Good afternoon, everyone. Welcome to the Dave & Buster's Entertainment, Inc. Second Quarter 2019 Earnings Results call. Today's call is being hosted by Brian Jenkins, Chief Executive Officer. I'd like to remind everyone that this call is being recorded and will be available for replay beginning later today. I would like to turn the conference over to Arvind Bhatia, Senior Director of Investor Relations, for opening remarks.
Thank you, Lisa, and thank you all for joining us. On the call today are Brian Jenkins, Chief Executive Officer, and Scott Bowman, Chief Financial Officer. After comments from Mr. Jenkins and Mr. Bowman, we will be happy to take your questions. This call is being recorded on behalf of Dave & Buster's Entertainment, Inc. and is copyrighted. Before we begin our discussion of the company's results, I'd like to call your attention to the fact that in our remarks and our responses to your questions, certain items may be discussed which are not based entirely on historical facts. Any such items should be considered forward-looking statements and 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 has been published in our filings with the SEC, which are available on our website at www.daveandbusters.com under the investor relations section. In addition, our remarks today will include references to EBITDA, adjusted EBITDA, and store operating income before depreciation and amortization, which are financial measures that are not defined under generally accepted accounting principles. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in our earnings announcement released this afternoon, which is also available on our website. Now, I will turn the call over to Brian.
Thank you, Arvind. Good afternoon, everyone, and thank you for joining our call today to discuss second quarter results and our outlook for the business. For the quarter, we reported record results, increasing revenue by 8%, EPS by 7%, and EBITDA by 5%. We have built a high-margin business that generates strong free cash flow, which when combined with our strong balance sheet, has enabled us to return more than $200 million in share repurchases and dividends and reduce our float by almost 13% as of the end of the second quarter. While we continue to profitably grow our business and return significant capital to shareholders, our comp sales results came in below expectations as last year's VR launch proved difficult to match, and our promotions were not as effective as we had anticipated. We also faced headwinds from adverse weather and the continued impact of competitive intrusion and cannibalization.
Later, Scott will provide more details on these factors and additional highlights on the quarter in his prepared remarks. First, let me share with you what we're seeing in the market and our approach to managing the business to maximize value for shareholders. There is no question that we are in an attractive and growing category as consumers continue to increase spending on experiences. As a leading brand that delivers immersive experiences, we are in a great position to capitalize on this favorable secular trend. At the same time, this trend and our success has attracted many more players in the space, and the overall market today is quite fragmented and competitive. Over the past 18 months, we've made important progress on several fronts, including enhancements to our food and beverage offerings and the introduction of more immersive games, including our industry-leading VR platform.
As part of our focus on operational excellence, we've also improved our service, as reflected in our consistently higher guest satisfaction scores. While we've accomplished a lot, we see great opportunities for continued improvement and recognize we have a lot more to do. As I have mentioned on previous calls, we see immense opportunity to drive traffic by increasing guest frequency and improving F&B attachment once guests are in the door. With an annual frequency of less than two times and F&B attach rate of approximately 50%, driving deeper guest engagement to improve these metrics is our biggest opportunity to reignite same-store sales growth. In the near term, our goal is to execute on five priorities that we have identified to maximize shareholder value.
First, the revitalization of our existing stores, which in the near term includes re-energizing the dining area in many of our stores to drive food and beverage attachment. It also includes continued food, beverage, and amusement innovation to augment our offerings, all of which is a part of introducing new wow experiences. Second, we are focused on building deeper guest engagement, which includes the nationwide launch of our new mobile app in October. It also includes increasing investment in digital media to more effectively reach our guests. Third, we are fueling growth investments by surgically reducing costs in other areas. Through the realization of operational efficiencies, both in our stores and corporate office, we expect to fund our growth initiatives organically by redirecting resources into our P&L. Fourth, we are enhancing rigor on capital and resource allocation to invest in the highest returning opportunities for the overall D&B system.
This includes optimizing store formats to match market sales potential and managing the pace of new store growth to maximize returns and sufficiently focus our development team and store-level managers on advancing our store revitalization efforts. Fifth, returning significant capital to shareholders in the form of share repurchases and dividends. I went through those pretty quickly, so let me spend some time on each of these five priorities, particularly the first. Our number one priority is store revitalization to reignite comparable store sales growth. Our focus on this initiative begins this quarter with our Wow Walls to reenergize our dining rooms. For those of you who have been to our Dallas store, you know we have been testing this idea since late last year, a cutting-edge visual display technology using a nearly 50-foot LED screen that can be customized by location.
We are very pleased with the lift we have seen in Dallas, particularly in F&B, and plan to roll out the Wow Wall technology in 35 additional stores by the end of October as the football season gets underway. Over time, we also plan to extend LED technology to our sports lounges to cement our position as one of the best and most innovative sports viewing destinations in the country to drive reach, frequency, and F&B penetration. The Wow Wall and expanding the use of LED technology are only some of the improvements we are making to our stores. In addition, we've re-engaged Jackman Reinvents to take a comprehensive look at our store portfolio and offerings to assist with our brand revitalization and a strategic refresh.
As the foremost customer experience reinvention company and an organization that we have worked with to great effect in the past, we believe this highly successful partnership will continue to be instrumental in enhancing our integrated experience across all customer touch points. We are committed to our store revitalization efforts and are excited about the opportunities in front of us. In addition, as we look to keep our games and attractions refreshed, we are excited to launch Terminator VR, which will be the company's fifth proprietary title in our VR library. The launch will coincide with the release of the new Terminator movie in November. We're excited to continue to leverage our leadership in the industry to be the go-to place for cutting-edge entertainment.
Making sure we have a strong pipeline of games and other initiatives to wow our guests and drive comparable store sales will continue to be a top focus for our team. With all of the projects underway and as new strategies emerge from our engagement with Jackman, we will maintain new store development flexibility and optionality, not only for our store revitalization efforts, but also to execute new initiatives. Our second near-term priority, which goes hand in hand with the first, is building deeper guest engagement. We have already discussed the large and untapped opportunity to unlock guest frequency and F&B penetration. Our new mobile app, rolling out nationally later this quarter, is an important tool that will help us exploit this opportunity. The app allows guests to use their phones to quickly purchase and recharge digital Power Cards, tap and play games, and earn valuable loyalty points.
It will also allow us to connect directly with guests and deliver targeted, personalized offers, whether they're in store or out of store. The new app allows us to capture powerful, actionable guest data and in a way that is highly differentiated in our industry. The app will be promoted on TV and through digital media, and our 12,000 guest-facing employees will also play a key role in increasing awareness and use of the app. We look forward to updating you on our progress in the future. Now, I'll turn to our third priority, which is to surgically reduce costs and deploy those realized savings to fuel investments in organic growth opportunities. As you know, we enjoy industry-leading margins, a result of significant margin expansion over the past decade. In fact, since 2006, we have nearly doubled our EBITDA margins.
We have achieved these results by delivering revenue growth while maintaining disciplined cost management. This proven discipline continues to serve us well today. Our preliminary estimate before one-time cost and reinvestment is that we can achieve approximately $15 million in annualized cost savings from near-term initiatives, including off-peak labor optimization, further centralizing our special events team, some G&A streamlining, and modest changes to recipes and gaming mix. We've made these changes thoughtfully in order not to impact the quality or the guest experience. We intend to reinvest most of our realized savings back into new initiatives to fuel organic growth. Speaking of new growth investments, we are investing in building a dedicated team to support the increasing digital presence and capabilities we anticipate.
We have added resources to our technology group and have engaged third parties to collect anonymized, privacy-protected data on our guests at a macro level, data that will complement what we are learning directly via the app. We are still hiring in this area with a few positions currently open to round out our consumer and data insights team. As we build a more robust database and gain valuable consumer insights, over time, we will have actionable intelligence to make our digital media, promotions, and offers more relevant, targeted, and customized for our guests. We are optimistic about the potential to drive better guest engagement by the investments we are making in our team, our technology, and digital presence, and look forward to reporting on our progress. To provide a little more context here, I want to emphasize our balanced strategy. We're not simply cutting costs to temporarily boost margins.
Instead, we are reallocating resources to the highest return opportunities, mainly in the areas of deeper guest engagement, digital marketing, and consumer intelligence capabilities. We are improving our operational efficiencies while maintaining and building on the company's strong market position and competitive differentiators. Turning to our fourth priority. I mentioned earlier, we have a rigorous approach to deploying our capital to the highest return opportunities. In addition to some of the exciting organic initiatives I've described, opening new stores in an attractive location also remains an important part of our growth strategy. The backdrop is that during the past 18 months, competitive store openings have accelerated, presenting a major headwind to the entire industry.
I know there are differing views among investors regarding our unit expansion strategy, so I want to take a moment to clarify our process for investing in new stores, particularly as compared to other capital allocation priorities. We know our stores deliver a strong value proposition. It is reflected in what we believe are best-in-class AUVs, margins, and store-level returns. We only pursue new unit growth when the incremental unit delivers a compelling return on capital, both on a standalone basis and when considering its impact on our entire system. Since 2011, the 29 new stores that have been open for at least three years have averaged annualized returns of 45% over their first three years. Looking at a more recent cohort, such as our 2016 class, this group has also averaged annualized returns of 45% in its first two years.
Realizing a less than three-year payback on a standalone business represents a compelling opportunity for opening new stores. In addition to strong return on capital, there are ancillary long-term benefits to opening multiple stores in a market. The additional stores deliver strong returns, increase store density, provide leverage on G&A and marketing and talent retention that help us fortress the market for the long term. While we're pleased with our success in the past, we're also excited to introduce more productive and higher return prototypes as we increasingly enter smaller markets. Take, for example, our 17K format Corpus Christi store, which opened in late 2018 and is on track to generate year-one sales of over $8 million, in line with the targeted volume for our 30K box. The store is expected to achieve approximately 35% store-level margins and a 50% cash-on-cash return in its first year.
While we're not suggesting all 17K format stores will generate this level of performance, Corpus Christi demonstrates the potential, efficiency, and returns of a smaller 17K format store. When such attractive opportunities are available, it makes compelling financial sense to pursue them. As we continue to identify high-value opportunities in revitalizing existing stores, we believe it's prudent to balance the demands that store openings place on our corporate infrastructure, development team, and in-store talent. As a part of our ongoing review process, we are carefully considering the pace of new unit growth. Consistent with our top priority of revitalizing our existing stores, we are preserving our optionality on new store openings in the back half of 2020 and in 2021.
While it's too soon to announce any changes at this time, we are evaluating our options and will pursue the path that we believe will create the most value to shareholders. In the meantime, continuing to open high-return new stores is the right strategy from a competitive perspective but also in terms of maximizing Return on Investment. Our investment velocity will continue to be balanced, and opening new stores will continue to be just one aspect of our overall capital spending plan. As I've mentioned, in the near term, reenergizing our existing stores to drive frequency and improving comps will be our top priority. Finally, our fifth near-term priority to create long-term shareholder value is returning capital to our shareholders.
Beyond investing in our business, we have been using our strong free cash flows and balance sheet flexibility to opportunistically buy back our stock and pay a healthy dividend to shareholders. Reflecting confidence in our long-term potential and the current valuation of our shares, the board recently increased our share repurchase authorization another $200 million to $800 million. As you heard me say at the beginning of the call, we have been quite active on the capital return front. We believe that capital return will continue to be an important contributor to our story going forward. To wrap up, we expect that generating improved comps and operational efficiencies, achieving higher ROIs from new stores, and returning capital to shareholders are not mutually exclusive and will all be important contributors to value creation at Dave & Buster's.
We have the talent, resources, and a long track record of success that shows we can effectively and simultaneously execute on our plans. Importantly, I would like to stress that we will continue to maintain a strong pipeline of additional high-return ideas that we actively evaluate to supplement the initiatives already underway. We are conducting a thorough review of all aspects of our business and operations as a part of our annual strategic planning process. We will adjust our strategic plan in response to our business review, competitive dynamics, market conditions, and other factors. We are a nimble, experienced team, taking decisive action in the face of recent performance and acting with appropriate urgency to extend Dave & Buster's long track record of delivering outperformance and superior returns. With that, I'll turn it over to Scott to discuss the quarter's highlights, our financial performance, and updated 2019 guidance.
Thank you, Brian. Good afternoon, everyone. I'll begin by spending a few minutes discussing the highlights of the second quarter, followed by our financial performance, and then finish with our full-year guidance. First, our key achievements in the second quarter. In amusements, we strengthened our VR library with the launch of our fourth proprietary title, "Men in Black: Galactic Getaway." In addition, during the summer, we launched several exciting games, including Centipede, Tons of Tickets, Ring Toss, and Basketball Pro. These titles have all tested well with our guests, and initial read on their performance has been positive. Within F&B this summer, we introduced a Hawaiian-themed limited time offer we call Island Vibes that included craveable entrees like smoky barbecue bacon Hawaiian ribs, aloha ginger salmon, and crispy Hawaiian chicken sliders.
For our upcoming October menu, we will introduce new items including a grilled chicken avocado ranch sandwich and drunken New York strip while removing a few slower-moving items. We will continue to enhance and innovate offerings in F&B as we know this will be an important contributor to our go-forward success. In terms of our marketing campaigns, during Q2, we continued to run our unlimited wings and unlimited video games promotion on Thursdays, as we did in Q1. In addition, we tested two promotions highlighting food and game combos, savable combos, which we ran for four weeks, followed by eat and unlimited play combo. Collectively, these value-oriented campaigns did not resonate with our guests as well as we had anticipated. Going forward, we will continue to test new promotions to bring value to our guests and increasingly leverage digital marketing to communicate our message.
For Q3, we have also brought back our $19.99 unlimited wings promo for game days during the football season. This promotion now includes a $10 Power Card instead of unlimited gameplay, which we believe will help improve per capita spend and amusement. With respect to new stores, we opened three new locations in the quarter and have opened two additional stores since quarter end. Year to date, we have opened 12 new stores, and we continue to expect to open 15-16 new locations for the full year. These store openings for the full year will skew towards large format stores and new markets. Looking ahead, we still have a significant white space opportunity. We have 132 locations currently and continue to believe our long-term opportunity is 230-250 locations in the U.S. and Canada alone.
We will continue to be prudent and disciplined as we expand our footprint, ensuring we invest in the highest Return on Investment opportunities while returning excess capital in the form of dividends and share repurchases. Now let me turn to our financial highlights. During the second quarter, total revenues increased 8%, driven by strong contribution from our 31 non-comparable stores, partially offset by a 1.8% decrease in our comparable stores. As Brian mentioned, our comp sales results came in below expectations as last year's VR launch proved difficult to match, and our value promotions were not as effective as we had anticipated. In addition, weather had an unfavorable impact of approximately 80 basis points on comps and competitive intrusion and cannibalization remained stiff headwinds during the quarter. Looking at overall sales by category, amusement and other grew 9.4%, and F&B grew 5.9%.
Amusement and other represented 60% of total revenues during the quarter, an increase of 80 basis points in mix from the prior year period. Breaking down comp sales, our walk-in sales were down 2%, while special events were up slightly. In terms of category comp sales, amusement and other was down 0.8%, while F&B was down 3.2%. Within F&B, food was down 3.8%, and the bar business was down 1.6%. Total cost of sales was $59.6 million in the quarter and improved 10 basis points as a % of sales. This was due to an improvement in amusement margins and a higher mix in amusement revenue, partially offset by lower F&B margins.
Food and beverage cost as a percent of sales was 70 basis points unfavorable compared to last year, primarily driven by the impact of our unlimited wings promotion, higher avocado prices, and costs related to our shift to fresh juices within our bar offerings. This decline was partially offset by the positive impact of 1.7% in food pricing and 1.9% in beverage pricing. Cost of amusement and other as a percent of sales was 40 basis points favorable compared to last year. Amusement margins benefited from our pricing initiatives and the continued shift towards virtual reality and other simulation games, partially offset by higher costs associated with the new RFID Power Card. Operating payroll and benefits expense was 23.5% of sales, or 40 basis points higher year-over-year due to the unfavorable impact of nearly 5% wage inflation, deleverage on comp store sales, and the impact of non-comp stores.
This was partially offset by the rollover of higher labor costs last year associated with the VR launch. Other store operating expenses were up 60 basis points year-over-year, largely driven by higher occupancy expenses, primarily at the non-comp stores, partially offset by leverage on our marketing costs. G&A expenses of $16 million were up 8% from the prior year, reflecting increases to support a growing store base and higher technology and stock-based compensation expense. As a % of sales, G&A was flat. EBITDA increased 5.3% to $79 million and was 23.9% of sales, reflecting a reduction of 60 basis points versus the prior year. Adjusted EBITDA of $86 million was up 4.4%, while diluted EPS of $0.90 was up 7% versus the prior year.
Shifting to the balance sheet, we had approximately $568 million of outstanding debt at quarter end, resulting in leverage of approximately 2 times EBITDA, up from 1.6 times at the end of Q1 and 1.4 times at the end of last year. The increase was mainly due to additional share repurchases during the quarter, and we feel comfortable with our leverage ratio at these levels. As Brian mentioned, we are driving value by returning excess capital to shareholders, and we have been quite active on that front. During the second quarter, our board increased the share repurchase authorization by another $200 million to a total of $800 million. We repurchased approximately 3.4 million shares in the second quarter for $137 million and had approximately $270 million remaining under the existing authorization at the end of the quarter.
We also paid our fourth quarter cash dividend of $0.15 per share during the quarter. Turning now to guidance. Based on recent trends, we are revising our fiscal year 2019 guidance as follows. Total revenues are expected to be in the range of $1.338 billion-$1.359 billion, versus prior guidance of $1.365 billion-$1.39 billion, reflecting growth of 6%-7% versus the prior year. Based on July and August comp trends, which were down approximately 4.5%, and our outlook for the balance of the year, we expect full-year comps to be in the range of -3.5% to -2%. This compares to previous guidance of -1.5% to +0.5%. We are projecting net income to be in the range of $91 million-$100 million, versus prior guidance of $103 million-$113 million.
Guidance was based on an effective tax rate of 22%-22.5%, which is unchanged. Finally, EBITDA is expected to be in the range of $272 million-$282 million. Excluding one-time charges, we expect EBITDA to be in the range of $274 million-$284 million. This compares to prior guidance of $283 million-$295 million. In terms of quarterly phasing, Q3 includes an estimated $2 million in one-time charges related to our cost-saving initiatives, as well as increased marketing to promote our Wow Wall and mobile app initiatives. Keep in mind that in Q3 last year, we recognized $2.2 million in business interruption insurance recoveries that had a favorable impact on EBITDA. Thank you for your interest in Dave & Buster's. I will turn the call back over to Brian.
Well, thank you, Scott. Our decision to reset guidance was not taken lightly and was taken in context of what we've seen in the marketplace since our last earnings call and the recent comp trends Scott mentioned. We have many reasons to be encouraged for the back half of the year. At the same time, we are cognizant of recent volatility and potential risks. As such, the midpoint of our revised guidance assumes no near-term improvement from current trends, and the upper end of our guidance assumes modest impact of initiatives starting in Q4. I'd like to close by thanking our team for their dedication and hard work as we focus on our five near-term priorities, namely revitalizing existing stores, building deeper guest engagement, managing costs to fuel organic growth, investing in high-return opportunities, and returning capital to shareholders.
As always, we appreciate our shareholders for your continued support and interest in Dave & Buster's. We'd be happy to answer your questions during Q&A. Lisa, please open the lines.
Thank you. If you would like to ask a question on the phone lines today, you can press star one on your cellphone keypad. If you are on a speakerphone, please make sure your mute option is turned off to allow your signal to our equipment. Once again, that is star one. We'll take our first question from Andy Barish with Jefferies.
Hey, guys. Just wondering if you could give us a little bit more color on sort of the non-impacted stores and maybe an update on the % of the system you think is impacted. The question is, are you seeing deterioration kind of in the core that hadn't been impacted by competition, which is leading to some of the other changes that you discussed today.
Well, I'll answer that. The first question about impacted stores. The base of stores impacted by either competition or cannibalization did grow in the quarter, Andy, from 40% in Q1 to 45% of our store base, comp base in Q2. That's not the only factor here in the second quarter. We mentioned on the call, the rollover of VR was a significant factor for us, the lapping of that platform launch last year with "Jurassic World." We underestimated the impact on traffic in our view. Weather was not particularly great for us in the quarter. We estimate about 80 basis points of pressure in the quarter. We mentioned that a little bit actually on the Q1 call as we started off in May.
We had some difficult weather around Memorial Day weekend, and then we had some weeks in July. There are a number of factors, but definitely the competitive landscape is something that continues to accelerate in our view.
Thank you.
Our next question comes from Sharon Zackfia with William Blair.
Hi, good afternoon. I guess I'd be interested in hearing more about the Wow Walls and if you could quantify any kind of lifts you saw there in Dallas, whether it related to traffic or food and beverage attach, and maybe compare or contrast that initiative versus prior remodeling initiatives you did around D&D, sports, and so on.
We're very excited about the Wow Wall. We, as you know, began that test in late 2018, in our Dallas store. It's a 50-foot LED screen. Really re-energizes, brings a whole new energy to that space. It's a very contemporary look. It's latest and greatest technology, LED panels, high resolution. We're combining that Wow Wall technology with some improvements in furniture, flooring, and other elements to really revitalize the dining experience. Our view is that is one of the great things, a whole new experience, and we have seen outsized performance. I don't really want to get into the specifics of Dallas here, but it is one of our top-performing stores, right in the top couple of stores in terms of performance in our system, and F&B in particular is performing very well.
We like the look, and we like what it does to the energy of our brand, and we like what we see with this investment.
Can I just ask a follow-up? Is it fair to think that those comps are positive in Dallas? When you complete a Wow Wall, is there a big initial lift or is it something that builds?
Well, they are definitely positive. It's one of our top two to three performing stores in the system. It is a highly positive store in our system. We made this improvement in, I think it was December of 2018.
Initially, we really didn't advertise that. It did build over time, building awareness. It did take a little time to be noticed for what we had invested there, but it's impressive. The difference here is we are going to invest in our third quarter in digital media to drive awareness of this offering. We will be investing to build that awareness. I do think it does take time. As I mentioned, our frequency is fairly low as a brand, less than two times. I think it does build over time, but we feel very confident in what this is going to do and add to the brand experience.
Okay. Thank you.
Our next question comes from Joshua Long with Piper Sandler.
Great. Thanks for taking my question. Wanted to circle back to the VR usage. You mentioned a couple of times the difficulty in lapping last year's rollout. I'm curious how you're thinking about VR and if it's a function of awareness or if it's content or yeah, what you're learning about how the consumer is engaging with that VR platform. Also wanted to see if you might be able to provide an update in terms of pricing. I know we had talked about some optionality in terms of higher pricing and/or bundling offers with the VR and any sort of latest updates in terms of what you learned there.
Thanks, Josh, for the question. Well, clearly, we learned a few things as we lap that introduction of a platform. In many ways, we introduced a roller coaster last year with both a platform and a very popular title in "Jurassic World." That proved to be difficult to match and roll over. The trial, the per capita lift that we saw with that launch was impressive and the rollover was difficult. We'll begin to move away from some of that outsized performance as we get farther away from the summer. We still have great aspirations for that platform. It is a platform that allows us to introduce new content, proprietary content, new movies, so to speak, new experiences. We're excited about the launch of "Terminator." This is an IP that we secured.
It's going to launch in and around the time of the launch of the movie in November. We really like what this game is going to deliver. As you asked, the notion of bundling is something that we expect to pivot into as we head into this launch of "Terminator." We have built, at this point, five really great experiences. Our media campaign as we launch "Terminator" is going to not only launch and feature "Terminator," but we are going to tie in the breadth of experiences that we've built in this library.
We'll take our next question from Jeff Farmer with Gordon Haskett.
Great. Thank you. Yeah, I appreciate the comments on lapping the VR launch, but can you provide a little bit more color on the daypart, weekpart trends, any type of customer demographic factors that might also be weighing on sales for you guys?
It's similar, Jeff, to what we have seen over the last more than four quarters. Our strongest daypart was earlier in the launch daypart over the course of the quarter, and we continue to have our toughest daypart in late night.
Okay. Then in terms of the incremental costs associated with the mobile app introduction, I'm just curious how much of those costs are already flowing through the income statement or if there are more to come.
Well, they are flowing through both our capital guide as well as some incremental expense associated with our technology team. They are reflected. Our efforts as it relates to 2019 are reflected. Go ahead.
One thing I'll add to that, most of that is flowing through. I think what you'll see, as I mentioned in Q3, that from a marketing standpoint, we will kind of over-index on marketing in Q3 to promote the rollout of the mobile app, as well as continued rollout of this WOW Wall.
All right. Just one final follow-up here. I think the same-store sales number came up, did you guys share the level of menu pricing or pricing? Thank you.
Sure.
Our next question comes from Jake Bartlett with SunTrust.
Great. Thanks for taking the question. My first question was about the engagement with, I might have written this down wrong, but Jackman Reinvents or Jackman. I think you referred to it as a strategic refresh. I'm trying to understand what that might mean for just your mix of games or just maybe a little detail on what that's going to entail.
Well, we're very excited about working with the Jackman team again. We are really taking a comprehensive look at our portfolio, our offering, as we think about our brand and revitalizing the brand. We had a very successful partnership with Jackman and his team dating back between the years of really 2010 and 2014. They were very instrumental in the success that we had in revitalizing the brand and some of the outperformance that we had in the years of 2014 and beyond. We're really excited about working with them again. They're a very bright team. They're, in my view, better today than they were a decade ago, and we're really optimistic about some of the initiatives that are going to come out of that work. This is not a thing that happens overnight.
We worked with this group for three to four years, but it did result in new offerings, new approaches to our business, and that's what this process is about. We are early on here, but really excited about this project.
Got it. Then you mentioned that the Terminator VR release in November. I'd be interested to hear what else is on the docket, especially the kind of the important holiday season, and whether we should expect kind of a similar cadence from last year with Dragon Frost being launched before the holidays. Then I also just had a larger question about content, and I'm wondering whether the kind of the more exclusive focus on VR for the last year and a half since Halo, is that at the detriment of some of the games that your core consumer appreciates?
That's a great question, Jake. We are focused on delivering a balance of titles. With the launch of the platform, the VR platform does offer us a great opportunity to introduce proprietary titles, and we have leaned in on that, obviously, since we introduced the platform mid last year. We're still looking at the cadence of how many. We obviously did three this year. We're evaluating that cadence. It is not at the detriment of introducing other highly popular titles. We introduced, I think Scott, in his remarks, mentioned some of the titles that we introduced over the course of this summer that are very popular in tests, that resonate well with guests, that bring new experiences. We're not solely focused on VR. It's a piece of the introduction of games.
It does one that is able to command a pretty good spot on our TV campaign and our media message. We're not abandoning all games here. We are working to deliver multiple games.
Got it. Last question. The unlimited wings and then now the $10 Power Card, that's a little different than last year with the unlimited gameplay. Do you see much risk around that? Is that something, I believe it's something you've done both before, but I just wanted to gauge any level of risk around kind of making that switch.
Another great question. We continue to work on our promotional toolkit, really kind of test and learn approach here. We did make the pivot here to a $10 card. That's the way this offering started back when we initially introduced it. We have optionality to think about or with what we feel like is a very compelling offer on the heels of an unlimited wing offer combined with a Power Card, and we're excited to start the year with it. As you recall, last year, we didn't have the unlimited wing promotion running in the first half of the football season or so. This year, we'll be starting with that in combination with this Wow Wall investment in a large nucleus of stores, and we think that's going to make for a powerful combination.
Got it. I actually have one other quick question. I apologize for that. It sounds like there's some variability about development on the back half of 2020 into 2021. Your comments about the store size, though, should we expect, just the success of the 17K format store, should we expect a greater mix of smaller stores? Is that kind of a little more certain than maybe how many you do in a year?
I'll take the first question, or last part of the question first around store format size. The 17K or the Corpus example, we're really excited about what that store is able to produce in terms of volumes, margins, and returns. We have discussed the fact that we are beginning to enter into smaller DMAs, smaller market sizes. We have always been looking for a flexible format and one that can deliver great returns. We like this format because as we think about some of these smaller markets where we may have thought about putting a 30K box in, and you can look at our model, our target out there for a 30K. Putting in a 19K that can do $8 million, it's going to deliver superior returns.
We're excited about what that means as we get really more into our 2021 class and beyond. Not able to impact too much in our 2020s. We've been underwritten for quite some time. We like the format. We like what it shows and what it means for enhancing our margins as we finish out our addressable market and continue to march down that road. As it relates to flexibility, we're heavily focused on revitalizing the stores. We have 130-plus store chain right now, and we are highly focused on reinvesting in that, starting with this Wow Wall. We are trying to maintain some flexibility. When I say that, I'm really talking about our late 2020 openings and into 2021 to give us flexibility in terms of the pace as we look at that revitalization effort and what that means in terms of demands on the team.
Just a reminder, everyone, please limit yourself to one question, and you may queue for additional questions. We will take our next question from Jon Tower with Wells Fargo.
Awesome. Thanks. I appreciate all the color around the near-term initiatives and particularly around the unit growth side. I was hoping to focus a little bit on the sales drivers in the existing store base. Two things, and they're kind of related. First, on the Wow Walls, can you discuss what you kind of envision for these walls over time? I know it sounds like it'll be trying to drive more traffic to the dining room area around sporting events, but can it also be used for e-gaming events in stores and other initiatives that you might be able to do? Separately, but somewhat related, a larger bar and grill competitor that's focused on the sports viewing space.
Announced an initiative into sports betting, that was actually on Friday. I'm curious, given the fact that you're re-engaging with the Jackman team, are you considering that, or would you even put that on the table as an option in the future, if the relationship or the consultancy with Jackman kind of points you in that direction? Thank you.
Thanks, Jon. As it relates to that, our dining rooms, based on the square foot that we've allocated to those spaces and the utilization rate that we get today, that it speaks to a need to revitalize the area. The Wow Wall is our answer to that. We are looking to bring a whole new energy to the space. These are very large screens. We have an capital allocation ability to scale this. It's going to be combined with improving, as I mentioned, some of the flooring, and some of the furniture to create really a new experience, bring energy to an area that lacks that today. We're excited about what that means and how we might, as you say, leverage that and use that in other ways than just sports. We have been working and testing a number of things around e-sports.
Did a few events in the months of May and June with a partner. We think as we improve this offering, it will bode well for how we might be able to leverage that, both in our e-sports leanings as well as what it may mean in terms of our position with partners in the sports betting arena. We're open-minded to that. We're open-minded to partnerships. We're aware of the [BetWild] announcement here, and we think that could represent an attractive opportunity down the road. Right now, though, we're focused on the five priorities I mentioned today.
We'll take our next question from Andrew Strelzik with BMO Capital Markets.
Hey, good afternoon. My first question, as you kind of reflect on some of the missteps on the food side, more broadly, what does your work, your kind of consumer insights suggest drives the F&B decision for your guests? I guess what I'm trying to get at is longer term beyond the Wow Walls, what structurally changes the performance of the F&B business longer term?
That's a great question. Right now, I mentioned a statistic in my prepared remarks that we are attaching or penetrating about 50% of our guests are buying a food and beverage item in our store. This does represent a great opportunity for us. We have a lot of square foot dedicated to this area. In my view, it could be utilized better. We're committed to improving our F&B comps here, and that does mean to us continuing to create a fresh and new menu. We've talked about our simplification efforts. We're going to continue to look at that and further refine our menu. We've introduced a number of LTOs to create a new experience, and our guest sat scores have improved both from a food quality perspective as well as speed of service. The awareness challenge still exists.
In our view, one of our biggest near-term opportunities right now is to drive guests in the door and drive F&B penetration by having an area that is immersive. That is why we are right now heavily focused on the physical plant nature of our dining rooms by bringing in an F&B offering over time, we certainly will. We believe investing in the dining room physical plant right now as we continue to work our menu is the biggest near-term opportunity we have.
We'll take our next question from Stephen Anderson with Maxim Group.
As you evaluate your recent results, certainly some of the press talking about the increase of the consumers perhaps getting a bit less confident. From a higher level, what's your read on the guest right now versus what your read was maybe three or six months ago?
Steve, were you asking about the consumer? Is that the question?
Yes. Whether you sense that the consumer has maybe a little bit less confidence or than what you've seen maybe in the last three to six months?
Well, I think the consumer is overall still very healthy. I know there's been some movement around with some of the tariffs, the noise and some of that stuff, but we still feel like we have a very healthy consumer. Unemployment is still very low. We have a lot of confidence in our ability to reach more of them through the things that we're doing and drive more frequency at the same time.
I'll just tag onto that. I think overall, the consumer is in a pretty good shape from an economic standpoint. I think some of these uncertainties can weigh from time to time. I think the outlook is fairly good, especially with the unemployment picture and some wage growth. I think we're doing pretty well. There's some headwinds on the expense side, but I think, the uncertainty in the environment will kind of ebb and flow. We feel like the economics health of the customer is really good right now.
Disposable income.
Yeah.
Yeah.
We'll take our next question from Joshua Long with Piper Sandler.
Great. Thanks. Wanted to follow up. Just as a clarification, you mentioned a couple of times about, I guess, the optionality in your real estate then earlier. That's really a kind of a 2020 or 2021 opportunity. Is that the right way to think about it, Brian?
We actually have a couple of units that were in our pipeline in 2020 in the 19K format. We have a couple in that 2020 class that were already planned. The pivoting that we see potential for really is at the 2021. There are a couple of those that we are reevaluating right now in terms of what the proper size is, and then obviously as we begin to underwrite into 2022, this will be a key part of our decision making as we, again, optimize the size of the store to our market sales potential because we just really like what we see in Corpus and its ability to generate some really big numbers with a very efficient box, much smaller back of house. That's kind of where we stand on that.
We'll take our next question from Brian Vaccaro with Raymond James.
Thanks. Good evening. I just wanted to circle back on the recent comp trends. I think you said July and August down 4.5%. Just trying to get a better understanding of what you think might be driving that incremental weakness. Is there anything, as you look beneath the surface, anything to add, amusement versus F&B segment comps, day of the week, maybe geographic or mall versus non-mall, that might help explain some of the incremental softness?
Brian, July and August, both of them were down in the mid 4% range. The comments that I made about difficulties in Q2, which relates to the VR role, however, continued into August. That is definitely a part of it. Weather played a part as well. We saw weakness up the Mid-Atlantic and Eastern Seaboard. The competition continues to grow. I mentioned that we are expecting right now 80 units this year on the names that we're tracking. That's up from 60, or maybe I didn't mention this. That's up from 60 last year. That is a headwind that is continuing to grow. Like I said, we're optimistic about what we're doing in our pipeline to work to offset that.
That's related to our efforts and heavy focus on revitalizing our existing stores and working on building better guest engagement, which is a big opportunity for this brand right now.
This does conclude the question and answer session. I would like to turn the call back over to Brian Jenkins for any additional or closing remarks.
Well, thank you for your time this afternoon. We look forward to reviewing our third quarter results with you in December.
Thank you.
That does conclude today's presentation. Thank you for your participation. You may now disconnect.