New products pop up as pizza leaders seek a larger slice of the pie

Nation's Restaurant News, June 25, 2001 by Gregg Cebrzynski

"It's a dedicated space in the restaurant for younger children," says Jon Rice, vice president of marketing. "It's kind of secured, so kids can't wander out of it. There are age-appropriate activities for preschoolers. Because it's designed the way it is, it doesn't appeal to older kids, so there's less commotion and traffic."

The chain also introduced "Ticket Munchers" into its restaurants. Kids feed their tickets into a machine, which produces a printout showing how many prize certificates they've earned. That speeds up redemption at the prize counter, Rice explains.

Chuck E. Cheese's also broke new ground in advertising, becoming the first company to run a bilingual TV spot on Nickelodeon. Kids in 16 percent of households in the United States speak Spanish, Rice says, and "we wanted to be speaking to our market in their language."

Although the kids probably speak English, the advertising message becomes "more meaningful" to them when it's in Spanish, he says. The bilingual spots ran in the Houston and Los Angeles markets, both of which have large Hispanic populations.

Despite the advances in operations and marketing, Chuck E. Cheese's announced that earnings would fall short of expectations this year. The Associated Press reported that higher cheese prices forced executives of CEC Entertainment, the chain's parent company, to estimate earnings this year between $2.47 and $2.52 per share, falling short of analysts' expectations.

Wholesale prices for mozzarella cheese recently rose to $2.07 a pound, according to the report.

Amid all the new-product news of last year came the end of a familiar legal battle involving Pizza Hut and Papa John's. The U.S. Supreme Court declined to rule on an appellate court decision that allowed Papa John's to continue using its "Better Ingredients. Better Pizza" tag.

Pizza Hut sued its rival in 1998, alleging that it misled consumers with false advertising and challenging the veracity of the slogan as well as other marketing claims. The first decision, handed down in U.S. District Court, banned Papa John's from using the tag. An appellate court reversed the ruling.

Although the case had been in the courts for almost three years, it did not impede the rival chains from concentrating on business.

Like delivering a pizza into space, for example.

Pizza Hut snagged bragging rights as the first chain to deliver a specially made pizza to a space-bound customer, sending a pie aboard a payload to the International Space Station. That ended Pizza Hut's space program, which got off the ground in 2000 when the chain's logo, painted on the side of a Russian rocket, blasted off.