Eddie Reilly's questions to DS leadership • Q1 2022
Question
Eddie Reilly of EF Hutton asked for details on how Drive Shack managed its variable operating expenses to achieve the strong EBITDA and margin increases for its Puttery venues in Q1 versus Q4. He also questioned if it would typically take two or three quarters for new venues to reach steady-state EBITDA margins.
Answer
President and CEO Hana Khouri explained that Q4 margins were lower due to 'surge labor' used for new openings, making Q1 a more normalized view. She highlighted that cost of goods came in favorably, driven by high-margin alcohol sales, and operating expenses were lower than budgeted as new venues require less maintenance. Khouri stated her expectation is that new venues can reach stabilization after just one full quarter of operation, as demonstrated by Charlotte. Executive Kelley Buchhorn agreed, emphasizing the continuous work with field teams to manage expenses and drive margins.