Good afternoon, everyone, and welcome to Dave & Buster's Entertainment Incorporated first quarter 2020 earnings results 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. Now I'd like to turn the conference over to Scott Bowman, Chief Financial Officer, for opening remarks. Please go ahead, sir.
Thank you, Eduardo, and thank you all for joining us today. After comments from Mr. Jenkins and myself, we'll be happy to take your questions. Just as a reminder, 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, in our responses to questions, certain items may be discussed which are not entirely based on historical fact. Certain of these items should be considered forward-looking statements related to future events within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated.
Information on the various risks, 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, 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 the earnings announcement we released this afternoon, which is also available on our website. I'll turn the call over to Brian.
Good afternoon, and thank you for joining our call today. On behalf of the entire Dave & Buster's team, we hope you and your families are remaining healthy and safe. Since our last conference call in early April, the COVID-19 pandemic has continued to take an unprecedented toll on our company, our industry, and the entire U.S. economy. We shut down all 137 of our stores as of March 20th and only began to reopen some in May as certain states began lifting restrictions. As of last week, we had opened 28 stores, and by the end of this week, we'll have 48 stores open in 15 states. While none of us anticipated this unprecedented crisis, I'm very proud of how our team has responded to the challenges posed. Tough times often bring out the best in people, and that is the case here at D&B.
Our team has demonstrated passion and commitment to the D&B brand, and we are fighting every day to rebuild the business and ultimately to emerge from this crisis and return our company to its leadership position in our category. I'm extremely grateful for their tireless efforts and honored to work alongside them. As we said back in April, our singular goal has been to weather the shutdown period and reopen our stores as soon as we safely can so that we can welcome back our furloughed team members, turn our games back on, and bring fun back into the communities we serve. Fun that we believe will be a very important part of the healing process as the country emerges from the shutdown. Our initial responses during the first several weeks of the crisis were thoughtful and decisive, and we implemented them effectively.
First, in the face of the store closures, we immediately took extremely difficult but necessary steps to significantly reduce our cash burn rate, which involved dramatically curtailing operating expenses, extending rent payments, temporarily halting all capital spending, and suspending our dividends and share repurchase programs. At the same time we were reducing our cash burn, we were also taking steps to extend our liquidity. This included fully drawing our credit facility, securing covenant relief on our credit agreement until the fourth quarter of 2020, and raising an additional $186 million in equity capital. As a result of these efforts, we currently have over $255 million of cash on hand to fund our liquidity needs going forward.
Out of necessity, much of our efforts over the past three months were defensive in nature, but now states reopen and relax restrictions on dining-in and entertainment venues, we have pivoted toward implementing a series of proactive initiatives, positioning the company to reopen stores, reengage guests, and rebuild our business. Accordingly, we have adopted two main principles as we emerge from this crisis. Number one, establish a deliberate and measured approach to reopen our stores. Number two, recalibrate our strategic initiatives to emphasize the return to profitability as soon as possible while positioning ourselves to capitalize on future opportunities. Relating to the store opening of stores, a key priority is providing a safe, clean environment for our team members and guests. We've put intense emphasis on sanitation and distancing protocols to ensure our stores adhere to the highest standards.
At the same time as we reopen stores, we have been mindful of the opportunity to redesign our operating models to serve guests more efficiently and to take advantage of evolving technology to win on every front. At this point, I'm going to ask Scott Bowman to quickly review our operating results for the first quarter and current liquidity position. After that, I'll dive deeper into our store reopening process and our recalibrated near-term initiatives. I'll also share some of the early results
We're seeing at our reopened stores, which has become our primary focus in the second quarter. Sure, Scott.
Before I walk through our first quarter results, let me remind everyone that all of our 137 stores were closed from March 20th to the end of the quarter ending on May 3rd. In addition, during three weeks leading up to the March 20th closures, we had already experienced significant declines in traffic as consumers proactively started avoiding restaurants and group entertainment venues. Our first quarter results clearly reflect that sudden change in our business. The first quarter revenue decreased 56% compared with the prior year period, including a 59% decrease in comparable store sales. Total cost of sales was $28.1 million in the quarter, an increase of 59 basis points as a % of sales.
The increase is mainly due to the write-off of perishable inventory associated with the shutdown of our stores. Operating payroll and benefits expense was $33.7 million, a decline of 37% from the prior year period, mainly due to furloughs associated with the shutdown. Other store operating expenses were $95.7 million, a decline of 10% from the prior year period. Expenses were reduced due to the shutdown, although we incurred $11.5 million in charges during the quarter related to the impairment of three of our existing stores, the write-down of site development costs related to our pipeline stores, and the termination of leases for three of our pipeline stores. G&A expenses of $14.6 million, declined 13.6% from the prior year. Compensation and incentive costs were down $4.1 million, offset by an increase of $3.1 million in professional fees.
Professional fees increased mainly due to advisory and legal costs related to raising additional capital and to assist with lease negotiations. For the month of April, all of our stores were shut down, and our weekly expense burn rate was consistent with our previous estimate of $6.5 million per week. Our debt service cost was $700,000 per week, also remaining consistent with prior expectations. EBITDA for the quarter was negative $26.1 million, which was slightly less than initial expectations due to non-cash write-downs. From a balance sheet standpoint, our main focus was to preserve the financial liquidity while maintaining critical store restart capabilities. To that end, we drew down the remainder of our revolving credit line to preserve capital certainty and significantly reduce operating expenses. Additionally, we opened negotiations with our landlords on rent deferrals and abatements and aggressively managed our working capital position.
We also reviewed our future store pipeline and made adjustments given the current environment. After careful review, we made the decision to complete construction on six stores that were near completion prior to the shutdown and review new construction as it gains greater clarity to market conditions and business recovery. The net capital investment needed to complete these stores is approximately $3 million. Including these new stores, we now expect to spend approximately $50 million in CapEx for fiscal 2020. An additional 11 stores were in various stages of permitting and construction at the time of the shutdown and are currently on hold pending further analysis and visibility into the ramp-up of our existing stores. Finally, we terminated nine leases, which were stores slated for 2021 or beyond.
Having taken those difficult steps related to our operations, we next had to quickly and thoughtfully pursue additional sources of capital to improve our liquidity position in anticipation of a prolonged shutdown and extended business recovery. After careful consideration of a wide variety of financing options to improve our liquidity in a highly uncertain environment, we executed the following actions to improve our liquidity position. First, we executed a $75 million after-market equity offering of 6.1 million shares at an average price of $12.10 per share, completed on April 14th. Subsequent to the end of the quarter, we completed a $100 million private placement of 9.6 million shares at a price of $10.44 per share, followed by a $10.6 million over-allotment option of just over 1 million shares at a price of $10.44 per share.
Additionally, in conjunction with our $75 million equity raise on April 14th, our credit agreement was amended with the following changes. The total leverage ratio and fixed charge coverage ratio will not be tested until our financial statements are required to be delivered for the fiscal quarter ending on January 31st, 2021. A minimum liquidity of $30 million that should be maintained, which could include unrestricted cash and cash equivalents. In addition to these recent financing actions, we are pursuing tax savings and deferrals offered through the CARES Act but have chosen not to participate in the PPP program. We will continue to evaluate all government programs and other viable financing options as we navigate through this uncertain time.
At the end of the quarter, we had $157 million in cash and cash equivalents on the balance sheet, which was an increase of $132 million compared to the end of the last fiscal year, which was mainly due to the drawdown of our revolver, net proceeds from the first equity raise, and the deferral of rent payments, which was partially offset by capital spending for prior construction work on new stores. Currently, including the $111 million proceeds from the second equity raise, we have over $235 million in cash and total debt of $750 million. We continue to aggressively manage our working capital position and prioritize our spending, and are grateful to all of our vendors and landlords to continue to support us through this reopening and rebuilding phase. To date, we have successfully negotiated rent deferrals and/or abatements on over 80% of our stores.
Payback of most of these deferrals is scheduled to begin in January 2021 and is expected to be completed over a 12 to 18-month time period. Keep in mind that our previous commitment to expand burn rate was done to reduce our working capital deficit as we began to manage more aggressively by seeking extended terms and other accommodations. As stores have begun to reopen and generate sales and variable profit, we've begun to direct a portion of this available cash towards gradually normalizing our working capital deficit. This could cause our near-term burn rate to temporarily increase until we get a larger portion of our stores reopened. With that, I'll turn it back over to Brian.
Thank you, Scott. With new capital secured, our credit terms amended, and tight controls on our cash spending, we've significantly extended our liquidity horizon. That has enabled the management team to focus our attention on two near-term priorities as we rebuild the business and emerge from the crisis. I want to take just a few minutes to unpack each of these near-term priorities in more detail. First, reopening our stores. Our store reopening process starts with a careful evaluation of state and local restrictions as it relates to guest capacity and hours of operation. Based on a scaled-down operating model, a store must have the initial potential to generate between 10%-20% of its 2019 revenues in order to generate a variable profit. We set hours of operation for each store based on pre-COVID high volume days and day parts in tandem with state-mandated limitations.
For those stores that are open as of this week, we are currently operating at an average of 60 hours a week, or roughly 65% of our pre-COVID average weekly operating hours. More importantly, those 60 hours generated about 90% of our pre-COVID revenue. We are deliberately focusing operations in our most productive times. Once we've made the decision to reopen a store, staffing is the next critical step in executing that store reopening. For all of us, next to welcoming back our guests into the stores, the most gratifying part of the reopening has been the opportunity to welcome back some of our valued team members who were furloughed in March. We're deeply appreciative of the loyalty and the enthusiasm and expertise they bring to the team. As we reengage our team, our staffing model anticipates a gradual ramp in sales.
Currently, with reduced hours and a narrowed menu, our reopening stores are able to operate with a smaller staff compared to our pre-COVID labor model. Once the store is reopened, we are adjusting our staffing as sales levels dictate. The next major step in preparing to store the reopen is physically and reconfiguring the space to promote and enable social distancing. Our large dining and bar footprint enable us to reconfigure the space to support social distancing guidelines and still maintain seating capacity of about 50% of our pre-COVID levels. We've also reconfigured our arcade areas to promote six-foot spacing by taking some of our games offline. In doing so, we've been able to maintain approximately 75% of our player positions and an even higher percentage of unique titles available for play.
Given the size of our stores, we are still in a really good position to generate meaningful revenue, even with capacity limitations and social distancing. As we reopen our stores, sanitation and safety protocols to ensure the health and safety of our team members and guests is of paramount importance. We have always prided ourselves on maintaining sanitation protocols that meet or exceed local health standards, and that remains our philosophy today. More recently, we've implemented additional protocols to reduce risk of COVID transmission in our stores. We are also enabling and encouraging guests to participate in maintaining a clean and safe environment for themselves and their fellow guests. I'll call out two other important changes that we consider to be temporary or transitional, if you will, during our reopening phase.
First, based on our historical data and insights from our culinary leadership, we've temporarily narrowed our menu to 15 items from more than 40 items pre-COVID. This narrowed menu provides a good variety for guests to choose from and an efficient assortment to execute with a limited kitchen staff. We are able to fulfill orders faster, and it also fits well with a new curbside order and delivery option that we are experimenting with in some markets. The second temporary or transitional change during our reopening process has been our marketing message and media execution. Recall that as a part of our cost-saving strategy during the shutdown, we significantly reduced our marketing spend. Now our team is focused on a local approach to marketing that utilizes traditional and digital media to drive awareness and accelerate recovery.
These integrated plans are leveraging local TV, out-of-home, social advertising, and digital radio to saturate our target market. Two of the three markets currently using this approach are leading our brand in recovery in terms of revenue, This early success has given us the confidence to expand to additional markets in coming weeks. This approach, as well as traditional outreach methods such as our loyalty database, suggests that our efforts are working. During the past week, our reopened stores generated sales at an index of 37% compared to their 2019 levels. For the top quartile of those stores, we are running at a 55% index, and for the bottom quartile, we're running at about 18% index at this point.
We are also encouraged by the steady week-to-week recovery we're seeing, ranging from an average of 17% index in the first week to an average of 46% of those stores that have been reopened for five weeks. That's the limit of our history at this point. Important to note here that all 28 of our reopened stores are producing variable profits. As we look forward, based on current information from each state, our projected reopening schedule anticipates having about 90 to 95 stores open by the end of July and then all stores open by September, barring any delays due to COVID-19 resurgence or changes in state or local guidelines. We also anticipate some of our stores in the Northeast and West Coast will be among the last to reopen.
As I mentioned previously, we currently estimate that stores can cover their variable costs at 10%-20% of 2019 sales levels. At approximately 60% of 2019 sales levels, we achieve EBITDA profitability at an enterprise level under normal operating conditions. This enterprise level break-even point will be a bit higher in 2020 due to additional costs and charges related to the shutdown and our financing efforts. Next, I want to turn to our second near-term priority, recalibrating and reprioritizing our strategic initiatives. As we look to rebuild our business, our team has rallied around the philosophy that great disruption can also lead to great opportunity to think differently. Our focus for the near term will be to invest and accelerate change in the following key areas, our service model, our menu, our programming, and our marketing.
Regarding changes to our service model, our corporate technology team has been working night and day and tirelessly with our store team to rapidly develop an exciting new technology to enhance guest service through a self-service contactless order and pay platform. This technology is going to enable a guest to access a menu, order their food, their beverage items, pay for their selections using their mobile device. Enabling our guests to control the experience on their terms will free our team members to focus on interacting guests in more ways that enhance the overall experience. We're currently piloting this technology in two stores as an optional experience for our guests. In July, we will launch in one store as the primary way to order and pay. We'll then take those learnings to evaluate a larger scale rollout. Another area we are investing in accelerating change is our menu.
After we complete the reopening process across the country and traffic has recovered to an appropriate degree, we plan to expand the temporary 15-item menu. The expansion will not simply be a matter of reactivating our pre-COVID menu. We will leverage our earlier work with the assistance of a third-party consulting firm to inform these changes and target a reengineered main menu by fall of this year. Our ultimate goal is to create a new, stronger food identity that resonates with our guests and is a differentiator of the D&B brand. The third area where we're investing in accelerating change is developing a strong programming strategy around our Wow Walls and other watch assets. Live sports broadcasts will return at some point. It seems likely that those first games, or in some cases, entire full seasons, will be played in empty stadiums.
We believe this creates a unique opportunity for us, and our team is developing strategies to leverage and amplify our unique Wow Walls and other extensive watch assets. We plan to promote our stores as venues where fans can enjoy a unique fan experience in a safe environment with great access to food and beverage and other great forms of games and entertainment. We'll have more to share on that as the plans come together over the next few months. Another area where we're investing and accelerating change is in our marketing. We had already begun to rethink our marketing strategy before COVID, and in March, we welcomed Brandon Coleman as our new CMO to inject new leadership and perspectives into our marketing strategy. We also initiated an agency review process prior to COVID with the original intent to launch a new brand campaign in May.
That process, while delayed, continued throughout the shutdown and culminated in the selection of Mother New York as our new creative agency. By fall, assuming we have successfully reopened all or most of our stores, our temporary marketing efforts will pivot to a new national brand campaign developed with Mother under Brandon's leadership. Our new campaign will amplify Dave & Buster's strong brand and unique assets through activations aligned with several key event-driven windows, all of which will contribute to engaging our guests on a more emotional level. To conclude, although the operating environment continues to be very fluid and uncertain, we're confident in our plan and optimistic about our ability to recover and emerge in a stronger competitive position.
Our team is laser focused on reopening our stores, re-engaging our guests, and rebuilding our business. We're using this opportunity to invest and accelerate change across key areas of the business, all with the goal of enhancing both the speed and magnitude of our business recovery. None of what we have been able to accomplish over the past 90 days or what we have set our sights on achieving looking forward would be possible without our dedicated team members. I want to extend a special heartfelt thanks to our team members across the country who are working tirelessly for Dave & Buster's, as well as those who remain on furlough. Your passion for the company personifies this great brand and will be a key intangible ingredient as we work together to rebuild our business. Eduardo, let me open the call for questions.
Thank you. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach your equipment. Again, that is star one on your telephone keypad to ask a question. We'll pause for just a moment. Thank you. Now take our first question from Andy Barish at Jefferies. Go ahead, sir.
Yeah. Hey, guys. Nice to touch base. Just first question, have you done any consumer work? I know it's early on returning to the locations and just kind of the feelings around cleaning procedures and social distancing that you might be able to learn something from.
Andy, it's good to talk to you. I hope your family is well as well. As we reopen the stores, clearly external factors like the health of the economy, fears around pandemic fears make it somewhat difficult to predict how our business is going to recover. That said, I fundamentally believe that people are social by nature and want to get back to living life. I think we're seeing that in our numbers. We're really encouraged by what we've seen in the stores we've opened with our comp stores producing a 47% year. It's a very limited amount of weeks of operation, and we've got some of our top tier stores up to as high as 55%. Some of those stores are actually in the 60% range, and that's moved up here to 60 as well. The recovery ramp is also encouraging.
We're really optimistic about our ability to claw back. As consumers are coming in our stores and as they come back into our stores, the feedback that we're getting right now is that in general, and somewhat overwhelmingly, we're getting positive feedback of what we're doing as it relates to our sanitation efforts. We have a pretty comprehensive program that we put in place. We're extremely serious about this. The feedback has been good. We have admittedly reduced some of our offering with our guests, with our limited menu and removing some of the games, and we really haven't got a lot of negative feedback on that. I think in general, guests seem very happy that we're open. They're tipping really well, which is obviously great for our team.
Our ops team has done such a fantastic job getting these stores back on and welcoming our guests back in. I'm extremely pleased with where we sit right now.
Yeah. Nice to hear. Then just pivoting to prod, what is your definition of variable profit? Just to level set.
Yeah, sure. What we did, Andy, we calculated what the kind of burn rate is, expense burn rate when our stores are closed. Okay. Variable profit is those additional expenses needed to open. What is needed to cover that additional expense to open the doors. Once we're able to cover those additional expenses to open the doors, we call that variable profit. Andy, one last thing that I actually meant to mention in response to your question. One of the other encouraging things, again, it's not like we have a lot of weeks here, five weeks, but what we are seeing is that the stores that are coming on later in the cycle, the stores opening last week and the ones that are opening actually this week are coming on at a higher index out of the gate. I think that's very good news.
As far as we get away from the original onset of this back in March, and some of these states that are opening up a little later, we're coming out of the gate a little bit higher performance. Thank you. Thank you, Andy.
All right. We'll now take our next question from Nicole Miller of Piper Sandler. Please go ahead.
Thank you. Good afternoon, we're very happy to have you in the team back and the stores opening. I wanted to ask about the employees and piggyback to the IPO and how you introduced us to what I would call Dave & Buster's career level labor. Obviously you communicated with them really well during this crisis, but as you get the stores back online, how many are what you would call career individuals? Are they less than half, or the vast majority? I'm asking that question because it seems like you could get up and running a whole lot faster if we can just practice leverage there. In addition to that, when you can operate at 90% of revenue, what labor are you running? Is that less than 90% or at that equivalent 90% or more than that?
Okay. Nicole, good to talk to you, and I hope you are doing well also. You're right. The D&B brand, our company has an incredible team that are extremely committed to the company. As we have begun to reopen the stores, we've had a lot of success in bringing back the skilled management team to reopen these stores. We're extremely pleased with that. We're glad to have them back. I appreciate the loyalty that they've shown to come back after the furlough period of time. We're coming back with a much smaller team. We're opening these stores, week one with two to three managers. That would compare closely to 10 in a normal situation. We have some very committed people that are extremely happy to get back to work and help rebuild the business for us.
I'm extremely grateful and it has a lot to do with the culture in this company and our COO, Margo Manning, and our regional VPs that have been with this company a very long time, that have stayed in touch with the team. I think that's paying us dividends right now. That's allowing us, as you said, to get open pretty quickly here. Margo and the team are getting stores up within seven days. We've done a couple faster than that. Once we make an internal decision to move forward, we're getting these lit up really quickly. I'm real pleased about that, and we're being aggressive. Once we make the decision and the mandates allow, we're going to move forward. We're going to give our team members a chance to get these stores open, rebuild this business as soon as we possibly can.
I think the other question you asked is about what labor will we have at 90%. We are working on a labor model that would allow us to operate at a lower index and that is it relates to team members. Some of that on the operator side, I talked about we're looking at a potential for technology enabled to take some of the transaction oriented elements of the guest interaction out of the server's hands so they can focus on the experience with our guests. It remains to be seen how that's going to work out. We are definitely going to come up in a nimble way. At this point, it's imperative that we do that.
Both of those sound very promising. I'll just ask a last question. We've been seeing a lot of survey data, and honestly, I don't know how much it matters because consumers say they're going to do one thing, and they might do something different, especially in this situation. Just by observation only, I'm not going to hold you to it. It's just by observation. If you look at demographics and look at behaviors in these 28 stores that are open, are there more individuals? Bigger group size, smaller group size? How much is eating? How much is amusement in the midway? Do they stay longer? Do they leave earlier? Just what are you observing in general?
Early on, as you know, we have what I call our gold box that we're putting together on each store as we open to try to get an understanding of what kind of guest profile we see as we reopen. It's skewing a little less family and a little more adult right now. I think some of that makes sense here. We have seen that and we are seeing amusement, the mix has increased on the amusement side. We're running about 5% points higher in terms of sales mix as these stores open up than before. It's coming out of the food side. Our beverage mix is about the same. We're seeing more play. People are coming back to play. As you know, this is the primary reason to visit D&B, and it's really always been that way.
That's what we're seeing as we get these stores ramped up.
Thanks for sharing that, and best of luck.
Thank you. Good talking.
All right. We'll look for our next question from Jake Gutwight at SunTrust. Please go ahead.
Jake, thanks for taking the question and also congrats on all the hard work in getting the business back up and running. Brian, my question was, it was really encouraging to hear that you expect to have stores open 90%-95% by the end of July. How should we think of the trajectory as we get there? Maybe any indication at the end of June, for instance, or is it really just some laggards, as you mentioned in the Northeast, that are going to be later in July? Just trying to understand how that progresses over the next two months.
We're sitting here in June right now. I don't know that I want to peg the June end and the July end. July is the 90-95, and we're essentially saying a month or so later, the rest of them are done. I think that's pretty close to being precise to me. Right now, we're expecting some of our California stores to be among the last to open, so that would imply that's sort of late August, early September. New York got pegged. Obviously, those two markets are huge for us in terms of store count. About 20% of our store count's in those two states. We're estimating California really more end of July, early part of August.
For good news on that front, really just this week in California, we actually are going to be opening up three stores in California, two in the San Diego market and actually in Ontario, our Ontario store. We've got a crack into some of these West Coast, Northeast markets. We've got a couple of Connecticut stores also. That's encouraging to see, and we hope to see more from them. It's really hard to predict, Jake, exactly what we think are estimates and likely we'll be wrong on these a bit. We meet twice a week to review the mandates as a small team, those are our best estimates right now.
Got it. Just digging into the performance at the stores that have been opened, I guess encouraging at this point that the range and especially some of those at the higher end of the range. Versus the 18% to the 55%, what is the common denominator? Is that just the length of days open, or is it very different consumer behavior in different markets?
It's some of all of it. As I mentioned in my response to Andy a minute ago, we're seeing some of the stores that are opening later. The first store opened really at the tail end of April, 1st of May. I think it was one day in April, but it was a single store. We don't have a long history. The stores that are coming in now, the stores that we opened last week, are coming in at a higher index at the outset. That's encouraging. We are seeing steady development improvement really in all the, I'm going to call them week classes. We've got certain stores that open each week. We're seeing steady movement up in each class. The class that is most developed right now is at 46%.
The number stores that have been open five weeks is staying at 46% right now. As I mentioned, we have some stores that are actually doing quite a bit better than that. There are some geographical differences. We contribute every week, we do some projection work on, again, limited data. Take it for what's it's worth in some ways. We're seeing markets where they have a lower incidence of COVID cases tend to have stronger performance, and we're seeing stores that have a tourist hotspot, some of the coastal areas in particular, seem to be performing better. I think there's some unique market elements, and I also think there's timing within the opening cycle here.
Got it. My last question really is for Scott. You mentioned that, I think it was sales at 60% of prior levels. Same store sales are down 40% at EBITDA breakeven. Can you help us break that down of what that looks like for G&A versus store level profits just to kind of help us? There's a lot of moving pieces that are hard to gauge. Any help on what that would mean for profit margins versus what you're expecting for the actual level of G&A?
Maybe it will help just to break it down, kind of enterprise level versus the store level. If you just think about the store level kind of full model profitability, we need to get back to about 50% index compared to this past year to get to profitability at the store level. As you think at the enterprise, you have to get closer to that 50% kind of index level to be profitable covering G&A and all those extra costs. When I think about that a little bit too, if you think about the 10%-20% to get to variable profit, meaning covering our variable cost to reopen. We're just achieving that. If you look at our first week of operational average in 17%, that's well within that variable profit range of 10%-20%.
Clearly, all of our stores are generally very profitable, as I said. Right now, the development curve in the fifth week stands at just shy of 50%. We're working our way up the curve here. Yeah, we're on track. Great. Thank you so much.
All right. We'll now take our next question from Chris O'Cull at Stifel. Please go ahead.
Hey, thanks. Good afternoon, guys. The company's always had really high amusement margins because of the minimal attendant requirements for those games. Do you expect this is going to change or will need to change with new operating and safety standards?
Yeah, I can start on that. We talked about the work we're doing in each of our stores to make sure it's a safe environment for our team members to get. Obviously, that takes some labor. It takes a lot of cleaning materials and masks and gloves and everything. We have invested in all of that, and we're doing a very diligent job of keeping our stores clean and making sure that everyone feels safe. That's going to cost It's on pace of about a $7 million number or so to do that activity kind of at the current pace. I think, time will tell how much that cost may vary or potentially decline as time goes on.
we think that although it is a fairly heavy cost, it's really well worth it and really a requirement for us in our mind to be able to provide that environment as we ramp up.
I know the company was looking at some new gaming technology prior to the crisis, and I'm just wondering how you're thinking around multiplayer games or how you are thinking about gaming in the future for Dave & Buster's under this new situation, this new environment?
Thanks for the question there. I mentioned in the prepared remarks what we're really focused on right now around service model, new programming and marketing. Those are what we're leaning into as we open the stores in an environment where we have some capital constraints, and we also have resource constraints from human side. We had worked on our strategy refresh plan really in the whole back of last year. Are still very committed to all the things that we were working on. We are taking a pause on a number of things to get our stores back open. Game purchases, physical games, multiplayer games. We had a couple of VR games on tap. We're taking a pause on that right now. As I said, our focus is getting stores back open.
Our belief is that, and I'll say this again, I think, people want to fundamentally socialize. This has definitely put a crimp in that for a period of time. We're going to have to wait and see how consumer preference has changed before we lean in a huge way on the game side. We have some great assets on the floor already. That is not a near-term focus for us.
Great. Okay. Thanks, guys.
Thank you. We'll take our next question from Andrew Strelzik with BMO Capital Markets.
Hey, good afternoon, nice to talk with you guys.
How are you?
I'm great, thank you. You described a number of the steps that you've taken, whether it was the menu or maybe more skeletal kind of labor model, those types of things. You described them as transitional. Is there anything that you've learned from what you've done that you think might be more permanent or why not?
Hey, Andrew, when you get in a situation like this where you were essentially forced to shutter your entire company, there's no question this creates an opportunity to take on. We are operating in a completely different way, both in the field and certainly here in our corporate office. People are working from home, and we've been very productive with extremely small teams getting the stores built back up. I expect that we will make changes, and the majority of those are in the areas that I talked about. Around our service model and how we engage our guests and that experience, and leveraging technology, the menu, which is something that we were aggressively working on. We lost some time in the shutdown, but we are gearing that back up.
Marketing is an area that we have run the same playbook for a long time, and with Brandon's leadership, we're excited to have him on our team. We're going to show up differently real soon, we're excited to show our brand in a different light. We have a lot of brilliant plans, and we're going to look to take advantage of that. I think we've got some good things that we're trying to lean into. We're going to need to be focused here, and we are pausing some things, at least for a period of time. Just give it a time.
Thank you. I think I know where Scott was going there. You mentioned the nine leases that will be terminated.
Yeah.
Is that something that you can talk a little bit about? Is it something that you anticipate that actually, assuming there's going to be a slower retail environment in coming years, you had previously talked about that potential maybe as early as 2021? Is that the right way to think about it, or is it maybe too early to think about it that way?
Hey, Andrew, you were garbled, at least on our line here. Maybe not to anybody else, but I'm not sure I got that question. Can you give us a quick note to that one more time? I apologize. You were on our line. I can't hear.
Can you hear me now, Scott?
Not really.
I'm sorry. I was just trying to figure out if, given the termination of some leases, should we anticipate a coming year slower store openings?
Just a little bit. Andrew, are you referring to the seven store openings we're looking for next year?
Yes, next year's, I guess.
Yeah. Okay. Yeah. What we've done so far, Andrew, is we, as I kind of mentioned in some of my remarks, we took a pretty hard look at our store pipeline in light of the current situation. We did decide to move forward on some stores that we may have completed that makes sense for us. The other stores that were in the pipeline, some we did terminate already. We still have some stores in the pipeline that really are just on hold right now. They may well be stores in 2021, but we're kind of in wait and see approach right now. They're on hold until we get a little bit further down the road and really understand kind of what the new normal may look like. We don't know exactly today what that will look like.
We need a little bit more time, but we should have some more detail to share in our next call.
Great. Thank you very much.
Thank you, Andrew.
I'll take our next question from Brian Vaccaro from Raymond James, please go ahead.
Good afternoon, and good brief . On that last point, when do you expect to open the six that you're finishing construction on, and how many signed leases do you currently have?
Scott Bowman, you had in your prepared remarks, we have a limited amount of net dollar outlay on the six we have remaining for this year. We're going to look for more clarity and more business recovery before we move in on those stores. While it's a fairly small net number, we're looking for a little more clarity and visibility before we start on those stores. Likely, it would be in the back half. Not entirely sure right now, our expectation right now, at least, I think it changes in the back half.
Okay. Brian, I wanted to get your perspective on the competitive landscape as well. There's obviously a growing headwind to the business for several years pre-COVID, but what have you seen in terms of permanent closures and the like, and how do you see that playing out in a post-COVID world?
Thanks for that, Brian. First of all, I guess I'll clear this. As I think about COVID-19, it's really devastating to a number of businesses, many businesses, particularly as you think about consumer-facing brands, restaurants, entertainment, and not to mention and understate all the people that have been impacted, they lost a job and livelihoods right now. Nothing positive about that to celebrate, really. It's really tragic in my view. That said, as we think about what we've been facing, particularly over the last three to four years, we've seen a rapid growth in the number of brands coming into the space, into our space, and the speed at which they were developing new stores.
Clearly, we've had a lot of headlines for a long time, and I think it's going to take a little bit of time for some of the dust to settle, at least on some of these companies, some of our competitors. I do think there is a pretty good chance, the odds are that there will be one of two things, either a number of the names that don't reopen or at least aren't growing at the same pace and have their rate of growth for some period of time. As I think about us, we designed the space. We're a leader in the space, and I think we're well-positioned to emerge in an even better competitive position post-COVID. I really do. We've seen some of our competitors that haven't opened many stores right now, or some that have opened very few.
I can't speculate on what that means about most of the companies that are private and what that's going to end up meaning. I think we're going to see less competitive headwind here on the other side.
All right. Thanks, Michael. Last one from me. I just wanted to circle back on the streamlined menu and labor model you talked about. Can you provide more color on each of those compared to pre-COVID levels? Maybe the amount that you streamlined the menu, and just how you plan to manage each as sales volumes build, how you're managing particularly the labor build there. Thank you.
Great. Thanks, Brian. I guess I'll talk about the menu first. As we began to think about the reemergence after we were shutting down, again, had a very small team, our culinary team, working on that and Art Carl, our VP in that area. We took the items on our existing menu, our pre-COVID menu, that were the most popular, this did not include select, generate a significant portion of our food revenue. Obviously with an eye towards getting a good selection and having good breadth, and that can be a little bit of a challenge with 15 items. It wasn't driven by supply chain, it was driven by our desire to have a menu that we could execute, our team could execute in a good way when we're coming up with, in some ways, a skeleton crew.
We were opening stores initially with extremely small teams and demand and then balance it as we grow and we're being more nimble about that. We start with a fairly small team and then scale up. The operating team has done a fantastic job in doing that. It's some heavy lifting to get your team members back right now, people on the hourly front, believe it or not. That's easier said than done. We're really efficient when we think about doing 10%-20% of our overall sales volume and we're covering the variable costs. You know our average AUV, that's a pretty low cost number.
We've developed a pretty nimble model to get these stores open because my feeling is that I want to get these stores open as soon as we can, get our team engaged and get them back, and then we build from there. That's what we've done.
All right. Thank you.
Thank you.
All right. We'll now take our last question from Jon Tower at Wells Fargo. Please go ahead. Mr. Tower, your line is now open.
Thank you very much. I had to find that mute button. That's always helpful. Thank you. I'm glad to hear you guys are doing well. Thank you for all the details during the call and the script. I was curious, maybe if you could provide us a little bit of information on the burn rate. Obviously last time you had updated us, you talked about a $6.5 million metric plus the $700,000 in debt expense or interest expense recovered. Do you have an equivalent for now in how the business is running right now?
Let me just comment on that. It's a little better. As you look at the month of May, at the end of May, we had 26 stores open. We opened our first store on April 30th, which I believe is during that month. As I looked at those stores for the month of May, they contributed about $300,000 a week towards that overall burn rate. That gives you some indication and understanding that they were ramping up and opening throughout the month. That gives you at least some perspective on how things may go in the future. We were pleased with those stores and hopefully that will continue, but we were pleased with those results in May for the entire month is about $1.2 million contribution to that overall burn rate.
Okay. Sorry, just to make sure I understand this completely, you mean contribution on the positive side, not the negative?
That's correct.
Okay, great. Obviously, quite a few moving pieces in your business right now. I am curious, in stores themselves as you're reopening, obviously some amusement in part of the store is being restricted, either the amusement or the dining side. I am curious, how are you dealing with the amusements that require more customer engagement and potentially team member engagement like VR and things like Pop-A-Shot? How do you see these coming back online, and when do you see that happening?
I guess I'll address VR first. We have had guest requests for VR. We have not opened up our stores with VR game in operation. We may test a location. We have some stores that are doing huge volumes right now. In some ways, our VR games are probably the cleanest games in the store because we have a practice of wiping and cleaning those after every use. It's just part of the normal protocol here. Reintroducing VR is not at the top of my list right now. It's a great attraction. It's a piece of what we do. It's not the driver to our success to get these stores back open and moving. As it relates to Pop-A-Shot or actually any of our multiplayer games, what we're tending to do here is deactivate some of the games because most of these have multiple player positions.
We are deactivating some of those to create the separations at this point.
Okay. Then just last one for me. I'm curious, this new menu piece of it all, getting down to the 15 items from the more than 40 prior to the crisis. I think you've alluded to it earlier, the idea of this potentially altering how the menu looks as you emerge from the crisis. I'm just curious, how much of a streamlined menu are you thinking about? Is it 15 items, obviously ranking the highest of the highest earning ones? Do you envision a period where it's only 40 items over time and much more streamlined, and perhaps you even shrink the footprint of the dining room? Do you plan to return to somewhere near where you were, close to 40? I'm just curious to get your thinking around that.
Thank you for the question. Honestly, that's something that we were in the midst of that work prior to COVID. We had partnered with a third-party consulting firm to assist us with some of that thinking. I do not expect that we will be back to a 40-item menu. I think when you get thrown into a disruption of this magnitude, it does give you a really good environment to learn some things. By necessity, we dropped the menu back to 15 items. Again, popular items, generally a lion's share of our food revenues, these items that we kept. We're keeping that. It will help inform, actually, the number that we come back with at some point in time here. I don't expect it to be over 40. I expect it'll be south of that. I think it'll be about 15.
I think it's going to be somewhere in between. That's something we're working on now.
Great. Well, thank you very much, and best of luck.
Thank you, Jon. You have a good evening.
That is all the time we have for questions, Mr. Jenkins. Mr. Bowman, at this time, I can turn the conference back to you for any additional or closing remarks. Please go ahead.
All right. Well, thank you. Well, thank you guys for joining our call today. We'll look forward to updating you on our progress in September. Also want to wish you a safe and a happy summer. I look forward to seeing you at one of our reopened Dave & Buster's locations very soon. Have a great night.
This concludes today's call. Thank you for your participation. You may now disconnect.