Why Chuck E. Cheese’s success hinges on tactical location planning

The brand could potentially target city fringes and suburbs.

When it comes to Chuck E. Cheese, location, location, location is paramount to the brand’s success.

In early January, the American family entertainment restaurant Chuck E. Cheese announced that it partnered with Royale Hospitality Group to launch the brand in Australia.

Royale Hospitality originated in Perth, Australia, with its namesake high-energy restaurant and entertainment concept, Planet Royale. The company proudly serves as the franchisee for renowned Australian brands like Outback Jack's and Milky Lane.

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Chuck E. Cheese is a chain of family entertainment centres and restaurants founded by Atari co-founder Nolan Bushnell. Its concept features entertainment like arcade games, amusement rides, and musical shows whilst serving food. The brand has more than 600 outlets across the US, the Middle East, and Europe.

In an interview with Taylor Fielding, managing director of TFM Digital, he said the brand could face two different types of competitors.

TFM Digital is a full-service digital media and marketing agency that has worked with brands such as the bakery cafe DEGANI, Dude & Duke Beerhall, and Anytime Fitness.

“In terms of food itself, it will be the main QSRs like McDonald’s and Hungry Jack’s. But for Chuck E. Cheese, I think they will try to sell the experience and the event so they may go head to head against Strike Bowling or Timezone, anything that offers a similar gaming element for kids and families,” Taylor said.

Taylor has experience in providing marketing strategy, media planning and buying to SMEs, especially in the franchise and multi-location sector, working with clients across fitness, health & wellness, retail, and hospitality.

In location hunting, Taylor said there are two sides. First, Chuck E. Cheese must identify where high-value franchisees live and where best to open their restaurants.

“For example, we could find out where the highest expenditure on QSR restaurants is or highly dense areas for parents and kids, and they should go to those locations. Yes, it will be competitive but it will be the best strategy for them to grow as a new brand in the market,” Taylor said.

According to TFM Digital’s research called the Future Franchisee Report, around 115,000 Australians are making up what it calls High-Value Franchise Prospects (HVFP). HVFPs are defined as those that have $100k or more in their bank accounts, know about investing and are ready to invest.

Taylor said 80% of  HVFPs live in capital cities.

He believes that for a brand like Chuck E. Cheese, Western Australia is an obvious choice of location.
Taylor said in reports he read Chuck E Cheese may be looking at Perth to open its first location, especially with the Royale Hospitality group located in Western Australia. He adds that this makes sense given that they identified Perth South East & South West to be in their top 25 list of SA4s where HVFPs live.

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“But it will be very different if they’re focusing on a market like Sydney or Melbourne. Each market has different nuances. They need to understand each market’s demographics and how the city runs as well. You don’t want to be 30 locations in and then realise the locations are probably not in the right area,” Taylor said.

For locations, Chuck E. Cheese will likely be targeting areas in the suburbs.

“Chuck E. Cheese needs a big space. They won’t find that in inner cities. Again, the best strategy is identifying where other QSR high-expenditure locations are like shopping centres,” Taylor said.

Even before Chuck E. Cheese announced entry in Australia, Dave & Buster’s, a family entertainment restaurant concept similar to Chuck E. Cheese, announced plans last year to open five restaurants. However, details of where the first restaurant will open remain under wraps.

Taylor said there are two things Chuck E. Cheese should keep an eye on to remain competitive against more established players. One is the need to offer a great customer experience, ensuring repeat business and driving positive sentiment.

“The second thing is marketing. They don’t have to compete on the same level as McDonald’s or KFC but they need to be tactical. If you look at how GYG has been tactical in the last couple of years with their app, their loyalty system, and things like free burrito days. They need to play in that tactical space,” said Taylor.