Chuck E. Cheese Buys Peter Piper Pizza Chain
Here’s the Ticket!
CEC Entertainment, with 577 Chuck E. Cheese locations, has purchased Peter Piper Pizza that operates 32 corporate stores and 115 franchise locations, mainly in the southwest U.S. Just a few months ago CEC was acquired by Apollo Global Management for $1.3 billion.
What this could mean. This is a great purchase for Chuck E. Cheese. Peter Piper Pizza has been developed in primarily Hispanic communities in the southwest U.S. and Mexico. Hispanic families eat pizza on average 26 times per year or once every 2 weeks. This is the highest for any ethnic group and other groups are slowly catching up. The original PPP mission was to feed a family of 4 for under $20, including playing games. Many years ago I consulted for Peter Piper Pizza and the goal was to expand to other areas of the U.S., but the expansion funds were difficult to obtain. This is not a problem for Apollo and we can expect a large expansion over the next few years, especially with the economies of scale that Chuck E. Cheese has mastered and can now integrate with PPP.
Game suppliers will certainly benefit. PPP does a lot of birthday parties already and they will likely do more. PPP caters to a higher age group than CEC (up to 8 years old) with some overlap in the 6-8 age group. Actually, PPP caters to everyone. There will most likely be some PPP’s that are larger and include FEC attractions, but we will most likely see more stores in the 15,000-20,000 sq. ft. average range.
With all of the expertise and economies of CEC, and their focus on introducing new technologies, these new PPP’s should be very successful. The FEC industry will need to be on its toes to stay on top of this new competition as well as the new competition from trampoline parks, and new store expansions from large chains like Dave & Busters, Main Event, and Rounders. Every FEC needs to make sure that they are maximizing revenues in every category and cutting out all unnecessary costs. My advice is to make sure that the average per capita spend is in line with what it is for the target markets you operate in, or that it can be quickly adhered to when the time comes. Over the past few years, many FEC’s have focused on higher per caps to cover lower attendance and felt secure that they captured much of their higher end socio economic market. This is a difficult long term strategy to maintain. My strategy has always been to have a blended focus on capturing a higher attendance (including higher repeat visitations through loyalty programs) by providing value to a wider economic range of the target markets. So far, it has worked well for 45 years.
