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CEC Entertainment Inc. Q2 2008 Earnings Call Transcript

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2008-07-22 16:00:21.0

Tags: CEC Entertainment Inc.

Question-and-Answer Session

Operator

Thank you, sir. (Operator Instructions) Our first question is from the line of Robert Derrington with Morgan Keegan. Please go ahead sir.

Robert Derrington - Morgan Keegan

Thank you. Dick, Mike, Chris, phenomenal numbers. Congratulations. What I'm curious about, and I'm not sure who to direct this to. When we look at the sales trends, obviously these look like the strongest quarterly results since I think first quarter of 2001. Can you give us some color on why it is that the trend is so strong now? Obviously you laid out a number of things. Dick, it seems as though the business has responded to these sales initiatives unlike anything I've seen in almost a decade.

Dick Frank

Bob, I think we would agree with that. What's really encouraging to us is all of the sales initiatives seem to be working and working in concert with one another. The other thing that I think is also at play is, as you will recall, back in the middle of 2006, we changed our strategic direction a little bit when we slowed down our new unit growth to really focus on the core. I think that, since that time, our operating people have really been able to focus on their specific stores and areas of responsibility. We haven't had the movement from store to store that is required when you are growing your store base 30 stores to 35 stores a year.

So, I think that our operators have just done a great job. I think people are well entrenched in their locations and focused on their responsibility, and I think it's all just coming together for us. And we see that in the momentum that we have today in our same-store sales performance.

Robert Derrington - Morgan Keegan

Dick, could you kind of break down the 5.7 for me for a minute? A piece of that is, I think there's a little bit of menu pricing that you took in the first quarter. Plus, you also had platters, plus you also had obviously birthday sales increases. Are any of those especially working beyond the menu pricing?

Dick Frank

I think, too, as Mike said in his comments, I think we believe that all of them are working. The menu pricing, on an annualized basis or in the quarter, is running about 1.8%.

Robert Derrington - Morgan Keegan

Okay.

Dick Frank

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