Chuck E. Cheese’s to Debut Attractions, Direct Mail

According to a report from Nation’s Restaurant News, “CEC Entertainment Inc., parent to the 544-unit Chuck E. Cheese’s chain, is using new store attractions and a first-time direct mail marketing campaign to drive recently stalled sales, according to a report released Monday by Morgan Keegan Equity Research.”

“Chuck E. Cheese has tested in one Dallas unit a new attraction called “Birthday Star Blast,” a clear, human-sized plastic capsule into which money, tickets and prize vouchers are blown — much like in casinos and television game shows of the past — to be gathered by the child celebrating his or her birthday. The test is to be expanded to 20 more stores.Birthday parties represent about 24 percent of Chuck E. Cheese’s business, so additions such as the Birthday Star Blast, which cost less than $3,000 per store, are likely to increase sales, according to the securities report from Morgan Keegan analysts Robert Derrington and Destin Tompkins. They had accompanied Mike Magusiak, CEC’s chief executive, and Chris Morris, the chief financial officer, on a tour with East Coast investors. Morgan Keegan solicits and undertakes investment banking business with CEC, and now holds an “Outperform” on the stock. Should the Birthday Star Blast become a systemwide feature that drives two incremental birthday parties per week, it would boost same-store sales by 1 percent, the analysts noted. The chain’s same-store sales fell 5.4 percent during its latest quarter. In addition, 60 percent of the sales from Birthday Star Blast would flow through to pretax profit, they said.”