It turns out the answer to Cicis’ sales challenges was there all along.
“Video games are a big part of our deal now,” Jeff Hetsel, Cicis’ president, said on a recent episode of the Restaurant Business podcast A Deeper Dive. “It’s kind of a game changer.”
The pizza buffet chain had struggled for years. Those struggles took on new meaning in 2020, when the 300-unit concept ended up in bankruptcy.
Yet, with new owners and a model that adds a distinct “eatertainment” element to the buffet concept, Cicis is doing just fine. System sales rose 14.5% last year. Same-store sales are up strongly in 2022. “I think we’re 30% positive over last year,” Hetsel said.
The company, which is about half the size it was a decade ago, is now looking at adding locations again. “We’ve got a booth and we’re going to franchise shows and starting to get some traction on selling franchises,” he said.
And as Hetsel said, video games play a big role.
More than three-quarters of Cicis franchisees own their video games, which can generate profitable revenue.
Cicis is a low-cost pizza buffet concept. The company had a video game room, but it was typically small, with eight games, and franchise operators didn’t even own those games. As a result, operators received only a tiny cut of the revenue from the games. And there was no real incentive to bring in new games. The company simply did not focus on that.
Meanwhile, Cicis as a business was struggling. Operators gradually closed half the chain’s locations as its unit volumes stagnated. More customers ordered their pizzas through delivery or carryout, while buffets fell out of favor. The pandemic made matters much worse, and with a substantial amount of debt the chain declared bankruptcy in 2020.
The company was sold to a group including SSCP Management, an Applebee’s operator and owner of Roy’s, and Anand Gala, the owner of Mooyah Burgers. That group acquired the debt and converted it to equity out of bankruptcy, and they argued that the franchisees of the brand were in better shape than the business itself.
“I’ve got unbelievable partners,” Hetsel said. “We have no debt. We own this thing outright. We don’t deal with the [private equity] group. It’s just us making good decisions.”
Hetsel is clearly happy not being part of a private equity-owned restaurant chain. He noted that in 2017, the owners tried to convince operators to go with a national amusement group. “I believe that was one of the worst decisions in the history of Cicis,” he said.
He added that the company made other decisions during that period that “chipped away at the profits of the company.”
“One month the initiative was … to save labor by putting self-busing stations in all the stores, and we’re going to go to all paper products,” Hetsel said. “It sounds good. It sounds interesting. But it drove paper up 15% and you still have to have some body clean the tables, so you don’t gain anything.”
Rooms vary in size from small groups to large gaming rooms where tickets can be redeemed for prizes.
Since the end of the pandemic, buffet chains have found some new life as consumers shifted back to dining inside of restaurants. And pizza buffet chains have had a particularly good run. The Iowa-based chain Pizza Ranch thrived last year. Pizza Inn, meanwhile, added buffet locations last year for the first time in a quarter century.
Meanwhile, eatertainment concepts have thrived in part for the same reason. While consumers are demanding more convenience, they also enjoy a night out.
Cicis is bridging the two. Video games are a natural extension for the chain, given its core customer base featuring families with children. And it’s a market that has long been established, thanks to companies such as Chuck E. Cheese.
Much of the video game idea came from a large Cicis franchisee who was generating strong results through expanded arcades that they owned. With operators simply owning the games outright, they take more of the revenue.
Before, video games might have amounted to 1% of revenue. These days it can run from 10% to 20% of a restaurant’s revenue, which is not a small amount for an operator of a restaurant averaging $1 million per year. More than three-quarters of the company’s franchisees now own and operate their own video games.
There are three different models franchisees can use, including a small game room, a larger one with card readers and a third version that awards customers tickets they can redeem for prizes.
“If you do it right and you really pay attention to it, whatever you spend, the return on that is somewhere between 10 and 13 months,” Hetsel said.
Games, as the saying goes, don’t call in sick. Once they’re paid off they are remarkably profitable, which is why companies like Dave & Buster’s historically focused more of their attention on that side of the business. “That game room is way more profitable than any kind of food you’re gonna sell because there’s very little labor in it,” Hetsel said. “It’s an unbelievable part of our business.”