- Sequential Same-Store Sales Improvement: Final month of Q3 saw a mere 1% decline, showing recovery from 4% annualized comp sales drop.
- Food & Beverage Momentum: New menu launched in October drove accelerated momentum, with 2nd consecutive quarter of positive comps.
- Marketing Strategy Shift: Focused on "smart value" combo offers (e.g., Eat & Play) instead of discounts, resonating with guests.
- Operational Cost Optimization: $58M operating cash flow generated, $442M total liquidity, and $59M adjusted EBITDA despite $42M net loss.
- Game Innovation Pipeline: 10+ IP-driven game launches planned for 2026, with current Midway spending up due to renewed guest engagement.
Operational Progress
Tarun Lal, CEO, highlighted the progress made on the "Back to Basics" plan, including the reconstruction of the marketing strategy, implementation of new food and beverage offerings, reinvigoration of field operations, and refresh of the games offering. The new menu test performed well, and the company launched the new menu in October, delivering strong results. The company is also focused on tightly aligning marketing campaigns with high-impact IP-driven game launches, with 10 new games planned for introduction throughout the year.
Marketing and Guest Experience
The company has seen success with "smart value offers" that package food, beverage, and games together, with Tarun Lal stating that these offers "allow our guests to appreciate and enjoy both our games and our games entertainment and our food and beverage offering." The company is also investing in the right level of innovation in the games area, with a pipeline of more than 10 games associated with strong IPs planned for 2026.
Valuation and Outlook
With a P/S Ratio of 0.28 and EV/EBITDA of 5.38, the market appears to be pricing in a relatively low growth trajectory for the company. Analysts estimate next year's revenue growth at -0.6%. However, with the company's strong brand awareness and efforts to revamp the guest experience, there may be opportunities for growth. The company's focus on margin enhancement initiatives and ability to manage and expand margins with flat to positive same-store sales growth is also a positive sign.