By Eric Jackson
The restaurant sector comprises all kinds of niche flavors and price ranges. The chain I like most from a differentiation perspective is CEC Entertainment (CEC - commentary - Trade Now), the parent of the kids' chain Chuck E. Cheese.
Parents are constantly scratching their heads to understand how to entertain their kids. After a few trips to a stuffy restaurant with a couple of young kids who end up crawling around the floor under your table -- or, worse, running around the restaurant -- earning you dirty looks from other patrons, you won't be likely to return with the clan anytime soon. Likewise, when you find a comfortable place where the kids are happy, the parents will be happy and will gladly spend their money.
Kids love Chuck E. Cheese. It's like going to a state fair indoors ... and they serve pizza. What's not to like? You run around and you spend money on arcade-style games with the hopes of collecting enough tickets to get a prize at the end. (Sorry parents, just like at the fair, you'll need to spend hundreds of dollars to get even a medium-sized toy.) The food's basic -- pizza and wings -- but sufficient to satisfy the kids while all the other stimulation is going on.