Dave & Buster’s Surges After KKR Takes Rare Activist Step

(Bloomberg) -- Private equity giant KKR & Co. took the unusual step to disclose plans to push for changes at Dave & Buster’s Entertainment Inc. Shares in the U.S. restaurant chain soared as much as 16% to the highest level since June.

KKR disclosed in a filing Friday that it owned a 10.7% stake, including shares and options. It also said it has had and would continue discussions with management or board about the business, operations and strategy. It may also talk with stockholders, security holders and other relevant parties and could take actions including transactions and board or management changes. KKR had previously reported a stake of about 2.65%, according to a filing dated Sept. 30.

KKR’s position adds to recent examples of private equity firms blurring the lines with activist investors. TPG, for example, is raising a fund focused on investing in public companies with the goal of pushing for changes, including seeking board seats and providing strategic advice to companies, people familiar with the matter have said.

Shares in Dave & Buster’s have tumbled in the past year, dropping 20% in one day in June following a surprise decline in quarterly comparable sales -- a key metric for retailers. Investor confidence was rattled, Gordon Haskett’s Jeffrey Farmer wrote at the time, and it would take several quarters for management to rebuild, he said. The stock hadn’t recovered until Friday’s jump.

The shares traded up 12.6% to $47.2 at 10:06 a.m in New York.

Dave & Buster’s first opened in Dallas in 1982 and has more than 110 locations, according to its website.

Today the chain is operating in an increasingly competitive industry. Same-store sales in the U.S. casual-diner industry fell 0.6% in 2019, according to Bloomberg Intelligence. Increasing wage costs, restaurant oversupply and difficulty to find labor all hurt the sector.

This week Dave & Buster’s said comparable store sales would decline 2.5% to 3% in the fiscal year ending early February.

Representatives for KKR and Dave & Buster’s couldn’t be reached for comment.

To contact the reporters on this story: Sally Bakewell in New York at sbakewell1@bloomberg.net;Scott Deveau in New York at sdeveau2@bloomberg.net

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Cécile Daurat

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