Chuck E. Cheese, the kiddie pizza chain acquired by private-equity firm Apollo Global Management last year, thinks it has a solution to its sales slump: winning over millennial moms.
The restaurants have never had difficulty appealing to kids, thanks to a combination of pizza, arcade games and guitar-playing animatronic characters. But getting parents on board — especially the younger generation of moms who are seeking higher-quality food — has been a challenge. Chuck E. Cheese’s sales have declined in recent years, so the chain is remaking its pizza, improving the salad bar, and expanding its list of beer and wine.
"Her kids know it's a fun place to go, but millennial moms want to provide that great experience without sacrificing for themselves," said Greg Casale, the head chef at CEC Entertainment, Chuck E. Cheese's parent company. "Before she was a mom, she was going to places like Panera and those concepts. She wants something that fits into her millennial lifestyle."
Chuck E. Cheese, which has been around for almost 40 years, has 588 locations, almost exclusively in the U.S. and Canada. The company, publicly held until last year, was bought in February 2014 by Apollo in a leveraged buyout valued at about $1.3 billion and then taken private.
Shortly after the deal, Tom Leverton took over as chief executive officer and hired Casale, who was trained at the Culinary Institute of America. CEC also owns Peter Piper Pizza, a chain with about 200 locations that it acquired last year.
Leverton took over a Chuck E. Cheese business that posted declining sales at established restaurants three of the past four years. Sales slipped 2.2 percent in 2014.
Targeting millennial parents is a relatively new challenge for food companies. Though the generation is poised to become the biggest and most influential set of American consumers, they're just getting into their 20s and 30s. That means marketers are still learning how millennials will adapt to becoming parents.
Leverton, who has two kids, had experienced Chuck E. Cheese as a customer and knew the food needed a face-lift. He said company research shows that the average kid — Chuck E. Cheese pegs its target demographic as between 5 and 12 years old — wants to go to the chain about 11 times a year, but only gets three trips. One of the main barriers, Leverton said, was parents nixing a trip because they dreaded the menu.
"For my kids, it could do no wrong, but I wasn’t very excited about going," Leverton said. "We want to protect and enhance what we do for children, but wildly improve what we do for adults."
Chuck E. Cheese is probably best known as a birthday party destination. But those events are only about 20 percent of the business, according to Leverton. In all, about half of sales come from entertainment, with the other half coming from food. One of Casale’s first projects was developing a new thin-crust pizza, again with mom in mind. A slice of the new pizza has 23 fewer calories than a slice of the regular pizza.
Leverton commissioned a blind taste test asking more than 400 customers who had eaten thin-crust pepperoni pizza at both Chuck E. Cheese and Pizza Hut over the last few months which one they thought was better. The results showed that 57 percent preferred Chuck E. Cheese, the company said.
"There’s no reason a pizza made a Chuck E. Cheese can’t be better than the pizza at Pizza Hut," Leverton said.
The company is even updating the look of its namesake character. In new imagery, Chuck E. Cheese looks less cartoonish and more like a computer-animated character. And gone is the backwards baseball cap.
The company also is adding limited-time-only menu items for the first time. The initial one of those, a dish that piles macaroni and cheese on top of pizza crust, signals that younger customers are still a focus.
"It has to be approachable for kids," Casale said.