Stung in recent months by a decline in traffic, Chuck E. Cheese is trying some new tactics to increase frequency of visits. They are testing a new value meal concept in 151 stores that combines food, drinks and game tokens. They are also planning to increase the number of redemption tickets dispensed per game and begin pricing all arcade games at one token. As anyone knowledgeable in the family entertainment industry knows, Chuck E. Cheese's game payouts have historically been far below what the industry has found is required to maximize game revenues. As counterintuitive as it may be, increasing the payout increases profits, as there is a greater value perception on the part of the customer and they play more. It all boils down to the classic gameroom formula of getting the perceived entertainment value plus the perceived prize value to exceed the cost of play.

Of course, Chuck E. Cheese's problems may be due to another problem - parental burnout - parents can only take the rodent so many times, no matter how much the kids love it. In next month's eNewsletter we will discuss the marketing challenge of pleasing both parents and kids as the dual decision makers.