Chuck E. Cheese's plans marketing makeover to reverse slipping sales

May 4, 2012

CEC Entertainment Inc., parent company of Chuck E. Cheese's, reported its Q1 financial results Thursday, which included a drop in revenues and profit.

Total revenues for the quarter decreased 3.8 percent, or $9.6 million, to $246.8 million from $256.4 million for the first quarter of 2011. Comparable store sales decreased 4.2 percent for the first quarter, compared to Q1 2011.

Net income decreased 5.2 percent to $32.3 million as compared to $34.1 million for the Q1 2011.

On a call with investors, Michael Magusiak, president and CEO, attributed the declines to unseasonably warm weather in the Northeast and Midwest, which drew families outside, and to consumers' continued tightened budgets.

He added that the company is now fully focused on generating increased customer traffic and comparable store sales through a new comprehensive marketing and advertising campaign that will be introduced in the second half of this year.

"Our strategy for growth will also continue to focus on reinvesting in our existing store base to continue to provide guests with our best-in-class product and experience, as well as expanding domestically and franchising internationally," Magusiak added. "As we move forward in 2012 and implement our new strategies, we believe we will see meaningful improvement in results."

CEC Entertainment first announced its intention to shift its marketing strategy in February. The plan will be spearheaded by the company's new agency, The Richards Group, and Scott McDaniel, who was named chief marketing officer in September. One of the main objectives is to direct the marketing messages more toward parents than children.

Among the efforts will be a makeover of the Chuck E. Cheese mascot, to debut in July. A new website will also be launched in the fall.

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Topics: Chuck E. Cheese's Pizza , Financial Management , Marketing / Branding / Promotion , Online / Mobile / Social , Operations Management

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