Leaders in Customer Loyalty, Powered by Loyalty360
Leaders in Customer Loyalty, Powered by Loyalty360
Pizza, Play, and a Fun Pass: How Chuck E. Cheese is Winning Hearts and Wallets
Chuck E. Cheese has been a household name in family entertainment for nearly five decades. With 560 locations across 17 countries, the brand has entertained families with children ages 2 to 12 through its unique blend of games, pizza, and birthday celebrations. However, as consumer preferences and economic challenges have shifted, Chuck E. Cheese has adapted with significant investments in modernizing its facilities and reimagining its loyalty programs to better meet the needs of today’s families. In our latest installment of Leaders in Customer Loyalty, we had the chance to learn more about the details of these fresh initiatives from Mark Kupferman, the Executive Vice President and Chief Insights and Marketing Officer.
Read the full article on Loyalty360 here: https://loyalty360.org/content-gallery/in-depth-exclusives/pizza-play-and-a-fun-pass-how-chuck-e-cheese-is-winning-hearts-and-wallets
Watch the full interview here: https://www.youtube.com/watch?v=S6F9lpzXIKM
There's always a memory that kids hold close to their hearts, Something that brings back cherished moments with family, usually revolving around a holiday or birthday. The friends are there, the parents are happy and everyone seems to be thoroughly enjoying the moment.
Speaker 1:There's often a nice birthday cake and, hopefully, some good food and, for those lucky enough to have their favorite food, often a pizza. If you're fortunate, you might have spent time at an arcade, maybe one with animatronics, or where you had the opportunity to win one of those amazing prizes. For those who had that opportunity, going to a special place like Chuck E Cheese was a big deal. It was an exciting time for the kids to run around, have fun, win prizes and take pictures in those little cars that jumped around. Big deal, it was an exciting time for the kids to run around, have fun, win prizes and take pictures in those little cars that jumped around. As time goes by, the memories fade. You might not remember exactly who was there and their friends may have transitioned into different circles, but every once in a while you come across a faded black and white photo of you and your child, maybe when they were six, seven or eight, and reminded how amazing that day was.
Speaker 1:Today we're going to hear more about Chuck E Cheese and their new approach to customer loyalty. They've reworked and retrofitted their stores and made significant enhancements to their customer loyalty program. Today, Mark Kuberman, Executive Vice President, Chief Insights and Marketing Officer is going to give us a closer view at what's new at Chuck E Cheese. So, Mark, thank you very much for taking the time to speak with us today. How are you? Good, I'm great, Mark. Thank you for having me today.
Speaker 1:First off can you give us a short introduction to Chuck E Cheese and tell us about your role within the company and maybe some of your previous experiences?
Speaker 2:Yes, so I've joined Chuck E Cheese about 14 months ago. For those who don't know, chuck E Cheese is the world's largest family entertainment center. We have 560 fun centers right now in 17 countries, and we entertain families with kids age 2 to 12 and their families for the last 47 years, and so that's probably one of the things that makes us stand out the most. We are known for our animatronics, pizza and birthday parties. In terms of myself, so, as I said, I joined 14 months ago as the Executive Vice President and Chief Marketing Officer for Chuck E Cheese. I've been doing family out-of-home entertainment mostly theme parks parks for the last 30 years, with stints at Paramount Parks, universal Orlando and, most recently before, the Six Flags.
Speaker 1:Chuck E Cheese has been a household name for family entertainment for a number of years. You know how has the brand evolved to meet the changing needs of families, especially regarding customer loyalty programs.
Speaker 2:I think you know the first place to start with is the fact that we've actually just finished a gigantic remodel that we started, wow, about five years ago, a little bit before there where it started, but it's just finishing up, where we've spent about $350 million to modernize all of our stores. So, yeah, and because because so most of the listeners probably grew up going to Chuck E Cheese and it's often a surprise when people come in just to see how different it is, how we've changed and evolved really to meet today's standards. The animatronics most of them aren't there anymore and we've replaced it with large TV screens, dance floors, new games, new prizes, entirely new experiences. The places look beautiful, really to meet what today's families are looking for, and so that's kind of the starting point. That's awesome. How many stores do you have? We have a total of 560 around the world. Okay, that's about in 17 countries. Okay, so that's the baseline In terms of loyalty.
Speaker 2:I think when we look at it, we really focus on three things. One is the fact that we are a highly differentiated product. It's unlike, you know, when you're talking to places where people go all the time. People visit us not that often because they're looking for a very specific experience that we offer. So we take that into account.
Speaker 2:The second thing we look at is the fact that we are about. We look at how consumers experience out of home entertainment. We do a lot of research on an ongoing basis to look at how people spend time outside the home, and it also dictates what we do in terms of how we structure our program. How people want to experience a place like Chuck E Cheese or a Dave Buster's or even a theme park is different from then how you might work if you were a grocery store or a gas station or even a restaurant or a gas station or even a restaurant. And then the other thing is we look very closely and we've had the opportunity to do this because we recently had a more points-based program look at how people actually use loyalty at a place like us, and so that's kind of how we've been evolving our program over the last several months, the changes that we've made to it.
Speaker 1:When you look at the current state of customer loyalty within the fast casual industry, what are you seeing? What is the current state, what are you expecting and where is the industry going?
Speaker 2:I mean realistically. It's been a tough time for both fast, casual and for family out of home entertainment, which is really where we're focused. We tend to think most of our revenue actually does come from the games, so we're more of an arcade than we are a restaurant, even though traditionally we've kind of been a mix, depending on where you look at in time. But I think the economy and the consumer's position that they're in right now has actually been kind of a challenge for both. On consumer surveys, when we talk to people they tell 88% of them say that they have strong concerns about food prices, inflation, gas prices. 63% say that they spend less time doing things that are fun with their families outside of the house just because of financial concerns. And the end result is that people have been cutting back and this matters for us because they're just being more thoughtful in terms of how they spend their time, where they go, what they do. They're going out less, they're going to less places, and so loyalty actually makes a big difference for us.
Speaker 1:The new FunPass membership is a totally new approach to your customer loyalty program. What prompted Chuck E Cheese to transition from a points-based loyalty program to a tiered paid membership model?
Speaker 2:Some of it comes down to what I mentioned just a few minutes ago in terms of the fact that we are a highly differentiated product and that people are choosing to go to Chuck E Cheese because they want to be at Chuck E Cheese. And if you think about it like a theme park or even a bowling alley or something, you do care which one you go to because they offer a unique experience. It's not just like a gas station. You may not care whether you go to this gas station or that gas station, because the product itself is undifferentiated, but when it comes to a place like Chuck E Cheese, they want our experience, they want Chuck E Cheese, they want the entertainment that we offer, the games that we offer, the food that we offer. And that mattered, because we were doing a point-based program up until now, and what we found is that most people weren't really using it. They'd sign up for the program because we would incentivize them to do so, but we found out that people just weren't using the program that we were offering before. It wasn't offering the value that they were looking for. For our side, it wasn't driving incremental visits, it wasn't getting anybody to spend anymore. The people who used it, liked it, but it wasn't really making a difference to the bulk of our guests.
Speaker 2:And so we wanted to take a step back and say what do our guests really want?
Speaker 2:I mean, what will actually move the needle for them and for us? And so we kind of took a different approach to it, which is we want to reward the people who are coming, but we also want to reward the people who are willing to make a commitment to Chuck E Cheese. And so what we've done is if you're willing to sign on for a couple of months, or if you're willing to sign on for a full year in terms of your commitment, then we will actually give you the best price on our games. We will give you the best price on our food, and so the way that this spells out is that you know guests receive benefits for spending more time with us, but they are making a commitment to us up front, and so far the feedback has been amazing. People really love the program. We've sold well, we've sold several hundred thousand of these things since we started this approach last summer, and the people participating, the guest satisfaction scores, look very positive for us, so we feel very good about it.
Speaker 1:Well, that's awesome. As I mentioned in the prep, we have a membership community. We actually had one of our members talk about their successful customer loyalty program that is, a premium program, subscription program and some of the benefits that that gives. But that first jump takes a little bit of a leap of faith right from a financial modeling perspective. Are people actually going to join? Are they going to have value? But to have that kind of a sign up in a short period of time shows especially for more of a trans not sorry, transitory product, but a product you may be using from when a kid's one to nine is amazing because it yes, and again, the families love it because first there have been a couple of different versions of this as we've gone.
Speaker 2:We've been testing this since last December. So we actually put it into one of our stores and then we put it into an entire market and then we put it into several markets and now we've expanded it across the country. But we launched our two month program last summer and what people love about it is the fact that they can come back whenever they want to. They can or just to, I guess, summarize what the program is Basically you get unlimited visits to Chuck E Cheese whenever you want. You get anywhere from 40 games to 250 games every visit, which, with 250 games, that's like several hours of gameplay. Now you can split the games across your entire family if you want to, so everybody.
Speaker 2:It's a family membership. So for prices ranging from $7.99 to $29.99 a month, you can visit Chuck E Cheese whenever you want to and play all the games you want to. But the other piece of it is is that you also get discounts on the food ranging from% to 50% every visit. So it creates an incredible value for families and the number of times people are using it has been amazing, and they're buying food when they come. They're having a great experience, so it's been a win-win for us.
Speaker 1:Can you walk us through the design of the new program as you've moved from that points-based program? How does one decide which level they want to participate in? The bronze level, the silver level and the gold tiers? They each have different benefits. So how does one decide, based on their family, which level to engage with? And when they make that decision, how do they engage with the program?
Speaker 2:It's actually a type of program where you actually buy into whatever level that you want. Okay, so you can certainly upgrade if you decide that you want more, but we really let the guests decide at what level they want to be at and we charge them in that regard. But if you think about it, you know if you're getting. You know, two hours of gameplay at a Chuck E Cheese might cost you around $40. And the fact that you can get that by just paying us $12.99 a month, which is the price for silver, and come back every day if you want to with your kids. We have people who come back every week. We have people who come back every couple of weeks. We have people who come back two or three times a week. And again, it really comes down to how they engage with the program at whatever level they want.
Speaker 1:So actually you kind of flipped the model, you changed the whole paradigm right. So where games were kind of the revenue in the past, getting them into the locations more frequently, especially in a time of you know value, which is kind of one of the big words we hear quite consistently right now within the customer loyalty industry You're getting them in and they're buying pizza. They're staying longer, right so they're staying longer. They're going to have to buy food, the salads, the great salads, the great pizza.
Speaker 2:Exactly, and I think, look, nothing trumps traffic, nothing is better than traffic and matters more than getting people into the locations, and this program does that. And then, once they're in the location, then the next challenge is you know how do we create incremental experiences that they want to pay for, whether it's, you know, more desserts, or whether or not we are right now testing pretzels and we're testing popcorn, we're testing churros to find out, you know, what are the types of things that we can do to get people so that when they visit, you know there's more to enhance their experience.
Speaker 1:What role does data play in the membership program? How is Chuck E Cheese using data and insights driven from the member activity to drive and deliver a more personalized experience and reward platform?
Speaker 2:Yeah, I mean, and I'd be remiss if I didn't say right off the bat that you know when, when you're in a business like ours, where you're mostly working with younger kids, we are very thoughtful in terms of any data that we collect. We don't actually collect any data from children. We don't keep track of what games they play. We don't collect more than very basic information as it relates to kids, because that's it's keeping kids safe. It's the number one value for Chuck E Cheese, I think.
Speaker 2:For the data that we do collect from parents in terms of visitation, in terms of what they spend inside the locations when they visit, that data is proving very useful to us in terms of what they spend inside the locations when they visit. That data is proving very useful to us in terms of thinking about the types of experience and how we change and tweak and adjust the program as we go. And I think the other piece of it is that, as you noted, we do do guest satisfaction surveys whenever anybody visits. We look at that data across the system in detail. We don't just ask one question, we ask people the full range of questions about their experience, so that our stores, our fund centers are constantly working to try to create a better experience and we are localizing a lot of that data in terms of what members are thinking about this program. What would they like to see us do to change and improve it? Because it's a key catch?
Speaker 1:point for us. You have a new partnership with STEMorg and you're going to create a STEAM program. It seems to be a very exciting development. Could you tell us a little bit more about the program? How does it fit into the bigger picture of introducing children to different Chuck E Cheese experiences?
Speaker 2:Yeah, it's kind of a surprise, I think, to some people, because we're the place where a kid can be a kid and have been for a long time now, and so educational-related activities and products. How does that fit in? I think it comes down to two things. We are focused on the well-being of kids as well, and I think what we figured out was that we can offer a fun educational experiences for schools and for classes where it's not just about learning, but it's about learning and playing games and doing Chuck E Cheese activities and also having fun. At the same time, and from a pragmatic standpoint, of course, it helps introduce more kids to the brand.
Speaker 2:This is targeted at elementary schools to get them in. It's a STEAM program versus a STEM program. The difference between STEAM and STEM is that with STEAM, you add in an A for arts, so creativity, arts, is a huge piece of what we do. At the same time, we have all the electronics. We used to have the robotics, so we have that piece as well. I would say the last reason in terms of why we integrated this was is just again, the people who on our senior leadership team, the people who work for Chuck E Cheese, wanted to be able to do something to really help families and kids and students, and so, as much as this is an opportunity for us from a group sales perspective, it's also a way to do something that we really just want to be able to offer to the families and to the communities in which we are located, as I mentioned in the intro.
Speaker 1:Everyone knows that Chuck E Cheese is synonymous with birthday parties, especially for kids, and the new birthday club is clearly resonating with families. What sets the program apart from your previous efforts?
Speaker 2:Yeah, I mean it's. The fun thing about Chuck E Cheese is that, since we have been around 47 years, if you go back in our history, you can find that we pretty much tried everything under the sun as an opportunity. In this particular case, though it's it's what it is is it's primarily that any parent can go to Chuck E Cheese, go to our website in the in the fund centers as well and sign up their family so that their kids receive free stuff for their birthdays. It's a win for us. We give them free gameplay, we give them free cotton candy, and we also give them stuff on their half birthday as well. It's a win for us because it does two things. One, it gets them into the fun centers at around one of their favorite times of the year their birthday and it also gives us the opportunity to make sure that they're aware of our birthday experiences.
Speaker 2:I think in terms of how it compares to other programs look, we didn't invent the birthday club, but one of the things that we have is a birthday experience that 68% of kids three to eight say is one of the number one places that they want to spend part of their birthday, and so it really helps us become part of their lives. It gives us that touch point again and it gives us a chance to talk with them around their birthdays and get them visiting the stores. So it's a win-win again. It's a win for the families because they're getting free stuff. It's a win for us because we're getting the engagement from them.
Speaker 1:One of the things we saw in the 2024 State of Customer Loyalty research paper was that 78% of brands had an interest in updating or enhancing their customer loyalty efforts. Yet with that change, that requires a focus on communicating some of the new program benefits, the offering, to the audience. Now how do you go about doing that with your program? New program rolled out sniffly different than it was before. How do you communicate some of that value out to your customers?
Speaker 2:Well, I mean it helps when it comes to the. Well, when it comes to the birthday program, that's fairly straightforward in terms of communicating it. We just put it everywhere that we can. I mean, the challenge, like you say, right now, is there's so much out there to read, whether it's online or just in your life You're walking down the street, the number of signs that you see people don't read anymore. It is very hard to get people to read the details, to differentiate, especially when you're a brand like Chuck E Cheese that people don't engage with all the time.
Speaker 2:But so, tactically, I think the way that we handle it is two things. One, we work by creating programs in ways that people expect, so that it's not counterintuitive in terms of people think that it ought to work one way, but it works. Another, we try to keep it as easy as possible, eliminate any friction, because people aren't going to read, they're not going to read the rules, they're not going to read the details. If it doesn't do what they expect, they're going to get frustrated and we don't want that, especially when we're talking to kids. I think the other way is we integrate this stuff into all of our communication at the fund center level, at our website, in our emails. I would say the same basic stuff that most Loyalty360 companies are already doing. So there's no, I don't think we have a magic bullet for it at this point, but you're right, it's something that we're very focused on.
Speaker 1:One of the things we've heard more about is this increased interest and push towards value. Many brands are looking at value from a number of different perspectives. You know how do initiatives like the membership program, the birthday club and affordable birthday packages work together to make Chuck E Cheese more accessible and appealing to your audience?
Speaker 2:I think there's two parts of that. I think, on the one hand, there's promoting the general experience, of course, reminding kids that we're here, reminding parents that we have these programs. We've tried to structure programs that are win-wins, that are because I mentioned it earlier before we want to create experiences that show we can offer, that we offer value and that we are affordable, and that people that, and we want to do that in everything that we have, whether it's our birthday programs or whether it's our loyalty program or whether it's our birthday club. Anything that we can do that creates a sense of value for them in terms of who we are, but that also captures the look. Everything we do is going to be captured in the context of we are a fun family brand where kids can have an amazing time, where a kid can be a kid.
Speaker 1:And how do you measure the success of these customer loyalty efforts and what KPIs are most important to you when evaluating the membership and birthday club programs?
Speaker 2:We're going to look at the obvious stuff first. We'll look at signups, of course, the rate at which people are signing up, but we'll also look at how often people are visiting, how much they spend when they visit basic stuff. And then, when you get into things like membership, you get into voluntary and involuntary churn. How many people are leaving the program on a regular basis? And we look and this is very important to us the guest satisfaction surveys. What very important to us the guest satisfaction surveys. What experiences are these people having when they come to our fund centers? Because in the end that's going to drive churn. That's going to matter in terms of whether or not they schedule a future birthday party with us, whether how long they stay in the program. It's a monthly program, so after the first year they can cancel the membership anytime they want to, and so we have to make sure that we're delivering a great experience for them every time they come.
Speaker 1:What are two or three things that you are most proud of when it comes to the new loyalty program and their impact on your guests.
Speaker 2:I love the fact that we've created something that's a win-win for everybody. Look, the more guests enjoy our program, the more affordable they find it to be. The more often that they come, the better we do as a company. I'm also proud of the way that we designed and built this program. Everything about this program was built internally by the Chuck E Cheese team, including from the strategy to the IT development to the marketing strategy. Everything about it was designed by our team at Chuck E Cheese and we did it really fast. We got this entire program launched in just several months. Both of these programs.
Speaker 1:Mark, now we have time for the wonderful quick-fire questions. We like to limit these responses to one word or a short phrase. And here we go. What word or short phrase do you use to inspire others? What do you think? What is your least favorite word that others use Can't? What excites you at work?
Speaker 2:Two things, I would say, solving puzzles, and, while I know it's going to sound corny, we get some amazing stories from our kids and from the guests who visit Chuck E Cheese. Those are just awesome to hear on a regular basis. What do you find tiresome?
Speaker 1:at home or at work.
Speaker 2:Tiresome is a hard word but I would say I find it daunting the level of detail that really any of these projects actually take.
Speaker 1:What book do you like to recommend to your colleagues?
Speaker 2:I would have to say probably the book that I recommend the most, that I look at the most, is the Experience Economy. That's by Joseph Pine, and James Gilmore.
Speaker 1:What profession other than the one you're currently in would you maybe like to attempt?
Speaker 2:You know, I'd always thought it'd be fun to be a lawyer.
Speaker 1:Is there something that you enjoy doing that you often don't get the time to do? Going on roller coasters? I miss that. Who inspired you to become the person you are today? My parents and my wife, elizabeth for sure. How do you want to be remembered by your friends and family?
Speaker 2:As someone, I guess who, in a small way made their lives better.
Speaker 1:Well, mark, thank you very much for taking the time to speak with us today. It is always a pleasure speaking with you. It's been a while since we last spoke. It was great to get an update on Chuck E Cheese and their new customer loyalty focused efforts. We appreciate it and look forward to hearing more from your team and Chuck E Cheese in 2025. Thank you, mark, it's great to talk with you today. Also, thank you to everyone for taking the time to listen today.
Speaker 1:Make sure you join us back every Thursday for a new edition of our Leaders in Customer Loyalty series. Until then, have a wonderful day.