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The Company is engaged in the family restaurant/entertainment center business.
For reference point and to allow for comments by others. As of the end of March, 2013.ROE 28.42%Trailing PE 15.34PB 4.10Div yield 2.50%
I like to take my kids to the place just to get out sometimes, but the food isn't all that great. Unless they can up with something new in their resturants, it gets old. I won't say they'll go bankrupt, but they won't Outperform.
CEC Entertainment develops, operates, and franchises family restaurant/entertainment centers under the name "Chuck E. Cheese's." The company operates 477 owned-units and 45 franchised units located in 48 U.S. states and 4 countries. The centers offer a fun, family-oriented atmosphere featuring musical and comic entertainment by life-size computer-controlled robotic characters, family oriented arcade games, a toddler play area, and token-operated rides and arcade-style activities. Menu offerings include pizza, sandwiches, a salad bar, appetizers and desserts. The management's plan for slower unit growth, increased ongoing remodels and more focused operations currently appears to be working as the company reported positive growth in recent quarter. The company is reducing its new store openings, mainly to focus on higher sales and return on investment from its existing stores. Beginning in 2007, the company plans to open approximately 8 to 12 new stores per year in densely populated areas and in its best performing geographic markets. The company is also paying attention on increasing the value to its guests with improved offers and increased distribution of coupons, cross-promotions and direct e-marketing.The above strategy will help the company to reduce its capital expenditure which will lead to increased free cash flows, which will help them reward the shareholders by share repurchases. The company’s strong business model with EBITDA margins averaging 25% plus over the past five years and an increased focus on remodels should drive same store sales improvement over the next few quarters. Looking at the positive trends shown by the company in the recent quarters it is expected that it will outperform in the future.
CEC caters to kids, which means that their customer base can be finicky. But as long as they remain sensitive to what makes youngsters happy, there will always be those in the target age group who want t heir birthday parties there. Maintaining their appeal is critical; finding ways to hang onto their aging clientelle longer will be a big bonus.
Concentrating on existig stores before opening up new ones.
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