David McKillips, CEO of Chuck E. Cheese, shares how his company remained resilient despite ongoing inflation.
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00:00So as a business, how is the inflation story progressing?
00:05I mean, we've seen inflation numbers come down.
00:07It's still elevated.
00:08People are mad about higher food prices.
00:14What are you seeing in terms of when you're
00:16dealing with your suppliers?
00:17So you're making fresh pizza.
00:19You need cheese and tomato sauce and dough.
00:22What are you seeing in terms of the prices?
00:25We're seeing commodity pressures in cheese and bone
00:28and chicken wings as well.
00:30But we have a very simple menu.
00:32So we are cheese.
00:34And the majority of pizzas that we sell
00:36are catering to a young audience.
00:37So it's cheese and pepperoni.
00:40And then we do have a fresh salad bar
00:41that we look at in terms of moving ingredients around.
00:45But we're still seeing commodity pressures
00:48in chicken and some cheese and some tomatoes.
00:50But we look at menu simplification.
00:52And we try to deliver that best price back to our guests.
00:56And I'm wondering, we've been hearing
00:58some ramblings every now and again.
01:01It comes up every few weeks about recession fears.
01:04In terms of your business, what do you see in terms of,
01:07I know you can't give specific numbers
01:08because of the quiet period.
01:10What do you see in terms of foot traffic?
01:12Are you seeing an increase?
01:13Is it the same as it was a year ago?
01:16Give me some kind of indication of how things
01:18look from where you sit.
01:20Just from a trend perspective, we've
01:21seen great demand on our new membership and pass program.
01:25So we have seen the inflationary pressures
01:27against these young families.
01:29And they have been responded with demand on certain offers
01:32that we have had.
01:33And we've used new outlets in terms
01:34of placing coupons out there in new areas like Groupon.
01:39But really, we've looked at two things.
01:42One, the membership platform and pass platform
01:45has been outstanding.
01:46And then the other piece of the business
01:47that we haven't talked about yet,
01:48but it's very, very important to Chuck E. Cheese,
01:50is birthday parties.
01:52So I'll step back for a second just
01:54to answer your question about recession in totality.
01:57So Chuck E. Cheese historically has
01:58done pretty well through any recessionary time periods.
02:01Where parents will continue to spend, even during a recession,
02:04is on their kids and on their pets.
02:06So we are a recipient of making sure
02:08that we're delivering great memories and great service.
02:11And there's more competition than there ever
02:14has been in the FEC categories.
02:15We've just got to make sure that we're
02:17delivering a great product.
02:18And our brand transformation has helped that as well.