Good morning, everyone. My name is Cory Hatton, Head of Investor Relations and Treasurer of Dave & Buster's. Welcome to our Investor Day. We'd like to thank everyone for joining and for your interest in our company's story. Traditionally, we have had the privilege of speaking with you once a quarter on our earnings calls, which largely focus on updating you about our company's latest financial results and other near-term trends in the business. Today is very special for us, because it is primarily about the future and where we are steering this fantastic business over the medium and long term, which you'll have the opportunity of learning about directly from many of our most senior executives presenting today. A copy of today's presentation will be made available on our investor relations website at the conclusion of the event.
Before we get started, let me get a few of the legal proceedings out of the way. I'd like to call your attention to the fact that in our presentation, remarks, and our responses to questions, certain items may be discussed which are not entirely based on historical fact. Any of these items should be considered forward-looking statements relating to future events within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Information on the various risk factors and uncertainties have been published in our filings with the SEC, which are available on our website. We encourage you to sit back, relax, and enjoy the roughly 90-minute presentation, which will then be followed by a question-and-answer session.
Throughout the presentation, you'll see on the left-hand side of your screen the ability to submit questions that will be addressed at the end of the presentation. With that, it gives me great pleasure to introduce our Chief Executive Officer, Mr. Chris Morris.
Thank you, Cory, welcome everyone to our Investor Day. We're so excited to share with you all the hard work our team's been focused on the last several months, and to share with you why we are so enthusiastic about the opportunities ahead for this incredible business. Throughout the presentation today, you will meet many members of our senior management team. As you can see on this slide, we have a new team with expansive breadth and depth of relevant industry experience. The average industry experience by team member exceeds 25 years, and many members of the team have been with us for less than two years, which has allowed us to bring a fresh, modern approach to an iconic brand, along with renewed energy and passion to drive this business forward.
Before we get into the details of our long-term plan, which I know all of you are excited to see, I'd like to walk you through a few slides about our company. Let's start with a snapshot of Dave & Buster's. We are the largest family entertainment platform in the U.S. and Canada, with exceptional unit economics, growth, and profitability. Today, we have 210 locations, 69 million annual guest visits. Our average unit volume is $11 million, and we generate $2.2 billion in annual revenue. Our Adjusted EBITDA margins are 24%, yielding $527 million in adjusted EBITDA, and our unlevered free cash flow is $492 million, representing a free cash flow conversion of 93%.
Dave & Buster's started 40 years ago. Over the last four decades, we've proven that we can be successful in all environments and profitably grow our business year in and year out. We've proven that we can be successful in good times and in bad times. Later in the presentation, we'll talk more about our consistent, strong financial performance throughout all business cycles. Today, we're even better positioned to continue to grow our business, having two brands under one roof with Dave & Buster's and Main Event. We're a skilled operator operating in the U.S., Canada, and Puerto Rico. We're in every major metropolitan market across the U.S. We're in all top 25 DMAs. Half our system is in the high-growth area of the Sun Belt region of the United States.
An important point to make on this slide is why we have a large geographical footprint, there's still ample room to grow, and we see a tremendous amount of white space opportunity, which we'll get into in more detail later in the presentation. We have a broad entertainment offering. We have world-class arcade operations, best-in-class sports viewing, bowling, laser tag, gravity ropes. All of these entertainment offerings are complemented with a high-quality food and beverage offering. All right, let's shift gears. Let's talk through our investment thesis. This is our point of view on why it makes sense to invest in Dave & Buster's. As you can see, we have identified seven key considerations. Number one, we are a highly differentiated entertainment company. Two, we are a clear leader in a high-growth industry. Three, we have a diversified business model.
Four, we have a long track record of profitable growth through cycles. Five, we have a very compelling free cash flow profile. Six, we have a very attractive unit economics. And finally, our team has identified several key levers to drive Adjusted EBITDA and cash flow as we move forward. Let's step through each one of these. We're a highly differentiated entertainment company with a very unique set of business characteristics. We have all the positive attributes of an amusement park operator, like a unique and differentiated experience, high free cash flow, recession resilient. We have ancillary revenue opportunities, high barriers to entry, and the main demand driver in our business is high-margin entertainment offerings. We also have all the positive attributes of a restaurant operator, like strong unit economics, convenient locations, national scale, year-round operations, and international franchising opportunities.
We live in the sweet spot of these two arenas. We're the best of both amusement park and restaurant operators. This drives our differentiated experience. It's why we are the leader in a high-growth industry. It's why we have a diversified business model with significant unit growth potential and a compelling free cash flow profile. It's why we have such attractive unit economics. Further to our differentiation, this slide shows how we compare to not only amusement parks and casual dining overall, but also a couple of the national-scaled operators in our industry. As you can quickly see, we are the most differentiated business across this comparison, which is a big strength of ours. We have multiple entertainment offerings and flexible space to evolve those offerings, which provides further differentiation from concepts with a singular product offering.
We have a world-class sports viewing experience, which we think is a big opportunity for us. The Dave & Buster's brand is an iconic brand with incredible brand awareness. We have 90% brand awareness. When you compare our brand awareness to the next national scaled operator in our business, there's a wide gap. The next national scaled operator has 68% brand awareness. Our opportunity that we see going forward is: how do we harness this significant brand awareness? People already know us. They like us. Our opportunity is driving frequency and driving conversion, which we'll get into both later. This slide illustrates our strong value proposition, which we believe is a huge differentiator for our business. You can see how we stack up against other entertainment offerings in the market.
In good times, when discretionary income is rising, we get the benefit of that discretionary spend going to entertainment occasions. In tough times, when consumers pull back, we tend to benefit from entertainment trade-down due to the strength of this value proposition. We are the clear leader in an industry that's growing at a double-digit rate. We're 50% larger than the next national scale operator, and our industry has grown 10% per year over the last 10 years, and it's projected to grow 11% per year between now and 2030, providing us a nice tailwind as we move forward. Our business model is diversified. We're not overly exposed to one key measure. When we look at our business across revenue by offering, revenue by geography, visitation by gender, visitation by income, we have a nice distribution across all those measures.
We believe this diversification is one of the reasons why this business has consistently performed over a long period of time. As you can see in this slide, we have a long-term track record of profitable growth through cycles. This is not a business that has wild swings from one year to the next. Earlier, I mentioned our strong value proposition. That positions us well to benefit from entertainment trade-down during a down cycle. You can see, during the Great Recession of 2008 and 2009, our revenue declined by 2%, and EBITDA only declined by 6%. Importantly, by 2010, we had fully recovered. Our free cash flow conversion is unmatched. On the right-hand side, you can see our free cash flow conversion every year for the past 10 years.
During that time, we averaged 88%, with a tight range of 82% on the low side and 93% on the high side. This speaks to the strength of our business model and provides us with significant flexibility to maximize value to our shareholders. Further to the strength of our business model, we have best-in-class unit economics with low maintenance and gains CapEx. On the left-hand side, you'll see several key metrics for our store base. We have 210 locations in 42 states, averaging approximately 40,000 sq ft in size, with $11 million in average annual volume, generating approximately $4 million in store-level EBITDA per unit, representing a 35% store-level EBITDA margin, with annual maintenance CapEx of $150,000 and annual game CapEx of $145,000.
Perhaps the greatest testament to the strength of our unit economics is the chart on the right-hand side. This shows the distribution of our store base on annual store-level EBITDA contribution. You can see 91% of our stores in our portfolio generate annual EBITDA of $1.5 million per year or higher. There's only 18 stores that generate less than $1.5 million a year in annual EBITDA, every one of those 18 generate positive EBITDA. We don't have a single unit in our portfolio with negative EBITDA. Best-in-class unit economics drive best-in-class returns. We have three different store formats, all three generate significant returns. Our small format units range between 15,000 to 25,000 sq ft. They'll generate $8 million in revenue, contribute $3 million in EBITDA, cost approximately $6.6 million to build, generating approximately 45% returns.
Medium store formats range between 25,000 to 40,000 sq ft. generate $9 million in revenue, approximately $3 million in EBITDA, cost $7.2 million to build, generating average returns of approximately 40%. Finally, large store formats range between 40,000 to 55,000 sq ft, generating $12 million in revenue, $4 million in EBITDA, and cost approximately $8.1 million to build, generating approximately 50% returns. Finally, we have numerous levers to drive adjusted EBITDA and cash flow growth. When we came on board, it was clear to us we had a strong launch pad, but the question was: How do we maximize the potential of this company? We spent months meeting with our operators and doing extensive research to better understand our strategic opportunities.
As you know, as a company, we have delivered strong financial performance over long periods of time, but prior to COVID, there were several years of lackluster performance, particularly on the top line. We wanted to understand this. Based on all of this work, it is clear we do not have a business model problem. In fact, we are even more convicted about the strength of the business model than we were when we stepped foot in the door. We learned our greatest opportunity was improved execution on a number of fronts. Some of our key findings were the marketing and media messaging had not evolved for over a decade. There was a lack of any comprehensive pricing strategy on games. The F&B offering had deteriorated and was subpar compared to peers, and was not designed to set our operators up for success.
While our units had been able to offer a high-quality experience to guests, they had not refreshed in over a decade. There was no thoughtful special event strategy, and there were several high ROI technology upgrades that had not been executed. Based on our findings, we have devised a clear and concise plan. We've identified $635 million to $825 million of incremental adjusted EBITDA opportunity from organic revenue growth, new unit growth, and disciplined cost management initiatives. What makes us so excited about the opportunity in front of us is most of these initiatives are not rocket science. A lot of this potential can be unlocked through simply better operational execution and basic blocking and tackling. We will use the next several pages to walk you through all the details of this plan.
The opportunities we've identified for Dave & Buster's are very similar to the work we completed at Main Event. When I started at Main Event in the early part of 2018, the brand was suffering from declining comp store sales. To understand these trends, we followed the same playbook we are following here at Dave & Buster's. We spent months meeting with our operators and doing extensive research to better understand the strategic opportunities to grow the business. Through that process, we learned the brand lacked a cohesive vision. There was no sophisticated approach to marketing, no brand architecture. The operators were fatigued and didn't feel supported. The guest experience was clunky and inefficient, and there was an inconsistent focus on special events. To address these opportunities, we devised a clear and concise plan.
We upgraded the management team, we refined the brand, enhanced the guest experience, revamped the new unit growth strategy, overhauled the marketing approach, improved operational efficiencies, and revamped the special event business. We had a great plan, having a great plan only matters when that plan is executed at a high level. Our team executed our plan. On the right-hand side of this slide, it's very clear we outperformed our peers on all key industry metrics. We believe this case study is important because we see many similarities to the opportunities in front of us with the Dave & Buster's brand. We've identified six levers for organic revenue growth. We add all this up, the opportunity is $430 million to $600 million of incremental EBITDA.
As we go through each one of these initiatives, we're gonna walk you through the math behind each one of these opportunities. We want you to see the art of the possible. However, the power in all of this is the combination of all these working together. The math that we're showing you is the impact each one of these initiatives will have on our business on an individual basis. The harder thing to quantify is the exponential impact of all these coming together at once. There's no doubt when we improve on all of these initiatives, the impact will be greater than the sum of the individual contributions. With that, let's dig into each one of these. First up, marketing optimization. We see an opportunity to improve our incremental EBITDA, $175 million to $235 million.
40 years ago, Dave & Buster's was the first brand to establish the now $30 billion in growing global entertainment category. D&B has very strong brand attributes, with 90% brand awareness and 70% consideration. Our opportunity is to harness the power of this brand to drive higher conversion and higher frequency. Conversion is the number of D&B guests who have visited us in the last 12 months as a percentage of those who have considered visiting us. Frequency is the number of times an average guest visited us in the last 12 months. We plan to improve both of these important metrics by tailoring our message to our audience and optimizing media efficiency with use of more digitally-focused strategy to reach our target audience through the media they are engaging with.
increase awareness of our unique national sports viewing platform, and using entertainment, innovation, and technology to improve engagement with our customers. Let's walk through some math to show the potential impact of improving these two metrics alone. Starting with frequency. With the average frequency of 1.4 times a year, if we simply improve that number by 0.1, from 1.4 to 1.5 times, that's an increase of $119 million in revenue, and with 60% flow-through, that's an increase of $70 million to Adjusted EBITDA. We believe we have an opportunity to increase our average frequency from 1.4 times to at least 1.6 times over a three-year period, generating an increase of $140 million in incremental adjusted EBITDA.
An improvement of our average frequency by 0.2 times simply means getting 20% of our guests to visit us just one additional time during the year. Let's move on to conversion. The math on conversion, every 1% change in conversion drives an increase of $20 million in revenue. With 60% flow-through, that's a $12 million increase in incremental EBITDA. Based on our research findings, we believe we have an opportunity to grow conversion by at least five points, going from 50% to 55% over a three-year period. Increasing conversion by five percentage points would drive incremental Adjusted EBITDA of $60 million. Let's talk through each target audience. First, families. Families are a big part of our business and will always be a big part of our business. We intend to protect this market share. Second, young adults.
Based on our research, we see the greatest opportunity to grow our business is through improving the execution of the young adult occasion. Let me be clear, we are not moving the business away from families over to young adults, rather, we have identified we have an execution gap on young adult occasions, the research shows that when we close that gap, there will be considerable market demand for our product offering, which will drive both conversion and frequency. We will close that gap by delivering tailored marketing messages that addresses the need states of this audience, then delivering on the brand promise through the right hospitality model and product offering during their visit. Finally, special events. We see an opportunity to grow this important revenue channel. In recent history, it's clear the special events side of the business was not a priority to our company.
We see a big opportunity here by simply making it a focus and supporting the teams to market and grow this business. We'll go through more in a few minutes. Let me now turn it over to Ashley Zickefoose, our Chief Marketing Officer, to walk you through more details of our plan to grow this business.
Hi, I'm Ashley Zickefoose, Chief Marketing Officer for Dave & Buster's. As Chris just mentioned, we put a lot of thought into the best way to reach our targets and what their need states are. We wanted to put that same thoughtfulness into our media approach. We did a deep dive into the Dave & Buster's media strategy, looking all the way back from 2010 to the present. What we found was the company was spending nearly all of its advertising dollars on cable TV. While TV may have been an efficient way to reach our target audience of 20 to 40 year olds back in 2010, it was not the case in 2019. This digital opportunity is huge and had been largely neglected by the company.
We see significant opportunity to improve our overall media efficiency by having a more digitally focused strategy, so we can reach our target audience through the media they're engaging with already. Through targeted marketing, we've already been able to lower our overall marketing spend and deliver significantly more impact. Our brand has shifted from approximately 15% digital and performance channels in 2019 to 80% in 2022, and we expect this to continue as we utilize micro-targeting to reach our audiences with multiple messages, so we can learn and adapt quickly and maximize media ROI and effectiveness. Watch has been the fourth pillar of the D&B brand for years, but the strategic positioning has never been more relevant. Over 127 million people watch sports in the United States, and about 27 million are regular sports watchers.
We call them social sports watchers, and they look very much like the D&B young adult target. They're looking to socialize, connect with friends, consume food and beverage, and take a break from adulting to have fun multiple times a week, about 145 times a year. The visit size of this occasion is massive overall. When you look on this next slide, we see it broken out by sport and period across five leagues. You can see the breakout of over 13,000 visits across every single month of the year. Not only do we love this consistent spread across months, but also how sports like baseball, as an example, happen multiple times throughout the week, including midweek games that happen during typically lower peak time frames, and not just games that happen during our high peak weekend time frames.
There are multiple opportunities every week, every month, for us to capture visit frequency and provide exceptional hospitality to our social sport watchers, so they come back time and time again. Why do we feel confident that we can win with the Watch experience and capture all of these visits? We already have an exceptional offering, with dedicated seats, full F&B, and multiple screen infrastructure in place at all locations. It is no wonder the Watch experience consistently scores the highest in guest satisfaction for all of the experiences we offer. However, we also know that only 4% of our guests cite Watch as their primary visit driver, and only 12% of our customers have unaided awareness of the Watch offering. This is in comparison to 90% of guests who have an overall D&B brand awareness.
There's significant opportunity for us just driving awareness of the Watch. Our marketing goal is to do just that, to drive awareness of our Watch offering and leverage our attributes and infrastructure to drive and capture those visits. We're gonna support this media strategy enhanced by scripted campaigns and partnerships during primetime events such as NFL, NBA, or really any relevant games or events for that season and time frame. We partner with our highly experienced local operators to ensure that marketing is customized with partnerships, Watch Parties, or promotions as makes sense. We work in partnership to maximize impact for every dollar spent. This next slide shows the sports calendar. It gives us something to promote every month, which we see as an effective method to drive incremental traffic. You can see it all come together on this next slide.
As we see our sports Watch strategy as a 360 approach, it includes a mix of in-store, local CRM, digital, social. It includes influencers as well as digital video channels, so we're able to meet our customers where they are and show them how the Dave & Buster's brand is relevant. In parallel, we're continuing to strategically innovate our entertainment offerings to drive frequency there as well. As we look to innovate on entertainment, we return back to what our guests tell us they want. They wanted let loose variety, interactive entertainment, connecting with my crew, and above and beyond hospitality. We bring these together so they can really stay focused in three key areas.
We continue to innovate by refreshing our games annually, finding IP partnerships to make our offering even more compelling, and testing and introducing relevant entertainment offerings such as Watch Parties and Watch Arcade, immersive gamification experiences. All of these things come together to build out a robust test pipeline, which we will walk you through soon and will help us to continue to grow and innovate as we bring to life the D&B entertainment offering. Turning to our website. We've made meaningful investments into our website to improve it. The reality is, the former D&B website was more of an information center. Guests would go there to find out simple facts, like store locations and store hours. We felt like it could do a lot more. We wanted to take the old website and turn it into an e-commerce platform and allow guests to transact it to drive revenue.
Now, guests can load money on Power Cards ahead of time, and the booking flows for special events are easier to navigate. Both of these are huge opportunities to grow, check, and drive transactions. In addition to that, we've also improved our engagement and visit conversion, and we've modernized our overall design. This helps our guests feel like our brand, whether digitally or in person, is modern and relevant to their experience that they're looking for. Our strategy is to drive regular engagement with our guests and to customize our offers so that we're able to convert and engage them to drive incremental visits. Our company did not have an active CRM strategy, and while D&B Rewards, our loyalty program, had been launched 18 months ago, it was not as robust as our team felt that it could be.
We feel there's real opportunity in exploiting the D&B Rewards loyalty program size, which is already at $4.8 million in only the first 18 months. Our intention is to continue the rapid growth, both in size and sophistication. What you can see here on the left is all the things that we are now learning about our guests. We know when they come in, what they're playing, what they're buying from a food perspective. We're starting to learn if there's a certain sport or other occasion that they really turn to us to help them solve. I can now take all of this information and create highly personalized and customized emails and communications that reach them. These can either be in own channels or in paid. What we have found is our rewards members really resonate.
They're coming to us 50% more in visitation and spending about 15% more on their checks every time they come in. Marrying the scale and size of our D&B Rewards program with the personalization that we're able to now understand and communicate with our guests, is helping us to unlock extreme potential with our CRM programming.
Let's talk strategic game pricing. We see an $80 million to $120 million incremental EBITDA opportunity over the next three years with this initiative alone. We started digging into our business and quickly learned that there was no comprehensive pricing strategy on games. We learned that we are priced at a significant discount relative to many of our competitors. In several of our markets, we see an opportunity to raise prices while still protecting our value proposition out in the markets. As you can see on this slide, our game prices are 40% to 80% lower than some of our competitors in several of our markets. We started to dig into this more, there are two main observations. Number one, Power Card prices have not increased in more than 20 years, which seem crazy to us.
The second observation is that we don't have tier game pricing. What that means is game prices are currently the same nationwide. There are four main things we're doing to address this. One, we're gonna redesign our chip tier menu. Two, we're gonna implement dynamic pricing models to better capitalize on peak demand. Three, we're gonna maintain regular price growth in line with inflation. Finally, we're going to create a selling culture out in the stores to upsell our guests. The opportunity is significant. As you can see on the right-hand side, we're showing the math on what the size of the prize is. A simple 1% price increase on games would amount to a $11 million increase in revenue. With 90% flow-through, that's a $10 million opportunity alone.
We believe we can achieve an increase of approximately 10% over a three-year period, equating to a $100 million impact to Adjusted EBITDA, still protect the value proposition in the business. Next up, improved F&B. We see an opportunity to grow Adjusted EBITDA by an incremental $75 million to $100 million. F&B is a critical part of our identity. It was important 40 years ago when D&B was founded, and it's important today. We know from all of our research, consumers are looking for occasions where they can combine dining with entertainment. It's one of the reasons we're seeing so much growth in our industry. We see an opportunity to grow F&B sales through, one, growing F&B attach, and two, improving F&B spend per guest. Growing F&B attach means increasing the percentage of guests who order food and beverage while visiting a Dave & Buster's.
We see low-hanging fruit in bringing our attachment back in line with historical levels and revamping our menu to drive customer spend. Our menu of the future will be simple, efficient, and fully aligned with the need states of our customers, helping us improve both the top and bottom line. Let's size up the opportunity here. Our number one opportunity is to grow attach rates. Currently, our F&B attach rate is 39%, meaning only 39% of our guests are spending money on food and beverage. Historically, it used to be significantly higher at 57%. Based on our research findings, we believe attach rates declined over a long period of time due to a deterioration of the perceived quality of our food, a deterioration in the relevancy of our product offering, and a deterioration of focus on executing our food offering.
We intend to fix this. When we do, it will have a meaningful impact on our business. Every 1% increase in attach drives $7 million in incremental EBITDA. We believe we can achieve a 9% improvement in attach rate, equating to a $63 million increase in incremental EBITDA. Note, a 9% improvement is approximately 50% of the gap to historical levels. We believe this is achievable. Our team has a lot of experience with improving food and beverage, and we know the winning formula for a higher attach is a combination of a compelling menu innovation and improved hospitality. Menu innovation will help us weed out low performers, simplify the offering, improve kitchen efficiency, and make the overall offering more attractive to our guests.
Our new hospitality model will reduce wait times, drive traffic, improve table turns, and maximize the overall efficiency of our F&B footprint, driving both revenue and EBITDA. Our strategy to drive F&B spend per guest is built on four simple blocks. One, we will redesign the menu to improve price-value positioning. Two, we will introduce more effective bundles to drive spend. Three, we will explicitly advertise size. Four, we will build and highlight a good, better, best alcohol program. Just 1% incremental spend drives $3 million in adjusted EBITDA. We believe we can achieve a 10% increase through these measures in the near term, equating to a $30 million increase in incremental EBITDA.
While we continue to drive a high-quality experience for our guests, our stores have not recently been modernized and refreshed in many cases for up to 15 to 20 years. We know from our experience and research that remodels in this business are a tried-and-true way of driving sales, presenting us with considerable opportunities ahead. We expect incremental EBITDA from $40 million to $75 million over the next three years through effectively executing a remodel program. We have developed three different types of remodels: a light touch, a base remodel, and then what we're referring to as a potential upside remodel. The light touch will include interior design and a new FF&E package. We will invest under $1 million per unit for light touches. The base remodel will include everything a light touch has, but will also include an exterior refresh, and it will include new entertainment offerings.
We expect to invest around $2 million per unit on our base remodels. Finally, the potential upside remodel. As we're looking to see what type of impact we can make on our markets, we wanted to take a handful of stores and do a little more. A potential upside remodel includes everything a base remodel has. It just has more entertainment offerings. We've gone a little further on evolving that platform to see what type of impact we can have on both our top line and our bottom line. We expect that investment will be right around $4 million. On all of these, we're expecting a 20% to 25% return on capital. This page gives you some before and after pictures. The top illustrates what our stores look like today. The bottom shows the look and feel of the store of the future.
Earlier, I mentioned it had been many years since we did our last remodel. The last time we started a remodel program was in 2011. It was a six-year program from 2011 to 2017. The company remodeled more than 40 stores. Those 40 stores that were remodeled saw an increase of 12% in same-store sales and a 33% increase in Adjusted EBITDA, underscoring the impact an effective remodel program can have on the business. Let's run through the math on how we're thinking about this remodel program. We're expecting there's an opportunity to do 68 large-scale remodels and approximately 74 light-touch remodels. The numbers may change as we move into this, as we learn more about remodels. We may toggle up or toggle down, depending on the results we're seeing.
Currently, our thinking is 68 large remodels, 74 light-touch remodels. We expect to achieve a 10% increase in sales on the large-scale remodels, driving a $75 million increase in total revenue. With 60% flow-through, that's a $45 million increase in incremental EBITDA. On the light touches, we expect to see a 2.5% increase in same-store sales, driving a $20 million increase in revenue, and with 60% flow-through, that translates to a $12 million increase in incremental EBITDA. This is an extremely exciting initiative for us, and one that we expect will not only improve the business today, but will give us the platform for continued growth going forward. Okay, let's talk special events. We see growing special events as low-hanging fruit. Dave & Buster's is built for celebrations and has an offering like no other.
It's clear to us, in recent history, the company did not have a concrete strategy across the organization to drive this business. Growing this segment is as simple as building a strong partnership between the sales and operating teams and focusing as one team on driving the business forward. We see an immediate opportunity to recover to pre-COVID levels, but our goal is to take it back to our historical highs. To achieve this, we plan to execute the same playbook we execute at Main Event to drive sales. We plan to reinsert sales managers in stores to proactively market the opportunity in partnership with operations. We plan to refine performance-based compensation structure, roll out new entertainment offerings to enable more social and team-building activities, and we plan to have an integrated sales team to target occasions for both brands.
To contextualize the opportunity, there's approximately a $40 million revenue opportunity just to go back to pre-COVID levels, and a $95 million opportunity if we aim to hit our historical highs. That translates to an incremental Adjusted EBITDA opportunity of $40 million to $45 million. Let's talk about tech enablement. We see an opportunity to grow incremental EBITDA between $20 million to $25 million in this area. There are four main things that we're gonna focus on to drive this performance. One, we're gonna optimize the service model. Two, we're gonna focus on our enterprise gaming ecosystem. Three, we're gonna address our store IT infrastructure, and four, we're gonna improve our overall data and analytics platform. I'm now gonna turn it over to Steve Klohn, our Chief Information Officer, to walk you through the details of these four key areas.
Thanks, Chris. Good morning, everyone. I'm Steve Klohn, our chief information officer. As you heard from the team, we are undergoing a robust transformation, which includes targeted investments in our IT technology and platforms. These investments are core and a strategic springboard that will enable our current and potential future businesses for years to come. We're going to be highly disciplined about these investments to ensure returns above our 20% ROI threshold. Our challenge, as we looked across all the technology offerings in the market today, is that we're a very unique and complex business. We have a massive opportunity to leverage our size and scale to invest, build, and innovate in developing our technology in ways no one else in our category can provide.
These investments are centered around four key business enablement areas and will significantly unlock world-class innovation that clearly sets us apart from our competition. These areas of investment include, number one, a robust and optimized service model. This will include updating self-service kiosks, improved self-service tablets, and other guest-facing technology. In addition, we will improve the customer experience by promoting more seamless flow upon entry into our stores. Labor costs will improve as we turn tables faster and remove operational bottlenecks, while enabling our team members to drive increased customer spend via upsells. Number two, a world-class enterprise gaming ecosystem. This will facilitate and enable dynamic pricing by location, facilitate promotional initiatives like All You Can Play, and facilitate better collection of certain customer data. Number three, a strategic transformation of our IT store infrastructure. This will allow for an improved payment processing, broadband, and Wi-Fi coverage within our stores.
It will allow for a better guest experience and facilitate traffic-driving initiatives like store versus store competitions. Finally, an improved data and analytics platform to drive our business forward. As you heard from Ashley, our teams are working to enhance our marketing and customer data by focusing on leveraging new technologies with AI, machine learning, and predictive analytics. We will complete this program in late October of this year, but have already rolled out key functionality to our operators in our stores. With better near-time data, our store leaders can make more informed decisions on labor performance and revenue that drives incremental sales and profit. We know that with more rich data and insights informing our decisions, our desired outcomes will be easy to measure. As you can see, we have spent a tremendous amount of time reviewing and gathering our business enablement needs for our future.
We expect these areas of investment will have an immediate impact, as we have seen the results on the Main Event brand and have been testing in several select Dave & Buster's. Our strategies are built on continuous improvement, where we will measure outcomes to ensure the return is there based on the investment. We know with the right team members, operations, marketing, and technology, we truly have an an opportunity to lead our category, consistently innovating to meet our guests' and our team members' expectations. With that, I'll turn it back over to Chris.
We see an opportunity to grow incremental EBITDA, $150 million to $225 million over the next three years by continuing to grow our unit base, both domestically and now internationally. We have a long history of successfully opening new units. Since 2012, we've grown our unit base 12% per year. As I mentioned, we still have ample white space to continue to grow. I'm now gonna turn it over to Mike Quartieri, our Chief Financial Officer, and have him walk you through our plans going forward to grow our unit base.
Thanks, Chris, and hello, everyone. Michael Quartieri, Chief Financial Officer. Although both brands have executed aggressive growth strategies, the combined white space remains extremely high. For the U.S. and Canada, the opportunity for continued new store expansion is exceptionally large. Following the merger, we performed a comprehensive white space analysis. The development team, together with our outside development partners and consultants, were able to use key quantitative and qualitative characteristics to create a continued growth strategy for both brands. This strategy and the output of the white space analysis provides a highly analytical approach to our site selection process. The current estimate of white space across both brands exceeds 550 locations across the U.S. and Canada. Over the next three years, we are only tapping a small part of the overall estimated growth opportunity. As illustrated, the three-year plan estimates only opening 48 new store locations.
The majority of these 48 locations have been identified and are already under construction or in some phase of the development process. The beauty of this model is our ability to throttle or feather our growth based on economic conditions and availability of capital. Averaging 16 new store locations annually over the next three years, we believe we can add $130 million to $155 million of adjusted EBITDA. The long-term potential, based on our current white space growth strategy, would add an additional $820 million to $970 million of adjusted EBITDA. As a reminder, we have achieved a 40% to 50% return on investment with our superior track record of opening new stores. The new D&B Minis are performing nicely. We have five under our belt now. We are getting a great return on investment.
The success of these new Minis unlocks many small markets, significantly expanding our white space. Now let me turn it back over to Chris to cover international.
Thanks, Mike. Our international growth is going strong. We've recently announced the signing of three development agreements for up to 31 franchise locations. The first one in the Middle East, the second in India, we just announced Australia. We've identified a total global potential of having 200 international locations that presents us an EBITDA opportunity of $60 million to $80 million in incremental EBITDA over the long run. Moving on to managed costs. We see an opportunity to grow our EBITDA $60 million to $80 million through cost optimization over the next three years, which will make our business more profitable. We're targeting four key areas to achieve this. One, synergy realization. Two, an active and rigorous cost management program. Three, investments in technology and equipment to reduce overhead. Four, optimization of daily operations.
With that, I'm going to turn it back over to Mike to walk you through the details of our cost management approach.
Thanks, Chris. As we addressed on our year-end earnings call, we have successfully implemented all the actions associated with our annual synergy target of $25 million from the combination of Main Event. While we completed this ahead of schedule, we remain laser focused on driving operational excellence, continuous improvement, and additional cost savings, all of which are ingrained in what we do every day at Dave & Buster's. We underwrote the acquisition of Main Event based on a $20 million synergy cost target, which we raised to $25 million shortly thereafter. We realized $8 million in fiscal 2022, and the vast majority of the remainder will be realized in fiscal 2023.
Now that our executive team has been in place for nearly a year and the integration work is behind us, we have turned to fine-tuning our organization and processes to identify areas of improvement, enhancements, and investments that reduce the overall complexity of conducting business and thus leading to further cost reductions in our existing operations. We estimate this incremental opportunity to be between $40 million and $60 million. The following table summarizes our approach to each major component of cost within our company. Starting with COGS, the combination of the optimization and simplification of our food and beverage offering, in combination with our relentless drive of our supply chain team to secure high-quality products, we believe we can extract an additional $10 million to $15 million of savings.
When it comes to labor, the combination of high ROI targeted investments in kitchen equipment and our handheld service tablets, enhanced hiring practices around hourly wage positions, and our labor associated with the simplification of our F&B offering, we believe there is an opportunity to reduce our overall labor costs by $20 million to $25 million. We also see opportunity to reduce other store operating expenses of between $5 million and $10 million, with reevaluating our utility infrastructure and enhancing our overall operational controls around general store supplies, janitorial services, and other store-level services. Lastly, with G&A, with the automation gained from the full integration of our two back office and support center systems, the removal of complexity in our back office operations, and our supply chain team's continued effort on consolidating service contracts, we believe there is an opportunity to reduce G&A costs by $5 million to $10 million.
These cost-saving targets are what we believe are achievable in the near term. We have been diligently working on a number of these initiatives already to yield the benefit to help offset any slowdown in consumer spending in the face of uncertain economic environment, and will provide a permanently lower cost structure to fuel higher profitability as business levels expand and we continue to open new units.
This is an illustrative roadmap showing that this business, with conservative assumptions, has over $1 billion of earnings power over the next three years. This is not guidance. We're not providing guidance, as the macro remains highly uncertain. We are simply showing a very clear and conservative roadmap to $1 billion of EBITDA over the next three years, based on assumptions around the execution of the plan we just walked you through. Obviously, if there's a deep recession, this outcome would be pushed out a year or two. If there's no recession, there's a potential to exceed this outcome. You don't need to believe a lot to get to $1 billion of EBITDA. We are setting ourselves a target of $260 million on organic growth, a 50% haircut of the identified opportunity to be even more conservative.
$70 million of cost savings, which almost all have already been identified. $145 million on new units, based on a conservative assumption, as we have already identified almost all of the stores required to get to that EBITDA. Our team is ready to execute. Our team is focused on delivering this outcome. Our team is focused on a billion-dollar EBITDA.
Reviewing our capital structure at the end of the first quarter of fiscal 2023, we had net debt of $1.2 billion and a leverage ratio just over two times. We have significant liquidity, given the $92 million of cash on our balance sheet and the $490 million available on our $500 million revolver. In conjunction with the significant free cash flow that our business generates, we feel good about our liquidity profile's ability to invest in our existing stores, develop new stores, and meaningfully return capital to shareholders. We feel very comfortable with our current maturity profile of our debt, with our nearest maturity being our senior notes, with $440 million of principal maturing in November of 2025.
With our improved credit profile, we are actively evaluating market opportunities to refi our term loan to reduce ongoing cash interest as we approach the end of the soft call premium at the end of June. Turning to our significant discretionary free cash flow in more detail, we generated $527 million of pro forma Adjusted EBITDA in fiscal 2022, with a 93% unlevered free cash flow conversion, which after $87 million of interest expense, resulted in $405 million of levered free cash flow. It's important to highlight that we have a unique and strong cash flow profile. We benefit from favorable tax attributes due to accelerated depreciation on new store openings, as well as significant NOLs to help lower income taxes. We have limited maintenance and new game CapEx required to grow the existing business at an attractive baseline.
We also have positive working capital as we collect the cash on the Power Card sales up front, but given the revenue recognition rules, we recognize that revenue as the card is utilized. We do include an add-back for pre-opening expenses as it is associated with new stores and is similar to growth CapEx, in that it's not required to grow the EBITDA of the existing business. Our business delivered a tremendous amount of cash during 2022, but I want to call out that 2022 was no anomaly. As Chris previously stated, our average unlevered free cash flow conversion over the last 10 years is 88%. This provides us the confidence that as we opportunistically return that cash to shareholders, we will continue our growth trajectory, allocating capital to its highest possible return.
Looking out over the next five years, we want to highlight the significant free cash flow potential of our business using a conservative range of adjusted EBITDA growth. This illustrative analysis, based just on cash flow, indicates significant upside to our current equity value. Given our discretionary cash flow, which excludes new store CapEx, our current equity value is so low that more than 100% of our market cap would be generated in discretionary cash flow over a five-year period, which is extremely rare. We will walk you through how we think about allocating that excess cash flow in the next few pages, but I just want to make the point that what we do with this capital is entirely discretionary. The strength of our balance sheet and high free cash flow conversion puts us in a robust position to make the most optimal decisions for our shareholders.
We will pursue the most attractive opportunities, with our priorities being, first and foremost, the reinvestment in our business. We will continue investing to grow new stores each year and attack the expansive white space opportunities available to us across the country. We will continue to invest in new games to retain our leadership position of our midway and other opportunities we've identified to expand our entertainment offering to attract new customers and keep the existing ones coming back for an experience that no competitor can match. We will also continue to identify high ROI operating and technology initiatives that meet our return criteria of greater than 20%. Second, we will opportunistically look to acquire complementary businesses in an accretive manner.
The universe of out-of-home entertainment is fragmented. We stand to benefit by playing a consolidating role with our superior operating capabilities, our growing database of customers, and our recent experience seamlessly integrating Main Event into the Dave & Buster's family. Third, returning capital to shareholders. We repurchased $200 million of shares since the beginning of the fiscal year, with $100 million of additional repurchase capacity remaining on our current board authorization. We deem our shares to be materially undervalued at the current trading levels. We will use a balanced approach in capitalizing on this market opportunity without jeopardizing our significant growth initiative. On this slide, we break out our anticipated capital expenditure into core and discretionary CapEx over two illustrative time periods, the average of the next three years and a future state.
Core CapEx consists of normal store maintenance, new games, and IT maintenance CapEx. We believe core CapEx is the amount required to support the baseline organic growth, and these values will be commensurate with inflation and our portfolio of stores. Our highly discretionary bucket of CapEx consists primarily of new stores, which we will expect to continue delivering industry-leading ROI and the anticipated spending on remodels and other high ROI-generating one-time technology upgrades. Discretionary CapEx projects will be executed on a test-and-learn basis with a laser focused on ROI. With that, let me turn it back over to Chris to cover operational and valuation benchmarking and closing remarks.
Let's bring this to a close with a conversation around valuation. While we are not here today to lecture you on market valuation methodologies, we think it's important to provide a backdrop as to how we benchmark ourselves against our peers that leads us to believe our company is significantly undervalued. With an equity value of $1.7 billion and net debt of $1.2 billion for total enterprise value of $2.9 billion. Our company currently trades at an undemanding 5.3x adjusted EBITDA multiple, with a 16% unlevered free cash flow yield and a 21% levered free cash flow yield. By all these measures, we are exceptionally undervalued, with a very high free cash flow yield. Despite outperforming on several operational benchmarks, D&B's valuation is meaningfully below peers.
We perform significantly above the average versus peers on every single relevant metric: same-store sales growth, revenue growth, adjusted EBITDA growth, margin, and free cash flow. We trade at almost a 50% discount from an EBITDA perspective and almost 60% discount from an unlevered free cash flow perspective. Not only does D&B trade at a steep discount to its peers, it trades below all companies in the broader entertainment, leisure, and hospitality industry. While there are differing views out there as to our company's most relevant peer set, what is clear is that no matter which publicly traded peer group you compare us against, we trade at a severely discounted valuation. We are not just undervalued versus our defined industry peer group, but across the entire entertainment, leisure, and hospitality industry.
Even looking at individual constituents of the respective peer groups, there are very few companies in any of these groups that trade at the levels we currently observe. A re-rating of our multiple to any of these peer groups presents an upside of well over 100%. If we combine our potential valuation upside with the three-year illustrative adjusted EBITDA of $1 billion we laid out in today's presentation, the upside opportunity is extremely compelling. We showcase four increasingly beneficial figurative valuation examples at the culmination of this three-year financial horizon. If we hit the number at D&B's current depressed multiple, the share price is $123.
If we traded at the average multiple we've traded at over the last five years, which is well below multiples we've traded at in the past and multiples of our peers, then we trade at $168 per share. If we hit and we trade at D&B's five-year pre-COVID average multiple, the share price is $187. If we hit and we trade at industry peers' average multiple, the share price is $223. In summary, we see many avenues to unlock this equity value and a tremendous amount of upside when our future financial performance works in tandem with the market's perception of us. All right, we've covered a lot of ground today. I wanted to close this up by just summarizing the key points that you've heard today. Number one, we have a high-quality, resilient business.
Number two, there's significant growth potential with many levers and a clear, actionable plan. We've clearly identified a pathway to $1 billion of Adjusted EBITDA. Number three, we're significantly undervalued on a relative and absolute basis. We have one of the lowest multiples in the broader entertainment, leisure, and hospitality industry, and we have a 20% levered free cash flow yield. Number four, we have an aligned, focused, and experienced management team, and that management team has executed this playbook before. That management team has invested $4 million of its own money into company stock. Number five, we're focused on superior common shareholder return.
We're actively identifying and executing on a number of high ROI growth initiatives, and we just completed $200 million of a share repurchase, representing nearly 12% of outstanding shares in F23, and we have $100 million left on the share repurchase authorization for more share repurchases. Thank you so much for your time and attention today. We're excited about our future. We're excited to continue to report on our progress on this very comprehensive plan, and we look forward to answering any questions you have. As a reminder, the Q&A tab is on the left-hand side of your screen.
All right, welcome back to our Q&A session. We have our executive panel here ready to take your questions. Our team is standing by behind the scenes to sort questions as they come in, and we will take as many as possible. As a reminder, you can submit questions to our team via the panel on the left-hand side of your screen. Okay, we've received quite a few questions already, so let's jump right in. The first question: How confident are you in achieving the $1 billion in EBITDA? We'll start with Chris for this one.
Okay. All right. All right, great. Thank you, Cory. We're highly confident that we can achieve the $1 billion. You know, a couple of things. One, as we mentioned during our comments earlier, during a recession, a recession might change the timing of when we can deliver, but there is no doubt that we have an opportunity to deliver a billion-dollar EBITDA. That's what our team's focused on. We're highly confident that we can execute that plan. Let's go through just a few of the details on that billion-dollar plan. Cost savings alone, there's $70 million in cost savings. That cost savings, we've already identified those opportunities. Our team is executing that plan to deliver on the $70 million. There's $145 million of EBITDA on new store development. We've already identified practically all of those new stores.
What's left to get to $1 billion is all of our organic growth initiatives. We walked you through all the math to get to the numbers that we presented on organic growth initiatives. It doesn't take much to believe that we can get there. The assumptions that we used on every one of those initiatives, those were reasonable assumptions. Then when we added all of those initiatives up, we took a haircut of 50% to get to $1 billion. We actually view that plan as a set of plan with conservative assumptions. We're excited about it. There's no doubt that the opportunities are there. They're right in front of us. It's really just a matter of our team's ability to execute that plan.
We're highly confident that we've got a team of people here that we're unified in our passion, unified in our vision, and unified in our dedication to deliver on those initiatives in that plan. When we do that, we feel great about all of those coming together to drive our performance in a meaningful way. Of course, there are things that are out of our control, things like the economy, which is one of the reasons why we said that this is not guidance. We're not providing guidance because there are certain things out of our control, and in an uncertain environment, that could have an impact on our ability to deliver. It doesn't change the fact that those opportunities are there, and they're meaningful, and we put the math behind it, and there's $1 billion.
We're highly confident, and we're excited to get moving forward.
Okay, slight follow-up to that one. If you started seeing a slowdown in your business, in the next few months, how would that impact your confidence in the $1 billion of EBITDA? I think you touched on this a little bit, but just elaborate there.
Yeah. Yeah, as I said in my just my previous answer, you know, a change in the economic environment might have an impact on the timing of our ability to deliver on that $1 billion in EBITDA, but it doesn't change the fact that the opportunity is there. Clearly, when you go through those initiatives and you see the math that we put behind each one of those initiatives and the assumptions that we made, there's no doubt that there's opportunity, and there's no doubt when you add it all up, it's a big number. It's a $1 billion-dollar EBITDA opportunity in front of us. It just really comes down to timing. You know, a change in the economic environment could shift our timing one way or the other.
Certainly, in a downside shift, it could delay the timing of those initiatives, and it could delay it a year or two years. Make no mistake, the opportunity is there, and our team's focused on driving the outcome of every one of those initiatives.
Great. Let's see, finding a good one here. Are there any learnings from historical periods of negative comps that gives you confidence you can sustainably grow comps now and into the future?
Yeah, I'll take that one as well. Sorry, I keep standing up. I have to stand whenever I talk. It just helps. Listen, we're focused on the future, we're focused on the opportunities that are right in front of us, not so much on bridging the gap to our past. You know, what I can tell you is that when we go through our business, we see ample opportunity to drive this business forward. We walk through all the different initiatives around our marketing optimization plan. There's no doubt that there's an opportunity to be more effective with our marketing dollars. There's no doubt that we have an opportunity to increase frequency and increase conversion. We know that. We know that those numbers are low relative to what others are able to achieve in our space.
That opportunity is there, and that's what we're focused on. You go through all the other aspects of our plan, and you see the same thing. There's clearly an opportunity to grow F&B attach. There's clearly an opportunity for us to grow spend per guest on F&B. There's clearly an opportunity for us to bring a sophisticated pricing model to games. I don't know how to bridge that to the past, but I do know that the opportunity is there, it's in front of us, and our team is prepared to execute. I think often what happens in business is, it's one thing to build a great plan. It's an entirely different thing to execute that plan and execute it in a high-quality way, and I believe that that's the difference-maker.
I believe our team that we've assembled here is a group of people who have a proven track record of execution. Now we have a clear line of sight on exactly what we need to do. We know how big the opportunities are. We've had the entire organization focused on driving every one of those initiatives and working together in a highly collaborative way. I believe our opportunity going forward is executing that plan. That's where we're focused.
Good. Okay, we've gotten a few on this topic. There's a lot in your presentation seemingly focused on the D&B brand. How are you going to be dealing with Main Event within your broader strategic plan?
I'll take that one, and hopefully, we can have Q step in or somebody else after this. I'll take that one. All right. Well, first, as a reminder, Main Event's 20% of our business. Naturally, our team is gonna focus on 80% of our business, 80% of the time. The things that we are focused on Main Event is, number one, assimilating the merger. We've been very focused on acclimating or getting Main Event brought into the Dave & Buster's system, and one of our first priorities was achieving our synergy target. We're really proud of the work that we accomplished there, where we had a $20 million target, and we over-delivered and achieved $25 million of synergies. That was our first priority.
The second priority is Main Event gives us just another growth vehicle. We walked through the amazing white space that we have, and our team's focused on continuing to grow our footprint with a sharp focus on ROI and getting to 500 or 550 unit count potential in the U.S. and Canada. Main Event is one of those ways that's gonna make that happen for us. Now we have many different ways of being able to grow. We have the D&B Minis, we have the D&B standard format, and now we have the Main Event opportunity to go into market and infill that market. What's gonna drive those decisions will be a sharp focus on return on invested capital. That's how we're gonna prioritize. Main Event just gives us more options to be able to grow this business.
We're excited about it. The reason you're not seeing us focus on it in this presentation is because we're focused on the immense opportunity that we have to grow the 80% of our business that represents the Dave & Buster's brand.
Okay, I found a good one for Mike Q. Mike Q, when can we expect to see the impact of these initiatives in the P&L?
Yeah. Good. great question. We're already seeing some of the benefits come through already. When you think about the immediacy of it, cost saves, the synergies are all flowing through the P&L now. More cost saves to come as we roll through things into the next year. New unit growth, you're seeing that today. We've already opened five stores this year. We've continued to open another 11 to get to our 16 for the year, and we have 16 next year and 16 the year after. When we talk about the marketing, pricing, food and beverage, special events, all of those initiatives are underway already. Some parts of those initiatives are immediate, quick fixes, some will be more near term, three, four quarters in length to get in, fully in place. We'll start seeing some of those benefits in the coming quarters.
Lastly, we talk about the remodels. That's probably more the longer-term version, but we'll start seeing some of those remodels come through in the next six months, back half of this year, with really more wholesome number of remodels getting done, in fiscal 2024 and 2025.
Great. As a reminder, left-hand side of your screen, you can submit questions, and they'll be received by our team back to house and sent to this iPad. Okay, here's a good one: How do you think you can grow prices while still maintaining the value proposition that you have touted?
I'll take that. Well, the first thing I'll say as a reminder, the price opportunity that we've referenced in our plan is around game pricing. The plan is to grow 10%, our prices 10% over a three-year period. That's a $100 million opportunity. When you look at it in that context, growing prices 10% over a three-year period, that's clearly a very achievable target. Our focus is on the value proposition. Our value proposition, in fact, was one of the strengths in our investment thesis. We are very focused on protecting that very strong value proposition. The science that went into determining that we had an opportunity to grow game pricing was built with the guidance of outside consultants.
We worked very closely with outside consultants who are experts on pricing to help us devise these plans. One of the ways, and one of the challenges that we presented to that group was to help us think through, to identify opportunities where we could grow prices without deteriorating the value proposition. We walked through how our game prices stack up against others in our industry, and clearly, we are way under where others are in the industry. You know, in fact, in some markets, we're 40% to 80% lower in some markets on our game pricing. We're not saying that we're just gonna jump right up to where the competitors are. What we're saying is we're gonna be really smart about this, and we're gonna raise prices on how we package bundles.
We're gonna have a dynamic pricing model, so we have the right price at the right time to match the peak demand. You know, that's being smart about the business and being very careful about protecting the value proposition. We see this as, you know, low-hanging fruit and something that we can execute against and ensure that we're gonna be able to drive our business forward in a meaningful way, while at the same time protecting that strong value proposition.
Great. Next question: How do you think D&B will be impacted for the upcoming recession, given that a majority of customers is under the $100,000 household income bracket?
Yeah, why don't I take that one? When you think about Dave & Buster's, one of the things that we have as our strength is our resiliency. When you look at the Great Recession of 2008, 2009, Dave & Buster's EBITDA margin only dropped about 6%, and it recovered quickly in the year following. Same thing with COVID, when we completely shut down. The moment we reopened, we started generating positive results, and we saw our EBITDA margins even grow exponentially above the pre-COVID levels. The one thing I think this business has proven is, although we're not resilient to a depression or I should say, a recession, but we are resilient in our business and what we could do from a margin perspective.
As things get tough, we also be able to control our costs, and one other thing about our business is, given our margin profile, the more that recovery comes through, and the more business comes into the four walls of our operations, the more flow-through we get to the bottom line. Again, although we're not resilient against a recession, but I think it's important that the business is resilient and can recover quickly in any type of situations. One thing I've learned about this management team in working with them over the last year, they know how to manage through any type of environment, and that gives me great confidence.
Great. another one for Mike: What is your target leverage? How comfortable would you be increasing leverage to buy back shares?
Well, that would be a decision we would make in connection with our board. The one thing I will say is management and the board are laser-focused on creating shareholder value and returning capital to shareholders when it makes sense. We're very comfortable with our cash flow profile and our liquidity that we have available to us. At these levels, we're more than comfortable with our current leverage ratio of just over two times. In the past, we have operated at a higher leverage ratio. I think we're more than comfortable with either seeing an increase in that leverage or maintaining it where we currently are.
Great. let's see here. Here's one. You have 16 new units per year in here, which leads to $144 million of EBITDA. What is your level of confidence of actually getting all of these units open at those levels, and what changes in a recession?
You want me to take that?
As far as the confidence on opening the units, we're 100% confident. Like we have done in the past, we have been able to execute and deliver. Right now, we have a very strong 2023 pipeline, 2024 and 2025, and we're working on 2026 stores, okay? The confidence level is very, very high, and I think our track record delivering has already been proven through the years. As far as the recession, one of the things that we have worked on through the years is to develop very good relationships and partnerships with the landlords.
As we have done in the past, particularly during the COVID days, if a recession comes, and we need to adjust our growth pattern and timing, we will be able to work with our landlords, and they will work with us, to be able to adapt and meet the requirements of the business.
Great. Another financial topic one, summary of a few questions that have come in: What do you expect for long-term margins of the business?
Yeah.
Thank you.
Obviously, a financial question, I'll take it. I think when we look at the at the margin and these, the initiatives that we have in front of us, especially on the cost side, I clearly see a path to us getting to north of a 30% AE for the margin. When you look at the cost save opportunities and the execution of those, we're really fundamentally changing the cost structure of the business. As I made in my previous response to the question, as we get higher flow through in the stores and we see those operations go up, there's a more of a benefit to the bottom line that we'll see.
As we grow more units, expand our business offering, we won't have to increase costs as much as we've seen, as we've done in the past, I should say. I think you'll see a much greater flow through to the bottom line, which gives me the confidence that we'll be able to get close to that 30%, if not higher.
Great. Let's get more of a strategy one. Historically, the brand has provided commentary on increasing competitive intensity and cannibalization. How have those elements changed over the last few years?
Okay. Yep, I'll take that one. look, this is, we operate in a competitive space. This is a competitive industry, the reality is, I've never worked anywhere where we didn't have a lot of competition. We actually look at this and just say, "If we're gonna compete, look at all the strengths that we have." The reason it's so competitive is because consumers are gravitating towards the type of experiences that we sell. Consumers want entertainment occasions. We happen to be the leader in that space. In our category, our industry is growing double digits, if we're going to compete, we're in the best possible position to have a competitive advantage over everyone else in this space. We have the tailwind of an industry that's growing double digits. We have national brand awareness of 90%. The next national scaled operator is at 68.
We are clearly the leader. We're 50% higher than the next national scaled operator in that space. There is no better position to be in than the position we're in right now to not only compete, but to win. That's why we're so excited. We're actually excited about the competitive environment because that tells you that this is a vibrant, rigorous category. Our opportunity is how do we continue to execute and execute at the highest level to be able to take advantage of our size and our scale, to reclaim our leadership position, to be able to grow this business, you know, substantially moving forward?
We believe that we have the right plan of attack to make that happen. We believe three years from now, that there will be a noticeable difference in our ability to drive long-term sustainable results than where we've been in the recent past. So we're excited about making that happen.
Okay, this is a partial follow-up on real estate strategy. I think, John Mulleady, this is a good one for you, just following on what you just said. What flexibility do you have to pivot new store spending during down cycles?
Like I said before, we have really good relationships with the landlords, okay? In our leases, we have some flexibility that will allow us to adjust to any economic, environmental changes. Okay.
Great. Shifting gears a little bit, there's been some interest in international expansion. Tonio, right here.
Mm-hmm.
How are you prioritizing opportunities and markets around the world?
Good question. Currently, we have identified around 80 countries around the world. Out of those, there are 25 countries which we define as preferential. The way we choose preferential countries revolve around socioeconomic markets, the ability of the local investor, how well the businesses are performing in those markets. In terms of inquiries, right now, we're having ongoing conversations across many of our preferential markets. We believe, in fact, that we may be making more announcements on development commitments over the next 90 days, as well as providing news about the stores we are currently selecting with our existing partners in the committed markets.
Great. Let's see. You've presented a lot of information today. Help us understand how you weigh the short-term economic challenges versus the long-term opportunities.
Yep, I'll take that. You know, I think it really just comes down to the plan that we've laid out. The thing that we're so excited about is the initiatives that we walked you through today. Those initiatives have immense opportunity to add a meaningful impact to this business, and that is with or without a recession, you know? Really, things can change macro. The macro environment might change, and that might impact the timing of the delivery of those numbers, but it will not impact the fact that there is significant opportunity to grow this business and grow it in a meaningful way. Our focus is on executing that plan. Our focus is on focusing on the things that we know that we can control. That's the way to navigate through this period of time.
We're excited about it, we're ready to get after it, and look forward to, you know, continuing to share the results of that particular plan.
Okay, great. Just looking at the time, I think we have the ability to do one more question. Let's pick a good one here on M&A activity. What types of acquisitions is D&B interested in pursuing? What is complementary in terms of M&A?
I'll, one, I'll start, and I'll kick it over to you. Look, our focus is on delivering the $1 billion. That's our focus. Executing the initiatives that we laid out in our call today, there are incredible opportunities, and that is our primary focus. M&A is not, you know, on an opportunistic basis, never say never. We might evaluate, an M&A opportunity, but our number one focus is on delivering the $1 billion that we've laid out because there's immense opportunity there.
Yeah, I think just to add on to that, I think one of the areas where we can look at M&A as being an accelerator of our growth is with our new units. Finding that out-of-home entertainment concept that aligns with either a Main Event or a Dave & Buster's that has great locations will help fuel our growth on the new unit aspect of it. First and foremost, it has to be opportunistic, and it has to be accretive. Without those two components of it, you know, we're not gonna bother to look at it. We got way too great of an opportunity in front of us with the billion-dollar opportunity that we're going after to get to the EBITDA of that level, and that's what we're gonna be laser focused on.
Okay, that's all the time we have for questions, so I wanna thank everyone for joining and pass it back to Chris for final comments.
Thank you. Thank you for the attention today. Thank you for your support. We appreciate all your questions. We appreciate your interest in our business. Clearly, there's tremendous upside in this business. We have the right team, we have the right focus, we believe we have the right plan, we're gonna execute that plan, we look forward to continue to give you updates on our progress coming forward. Thank you very much. Have a great day. Thank you!