What happened

Dave & Buster's (NASDAQ:PLAY) shareholders had a strong start to the year as the stock gained 16% compared to an 8% spike in the S&P 500, according to data provided by S&P Global Market Intelligence.

The boost put the volatile stock back in positive territory for the past 52 weeks, up 4% versus a 1% drop in the broader market.

A man and a boy at an arcade.

Image source: Getty Images.

So what

January's rally came courtesy of a positive mid-quarter update from the restaurant and entertainment chain's management. CEO Brian Jenkins and his team said recent marketing, menu, and gaming improvements have helped turn the tide on revenue growth. As a result, sales at existing locations are now expected to rise by between 1.8% and 2.5% in the fiscal fourth quarter compared to a 1.3% decline last quarter. Dave & Buster's also lifted its earnings outlook for the period.

Now what

The stronger fourth-quarter growth likely won't be enough to keep the chain from reporting its second straight year of falling comparable-store sales. However, the rebound does suggest that management has a good handle on the issue heading into 2019. The return to positive customer traffic, meanwhile, supports the chain's aggressive store-growth goals that target expanding the base by about 10% each year for the foreseeable future.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Dave & Buster's Entertainment. The Motley Fool has a disclosure policy.