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Americans Can’t Afford Hobbies
Courtesy of Dave & Buster’s
Mainstream leisure-economy brands are getting squeezed as consumers tighten their belts.
Why It Hurts: When Americans’ budgets shrink, the first thing to go is typically a fun outing with family or friends. With inflation still stubbornly high and cost-of-living expenses increasing, arcades, bowling alleys, theme parks, and other IRL activities may become mall zombies.
Between The Lanes: Well, this is no fun.
Companies like Dave & Buster’s, Lucky Strike, and Six Flags have missed their performance metrics… sometimes by huge margins.
That has led to tumbling stocks. For example, Dave & Buster’s is down 60% this year alone.
In fact, Bloomberg reports that the consumer discretionary sector (basically, the fun stuff people do on a Friday night) has the “second-highest distressed ratio” of any sector, at 6.7%. In other words, the economics are ugly right now.
Final Check: Leisure brands are a key indicator of the average consumer’s financial health, according to Meghan Robson, head of US credit strategy at BNP Paribas. Basically, if these brands are struggling, it means everyone is struggling.
But there’s an interesting wrinkle. Even though these brands are suffering, other forms of entertainment are thriving. Movie theaters, which were decried as a dying breed just a few years ago, have come roaring back.
So, what goes around may very well come back around… as long as they don’t file for bankruptcy.
The Future: Expect leisure brands to test Gen Z-focused rebrands to appeal to customers desperate for IRL experiences.
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Today’s email was written by David Vendrell.
Edited by Nick Comney. Polled and Copy-edited by Kait Cunniff.
Published by Darline Salazar.