Investing.com -- Moody’s Ratings has revised its credit outlook for Dave & Buster’s Entertainment (NASDAQ: PLAY) to negative from stable while affirming the company’s B3 corporate family rating. The revision signals growing credit risks tied to persistent operational weakness and execution hurdles surrounding the restaurant-entertainment chain's ongoing turnaround strategy.

Management is attempting to reverse the slide through a broad suite of strategic initiatives, including value-focused marketing, refreshed entertainment options, updated food and beverage menus, and aggressive cost cuts. Moody's highlighted that execution risk on these efforts remains high as discretionary consumer spending faces ongoing headwinds from persistent cost inflation.

Despite the heightened operational pressure, the rating agency affirmed the company's B3 credit profile based on expectations that liquidity will remain adequate. Capital expenditures are anticipated to slow as management shifts focus toward selective remodels, limiting the need for drawn liquidity on its revolving credit facility.

Moody’s noted that ratings could face further downward pressure if negative same-store sales persist or if debt-to-EBITDA remains above 6.75x alongside interest coverage below 1.25x. Conversely, an upgrade would require debt leverage to drop below 5.5x alongside a sustained return to positive same-store sales and positive free cash flow.

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