Chuck E. Cheese has launched a new monthly membership pass designed to help customers weighed down by rising costs. David McKillips, CEO, Chuck E. Cheese, joined TheStreet to discuss how the new Fun Pass allows families to enjoy more entertainment for less.
Related: Chuck E. Cheese subscription plan costs less than Netflix
Full Video Transcript Below:
CONWAY GITTENS: So tell me, how is Chuck E. Cheese being impacted by the pullback that we’re seeing in discretionary spending?
DAVID MCKILLIPS: Well, there’s no doubt that the macroeconomic conditions have put some pressure on really young families, which is our core customer. So it’s young families with young kids 2 to 12 years old with a bull’s eye of 3 to 8. And we’ve seen the inflationary pressures, even though inflation has come down. But if you still look at the pressure points on families, it’s rent, it’s utilities, it’s groceries, and that hits our customer directly on on their everyday expenses. So we know that our young families are having to make a choice on how they spend their discretionary income, especially for out of home entertainment. So we just try to position ourselves to be that one outing that a family of four is going to go every month.
CONWAY GITTENS: And so how does the monthly fun pass address that issue?
DAVID MCKILLIPS: Well, the monthly Fun Pass has been a home run for us. First thing, we launched a two month pass this summer. It’s our fourth summer doing it. But this summer we made it even a little bit more impactful in terms of its value. And in years past it was you buy a monthly pass, it was valid for two months and you could come every single week for a denomination of 60 minutes or 90 minutes or 120 minutes, right? This year we changed that value perception and value equation to give you. Now every day you can come for two months. So last year we sold 78,000 passes. This year we are getting ready to sell 400,000 passes. At the same time, we tested exactly what your question was. What are we doing on a monthly membership? We tested in three markets, a monthly subscription program, and we just launched it about a month ago. We’ve already sold 20,000 monthly memberships and I have guests now and I’m in the stores all the time.
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CONWAY GITTENS: And why now? Because this inflation squeeze has been happening. I mean, for what better part of two years? Right and so why was now the right moment to launch a subscription pass?
DAVID MCKILLIPS: We’ve been watching and feeling the effects of the macro right. First quarter of last year was a really, really strong time period for chuck e cheese because if you think about it, children who were born in 2019, right. Had their first birthday during covid. Their second birthday still during covid, where we had a lot of restrictions. And in 2022, we had the omicron variant. So in first quarter, which is the biggest birthday time period for us, those kids were never able to celebrate their birthdays. So then in the first quarter of 2023, it was gangbusters. We had a really strong quarter, which we lapped over that this year. But we’ve been watching the macro and all the pressure against the young family. So we thought this is the time where we really needed to deliver value and we’ve got to deliver fast or deliver value fast for our consumer. And and they’ve and they’ve really been receptive to it.
CONWAY GITTENS: And what does value mean at a place like Chuck E. Cheese, especially when it comes to food because I wonder like a parent can get a hot dog, they can get a slice of pizza, they can get a chicken tender any anywhere. Right? there’s a lot of competition for those kind of food products that you sell. So what does value mean at Chuck E. Cheese?
DAVID MCKILLIPS: It means two things. Number one, our guests come for the games, right? 70% of our revenue all comes from entertainment and merchandise. They’re going to come and play the games. You probably don’t know this, but we’re the largest arcade in the world. 2 billion game plays every single year. So people are coming to chuck e cheese for the game. But you’re 100% right. They don’t need to eat. So when they can, they can eat before they come and they can eat before they they or after they leave. But for us to deliver value, it’s the full experience. So you can play games at a low cost. You can now get your pizza or your wings or your cakes at a low cost as well. So now it’s a full family outing where you can dine and play and make memories at Chuck E. Cheese for a low price.
