Good day and welcome to today’s Dave & Buster’s Incorporated Third Quarter 2017 Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Jay Tobin, Senior Vice President and General Counsel. Please go ahead, sir.

Thank you, Melissa and thank you all for joining us. On the call today are Steve King, Chief Executive Officer; and Brian Jenkins, Chief Financial Officer. After comments from Mr. King and Mr. Jenkins, we will be happy to take your questions. This call is being recorded on behalf of Dave & Buster’s Entertainment 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 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’ll turn the call over to Steve.

Thank you, Jay and good afternoon, everyone. We appreciate your participation in our quarterly conference call. Today, I'll review our third quarter performance highlight our key strategic priorities and update you in our new store pipeline and significant wide space opportunity. Brian will walk you through the key financial highlights and I'll conclude by updating you on our development efforts before we open it up to your questions. I'd like to begin by sharing a few high-level thoughts of our four strategic priorities before I dive into the quarter itself. First on Amusement, the category continues to be the primary business for the visit. And it's growing, but we remain focused on continually strengthening our content portfolio and differentiating it from our competition. Our 2018 games line up is shaping up to be the best and I'll talk about that a little more later. Second, we're committed to reigniting the momentum in our F&B segment by improving product alignment and speed of service. Third, we're taking steps to remove friction and the guest experience and fourth, also by strong new store returns, we want to continue to drive unit growth over the long-term. Now for a few highlights for the quarter. While the third quarter had its challenges, including weather and difficult comparisons, our teams did remarkably well, I'm incredibly proud and grateful for all their hard work. We grew revenue by approximately 9% and EBITDA by about 10%, excluding the estimated impact of Hurricanes Harvey and Irma on the mainland and Maria on the Puerto Rico where we have a store scheduled to open during the quarter revenue was up double digits. Q3 comps were down 1.3% which includes an estimated 50 basis points from the impact of the storm. Our stores in the Huston and Florida markets remained…

Thanks Steve and good afternoon everyone. Let me begin by thanking our team members across the country for the relentless focus on execution that enabled us to deliver strong financial performance while also improving the guest experience. Including the hurricane headwinds both revenue and EBITDA would have been up low double-digits, also we were able to maintain EBITDA margins despite a slight decline in comparable store sales. Now here are some of the other highlights for the third quarter. Total revenues in the quarter increased 9.3% $250 million that’s up from $228.7 million in the prior year due to strong contributions from newer stores. Revenues from our 76 comparable stores fell 1.3% to $196.4 million while revenues from our 25 non-comp stores including one that opened during the quarter increased to $52.4 million. That’s up from $29.5 million in the prior year. These results are included with an estimated unfavorable impact from hurricanes during the quarter of 50 basis points on comp sales and $2 million on total revenue. Please note that the following disruption -- following the disruption caused by Hurricane Maria we delayed the opening of our Puerto Rico store from earlier October to mid-January which caused us an estimated $1 million in sales for the quarter and $4.5 million for the year. Turning to category sales. The mix shift to our more profitable entertainment business continued as total Amusements and Other sales grew 11.8%, while Food and Beverage collectively increased 6.3%. During the third quarter, Amusement and Other represented 56.9% of total revenues, reflecting a 120-basis point increase from the year prior period, continuing a long-term trend and reflecting the primary focus of our promotional strategy. Now breaking down the 1.3% decrease in comp sales, our walk-in sales fell 0.9% essentially in line with [indiscernible] while our…

Thank you, Brian. I would now like to review our recent and upcoming store development activities and our long-term opportunity in that area. We are very pleased with the response our recent store openings. As we mentioned during the third quarter we opened one new store in Pineville, North Carolina. In the fourth quarter so far, we opened four stores including one in Brandon, Florida located at just east of Tampa, Woodbridge, New Jersey and just yesterday two stores, one in Auburn which is near Seattle, Washington and one in White Marsh, which is near Baltimore, Maryland. New Jersey and Washington by the way are new states for us. As Brian mentioned, we’ll round out the year with our Puerto Rico store, which is now scheduled to open in mid-January. The 14 stores reopen this year representing about 15%-unit growth are comprised of 8 stores in new markets for D&B, 6 stores located in markets where we already have a brand presence. In terms of the square footage, we expect 10 large stores in this year’s class, including eight that are approximately 40,000 per feet, two that are in between 30,000 and 40,000 square feet with the remaining four stores that 30,000 or less are small stores that we characterize them. We currently have 11 stores under construction and a total of 27 times leases, providing a significant visibility on our new store growth well into 2018 and 2019. Next, I will spend a bit on our fourth strategic priorities I mentioned beginning in my prepared remarks. We will continue to differentiate our Amusement offering by adding titles on our proprietary exclusive, as well as non-exclusive basis. In 2018, we will focus on strengthening our offering with particular emphasis on exclusive and propriety gains. It’s great visibility into our offering…

Certainly. [Operator Instructions]. And our first question will come from Jake Bartlett from SunTrust.

Great. Thanks for taking the question. First, I'm wondering if you can help set a little bit on the fourth quarter. Your implied guidance has been same store sale. Looks like it's pretty wide range 300 basis points range roughly. It could be pretty deep negative territory or low single digits. Help us understand what are your expectations are to narrow down in the fourth quarter. And then also just comment about the slow start to the quarter and any help on what you can attribute that to?

Well Jake, I think you have it right I mean our guide for the fourth quarter sort of slightly positive to low single-digit decline and it’s driven by a slow start kick off for the quarter. We ended Q3 with storms and some of that stuff. It was a little bit softer. So, we have brought our guidance down. As we look at it our business, three years 2014 to 2016 we are at comp growth of 20% magnitude over that period of time, casual dine was down 25%. So those three years straight very, very strong collective performance outperformance in that, averaging about 7% multi-year in comp over those three years. So, we have some pretty tough compares so we have some big weeks to go. Bookings, our sales bookings are right now recovering and solid. But these are some of the biggest weeks that we have coming up here around holidays and we are trying to given ourselves some range of performance in that guide.

Okay. And then when I think about the holidays, I know there is -- you gave a Saturday back for Christmas and also for New Years. How material impact should that be thinking about Halloween it seemed to be a about 150-point, Good Guy last year. So, may be help us out there and I know there’s Super Bowl as well up trailing in the last eight quarters. So, may be just help us understand how that’s going to play out or impact your comps through the rest of the quarter?

Well Jay I am not going to get into specifics of the impact, we had with the move of Christmas and New Years away from the weekend is helpful to us. Again, these are some big weeks. There are some weather dependencies. But there are positive impact that’s in front of us coming up here in December early January, but I don’t want to put a specify number on that.

Okay. And a real quick. On the movement towards the smaller box, you tried that before as I recall, and it didn’t quite work as well. You moved away from the very smaller box that you were trying a number of years ago. What’s different this time around? And then also what is the [impedes] for doing it? It seems like you are in the sweet spot for new available locations, developers are wanting to be anchor for them now profit wise. Why the shift now towards the smaller box?

Well let me answer your first question which was what’s different about this time compared to last time, and I think one of the things we’re excited about is it is different in terms of the way that we’ve laid out the building this time around. Last time essentially, we just took proportionally shrunk it. But we have special events space in there, and we had a dining room, we had everything that you have in a traditional five stores just everything looks smaller. And what that manifested itself in the midway or the arcade was about 500 square feet. In this new format that we are doing we are going to have an arcade that’s 10,000-square foot which is essentially the same size to what we have in our current malls. And instead of doing a separate dining room and special events and all the rest of that, we are going with a straight forth theme or essentially D&B Sports and we will have some dining oriented towards the arcade like we have in most of our stores. but we are really going to focus on D&B Sports attached to a 10,000-square foot midway. And we just think it’s going to be a much better and more effective way for us to try to tackle those smaller markets. And in terms of kind of right now, I think we want to make sure that we have a model that’s early embedded and that’s how we’re doing a couple of them and want to see what kind of returns, what kind of volumes in particular we can generate in these five stores. So, see exactly how large the addressable market is.

Our next question will come from Jeff Farmer from Wells Fargo.

You guys did mention several food and beverage strategies. So, can you just highlight what you see as the mobile order and pay out opportunity and how quickly you guys think you can execute upon that, if there is something help you don’t ask food and beverage business?

I think we see it as a two-step process Jeff. I think first of all, the adoption rate on mobile kind of pay at the table and something like that truly mobile on your phone it’s pretty low. But we’re testing that, just to make sure that we understand that. But we think the bigger short-term opportunity is really pay at the table. And so, we have begun testing that, we have it on from tables as we speak. Our view of that is the other adoption rates 50-50 70% of people paying on that, which is going to create an opportunity for a number of different things, it’s going to enable us go faster in terms of the checkout process, obviously will enable us to do somethings maybe not obviously, but it will also enable us to do somethings with ordering, surveys even a wording or staff and one of the things we’re particularly excited about is because of the size of our space, the ability for the guest to somebody that they’re sitting in an area that may not have someone on top of them I think there is an important element of what we’re looking for as well. But we’re excited about what that technology can be in the short-term. And then I think in the longer term, our vision would be, there are a number of things that could be enabled by smartphone including kind of activating the games and really because it’s a question of, how do you get it, so that you get a real estate on somebody's phone in order to enable that process.

Thank you. Just one unrelated follow-up. So, it sounded like you pointed to a pretty stable encroachment and cannibalization same-store sales headwinds quarter-over-quarter, but can you give us any color in terms of the sense of the magnitude of those two things. Are they 100 basis points combined 150. Any color would be helpful.

Yes. We anticipated to call out start providing those numbers each quarter, because it is an inprecise science, it's somewhat difficult to master the impact competition cannibalization. We often have both happening at the same time in the same market. So, there is a little brave to the estimate, but we’re, we spend a lot of time trying to analyze it, but we are hesitant to start quoting a scientific number on this. The reality is that there is a significant -- it’s a significant headwind for us. And to give you some perspective, I think might help if you dial back from Q3 of ’16 through Q3 of ’17, you heard us talk about TopGolf and Main Event and of course we have our self-opening stores in our own market. About a third of our comp based is being impacted by one of those two competitors who weren’t our self. So that's a significant number of stores where either Main Event or D&B has opened. So, it's not an insignificant headwind, it is a headwind that has grown over the years two years ago, we weren't even talking about this. We don't feel like it's going to moderate in the near term. We have one of our competitors that has slowed down some but TopGolf and Main Event is growing and there is more money being invested in the dining and entertainment space not just those two guys. And I think part of as we keep showing our 50 year one returns and attracts money. And I think there are more competitors come in the space we don't think it's going to moderate that said, I think we feel like we are best-in-class. We have the industry leading AUVs and I'm not going to put top goal in that, but that's a sort of a different beast. We have what we feel like our best operators in the country, running these stores. And we think most of these folks have lower ROI of an attract capital. So, we don't think it's going to go away, but we do feel like we have the team to respond but we're going to feel the competition I think first on time.

Yeah, I apologize, just a quick follow up on that. So, you said the third of the system theoretically or roughly been impacted over the trailing fourth quarter period. It sounds like you expected to be a similar level moving forward, but if we were to take this back a year or two, will this be a quarter of the system impacted by either cannibalization or encroachment?

I have those numbers somewhere, it would be -- we started to talking about this last year. When really TopGolf and Main Event and has really started to expand their store growth in back half of '15. So, this was not on our radar. We've been tracking the competition, but it was not a meaningful topic in the '12, '13 kind of years even '14. And right now, I think Steve mentioned in his remarks but next year we're going to skew slightly towards the existing markets in our store base for next year which is a little bit different this year. So, there is a little more cannibalization headwind moving into next year if you look at our remarks. And again, I don't think we see competition declining going forward.

Our next question will come from Andy Barish from Jefferies.

Hey, guys. There is some expense shifting kind of in the quarter. I mean you actually got labor leverage with negative comps and all the disruption. But other store operating went the other way. Is there anything other than kind of the inefficiencies or what did you do on the labor line to kind of get that leverage year-over-year?

A lot of focus, as I said in the remarks, I mean we've been working hard and our [indiscernible] from the operations team did a really a fantastic job dialing in hourly labor in the quarter. So, we actually were favorable year-over-year on our hourly line and that hadn't been the case in any quarter or really much this year. So, the comp declined. So, in past [indiscernible] and as I mentioned in my remarks guest satisfaction, guest polls went up, we improved. So, we are not trying to burn furniture here, but we did dial it in particularly in the non-comp stores. There is a natural lever in later around bonuses and as you think about our guide as we guide down bonus, bonus was down in the stores as well as we are -- if our numbers are coming down and so that you see that both in our G&A expense we saved some money in incentive comp year-over-year because of that and G&A and also in the field. And then we are just having really good experience this year really every quarter and it was fantastic this quarter on net of opening. And we keep wondering if that’s going to be ongoing but it has been ongoing in all three quarters this year and it’s actually expanded. Labor came out in a really good way for us. On the other store operating expenses 170 bps of decline. We have been talking about the occupancy thing for a while. We are opening new stores they have much higher rent really compared to the legacy stores. But well over half of that 170 bps is in occupancy cost. And we did invest some money in additional marketing as well, not too much in that even now but we did spend a bit more in marketing in the quarter. We indicated we expected to de-leverage marketing about a year on our conference call that did occur in the quarter and we did invest some money in showing the five, [indiscernible] that we view as sort of an investment spend to kind of build our reputation as a sports doing venue and it did protect the business to call it an incremental win in terms of profit I wouldn’t say that’s the case I think it’s more of trying to hang on to the sales, kind of at home watch event and so we just spent some money on that. But occupancy is a big number.

Okay. And then looking at I mean obviously for ‘18 you are implying sort of flat to slightly lower EBITDA margins again with the new store and efficiencies as sort of a headwind. Are there anywhere to pushes or pulls to kind of think of at this early stage even before you are obviously into the year?

I am going to hesitate. We are going to stick with what our prepared remarks were on the guide. We will cover some of the specific line items and some of that stuff on our April or fiscal year end call Andy. But our overall high-level guide does imply some potential to margin erosion and I think I would point heavily towards the new store mix, rolling occupancy cost, more openings. We have got 14 stores this year, 25 of those stores out of 100 are built in the last two years and we are just growing more and more of those and that’s a structural difference in our cost structure. We don’t view it as a long-term negative it is just what it is and we still like the returns as we grow. We are going to keep growing. We are going to build some of these little 15 to 20s and some of the smaller MSAs. We are excited about the potential of those. When we come to those we are excited to see what that’s going to do. But they are not going to have us set the same kind of margins as our legacy stores. We’re not going to be doing those kinds of margins and those stores.

Our next question will come from Sharon Zackfia with William Blair.

I guess couple of questions. I know you televised and marketed Eat & Play Combo during the quarter. So, I’m just wondering, what you saw the response rate was there, was it good or in keeping with what you had hoped? And then as you think about kind of breaking through with consumers was a value message maybe more specifics and how you do that? And then as a tangential question and I understand, this is a loaded question. For 2018, are you -- should we expect to step up in the tax rate to the 36 to 37, that you normally tell us or is 30 a good number to plug-in right now?

I thought it was going to be 22.

Yes. So, tax rate was guided 29.5% to 30% for the full year. You should be thinking that 36.5% to 37% directionally excluding the impact of the simplification related to share-based payment. So, we’re going to be including the number with and without in terms of net income, because we are getting a significant credit or a shelter in the numbers this year on our guide to give 600-700 basis points. I really can’t predict what next year is going to bring in terms of option exercises, it's out of my control and Steve's control. So, I don’t want to predict that. We’re going to be talking about the numbers pre-that, so we can look at true comparisons. We don’t want to have to rollover the net income numbers, the EPS numbers that have that big credit in it, it goes down next year. But that means impact rate goes up. But it really depends on after the set option expense next year.

Yes. Again, on the marketing question for what we did with Eat & Play Combo. We ran it as a test for a couple of weeks. To be honest with you, we didn’t see anything that was meaningful there in terms of an increase in either the penetration or lift in overall sales. So, we’re kind of back to the drawing board as it relates to a value promotion that can significantly impact sales. You can also say that, we ran even longer in the quarter for All You Can Eat wings, which is a fairly serious discount in terms of that combination package. And again, didn’t see a huge uptake in terms of what we saw in F&B side in particular from a revenue and penetration standpoint. So, we will be coming at you with something different in 2018 as it relates to value messaging.

Is there anything planned for the holidays around value or is it really something where we’re going to hear more in 2018?

I think you hear more in 2018, we’re not really featuring value between now over the holidays as an update message. We always have some amount of value with respect to the Amusements. Now we will have play x number games for you, which is a value message there. But just on the food and beverage side, I don’t think you’re not going to see a significant value message for you there.

Next, we'll take a question from Joshua Long from Piper Jaffray.

Great, thanks for taking my question. Wanted to circle back to the smaller format stores. And just Steve if we should be thinking about those as maybe backed on existing units or an opportunity to go into newer markets that otherwise wouldn't be able to support some of the larger or the prior store format?

The way we're thinking about when we said in the prepared remarks between 20 and 40 new stores of this size. Those are new markets that we had deemed too small for our current small format. So those are completely new markets for us. Having said that again, I alluded to this a little bit in my comments that depending on how much volume these stores could do, there is a chance that some of those ones that we had originally thought of as small stores we might think about doing this way if we got better return. So again, early to tell early days but that's the way we're thinking about it, these are 20 to 40 completely new markets that we've been in with our current small format.

Great, that's helpful. And then as we think about the move in to virtual reality, that's something that we've talked about in the past that it maybe wasn't the right time or maybe the technology just hadn’t got there yet. So how should we be thinking about that as still being able to come hit all the buckets for what you're trying to do in terms of turning people over getting the returns on the gain and that's kind of bogging down the midway. What's changed there from either technology or process standpoint where it makes more sense now to kind of start investing in that as a test?

I think that there is a couple of things. One we have figured out a multiplayer platform that we can do more than one person at the same time. Some of what we've experimented with in the past are sort of single play either first person shooter, driver all that stuff that was essentially a single person at a time. And so, we've amazed, we've been able to come up with a way to and I don't give away too much here because we're not we want to save some for the launch, but it's a multiplayer at the same time, it's something that we think is a platform that we're going to be able to rotate different content on. So those are two of the things that we think are significant it will be attended. So, there will be a small amount of labor associated with it. And I would think about it is more of an attraction oriented piece. Although there will be -- it will be interactive in the sense of a game but it's more like a simulator than it is like a redemption kind of game.

That's helpful. And definitely want to keep some of the allure there for the release. But should we think of that an up sell or something that you could still participate in through this the normal power card dropout?

So, we've done a little testing on this and we've made it an incremental spend now on the power card.

Our next question will come from Brian Vaccaro with Raymond James.

Thank you and good evening. Wanted to circle back on your recent comp trends. And you mentioned you are off through the sluggish start obviously. But as moving in and there is a casual dining industry seems to have stabilized a bit versus a weaker tougher trend in the third quarter. I guess I'm curious what you think is driving some of that differential in your recent performance, is there one piece of this special event something else that might be driving that differential and relative performance that you point out?

I think probably what I didn’t say on that -- on Jay’s question is a mild start to fall and winter is not typically [indiscernible]. We don’t feel like we are getting really a favorable swing so far in terms of the start to our Q4 as it relates to weather. So, what might be helping casual dining may be opposite for us. I think is what you may find.

Okay, alright. And can you also speak to what you are seeing in terms of your mall versus non-mall locations in the recent quarter?

We continue to see some divergence in terms of mall versus non-mall in terms of the mall stores underperforming slightly. The non-mall stores -- but then again when you split back to the compares they have much -- not much but they have tougher compares. So, if you look at two years back and three years back they are sort of inline at this point with 2017 lagging overall a bit.

We would like to see mall traffic be better. We would like to see casual dining to be stronger and not negative comps, so not necessarily helpful for malls to be struggling, I mean we’re destination, people do come to visit us, just us but there’s at least one guy that I would like to say that might come to the mall and then sees us. So, we would like to see traffic and that quite helps.

Alright, that’s helpful color on that. And last one on the sales front. And I just have one more marketing question. But if you look at the new unit performance in the quarter and if you compare the average weekly sales in the non-comp unit versus say the comp base, its looks like that spread wind out quite a bit here in the third quarter at least on our math. Curious if there -- can you confirm that to be -- are there any factors like seasonality, large versus small that could be impacting that relationship which has been a little tighter over the last few quarters at least on that?

The latter, I mean I think we have been trying to communicate that first of all we are trying to -- we are guiding a large door format to do 11 million steady state lower than our current average which is up of 11 million for the whole system. And we are building smalls that we are targeting to do roughly 7 million steady state sales and then we are building these stores that are somewhere in between and that’s the reality what our development cycle has been. Of the 25 non-comp stores that we have in our store base, only 10 of them are true large 40,000 and up, seven are small and we have eight of the sort of in between that are going to do somewhere in between. So, I think that’s the piece that’s may be during this year. And then I would say as you look at kind of our -- what we’ve opened to-date I am talking about the [indiscernible] nine stores have been opened to-date while we said most of the stores are going to be skewed large this year, only four of those nine are true large, most of the larges are coming here in the fourth quarter. So that mix is impacting their AUV and its not a surprise to us. Again, we are focused on our rise and return on investment but we don’t expect AUVs to say, for the whole brands to be comp at the current based base comp story to be submitted.

And the last one for me. If you look at your implied fourth quarter EBITDA guidance, it would seem to imply, it’s pretty meaningful margin contraction. Again, in this third quarter, you had negative comp, you saw a little bit of positive expansion on the EBITDA margin line. I know we’ve got pretty openings. But can you walk through maybe some of the other puts and takes that are embedded in your implied fourth quarter EBITDA guidance outside of the preopening line? Thank you.

Yes. If you go to the top end of our guide, you’re going to see some margin compression relative to kind of 40 bps of favorable margins year-to-date. The big changes are number one, marketing, we’ve leverage marketing year-to-date. We anticipate that will be deleveraging item in our fourth quarter. So that’s a fairly significant number of pre-opening costs, we guided that number up by about $2 million of pre-opening, it's going to be a drag -- increased drag it is year-to-date, but it’s going to increase in Q4. Again, we view that as -- just as an investment and strong pipeline in new stores. But there is increase related to pre-opening costs. And I would say the other significant item is probably around, relative to our kind of trend to date, it’s around gross margins, we’ve been very favorable on the Amusements side, on the year-to-date basis. We are and a lot of that on the heels of this simulation mix shift that we have seen and we are hesitant to be too aggressive on what we’re projecting on the gross margin, we are not being as strong on our gross margin project in Q4. And we do see more inflation on the food commodity side too. So those are kind of the big items that are causing the separation from what we see year-to-date versus the Q4 kind of implied margin.

And in the ’18 guidance Brian. Just a follow-up while you’re talking about food costs in the fourth quarter. Can you give an early read on the food inflation guidance in ’18 and also what you expect on wage inflation?

I think we’re going to hesitate against getting in to all the items of the guidance.

We’re going to guide on fourth quarter.

Yes. We’ll guide some other line items specific to next year when we get on our April call.

And next we’ll take a question from Steve Anderson with Maxim Group.

I have a question about the food and beverage side of the business [indiscernible] on the comments. But want to ask about some of the local store marketing efforts like some local margins that maybe on in some stores, but not in others and there is something that you would be pursuing ’18 in some markets?

I think we’ll have test that though in some markets and not others. And we do allow a certain amount of latitude for our stores to do promotion on a local basis. But I wouldn’t say it is a large part of the 2018 strategy.

Our next question will come from Andrew Strelzik from BMO Capital Markets.

Hey thanks for taking the question I actually have two quick things. First, as you're looking at these smaller -- the new smaller footprint stores and kind a thinking about the mix of square footage. Have you thought about going back to your existing stores even some of the larger stores just given where the food and bev trends have been? Are you talking about maybe a more fast casual type opportunity within those stores? Have you gone back to thinking about could this be kind a foreshadowing of thinking about how the footprint could change kind to retrofit some of those stores maybe to enhance the Amusement side or any other changes?

So yes, we thought it we've discussed it. I think that for the most part, we feel comfortable with the capacity that we have on the Amusement side. But that's with today's level of Amusement sales et cetera. I think if you continue to see Amusement sales grow at some point you may want to take some of the space within the box and reallocate it. And I think that is the beauty of what we have with a lot of the stores 35,000 enough we would have the ability to number one, do something like to put casual and then some other instances if we wanted to take a shot at increasing the midway and seeing what kind of impact that would have we could. And you'll have to make some trade off in terms of what you think that does the volumes in other areas of the business. But you might look at some stores and say that's worth another same testing you choose. But we don't have any plans to do that.

Okay, great. That's helpful. And my other question, can you talk about maybe the characteristics of the markets that you're looking at for the smallest footprint stores? And I guess I'm just wondering the thought process behind the 20 to 40 number that you put out, how did you come to that number? Thank you very much.

So, we're really thinking about smaller DMAs or SMAs that range in size from call it a low-200 up to 5 or so average. I think it's somewhere in the 4 range, 4 of the size of the adjustable market there. and that is really a smaller market than we thought we could address with our current small format. So that's why we collected those and that's how we collected those, why didn't we go smaller than that, we're looking at a number of different factors to try and determine where we thought we could get that $4 million to $4.5 million of sales and we thought that at the 200 level of population we can probably get that and some of those have some tourist tax spend and some of those sort of things, but at that level, we thought we could get there. And that's really how we selected those stores.

We have no further questions at this time. And I'd like to turn the call back over to our speakers for any additional or closing remarks.

Great. That's it from our end. Thank you very much for joining the call today. We look forward to reviewing the fourth quarter results with you in early April.

That does conclude our conference for today. Thank you for your participation.