Dave & Buster's Entertainment, inc (PLAY) Q2 2021 Earnings Call Transcript

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Dave & Buster's Entertainment, inc (PLAY -4.99%)
Q2 2021 Earnings Call
Sep 9, 2021, 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 Incorporated Second Quarter 2021 Earnings Results Conference Call. Today's call is being hosted by Brian Jenkins, Chief Executive Officer. He will be joined on the call by Scott Bowman, Chief Financial Officer; and Margo Manning, Chief Operating Officer. [Operator Instructions]

Now, I would like to turn the conference over to Scott Bowman for opening remarks.

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

Thank you, Christy and thank you all for joining us today. In addition to Brian and Margo, we also have Brandon Coleman, our Chief Marketing Officer joining us today. After our prepared comments, we'll be happy to take your questions. This call is being recorded on behalf of Dave & Buster's Entertainment Incorporated and is copyrighted.

Before we begin our discussion on the Company's results, I'd like to call your attention to the fact that in our remarks and responses to questions, certain items may be discussed which are not entirely based on historical fact. 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. 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 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

Thanks, Scott and thank you, everyone for joining us this afternoon. Over the past 18 months, our team has successfully navigated COVID challenges, while at the same time accelerated our strategic initiatives. We have had a single goal to emerge as a stronger, more competitive company. I am pleased to report today that we have accomplished that goal. Our brand is back and we are stronger than ever. The second quarter results we announced earlier today are compelling proof that this team's extraordinary efforts have succeeded.

We achieved record setting financial performance reaching new high watermarks on virtually all financial metrics. Second quarter revenue of $378 million was an all-time quarterly high for us surpassing 2019 by $33 million. Our success was fueled by the return to positive comp sales of 3.6% over Q2 2019 levels. Even more impressive was our strong EBITDA performance, we grew by the $100 million mark for the first time in any quarter in our history, achieving $114 million in EBITDA up $36 million or 44% from Q2 of 2019.

Our operations team did an outstanding job, leveraging new order and pay technologies, adapting our service model and optimizing costs to deliver our first ever EBITDA margin to crush 30%, exceeding the 2019 Q2 compare by over 700 basis points. During the quarter, we were also able to bring our two stores in Canada back online marketing the complete reopening of our store base, an important milestone for our Company.

Last year, when liquidity was our imperative, we successfully rebuilt a strong capital structure bolstered by equity infusion, a new bond offering and amended credit facility. We now have a significant flexibility to run our business and invest in our future. With the record-setting operating cash flow generated in Q2, we reduced our net debt outstanding by nearly $90 million, providing us with over $440 million in available liquidity at the end of the quarter. As further evidence of our confidence in the business, we recently announced that we intend to redeem 10% or $55 million of our outstanding bonds using available cash. We have come a very long way in just over a year. These strong results were made possible by an unwavering focus over the past year and a half to accelerate initiatives to make us a stronger company.

In our second quarter, we introduced an entirely new menu that broadens our appeal and is easier for our stores to execute. Over the summer, we made a meaningful investment in our entertainment offering with the introduction of seven new games. We also took steps to widen our entertainment plans by operating programmed events in select markets. While early on, we are confident these efforts will broaden our reach and increase visit frequency and we are accelerating our investment in our entertainment team to bring that to life. We lead for traditional order and pay platforms with the systemwide rollout at our new mobile web-enabled platform.

Mobile web adoption has been extremely strong significantly exceeding our expectations. The majority of our guests now use the technology and our success on this front has been crucial and facilitating a more efficient operation while also allowing us to deliver a great D&B experience. To solidify our team in a challenging labor environment, we provided temporary pay incentives to our team members this quarter and succeeded in attracting the talent necessary to deliver an outstanding quarter.

Under the leadership of CMO Brandon Coleman, who you will hear from in a moment, we onboarded new creative and media buying agencies and revamped our brand message and media strategy. These changes culminated with a concentrated media investment, the summer to relaunch our brand with a new voice featuring our new menu and games. This was part of our new marketing strategy to shift spending from the shoulder periods to increased focus on the windows that would have the most impact and those changes were meaningful.

Comp sales were up 7% in the final eight weeks of Q2, a marked improvement from the first five weeks of the quarter that was down 4%. And despite a few headwinds we are encouraged that our comp sales for the first five weeks of Q3 including Labor Day are still up versus 2019 reflecting the strength and the resiliency of our brands. With dramatic improvement in our financial foundation in the first half of this year, we've also begun to rebuild our new store pipeline with the recent opening of our store in Bellevue, Washington and one store in Brooklyn, New York planned for Q4, we expect to open four stores in 2021. We plan to open between six to eight store next year, representing a meaningful acceleration compared to 2021.

As we have discussed in the past, rightsizing the store format for the market and sales potential is a priority for us. We are extremely pleased with the performance of our most recent new 18K [Phonetic] small format store that opened at the beginning of this year. Our Gainesville, Florida store is the first freestanding small format unit that we have built from the ground up. Generating nearly $6 million in revenue during the first half of 2020 alone, absolutely crushing, our expectations for revenue, EBITDA and return on investment. We are encouraged about the efficiency and throughput of this new format and the potential to leverage it in new markets. This quarter's performance proves that our brand is resilient and resonate with guests of all ages. We are thrilled with our record-setting performance and excited about continuing that momentum in the back half of the year.

At this time, I'll ask Scott to cover our second quarter results in a little bit more detail and share some insights on our expectations for the remainder of the year. After that, our COO, Margo Manning; and CMO, Brandon Coleman will cover more detail of the operating and marketing innovations, we've implemented this summer as well we have planned for the second half. Scott?

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

Thanks, Brian. Our second quarter results reflect a significant acceleration in sales and profitability for Dave & Buster's which generated impressive cash flow for the business. We ended the quarter with all 142 stores opened, including one new store that opened during the quarter. With all of our stores open, we are seeing strong demand for our brand including rapid sales growth in our California stores as we ramped up during the quarter.

With record sales and strong execution of our margin enhancing initiatives, we were able to produce record profitability for the quarter. Total revenues of $378 million were an all-time record and included a 3.6% increase in comparable store sales compared with the second quarter of 2019. Average weekly sales were $208,000 per week for the quarter versus $206,000 for the second quarter of 2019. In terms of category sales, amusements were up 17% comp, while the F&B business was down 17% compared with 2019. For amusements, the increase was driven mostly by an increase in per cap spending. For F&B, the decline was mainly due to a decline in units sold, partially offset by a slight increase in per cap spending. Sequentially units versus 2019 improved significantly for both F&B in Amusements compared with the first quarter.

Comparable store sales showed acceleration during the quarter compared to 2019 with comps of negative 4% through the first five weeks of the quarter and plus 7% for the last eight weeks of the quarter. This sequential improvement was driven by improved traffic trends, which was partially driven by more effective marketing and the ramping up of our California stores. Regarding sales mix, amusements and other was 67% of total sales for the quarter versus 60% in the second quarter of 2019 driven by fuel discounts and a shift to higher denomination Power Cards.

EBITDA for the quarter was an all-time record of $114 million or 30.2% of sales and represented 729 basis point improvement compared with the same period in 2019. The improved performance was driven by a higher music [Phonetic] mix, leverage on labor cost due to lower staffing levels and our lean operating model, a $3 million reduction in preopening costs and operating expense leverage from higher sales. Adjusted EBITDA for the quarter was $119 million or 31.6% of sales, representing a 660 basis point improvement compared with the same period in 2019.

Net income increased 63% from 2019 to $53 million in the quarter, resulting in a 19% increase in EPS to $1.07 per diluted share. These improved operating results produced $121 million and operating cash flow during the quarter and we ended the quarter with $108 million in cash and zero outstanding on our revolving credit facility. Total long-term debt stood at $550 million at the end of the quarter consisting of our senior secured notes maturing in 2025. As part of our capital allocation strategy and to capitalize on our current cash position, we recently made the decision to redeem $55 million of our senior secured notes using a redemption option in our indenture agreement.

As background, we may redeem up to 10% of the notes at a redemption price of 103% of the principal amount during the first 12 months after issue. We may redeem another 10% of the notes during the second 12 months after issuance which begins at the end of October. By executing the 10% redemption, we will pay a $1.7 million premium over the principal amount to redeem the notes, but we'll see $4.2 million in annualized interest.

Additionally, at the end of the quarter, we had approximately $41 million of negotiated rent deferrals on the balance sheet. We expect to pay back approximately $14 million of deferred rent throughout remainder of fiscal 2021, $22 million in fiscal 2022 and the remainder thereafter. Regarding tax refunds, due to current IRS backlogs, we now expect a delay in receiving approximately $60 million in refunds from CARES Act legislation and the carryback of 2020 losses. We now expect to receive these refunds in mid to late 2022.

Turning to capital spending, we opened one new store in the second quarter and the best for total of $39 million in capital additions net of tenant allowances. Subsequent to the end of the quarter, we opened one additional store at the end of August. In the fourth quarter, we plan to open one additional new store and relocate an existing store to finish the year with four new openings and one relocation, which will bring us to 144 stores by the end of the fiscal year. Overall, we are very pleased with the second quarter results and a sound financial footing we have established going into the back half of the year.

Turning to our outlook, I would like to offer some insights for the third quarter of fiscal 2021. As a housekeeping note, I would like to provide some details on reporting and guidance going forward. Regarding our profitability metrics, we will place more emphasis on adjusted EBITDA versus EBITDA going forward. This is to be responsive to investors who prefer this metric as a better represents, true normalized earnings power of the business. Regarding guidance, as the business continues to normalize, we will be reverting back to annual guidance starting in 2022 updates with provided quarterly. Regarding recent trends, comp sales for the first five weeks including Labor Day have been over 1% compared to 2019 reflecting broad-based strength despite negative impacts due to changes in school calendars and favorable weather in COVID resurgence in our Southeast markets.

Based on these current trends, we expect total third quarter comparable store sales to be approximately in line with the quarter-to-date trend compared with the third quarter in 2019. We expect third quarter EBITDA to be significantly higher than third quarter 2019, but with some slight moderation compared with the percentage increase in the second quarter. This reflects margin improvement that exceeds our 200 basis points target, which is driven by improvements in gross margin, payroll and benefits and pre-opening expenses.

Keep in line with the level of these benefits may change over time as we continue to work toward more normalized operations. From a capex perspective, we are updating our guidance and plan to invest $95 million to $100 million in 2021, which compares to prior guidance of $55 million to $70 million. Based on our current financial position, we are taking opportunity to invest an additional $14 million in our stores to accelerate the rollout of new technology, upgrade our WiFi capability and upgrade equipment in select stores. These upgrades will improve the guest experience and will accelerate our technology deployment to further drive strong returns.

Additionally, we are taking opportunity to accelerate development on several of our pipeline stores help maximize their impact in 2022. In summary, our team has done an excellent outstanding job during the first half, totally reopening all of our stores while implementing a number of impactful initiatives that have enhanced profitability and cash flow. We're well positioned for the second half and are positioning the Company for further growth in 2022 while closely managing to ongoing effects of the pandemic.

With that, I'll turn it over to Margo.

Margo L. Manning -- Senior Vice President and Chief Operating Officer

Thank you, Scott. I echo the appreciation for our team's tremendous second quarter efforts. We believe the new menu, games and service model initiatives that we've been implementing over the past nine months and the concentrated focus that we have put against streamlining store execution is helping to drive our strong sales and enhanced profitability. Let's start by talking about our menu initiative. Its design simplifies operational execution and provides our guests with quality ingredients and enhance flavor profiles. Since deployment in May, half of our top 10 best sellers are either new or refreshed options. In addition, we conducted an extensive menu pricing test that gave us confidence to take a price increase effective late August to offset inflation pressure. Based on our guest visitation rate, we'll continue to watch the menu performance to gain a full understanding of its impact on sales and the guest experience over a longer timeframe.

On the beverage front, we completed our beverage analysis and are now using the research to evolve our beverage offering. The good news here is that the research data indicates our beverage menu is attractive to our guests and simply made some targeted refinements to expand its appeal and reach. Our goal is to launch a freshly curated beverage menu in Q4 to improve relevance and attachment in order to drive beverage sales.

Next, I want to talk about our entertainment initiative which is among some of the most important work we are doing. In Q2, we launched several tests to determine the entertainment appeal of programming. We successfully hosted themed Trivia Night with Geeks Who Drink. These events are easy to execute and are also easy to market to our guests. We intend to rapidly expand these test to more market this fall, based on its early success. Additionally, we continue to refine our live music test. These are highly engaging events, they're are held during the weeks and they bring guests into our stores to have fun during what is typically considered off peak times.

This fall, we'll introduce additional entertainment formats incorporating music, film content and live interaction, and as core, it would not be fall without talking about fall football. This year we'll be amplifying the D&B football experience. From an entertainment standpoint, we'll lean heavily into our custom, video content with new proprietary video elements to help our guests pre-game before kick off with an added integration D&B's live radio format.

In key markets, we'll introduce live host to amplify select football games. These performers will engage guests before, during and after the football games with activities and prize giveaways. Our intention is to use this program model throughout the year and expand it further in 2022 as we continue to look for ways to get the guests more reasons to come visit D&B. Now let's turn to staffing. The labor market continues to be challenging. In Q2, we made a temporary investment in hiring programs and retention incentives and we gained significant staffing tractions which bolstered our staffing levels for what was a very busy summer. Q3 will bring a seasonal drop that combined with our new technology tools will put less pressure on staffing. This will give us time to lift our sights to the holiday season.

Our intention is to selectively extend aspects of the staffing programs as we need to ensure that we have the team in place to bring in the critical Q4 holiday season. Our brand wide rollout at the new service model has been completed and it provides a more integrated in-store guest experience. The new service model combines tablets and a mobile web platform to enable a completely contactless order pay experience. From full deployment to-date, over 50% of our guest chat are utilizing this mobile channel. This technology will help transform our business model and it allows us to operate more efficiently. Due to the strong adoption by our guests, we are continuing our test of a completely self-serve, mobile web enabled guest experience in two of our stores.

On our prior earnings call, Brian mentioned that we implemented a new guest feedback tool, Medallia. It's a comprehensive tool that gathers in-store and social feedback to identify trends to improve the offering and the execution. Given the challenging environment, we're really pleased with the summer resolve and we'll use these guest insights to continuously improve our in-store experience.

To wrap up, I want to recognize and thank our entire team for the exceptional performance this quarter. During my store visits, I see team members are working hard to deliver a fun experience to the guests. And here at our home office, this team has worked to provide the critical support needed to set our stores for a great summer. We are energized by our record-setting results this quarter and we look to carry this momentum forward.

And with that, I'll turn the call over to you, Brandon.

Brandon Coleman -- Senior Vice President and Chief Marketing Officer

Thank you, Margo. Today I have some exciting news to share as we have completed our first campaign under our new marketing strategy. I'd like to begin today by reviewing the campaign performance and then look ahead to our future marketing plans and our new loyalty program. The summer campaign which ran from mid-June to early July, employ our new window-based media approach that concentrate marketing dollars into periods were Dave & Buster's is most relevant. This change in strategy provides focus and depth in our marketing communication and prioritize incremental visitation over general brand awareness.

We also dramatically changed our media mix during the summer campaign by shifting the majority of our spend to digital media. This shift has enabled us to be more surgical with our audience-targeting while maintaining high levels of video impressions as a percentage of total media. For this campaign, we also leverage first party and third-party data to improve the conversion rates across media channels. This more intelligent approach to audience-targeting was punctuated by fresh creative highlighting an intentional shift in our brand, communications from discount-driven value messages to an emotional brand connection that drive visitation.

The new creative captures the shared winning experience in a simple, yet powerful visual and auditory brand expression, Ding Ding Ding is strengthening in consumer demand combined with this strategic marketing pivot enabled us to deliver a substantial improvement in comp sales trend during the commercial window. We were also able to codify learning for the back half of 2021. For Q3 and Q4 of this year, we will focus on two media windows. Our fall football and winter brand campaign. The fall football media will support selected stores which over index for sports watching audiences. Reaching about half our systems, this media spend will be lower than the summer campaign. In addition to the media push, we will also be bolstering the brands sports credibility in driving buzz among sports fans through partnership with [Indecipherable], whose audience and satirical approach to sports talk match well with the Dave & Buster's brand.

In November, we will launch a new winter campaign that follows the framework of the summer campaign, as they return to higher media spend in more diverse array of activations across channels. Media targeting for this campaign will again leverage our consumer data to improve conversion. This campaign also has a data collection component to drive enrollment and our new loyalty program. That's right. After several iterations and consumer testing, we have developed an engaging new D&B rewards program, the new D&B reward program will elevate our loyal guests from transactional rebates to aspirational status achievement. The program which launches in early Q4 incentivizing guests for games play similar to airline programs that incentivize the amount alone [Phonetic].

The new D&B rewards will also introduce a functionality plus challenges where guests can complete unique combination and activities to earn both digital and physical rewards. Finally, this program will be inextricably linked to the D&B app adding incremental functionality and further improving the apps relevance for our growing user base. From loyalty to media to insights, our marketing team is always learning and optimizing to meet the changing consumer landscape. We're focused on increasing our known guests database to driving profitable sales, increased personalization and ultimately connect more deeply with our guests.

This constant informed evolution will unable Dave & Buster's to have maneuver competitors and build brand relevance for years to come. Now, I hand the call back to Brian for his closing remarks.

Brian A. Jenkins -- Chief Executive Officer

Well thanks, Brandon. We are extremely gratified to see how enthusiastically guests around the country has returned to Dave & Buster's. We feel more confident than ever about the unique position we've built over the past 40 years and the innovations that we've implemented over the past 18 months to enhance the guest experience in every facet of our business. We're focused on fully implementing the remaining elements of our new beverage menu, service model, programming and marketing initiatives and to fully staff our stores. Our record-setting second quarter performance proves the resilience of our brand and the tenacity of our team. I want to thank them again for their dedication and their passion and for everything they do every day to help our guests turn an ordinary day into an extraordinary entertainment experience.

Now we'd like to open the call to your questions. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] We'll go first to Andy Barish from Jefferies. Your line is open.

Andy Barish -- Jefferies -- Analyst

Hey guys, amazing results over the summer. Congrats.

Brian A. Jenkins -- Chief Executive Officer

Thank you, Andy.

Andy Barish -- Jefferies -- Analyst

On -- I think you were expecting or starting to maybe hope for a little bit more shift to food and beverage sales with the rollout of the new menu and that really didn't noticeably happened during the quarter, is there anything you don't kind of to add on that node or is it just an effort that's going to take a little bit of time given the -- given customer patterns.

Brian A. Jenkins -- Chief Executive Officer

It's really, great question, Andy. Well look, we are extremely pleased with the traffic move that we had in both amusements and food for the quarter. By the end of the quarter, when we hit the month of July, our amusement traffic was back in positive territory, were up close to 2% as measured by Power Cards and our food traffic as measured by obviously two accounts was down a little bit, down about 3% by the end of the quarter. So sequential improvement of significance versus the first quarter. So look, we're extremely pleased with getting the business back into positive comp territory for the first time in quite some time. And with both the traffic moves we've seen, and as Scott mentioned on in his prepared remarks, we continue to see significant per capita lift in the amusements piece of the business. So we're getting very high buy-ins, we're not discounting. So I don't think it's surprising that we're seeing amusements out-perform here.

Andy Barish -- Jefferies -- Analyst

Got it. Understood. And then a quick follow-up, as long as we have Brandon on the line, on rewards, if you look out to '22, does this -- does this drive frequency more so of existing customers or spend and then any explicit cost to rollout the program or discounting commentary when customers are at points where they can redeem rewards and things like that.

Brandon Coleman -- Senior Vice President and Chief Marketing Officer

Absolutely, great question, Andy, and thank you. First, I'll address the intention of the program, it's intended to drive frequency and spend. The points for games played incentivized guests to do what they love to do at Dave & Buster's which is playing games. So that can be achieved through more visitation or increased spend per visit. There are three levels to this program and have member progresses from player to icons of legend and there will be significant award in each step of that progression. There also be micro rewards in between based on behaviors and activities. These rewards range from digital badges to free appetizers to bonus play shifts, but we're seeing about an 8% cost on that as a percentage of total loyalty spend.

Andy Barish -- Jefferies -- Analyst

Got it. Thank you very much.

Brian A. Jenkins -- Chief Executive Officer

Thank you.

Operator

And next we'll go to Jake Bartlett from Truist Securities. Your line is open.

Jake Bartlett -- Truist Securities -- Analyst

Great, thanks for taking the question. And also congrats from these amazing return to above 2019 level so quickly. My question was just on, I'm just trying to understand some of the drivers. It seems like there is volatility in the same-store sales trends. The deceleration over the last five weeks. It's great to see, it's still positive, but could you point to that the major factors there, whether it's the -- they're focused on the peak periods for your advertising. So maybe pulled back, a lot obviously, that's after the window, but anything there that's driving the deceleration or. I think the big question on one question on investors' mind is the Delta impact and how you're kind of engaging whether that's really the primary driver to the deceleration here? And I have a follow-up.

Brian A. Jenkins -- Chief Executive Officer

Yeah, good question. Nice to hear from Jake. Well first of all, as I said in my remarks, super, super encouraged by the strong recovery we saw over the course of the second quarter, again really nice to get back in the positive comp territory. Obviously, we discussed on some of the prior calls that we were looking toward this summer window as really the appropriate time to get back out with the media voice, with new games in combination with the new menu and go there and really concentrate some investment during that time. And I think that was obviously very impactful. We saw a pretty nice trajectory change in the back part of Q2. So super super pleased with the results, a lot of hard work on the part of our team and our operators did a, just a phenomenal job entertaining our guests the summer. So super happy about that.

As we hit this August period and enter into the -- into our third quarter, look I'm super pleased to the nose up as a brand being positive comps right now, as we enter the third quarter, we're encouraged by that as well. Yes, it is slight some decline from our Q2 results, but you know there have been a number of factors, there are some pockets of some of the markets where school calendars have shifted, there are some headwinds and in some places around some of the hurricane activity that popped up all the way through the country really with Ida and Henri. And then outlook, we do have some markets where COVID cases have resurged and we have seen some regional softening from that. But this in my view is a bump in the road. Last year was a accretive, I would call this year is a bump, we're going to get through this and we're fine, we're super encouraged with where this business sits right now.

Jake Bartlett -- Truist Securities -- Analyst

Great, thanks. And then the follow-up is just really on your entertainment content and I think in watch and for a while now, we've been kind of waiting to see what you're going to do with sports betting, and sort of arrangements there I noticed your press release relate to parcels this morning. So Barstool Sports. So, any update there, maybe some of the puts and takes, maybe kind of why why we haven't seen an agreement yet or maybe in agreement is off the table at this point. Any update would be helpful.

Brian A. Jenkins -- Chief Executive Officer

I'm not going to talk a little bit about the broader entertainment. We're actively or aggressively pursuing programming and we're -- are getting to the sports betting, cycle, super pleased with the lineup of new games we launched this summer. First, I mean a significant investment, seven titles, various introduction we've had in two years, so it's nice to put some new content out for our guests. We -- we have some exciting titles, the plan for the balance of the year. Specifically, we plan to launch transformers VR title here as we hit our fourth quarter window. And that is one of the highest-grossing joint ventures of all franchises of all time. So excited about that.

We mentioned last quarter, we delayed the top end VR title that we have under development and that is going to get delayed again because of the film getting pushed into the next summer. So, but we're ready with that title, but we will be pushing that. I'm going to let Margo talk a little bit about programming, but as it relates to your question on sports betting, we continue to explore a sports betting partnership. We do believe that we will represent a meaningful enhancement to our appeal as a sports watching destination. We're working on that. We're in active discussions, and when we finalize that agreement, we'll have more to share, and I don't really have anything else to share on that right now.

Margo L. Manning -- Senior Vice President and Chief Operating Officer

Yeah. So, I'll just add a little bit more color about programming. We had mentioned that we hired a new programming leader and we're really excited about the impact that he has been able to make in a short period of time. We have posted several different types of themed Trivia Night. That has some got some great traction and actually are looking to not only expand the number of stores that we're doing, but we're also going to be testing, doing the Trivia weekly, because we had such great demand for that. We're going to talk more about that as we refine that format and as we start taking the test in a broader. With the product stores throughout the brand to just get a sense of, what is the right amount our frequency and content that we want to deploy there.

To my format, entertainment has also been something that we're refining and we're encouraged by. Additionally, when we talk about fall football and trying to incorporate some video elements, some live post, it's important for us that we really identify the scale and style that is right for us. Because, we're looking to take this to a market in '22 and a lot of different ways, move premier, TV premier. The ability to take that into lot of different content is what is most exciting about us. So you'll be hearing about programming from us in the future as and we really get more in depth with not only how we're executing, but what kind of content is the most appealing to our guests.

Jake Bartlett -- Truist Securities -- Analyst

Thanks a lot.

Operator

Next we'll go to Jeff Farmer from Gordon Haskett. Your line is open.

Jeff Farmer -- Gordon Haskett -- Analyst

Thank you. You guys did touch on menu pricing. But can you quantify any pricing actions you've taken across the food and beverage segments or amusement segment side of the business over the summer. And again any insight into what you might be planning to do with the potential August price increases.

Brian A. Jenkins -- Chief Executive Officer

Yeah, so we talked about the menu price increase kind of mid single digits. We haven't done anything proactively on the amusement side, but keep in mind that, in effect, we do have an effective price increase on the amusement side. Similar to what we talked about last time and that's due to really very little discounting in the amusements area. With the demand that we've seen lately in amusements. We haven't really been doing much of any discounting, but we're still seeing the demand there. And so when you think about the per cap increase, that we're seeing in amusements business, close to 30%. We measure about 40% of that, our estimate about 40% is just really due to, not knowing the discounting that we've done in the past.

So that has been the favorability for us without taking specific pricing actions just going back on the discounting. So that's, that is helping us to food pricing we thought was warranted. It's been about two years since we've done any kind of pricing activity on food and beverage. And so that will help offset some of the other inflationary pressures that we see in the business.

Jeff Farmer -- Gordon Haskett -- Analyst

Okay. And then...

Brian A. Jenkins -- Chief Executive Officer

Did you clarify that the mid-single digit food increase that we're talking about is really just a recent event here, August 30, is that?

Margo L. Manning -- Senior Vice President and Chief Operating Officer

Yeah.

Brian A. Jenkins -- Chief Executive Officer

That's right. Yeah. Yeah, just to clarify.

Jeff Farmer -- Gordon Haskett -- Analyst

Okay, that's helpful. And then similar topic, you had also mentioned or touched on at least wage rate inflation. So question is, I guess what do you currently seeing in the wage rate inflation environment. And I'm not referring to over time and things like that, but just pure wage rate inflation for hourly employees. In terms of what you saw, I would say in the second quarter and then new expectation for the third quarter. Are things going to get much more challenging are we seeing things get about a challenging is are going to get. And then it sort of moderates as we get into 2022. Any sort of insight there would be helpful?

Brian A. Jenkins -- Chief Executive Officer

Sure. As we look at wage inflation, so we've seen that pressure just like many others in the industry. Our estimation is that we're seeing, in terms of mid-single-digit increase annualized versus 2019. And we do expect that to continue for the back half of the year. There -- we think that there will be a continuing high demand for labor and the labor market will continue to be tight. Base that's kind of our view, a couple of things to think about in the back half that could change things one way or the other with unemployment benefits going away here very soon. And then potentially more people returning to work that could be a dynamic that alters that estimate.

But we do feel like there'll be a similar level of inflation for the remainder of the year.

Jeff Farmer -- Gordon Haskett -- Analyst

Thank you.

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

Jeff, I mean the good thing here is that despite some of the wage pressures, the efforts of our operators in terms of implementing and rolling out, some of the new technology around mobile web and our POS handheld has really helped us in a big way. Margo and her team has done a phenomenal job working through that. The top mitigate, some of that wage pressure that we're seeing, just in terms of how efficient the teams should become with that tool. And we're still...

Margo L. Manning -- Senior Vice President and Chief Operating Officer

Early days.

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

Early days, right now.

Jeff Farmer -- Gordon Haskett -- Analyst

Thank you, again.

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

Yes.

Operator

And next we'll go to Brian Mullan from Deutsche Bank. Your line is open.

Brian Mullan -- Deutsche Bank -- Analyst

Hey, thank you. If we look at your EBITDA margins for the first half of this year, they appear to be up about 450 basis points versus the first half of 2019, which is obviously very strong. Scott, I'm wondering if there might be any updates to your prior EBITDA margin expansion framework. Even if there is some moderation from here to the EBITDA margin expansion in a normalized year could ultimately proved to be greater than 200 basis points on sustainable.

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

Sure. Just kind of, to go back, our original commitment was 200 basis points of improvement. Once we hit in 2019 AUVs and that was an analysis that was done on the 2019 cost structure and there is other things that can help or hurt that number going forward with inflationary pressures or benefits with improved gross margins and lower pre-opening expenses and things like that.

But 200 basis points is really meant to be in comparison of the 2019 cost structure and the things that we were proactively doing let to reduce costs in that area. So, as you know we've done better than that. And so as we look forward and we see the improvement in our gross margin, mainly due to a higher amusement mix that alone, we think will be somewhat sustainable for the near term. And so with that kind of in our forecast, we do feel confident that we can achieve at least that 200 basis points at 2019 AUV. As we think about the most recent second quarter, we did overachieve quite a bit. And just to give you a little bit of color on that. As we think about a positive comp, that by itself helped our margins with the strong flow through that we're seeing on those comp store sales. Gross margin was well above last year as well. Most of that was due to amusement mix. Pre-opening expenses were down quite a bit and that's just the nature of building fewer stores.

So those things -- the gross margin in pre-opening especially are two examples that, what really contemplated in that 200 basis points of improvement, because we -- we were more focused on kind of a structural side of the business. And so we excluded those two items knowing that those could ebb and flow. And so -- as it turns out, they have been favorable for us, and so we've enjoyed that favorability.

And then on the payroll and benefit side, we've seen a little more favorability there as well. Brian mentioned the rollout of technology, so that certainly has helped us, but we're still trying to step up. So we're making progress there, but still trying to increase staffing. And so as we do that and get closer to kind of more normalized staffing then, that benefit will come down a little bit. But all that being said, I mean, we're really excited about what we're seeing in the favorability that we're seeing and more than ever focused on maintaining that commitment that we made. And as we grow sales that will surely benefit us on the bottom line.

Brian Mullan -- Deutsche Bank -- Analyst

Okay, great. Thank you for all that, that's great color. And then on the development pipeline, encouraging to see you're expecting six to eight new units in 2022. My question is as you look out to 2023 and beyond, what is the right pace of unit growth for this business? Is six to eight units going to be the sweet spot for you? Or are there scenarios where maybe you could open more than that? Just any color on your current thinking?

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

Well, as I is mentioned in my remarks with the financial foundation really just really, really strong place right now, we're flowing a lot of cash for more profitable than we've ever been in our history, We're just -- we're just in a really good place right now. And so the development team, which is in my view the best in this business is very active right now working our pipeline. Obviously, in 2020, we stood down on a lot and protected the mode, if you will.

But right now we're aggressively pursuing units. And as I mentioned, we have paid on a fixed date on target for next for next year, feel very good about our ability to hit those numbers. We actually have nine properties under lease right now that are in our pipeline. And then we've got nine additional locations, and it's growing as we look toward our 2023 pipeline and beyond. So we are actively working 2023 and 2024 right now. I don't really want to step out into a big number right this moment. We do still have work to do to build our leadership bench strength. 2020 was tough on -- our business, tough on our fleet. So we have some work to do to rebuild the bench strength to be able to accelerate into 2023. But we're very optimistic about where we stand and we're active in that, but I don't want to pick an exact number right today.

Brian Mullan -- Deutsche Bank -- Analyst

Thank you.

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

Thank you.

Operator

And next we'll go to Nicole Miller from Piper Sandler. Your line is open.

Nicole Miller -- Piper Sandler -- Analyst

Thank you for the update and congrats on the performance. Two questions. The first is it's helpful to get the -- currently, the land. Could you translate that comp 3Q to date and to AUV or share the 2021 versus 2020 comparisons, so we get really, I'm thinking about the seasonality. Right. And also the same for EBITDA can you revisit what you said about EBITDA, couldn't write that down quite quickly enough. And if possible translate that to dollars as well. Thank you.

Brian A. Jenkins -- Chief Executive Officer

So which part would you like to repeat on EBITDA.

Nicole Miller -- Piper Sandler -- Analyst

No I'm sorry I missed, you said 3Q should be higher, but then you said something else, I just didn't catch that, I'm sorry, In relation to 2Q.

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

So, yeah, as we think about third quarter EBITDA, we think it will significantly be 2019 numbers from a dollar standpoint. What I was trying to convey was, if you look at the -- the percentage that we saw in Q2, we don't think it will be as much as Q2 from a percentage standpoint versus 2019. But you know based on current trend, we see Q3 EBITDA significantly beating Q3 of 2019.

Nicole Miller -- Piper Sandler -- Analyst

Okay. And then the 1.3% comp, what is that on an AUV basis? Or just underlying that I know it's -- it's a hot crazy percentage number, but what does it translate to at 2021 versus 2020 comp? Either way will fill the gap.

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

Yeah, so, we've kind of been in the practice of giving the comp versus 2019. And so yeah, I think if you think about the comp, the AUV should really kind of mirror that comp in our AUVs in 2019 was, so that's $10.5 billion or so per store. So it has to be just slightly higher than that, given the 1.3% comp.

Nicole Miller -- Piper Sandler -- Analyst

Okay. That will work. And then on the pipeline was helpful to hear about like going forward, and maybe we could just talk about the reacceleration to get to the going forward. So for 2022, 6 to 8 [Phonetic], it sounds like those almost be, otherwise there is sign leases, but I just wanted to confirm, and are these new stores to the pipeline or are they there prior and kind of where are they opening? And sorry last part, I'd number international back in the day and I thought maybe I should just pick your brain on that, because you're in a really good position and maybe that's something that comes back as an opportunity. So thanks for again for taking my questions.

Brian A. Jenkins -- Chief Executive Officer

Nice to hear from you. Look, the 6 to 8 we are talking about for 2022 were all in our pre-COVID pipeline. So this is a reactivation of stores that we had on top, previously they lean a little bit more toward existing markets for us. There is a couple here, couple California in this mix. So, and then we've got a couple of these small format stores as well in new markets. So there is a couple of two or so of the sort of 20,000 and lower. So I mentioned, we're really excited about that format and what it could mean for us. And mean for our total addressable market, we're reevaluating that right now in terms of how deep we think we could go, given the strength of that part. And so, but yeah, all eight of those are at the top end or in our pipeline.

As our -- the additional mine that we are working. Many of those were in our pre-COVID pipeline as well that we paused on and so a lot of those were in the mix prior. And as I mentioned, we're continuing to look at not only new properties that weren't in that mix, but some additional sites that we had on our radar pre-COVID. So very active now it's a lot better position to be in when dealing with lease negotiations that we were in for most of 2020 and our development team is laser-focused on building the pipeline back. So very encouraged.

As it relates to international. That is something that pre-COVID that we deemphasized as we sought to really focus our attention on the core domestic opportunity and business and, but that is something that we are revisiting right now. I don't have anything really to report on that, but that is something that we are -- that we revisiting right now.

Nicole Miller -- Piper Sandler -- Analyst

Thanks, again. Appreciate it.

Brian A. Jenkins -- Chief Executive Officer

Thank you, Nicole.

Operator

And next we'll go to Andrew Strelzik from BMO. Your line is open.

Andrew Strelzik -- BMO Capital Markets -- Analyst

All right. Great, thanks for taking the questions. A couple of quick ones from me. I'd love to hear a little bit more about what you're learning and maybe any surprises or anything that's been different with the rollout of the web platform and the tablet that you have going on there. I don't know if there is check implications or consumer behavior implications. You've mentioned efficiencies a couple of times, if there's margin implications there. So anything on that would be great to hear?

Margo L. Manning -- Senior Vice President and Chief Operating Officer

Hi, it's Margo. So obviously in the difficult staffing environment, one of the most powerful things about this is just then the ability to help offset backing count. It also hasn't really enabled us to think through the guest experience and what are the touch points that we want our team to really focus on. And to your point, we are seeing some impact it in early days, but I want to go into a great deal of detail. But we have been able to expand server sections and we have been able to reduce for sever routers [Phonetic]. And again, when I talk with you about it being early days, one of the things that we believe over time is, as we get our guests more comfortable with it as being our team more comfortable with it.

And as we've learned the best ways to refine that it will become just more powerful over time. So we're very encouraged with the short time horizon. It's really too early to comment on exactly where we think it will end up, but we'll definitely share that with you as we continue the journey. And I guess when you go to the supply. Progress on your supplies, I have to tell you, I was definitely surprised about against level of adoption, so you know have over 50% of our GAAP to take us up on using this has been a really positive surprise for us.

Andrew Strelzik -- BMO Capital Markets -- Analyst

Okay, that's great to hear. I wanted to ask also on marketing. I know there's been a lot of changes in terms of the channels and the levels, etc. I guess so I'm just trying to frame up, as I think about the margin profile going forward, is this kind of the lender being a larger than normal marketing year and normal market marketing. Are you still trying to dial in kind of what that's going to look like based on the learnings from this. Any help on how the trajectory that looks over time would be helpful as well.

Brandon Coleman -- Senior Vice President and Chief Marketing Officer

Yeah, absolutely. We're still gaining learnings as we come through each marketing promotion, but right now for the full year, we anticipate spending to be slightly over $30 million and that's versus $21 million last year and $45 million in 2019. Due to our window-based approach, approximately about two-thirds of that will be spend -- will be concentrated into Q2 and Q4. A lot of that concentration comes from consolidating the immediate spend within a quarter not necessarily pulling from other quarters, but that -- does that answer your question, Andrew?

Andrew Strelzik -- BMO Capital Markets -- Analyst

Yeah, that's exactly, I was looking forward. Thank you. And just one last quick one for me. Just in terms of the capital allocation philosophy, if Dave & Buster's is not going to be and I know you're not guiding with, if it's not going to be in 10% plus unit grower kind of going forward, obviously the performance is very strong. The cash flow is very strong as well. I'm just curious how you're thinking about allocating that, you know, whether it's a dividend or going back in that direction or try to cash to shareholders. It seems like there's a lot of opportunity there. So just curious for your perspective.

Brian A. Jenkins -- Chief Executive Officer

Thanks. Sure, Andrew. So from a big picture standpoint, we do want to maintain our flexibility here. And near term, our intent is to delever the business over time. And we'll balance that against the broader capital allocation strategy. The key priority -- key priority for us will be new store openings. So we are starting to ramp up some there. We've seen great returns on our stores. We have some revised, more efficient format that could help us even, even bigger returns, especially on the small store format. So we want to make sure that is kind of at the top of the list, but we also will invest in our core business.

We've done some good investments in our core business with our technology. But more recently, we're spending more dollars to upgrade our equipment, our -- the equipment to make it kind of a best-in-class for that watch customer. And we want to make sure that our stores are in good shape and after that returning cash to shareholders through share buybacks and dividends they'll have lower priority at least in the near term and that may change over time, but for right now, we're most interested in growing the business and delevering the balance sheet.

Andrew Strelzik -- BMO Capital Markets -- Analyst

Thank you very much for the perspective.

Brian A. Jenkins -- Chief Executive Officer

Thank you, Andrew.

Operator

And next we'll go to Chris O'Cull from Stifel. Your line is open.

Chris O'Cull -- Stifel -- Analyst

Hi, thanks guys for taking the question. I had a follow-up question regarding the development. It sounds like you're hoping to get back to like a 2019 development pace maybe within the next couple of two to three years given the type of growth you're talking about. And is that -- is that a reasonable assumption or am I my hearing you right?

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

I don't -- I don't think I pick '23 number. Look, we're -- 2022 is what we're targeting on right now, which is a meaningful acceleration under 8 [Phonetic] for this year. We're pleased with that kind of pacing. I think it's what we can digest. It's really all we can get done for 2022. I do think over time, we'll be able to see some acceleration, but again I'm going to stop short of picking exact numbers for '23 and '24 right now, but we have some lifting to do with the leadership team and the bench strength to be able to open our stores. Well, I think pre-COVID we did that better than anybody in this business. and we had what really, really strong track record. We've got to build the muscle back a little bit here. But yeah, I think we can work our way toward an acceleration. But I don't want to pick a number.

Chris O'Cull -- Stifel -- Analyst

And Brian, before the pandemic, I know the Company was investing in a brand study to identify opportunities to improve the brand's relevance and compete better. And I'm just wondering, do you still believe there is a need to complete, I don't want to say a major, but a remodel program within the system?

Brian A. Jenkins -- Chief Executive Officer

I think it's really important to reinvest obviously back into the core business and whether that look and feel investment and or content, whether there be games, whether that be broadening our entertainment lens through programming, we do we feel, we need to be an innovative company. I mean we're the leader in this space for a reason. And we have a lot of folks that are entering the space, many of them chasing our AUVs, our returns. And so we need to continue to innovate. So yeah, I think it's really important, and that will involve some investment in the core business and involve touching our stores with some kind of cadence. I think it's actually really important.

Chris O'Cull -- Stifel -- Analyst

My last one is, should we expect the capex spending to continue to rise from this $95 million to $100 million in '22 or should it stay at this level?

Brian A. Jenkins -- Chief Executive Officer

Yeah, so we're, I mean, we're not really giving guidance yet on that, but you know what I can say is that in all likelihood, it will increase, just for the simple reason that we want to build more stores that will cause an increase. And then what Brian saying as well. So we've been spending less, on store maintenance and things like that, because of the need during the time. So we're slowly ramping that back up and we will continue to do that next year looking at refreshes and remodels that is in that consideration set as we look at capital plans for next year.

Chris O'Cull -- Stifel -- Analyst

Great, thanks guys.

Brian A. Jenkins -- Chief Executive Officer

Thank you.

Operator

And next we'll go to Brian Vaccaro from Raymond James. Your line is open.

Brian Vaccaro -- Raymond James -- Analyst

Hi, thanks and good evening. Just following up on seasonality. And just to make sure we're all on the same page. I believe August is an average month historically, so maybe around $200,000 that we're thinking about it, we're thinking about August of 2019. Scott, can you confirm that's accurate? And then just also remind us how that monthly sales seasonality sort of moves through the rest of 3Q?

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

Sure. Yeah, you know what I would say, Brian, is, as you get into August, the first couple of weeks are fairly normal and then it starts to drop off in the back half of August. And then through the kind of like a back half of August and September and October is when we see our seasonal debt which is on average about 85% of kind of the average for the -- for the whole chain for the year in terms of average weekly sales.

Brian Vaccaro -- Raymond James -- Analyst

Okay, great. So that's up 1.3% that you did quarter-to-date, that quarter-to-date average weekly sales is in that ballpark of around $200,000 then.

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

So for the first -- the first five weeks of the third quarter, the average weekly sales was 1.87% [Phonetic] for those [Indecipherable].

Brian Vaccaro -- Raymond James -- Analyst

Okay, great. Great. And on the small store format, I was glad to hear gains rose up to such a strong start. Can you remind us what the expected cash investment is on that smaller prototype?

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

Yeah. So for that type of prototype, Brian, I mean the average as of 80,000 square foot store. So it's between $6 million and $6.5 million.

Brian Vaccaro -- Raymond James -- Analyst

Okay, great. And then just last one back to capital allocation and thinking about the balance sheet, what's the right level of debt for the business in your view in a post-COVID world and are there any targets on net debt to EBITDA or adjusted leverage that you have in mind? Thank you.

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

Yeah, good question. So we don't have a hard leverage target yet, you know for us, we'll need a little bit more time to establish kind of new normal for cash flow and understand our capex needs that we need to grow the business. And so as that picture becomes little bit more clear and as we're also able to continue to delever the business debt we'll take that all into account. But first and foremost, we want to make sure that we have the dollars available to invest back into the business, whether that be existing stores or new stores or other things. But also the leftover cash to the extent there is something we would like to continue to delever the business for the foreseeable future.

So as things start to normalize a little bit more, we'll probably be able to talk more about a leverage target, but that's our general thoughts right now.

Brian Vaccaro -- Raymond James -- Analyst

All right. I appreciate that context. Thank you.

Operator

And next we'll go to Sharon Zackfia from William Blair. Your line is open.

Matt Curtis -- William Blair -- Analyst

Hey, it's Matt Curtis on for Sharon. Thanks for taking my question. I just had a question on Power Card spend levels. I apologize if I missed this during your comments, but have you seen any moderation in Power Card spend so far in the third quarter?

Brian A. Jenkins -- Chief Executive Officer

Yeah, for Power Cards, no, it continues to be very strong. So we haven't seen any meaningful drop off.

Matt Curtis -- William Blair -- Analyst

Okay, thanks. And then just a quick question on labor, I understand that were earliest, it sounds like you feel comfortable basically on your staffing levels, but I'm wondering if you could tell us anything about what your staffing levels are like now versus 2019.

Brian A. Jenkins -- Chief Executive Officer

So I can start off, so staffing levels you know still are less than in 2019. So there is a little way to go if you're kind of get ultimately where we want to be, but we're making progress in, I think the other thing to keep in mind is the technology that we put in the store with our mobile order and pay, you know functionality as well as or tablets is really helping and keep in mind that we just finished the rollout that technology toward the end of July. And as those in some cases, stores are kind of still running and giving efficient with that technology, but we think that will surely help us continue -- as we continue to move forward. So, still making progress, but still a little way to go and we will keep -- keep the pace coming as we move forward.

Matt Curtis -- William Blair -- Analyst

Okay, good. And then last one from me, could you talk a little bit about the private party business and how that's been trending? And then how are you thinking about that business heading into the holiday season given that this one is going to be relatively normalized compared to last year. Obviously.

Brian A. Jenkins -- Chief Executive Officer

Yeah, really good question, I guess, first and foremost, for as we report the numbers for the second quarter, super pleased with the recovery in our walk-in business, I mean we were double digits in walk-in sales for the second quarter, so really strong recovery. Our special events business is currently lag walk-in so far, while we did see and are seeing sequential improvement in bookings relative to 2019 as we head toward our fourth quarter. It's not in the same place today as our walk in, and so if we think about kind of heading toward the fourth quarter, which is obviously a big quarter for special events for us, we typically see bookings start to pick up in late September, big time in October, into November for, while important December and so it's really. And in my view, pretty hard to predict how corporate demand is going to play out right now. We do feel like the booking window, maybe a little bit more delayed and actually maybe a little more compressed than a typical year in the face of some of the COVID resurgence we're seeing.

So the good news is, look, we've got a lot of runway left here in front of us as we head toward again a big fourth quarter typically for us and our team is working really hard to maximize their full potential as we had toward that.

Brandon Coleman -- Senior Vice President and Chief Marketing Officer

The other thing I'd add to that Brian is that we are being proactive about driving the business and we have several key initiatives that we're launching here in the beginning of Q3 to go out and get that business and not just wait for it to come to us.

Matt Curtis -- William Blair -- Analyst

Okay. I appreciate you squeezing me in. Thanks.

Brian A. Jenkins -- Chief Executive Officer

You bet.

Operator

And we'll take our last question from Jon Tower, Wells Fargo. Your line is open.

Jon Tower -- Wells Fargo -- Analyst

Great. Awesome. Thanks for squeezing me in. I appreciate it. I was curious that clearly had -- clearly customers are using your business a little bit differently than the same period in 2019 given the higher mix of amusement versus the food and beverage. But I was wondering if you could talk a little bit about how the customers are using you outside of that, maybe it's weekday versus weekend and even within the day are you seeing perhaps an earlier start to the day at least maybe during the second quarter with more kids around and out of school. And are you -- what are you seeing with respect to your larger family visits? Are those still depressed versus say the individuals coming in versus 2019 levels?

Brian A. Jenkins -- Chief Executive Officer

Lot of questions in there. I wouldn't say our mix by day and week is materially different. We -- look, we're definitely -- our late night business is not as strong we have our constraints. So our Friday and Saturday nights are not as strong as they were pre-COVID right now. So it's quite remarkable really that we're putting that kind of numbers we are with, listen constraints around the late night. So we're super pleased with the mix of business right now as we think about moving forward a lot of the initiatives that we're working on are trying to drive utilization in frequency, particularly in some of these off peak days, week days and some of the things, Margo is talking about what we're doing from a program perspective are laser focused on those windows to try to drive a Tuesday or Thursday to a higher -- higher place than we have historically, clearly, Wednesday is a kind of a hero day of week during the week day for us. It's discount driven, it's really our only discount right now that we have out there. So we're looking to really try to drive compelling reasons to visit over a broader spectrum of days and we have historically and see us focused on that. We have a lot of capacity that goes underutilized and that's a focus for us.

Jon Tower -- Wells Fargo -- Analyst

Got it. And on Friday and Saturday nights are you still constrained on your hours meaning into this fiscal third quarter?

Margo L. Manning -- Senior Vice President and Chief Operating Officer

To the extend of the hours and saw, are specific fall, but we don't necessarily have all the stores staying both in as late as state yet, but we have expanded those hours with the third quarter in order to accommodate the programming associated with what we got.

Jon Tower -- Wells Fargo -- Analyst

And then the last one for me, I know this has mentioned a few calls ago, but I'm curious, if there is any updates to be had on the virtual brand testing that you've done a couple of markets?

Brian A. Jenkins -- Chief Executive Officer

Wings...

Margo L. Manning -- Senior Vice President and Chief Operating Officer

I'm sorry, kitchen...

Brian A. Jenkins -- Chief Executive Officer

Yeah, kitchen.

Margo L. Manning -- Senior Vice President and Chief Operating Officer

I'm sorry. So we continue to offer our Buster's American kitchen as well Dave investors virtually and that actually continues to be delivering the same amount of sales that I think they're probably first offered. We really excited about our Wings Out and virtual kitchen and due too, really just supply chain issues walked away from that as that stabilizes we have started a plan to talk through rolling that out, but we want to do is make sure that we can cater the demand that we have in our stores, because we intend to get a heightened focus during the football that we want to make sure that we're stabilized, but then we have an interest in making Wings Out throughout the brand, because back half was the most encouraging out of all the virtual kitchen test.

Jon Tower -- Wells Fargo -- Analyst

Awesome. Thanks for taking the questions. I'm going to...

Brian A. Jenkins -- Chief Executive Officer

Thanks, Jon.

Operator

And we have no further questions, I'll turn it back to you for closing remarks.

Brian A. Jenkins -- Chief Executive Officer

Well, thank you. We thank you for joining our call today. We wish you and your families a safe and active fall season. And look forward to seeing you all at D&B location very soon. Have a great night folks.

Operator

[Operator Closing Remarks]

Duration: 76 minutes

Call participants:

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

Brian A. Jenkins -- Chief Executive Officer

Margo L. Manning -- Senior Vice President and Chief Operating Officer

Brandon Coleman -- Senior Vice President and Chief Marketing Officer

Andy Barish -- Jefferies -- Analyst

Jake Bartlett -- Truist Securities -- Analyst

Jeff Farmer -- Gordon Haskett -- Analyst

Brian Mullan -- Deutsche Bank -- Analyst

Nicole Miller -- Piper Sandler -- Analyst

Andrew Strelzik -- BMO Capital Markets -- Analyst

Chris O'Cull -- Stifel -- Analyst

Brian Vaccaro -- Raymond James -- Analyst

Matt Curtis -- William Blair -- Analyst

Jon Tower -- Wells Fargo -- Analyst

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