How Chuck E. Cheese remained resilient despite ongoing inflation

The Street

David McKillips, CEO of Chuck E. Cheese, shares how his company remained resilient despite ongoing inflation.

Transcript

00:00So as a business, how is the inflation story progressing?

00:05I mean, we've seen inflation numbers come down.

00:07It's still elevated.

00:08People are mad about higher food prices.

00:14What are you seeing in terms of when you're

00:16dealing with your suppliers?

00:17So you're making fresh pizza.

00:19You need cheese and tomato sauce and dough.

00:22What are you seeing in terms of the prices?

00:25We're seeing commodity pressures in cheese and bone

00:28and chicken wings as well.

00:30But we have a very simple menu.

00:32So we are cheese.

00:34And the majority of pizzas that we sell

00:36are catering to a young audience.

00:37So it's cheese and pepperoni.

00:40And then we do have a fresh salad bar

00:41that we look at in terms of moving ingredients around.

00:45But we're still seeing commodity pressures

00:48in chicken and some cheese and some tomatoes.

00:50But we look at menu simplification.

00:52And we try to deliver that best price back to our guests.

00:56And I'm wondering, we've been hearing

00:58some ramblings every now and again.

01:01It comes up every few weeks about recession fears.

01:04In terms of your business, what do you see in terms of,

01:07I know you can't give specific numbers

01:08because of the quiet period.

01:10What do you see in terms of foot traffic?

01:12Are you seeing an increase?

01:13Is it the same as it was a year ago?

01:16Give me some kind of indication of how things

01:18look from where you sit.

01:20Just from a trend perspective, we've

01:21seen great demand on our new membership and pass program.

01:25So we have seen the inflationary pressures

01:27against these young families.

01:29And they have been responded with demand on certain offers

01:32that we have had.

01:33And we've used new outlets in terms

01:34of placing coupons out there in new areas like Groupon.

01:39But really, we've looked at two things.

01:42One, the membership platform and pass platform

01:45has been outstanding.

01:46And then the other piece of the business

01:47that we haven't talked about yet,

01:48but it's very, very important to Chuck E. Cheese,

01:50is birthday parties.

01:52So I'll step back for a second just

01:54to answer your question about recession in totality.

01:57So Chuck E. Cheese historically has

01:58done pretty well through any recessionary time periods.

02:01Where parents will continue to spend, even during a recession,

02:04is on their kids and on their pets.

02:06So we are a recipient of making sure

02:08that we're delivering great memories and great service.

02:11And there's more competition than there ever

02:14has been in the FEC categories.

02:15We've just got to make sure that we're

02:17delivering a great product.

02:18And our brand transformation has helped that as well.

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