Brian A. Jenkins -- Chief Executive Officer and Director

Thank you, Nicole. Well, just to clarify a little bit, [indecipherable] we're activating the old sports and we invested in our new sports area in some of our dining rooms, Nicole and put in these 43-foot LED screen. So we're introducing that new technology, new energy into our dining rooms, really just being our position as one of the best and innovative sports viewing destinations in this country. So what we are now working on is programming around that asset. They are great assets. So we are looking at some programming around that, specifically right now, we have in test in a couple of stores live hosted events with local radio, celebrities as well as some in venue sports celebrities. So we'll see how that goes but we are looking to leverage these -- this asset in a broader way than we have in the past.

Nicole Miller -- Piper Jaffray -- Analyst

But that's maybe and if I'm not still getting it right out, I'll just apologize and move on. But it is supplementing the work that you had then recently done and then activating essentially programming, again my words not yours, but what did you learn from the previous remodel of, let's call the Billiards area, sorry, very generally that's leading you to the conclusion of taking another chunk to use it for this kind of similar purpose?

Brian A. Jenkins -- Chief Executive Officer and Director

Well, in our view, it dates back to some of the revitalization efforts that we underwent back in earlier in the decade. We view the sports offering us a very strong, a big component of that effort, while we're changing the physical plan, look and feel to be a little more modern contemporary, we were also adding the watch element, and we recognize that currently our dining rooms are the least visited space in our full walls and what we were seeking to do is bring in a new asset into that area, bring energy to the space, have it in the location in the store that guests would want to go visit and really in an effort to drive F&B attachment rate and not have it the location that is least desired location in our store. So I think this will, and we saw good success with that in our Dallas stores as we, as we made that improvement there and I think it will take time to build, but we are very encouraged by this asset and what we're going to be able to do with that over time.

Nicole Miller -- Piper Jaffray -- Analyst

Okay, thank you. That's very helpful. And just a second last question, are there other snackable options in the Arcade or Midway, is there going to be an ordering platform attached to that, is there any technology that you have to order from the restaurant area? Could this eventually become enabled in the app in any way, anything along those lines possible?

Brian A. Jenkins -- Chief Executive Officer and Director

The first locations where we are standing up this idea of a food-cart with snackable are the roughly five things that you can purchase along with beer selection as well as the signature drink from this location within the Arcade. You will be ordering it from a person, so there won't be technology involved other than normal PR at this stage.

Nicole Miller -- Piper Jaffray -- Analyst

Okay thank you very much.

Brian A. Jenkins -- Chief Executive Officer and Director

You're welcome.

Operator

Thank you. We will hear now from Jake Bartlett with SunTrust.

Jake Bartlett -- SunTrust -- Analyst

Great, thanks for taking the question. Brian, you mentioned that Terminator or maybe it was, Scott, but Terminator has mixed very higher has been a popular VR platform. Also the Wow Walls you are rolling those out to additional stores and you exited the quarter and you have seen like results were improving. Would you give any commentary on the current trends and whether that improvement has continued kind of like you had last quarter?

Brian A. Jenkins -- Chief Executive Officer and Director

Well, we obviously, we are excited about how quickly we were able to scale the Wow Wall improvement that we've said about to accomplish over the course of the quarter. We met our goal of 35 and pushed on to a few more units, again very, very early on in that initiative, in terms of how we again build community around that asset, but and Terminator has driven to the second most popular title, Jurassic World still number one, very strong IP in Jurassic World but so on both of those really kind of late in the quarter. The assets on the Wow Walls over the course of the quarter and Terminator late in the quarter. As we sit here today, we're essentially in terms of the comp performance we are essentially in line with where we ended our Q3 results at around down 4%. So we're tracking right, consistent with our guidance here. And we have some very big weeks in front of us.

With the holiday season, which we're very excited about, biggest weeks in the year are in front of us and we're -- I believe we're shaping up a good Christmas season here.

Jake Bartlett -- SunTrust -- Analyst

Got it. And with the Terminator fairly recently launched, I mean is that we would still have some staying her throughout the holiday season. I guess is my question as you lap Dragonfrost, which I don't think mixed very high, but just how do you view your current content in the holiday season versus last year spreads?

Brian A. Jenkins -- Chief Executive Officer and Director

Well, I think Dragonfrost, Terminator is more successful than Dragonfrost well as in the prior year in my view. So, and we're not actually featuring that in a big way on our media at this moment. So, I'm not sure, I would call it a push, as you think about --

Jake Bartlett -- SunTrust -- Analyst

And last question just on the content. For 2020, you mentioned two more VR names, it sounds like some of these multiplayer platforms are in test, would you describe them as maybe beyond test in your platforms that could really have a meaningful impact in 2020. I'm just trying to understand what, how confident you are on the content for 2020?

Brian A. Jenkins -- Chief Executive Officer and Director

Well the two VR attractions that we have in test right now, we actually tested both of them in 2019 and they are in four stores right now. We've seen some great potential with actually both of these platforms. They are both multiplayer attractions, they both lend themselves to that, socialization, competition, collaboration, things that we're looking to try to scale up in terms of our mix of entertainment offerings, both very high energy. So, we haven't made a final call on how many we're going to do, it's highly likely that we will do some of the -- either or both of these attractions in 2020, we haven't made a final determination. it's very unlikely that we would scale it across the entire chain.

Jake Bartlett -- SunTrust -- Analyst

Got it.

Brian A. Jenkins -- Chief Executive Officer and Director

Big format. One of them in particular is a very big format, [indecipherable] pretty big amount of space in our Arcade, it's also very impactful looking. So, we'll make that determination here in the first part of the year on how far we are going to, and we will share that more broadly on our next call.

Jake Bartlett -- SunTrust -- Analyst

Okay.

Scott J. Bowman -- Senior Vice President and Chief Financial Officer

Jake, this is Scott. I'll just kind of tag on to that, so, you see that I mentioned the Hot Wheels game that moves really well -- it's just been rolled out and then the Pong games, which I will admit I do remember we were waiting on. That's a different game, but multiplayer as well. But then just talking with [indecipherable] shows and conferences and they are probably more excited on what may happen in a little while just on the opportunity out there and the new games that are coming out. It does seem like there are more content available out there. And yeah, we do have quite a few things in the hopper for next year that we're pretty excited about that we think will have a pretty solid lineup as we get into next year.

Brian A. Jenkins -- Chief Executive Officer and Director

Jake and as you know, just to tag on that a little bit. We will be focusing on multiplayer games largely, may be some single player games. We will be heavily focused as we look at the games that are available out there on prioritizing those games where multiple players can play.

Jake Bartlett -- SunTrust -- Analyst

Great. And Scott last question, that prior guidance had included I think $2 million in onetime charges. Are those no longer contemplated or how should we think about?

Scott J. Bowman -- Senior Vice President and Chief Financial Officer

Yeah, so the $2 million in onetime charges that was an estimate at that time is what we thought that we would see that I would say is that we feel like we've taken most of those charges at this point. And so we feel like that, these charges are [indecipherable] based on kind of getting it past most of the restructuring that we want to.

Jake Bartlett -- SunTrust -- Analyst

Okay, thank you very much.

Brian A. Jenkins -- Chief Executive Officer and Director

Thank you, Jake.

Operator

Thank you. We will hear now from Jeff Farmer with Gordon Haskett.

Jeff Farmer -- Gordon Haskett -- Analyst

Great, thanks. Bigger picture question to start. I'm just curious how your strategy has evolved to combat a lot of this in competitive encroachment you've seen over the last several years. Are you doing anything differently in the markets that have been most impacted by encroachment?

Brian A. Jenkins -- Chief Executive Officer and Director

Well, Jeff, we're really focused on overarching strategy refresh right now for the entire brand. We're, we're, as a step forward, we're not going to stop the onslaught of investment coming into the space. They are competitive in terms of visibility in and around us. So what we are focused on is our strategy and what we're doing and we're taking a comprehensive look at the business right now in partnership with Jackman Reinvents who really helped us revitalize the brand earlier in the decade, we have gone through a fairly comprehensive amount of work around in depth customer research, really trying to understand our core consumer and the attitudes that really drive the behaviors and honestly it would be, we're trying to drive more guests coming through the door and more frequently. So that's really informing our strategy as we think about what we're trying to accomplish from a food perspective that is, that is giving rise to some of these test and learn pilots that we're putting in place with a huge sense of urgency right now, which on the food side is around refreshing the menu with some of those preferences, this notion of signature shareable items.

We have menu change that we're currently putting in test around that, the snackable, accessible idea that I mentioned earlier. So we are tackling that right now from a games perspective. We know our guests are really, really looking for social games. So, that is why we are emphasizing multiplayer games right now and it had been for a little while, but we are ramping that up. That is why we are testing a physical game. Our opportunity in our stores, and when I say physical games I'm always talking about large format Giant Jenga, Twister, Surfer Board, Corn Hall some of those games, bringing that into space, to allow for our guests to socialize together as friends and family. So and then it is also this work is informing the look and feel of our stores on our store revitalization program. There are a number of ideas we have around store layout.

Number one, maximizing our Wow Wall right now, and creating some spaces that are more conducive for social interaction. If you think about our case today, you're out, you play and often you're doing it alone. So we're really looking at trying to have our food, bev and entertainment options collide, so we can increase our penetration across the brands. So we are working with urgency across the entire brand to activate these plans right now.

Jeff Farmer -- Gordon Haskett -- Analyst

That's helpful. Just to follow up on that in terms of that work with Jackman in the revitalization programs you pursued in the past. Can you just remind us what type of capital commitment to those programs require and I realize that with the Wow Wall you've already put some capital to work. But in terms of theoretically what could lay ahead or lie ahead in terms of future capital commitment if Jackman decides to do something a little bit more aggressive.

Brian A. Jenkins -- Chief Executive Officer and Director

Well, first of all to clarify, you know, while we move forward with is what the company is going to move forward with in terms of what we feel like is strategically correct. The Jackman team is a great partner for us to help us amplify some of the ideas that we have. So from the middle agents, we will be getting our calls and what we decide to do based off rigorous test and learn that we are enacting and putting in place right now. But the prior activity and revitalization effort we were spending in the neighborhood of about $2.5 million of store but in that case we were touching a lot of element of our stores, we called it for the bar and we were [indecipherable] outside. So we don't expect the scope of this to be in that same zip code.

Jeff Farmer -- Gordon Haskett -- Analyst

Okay and just last one would be for more brief. But outside of unit development, I think you guys largely withheld your first look at FY '20 guidance which financially I think is you provided some revenue growth and EBITDA growth numbers, but focusing on that from a structural standpoint, are there any factors in play that would either lead to another year of EBITDA margin contraction or allow you to sort of break this one of EBITDA margin contraction, as you move into FY '20?

Brian A. Jenkins -- Chief Executive Officer and Director

Okay. That's a good question, Jeff. And a lot of what we're talking about today is really focused on getting comp store sales going in the right direction and investing in high return stores. And if we focus on those key things and we have solid initiatives behind both of those, especially the comp store. We feel like that's the best path to EBITDA margin expansion. And so that's what we're really getting behind.

Jeff Farmer -- Gordon Haskett -- Analyst

All right, thank you.

Brian A. Jenkins -- Chief Executive Officer and Director

Thank you, Jeff.

Operator

Thank you. We'll take our next question from Andrew Strelzik with BMO Capital Markets.

Daniel Salmon -- BMO Capital Markets -- Analyst

Hey, this is actually Dan on for Andrew. So I think you touched on this a little, but just wondering if you can maybe give us any additional insights on what sorts of data you're collecting for the app and it's something like you're already doing some of this already, but I'm just kind of curious what you think the timeline will be to sort of fully leveraging that data for things like more targeted advertising, where you will see offers and any other strategic initiatives over time?

Brian A. Jenkins -- Chief Executive Officer and Director

Good question, Dan. We're super excited. Very, very optimistic about our mobile app and this really has given us a filter to bring in first-party data in a way that we've never had in the history of this brand. So, very successful launch, national launch in October. I think if you heard my prepared remarks we've gained about over 600,000 new guest accounts and I think guest accounts that means we have a email address and a phone number and that compares to about 800,000 active guest accounts that we had previously. And when I say active that means they either came into the store and purchased and/or played a game. So significant movement in two short months. So very, very encouraged by that. We have seen higher -- by the guests download the app and buy. We have seen better frequency, we are measuring frequency of visit for our app users relative to the other control base and we've seen more recharge activity, as you may recall, one of the capabilities of the app is to do a quick recharge on your phone without having to go through a person or a store there or a kiosk.

So we're now, while we're still trying to get the acquisition onto the platform and we will continue to really drive that build a bigger database. We are rapidly actively using the database to reach our guests in a more targeted relevant manner. So we have been doing, began to do email contacts that are different depending on the guests behaviors and in other words, if the guest is low on their chips and hadn't been in for a while, then we might give them an offer. If a guest has a lot of chips still on their card and hasn't been in, we will just, we will encourage a revisit.

So that's an area that we are really trying to develop and build out right now. And as you may remember from the last call that is also an area where we're reinvesting some of these cost savings in terms of the team and technology and tools to allow us to really capitalize on what -- this database is very exciting for us right now.

Daniel Salmon -- BMO Capital Markets -- Analyst

Great, that's really helpful. And then maybe just kind of building off that, you kind of touched on adding additional functionality to the app as you kind of move along with it over time. Obviously, pay at the table, it sounds like something that's going to be obviously very beneficial. Are there any other specific functionality that you guys have kind of maybe targeted as maybe longer term additions to the app. Just wondering if there's anything incremental there.

Brian A. Jenkins -- Chief Executive Officer and Director

Yeah, we actually have a number of capabilities that are in the pipeline and we're looking to build out over time on the app and what I really want to mention right now is the one that's near term, which is the pay at the table capability of the app that is closing right now, but yes, we have a number of other things that we're looking to future, we will look into that after the app over time to make it even more relevant for the guests and drive engagement in a better way.

Yeah I think the important thing to take away is just that when we -- the time the app and the team put all their thought together, I mean it was a long-term in nature. And so the platform that we chose definitely had a longer-term roadmap in mind. And so we can continue to make enhancements and increase the functionality over time. So that's a big piece of it though as the database grows in, we continue to add more functionality on the app, we should see better return from it, but definitely has a platform to do that. And we have a pretty robust roadmap ahead.

Daniel Salmon -- BMO Capital Markets -- Analyst

Great, thank you for taking the question.

Brian A. Jenkins -- Chief Executive Officer and Director

Thank you, Dan.

Operator

Thank you. We will take our next question from Stephen Anderson with Maxim Group.

Stephen Anderson -- Maxim Group -- Analyst

Hi, sir. Good afternoon. And I just wanted to know if it's something you mentioned on the call about the easier comparisons year-over-year, I think it was on the earnings on the food side of the business, but have you seen also on the region side of the business where you saw progressively better comp as the corporate progressed. And you mentioned weather as well once it, see if you can get any have hurricane impact from Hurricane Dorian and all that.

Brian A. Jenkins -- Chief Executive Officer and Director

Yes sure so, on the F&B side if you kind of look at the quarter and even looking forward, we had some benefits in the quarter because we got our Wings promotion for a period of time on Sundays, Mondays and Thursdays which we did not have in the prior quarter. Because of the hurricane in the quarter, we had a few days, but the most part, Q3 was rolling over and no Wing promotion on these three days in the prior years will give you some benefit. I think as you look in the Q4, we did, we'll have more of a like-for-like promotion on the wings, so that will make, you know a little bit tougher compares for F&B. If you look flip that around on the Houston site, yes, we started to see some improvement in others, firstly, at the end of the quarter and so that's encouraging.

So as we get into the fourth quarter, we're thinking that that will continue somewhat, and we have some concrete reasons of why that is and a lot of it is that we've been talking about with the mobile app we're seeing more awareness. And so that's pretty exciting, so that will be continuing in to fourth quarter we think, we do have some tougher comparison in fourth quarter. So we're also taking that into account.

Stephen Anderson -- Maxim Group -- Analyst

Great, thank you.

Operator

Thank you. We will take our next question Chris O'Cull with Stifel.

Analyst

Hi, thanks. It's actually Alec on for Chris. Just curious what's been the average sales lifted locations with the Wow Walls? Are you seeing any common factors among the locations that are maybe doing better than others?

Scott J. Bowman -- Senior Vice President and Chief Financial Officer

First of all, it is still early on, we [indecipherable] over the course of the quarter. Feedback from the stores has been real fantastic. We have some stores that are performing really, really well. Boston is one of them, it makes some sense. But it's really. But as a class they're slightly better pre, post net of control is what I'd say right now. So knock it out of the pulp yet, we're more encouraged with what we're going to be able to deal with this asset.

Alec Pierce Estrada -- Stifel, Nicolaus & Company -- Analyst

Okay, great, thanks. Second question is just you've called out week late night daypart sales in the past, is it still the case? And do you believe that has anything to do with customers kind of staying in and ordering third party delivery. Do you view that as a risk to the daypart for the company at all?

Brian A. Jenkins -- Chief Executive Officer and Director

Well, two questions in there, obviously just in terms of our daypart, our weakest daypart continues to be late night, and really, and that's been continuation for really probably through two years now. I don't know that I attribute our sales pressures do at home ordering or delivery ordering. Right now, we attribute much more to competitive intrusion where we can actually see markets where we're performing very, very well, strongly, the stores have performed well and then we have impact from a competitive intrusion of that.

So I don't attribute our bigger pressure being deliberate. We are in entertainment that primarily people visit us for our entertainment offering, our game offering first and foremost, obviously, we'd like to get more of the food occasion, but that's part of it. I think that is not, not to say significant.

Alec Pierce Estrada -- Stifel, Nicolaus & Company -- Analyst

Okay, great, thanks. And just last one, speaking of the competitive intrusion. It looks like a lot of competitors are willing to kind of accept lower margins to offer more value than the largest player in the segment right now. Do you think that eventually that dynamic will make it kind of difficult to recover margin even with improving same store sales performance or do you believe, it's just a matter of increasing the sale?

Brian A. Jenkins -- Chief Executive Officer and Director

Well, I don't. Our checks on what our competitors are offering in terms of pricing compared to us. So I don't, I don't view us as being at a balance with our competitors that I view, they may not look very good from a margin perspective. But I think that's a lot more due to the operating model meaning a lot of the competitors have a broader offering with a lot of attended attractions, that have put a lot of pressure on the margin profile. So and that's why we're very careful about when we make a decision to add traction that requires an attender or something like that we want to make sure that it feels very incremental. And it's going be a traffic to us as a brand before we actually going into it.

Alec Pierce Estrada -- Stifel, Nicolaus & Company -- Analyst

Great, thanks. Thank you for taking the rest of the question.

Brian A. Jenkins -- Chief Executive Officer and Director

Sure.

Operator

Thank you. [Operator Instructions] We will hear now from Brian Vaccaro with Raymond James.

Brian Vaccaro -- Raymond James -- Analyst

Thanks and good evening. I just wanted to circle back on the Wow Walls and could we see or what's the average cost of the Wow Wall. And was that the primary reason for the increase in capex guidance for the year?

Brian A. Jenkins -- Chief Executive Officer and Director

I'll take the first, and I'll hand it over to Scott on the second. I said on the last call, I really didn't want to disclose the Wow Wall investment amount for sure, you know, we have a couple of small providers, we had a supply and that equipment right now and I think we've been successful in getting some very attractive purchase price as we've installed those walls. So our competitive reason that to provide the exact number on that. So yes, when you look at overall capex the increase in the guide, Wow Walls, they were a good portion of that. But we also had a couple of other things, just from a timing perspective, relating to the land purchase in one of our future stores that moves up into this year and then we had a sale leaseback with that transaction that will get pushed into early next year. So, there are a couple other pieces to that equation.

Brian Vaccaro -- Raymond James -- Analyst

Okay. And I think you said 35 units that you've completed the Wow Wall in with 14 more planned for '19, has the decision made to be yet to roll it further into 2020?

Brian A. Jenkins -- Chief Executive Officer and Director

Just to clarify, then we -- I pass off to our development team and really purchasing team who were able to scale 35 units over the course of the third quarter and what I said is we've actually gone another 13 over the course, so far, over the course of Q4 and we have three more on path. So that would take us to 51 units. We obviously, we fixed some of those stores that were they can accommodate this kind of asset and at this point we feel that to the level that we're going to, going to for a period of time, we're going to, we're going to look going to turn our attention to leveraging that asset. That's what our plans are at the moment.

Brian Vaccaro -- Raymond James -- Analyst

All right. Understood. And then Scott, on the $3.3 million charge that you highlighted in the third quarter, could you map that between the different line items, how much in G&A, how much in labor, how much in other opex, if it was mapped to those three lines?

Scott J. Bowman -- Senior Vice President and Chief Financial Officer

The bulk that there will be other store operating expense and there got to be most of it and then a small portion of it maybe about a third of that, will fall into operating payroll and benefits and G&A.

Brian A. Jenkins -- Chief Executive Officer and Director

Well, I'll say that without the kind of restructuring charge that we heard in operating labor and benefits, at the store level, we would have actually been slightly favorable year-over-year, as a percent of sales. So, yeah that's two thirds of what will fall under store operating.

Brian Vaccaro -- Raymond James -- Analyst

Okay, thank you.

Operator

Thank you. This does conclude today's question-and-answer session. I'd like to turn the conference back over to management for any additional or closing remarks.

Scott J. Bowman -- Senior Vice President and Chief Financial Officer

Well, thank you very much for your time this afternoon, and we look forward to reviewing our fourth quarter results, with you in April. We also wish everyone a safe and happy holiday season and look forward to seeing you at one of our many D&B locations very soon. Have a great night.

Operator

[Operator Closing Remarks]

Duration: 58 minutes

Call participants:

Scott J. Bowman -- Senior Vice President and Chief Financial Officer

Brian A. Jenkins -- Chief Executive Officer and Director

Andy Barish -- Jefferies -- Analyst

Nicole Miller -- Piper Jaffray -- Analyst

Jake Bartlett -- SunTrust -- Analyst

Jeff Farmer -- Gordon Haskett -- Analyst

Daniel Salmon -- BMO Capital Markets -- Analyst

Stephen Anderson -- Maxim Group -- Analyst

Analyst

Alec Pierce Estrada -- Stifel, Nicolaus & Company -- Analyst

Brian Vaccaro -- Raymond James -- Analyst

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