The parent company of Chuck E. Cheese has spent $230 million renovating its stores.
Source: CEC Entertainment
Four years after emerging from bankruptcy, Chuck E. Cheese is making a comeback, thanks to a dramatic revamp that introduces its games and pizza to a new generation.
In June 2020, just as some states were beginning to lift pandemic lockdowns, Chuck E. Cheese’s parent company CEC Entertainment Filing for Chapter 11 Bankruptcy protection. Months later, the company emerged from bankruptcy under new leadership and shed about $705 million in debt.
Even as the coronavirus pandemic recedes, the company faces another existential threat: pleasing children and their paying parents in the age of iPads and smartphones. The company has spent more than $300 million in recent years to address this challenge, and the investment is starting to pay off.
CEC Entertainment, which also includes Pasqually’s Pizza & Wings and Peter Piper Pizza, has reported eight consecutive months of same-store sales growth and is no longer in debt, Chief Executive Dave McKillips said. The company is not publicly traded but discloses its financial results to bond investors.
CEC Entertainment’s annual revenue will grow from US$912 million in 2019 to approximately US$1.2 billion in 2023, According to Reuters. This is because Chuck E. Cheese has fewer locations. The chain now has 470 stores in the United States, down from 537 in 2019.
Sustaining growth is not easy. Like all restaurants, the chain must win over consumers who are eating out less as costs rise. Chuck E. Cheese also has to capture the attention of kids and parents in a fragmented media market.
Goodbye, animatronics
Since Atari founder Nolan Bushnell opened the first store in San Jose in 1977, Chuck E. Cheese has become a childhood staple for many, known for its pizza, birthday parties and animatronic mouse mascot and band. .
After emerging from bankruptcy, Chuck E. Cheese and its stores were remodeled to give them a new look today. Gone are the animatronics, SkyTube tunnels and physical tickets of yesteryear. Instead, trampolines, mobile apps, and floor-to-ceiling JumboTrons have replaced them.
The changes come from former Six Flags executive Mike Killips. He joined the company in January 2020, just months before the lockdown would temporarily close all locations. By April 2021, the company had raised $650 million in bonds and used it to fund its restaurants.
“The company has been starved of capital for years. It hasn’t been transformed. It hasn’t been touched,” he said.
Apollo Global Management took Chuck E. Cheese private in 2014. But the deal was canceled without any explanation.
New cash prompts candid look at Chuck E. Cheese model — including its iconic animatronic bandstarring Charles Entertainment Cheese and friends.
“We took away the animatronics. That’s a big debate for a lot of traditional bands, but kids consume entertainment in a different way, you know, growing up with screens and little entertainment that’s constantly changing,” Mai said. Killips said.
The chain has also redesigned its menu and upgraded to freshly made pizzas. Kidz Bop becomes official music partner. Other kid-friendly brands like Paw Patrol, Marvel and Nickelodeon have also become partners for its games.
Then there’s the trampoline.
“We saw a clear opportunity … to be aggressive,” McKillips said. Growth in the family entertainment category comes primarily from activity-based businesses such as trampoline parks and climbing walls, he added.
The company first tested trampolines in Brooklyn, then in Miami, St. Louis and Orlando. As of December, 450 Chuck E. Cheese stores were equipped with children’s bouncers. Unlike the SkyTubes or ball pits of the past, patrons must pay an additional fee to use the trampolines. (The ball pit disappeared from the Chuck E. Cheese store in 2011, but the SkyTubes lasted about another decade.)
After the company spent $230 million to remodel Chuck E. Cheese stores, McKillips now says the process is complete.
“We need to fix the product. The product has been fixed,” he said.
subscribe consumer
Another focus is reintroducing the brand to customers, especially adults who only know the Chuck E. Cheese they ate as children.
“You come in around three, leave around eight or nine, and don’t come back for 15 years. We have to go talk to a whole new generation of kids, and during COVID we were off the air. We have to build this,” McGee Lipps said.
For example, Chuck E. Cheese’s birthday business, one of the company’s best marketing tools, struggled after the pandemic hit. Today, it’s back to pre-pandemic levels.
Last year, Chuck E. Cheese began seeing a drop in consumer spending at many restaurants, from McDonald’s to Outback Steakhouse, and the chain had to figure out a way to attract value-oriented customers.
This summer, Chuck E. Cheese launched a two-month tiered subscription plan that offers unlimited access and discounts on food, drinks and games. The member encouraged families to visit more frequently, rather than the usual two or three times a year. Subscriptions start at $7.99 per month, with additional plans priced at $11.99 and $29.99, promising deeper discounts and more games.
“In 2023, we sold 79,000 passes. This year, we sold nearly 400,000 passes during the same period.” McKillips said of 2024. “This shows that if consumers get better, they will seek and consume value. They will get a return on their spending.
This fall, the company followed the success of the pass by launching a 12-month membership and has sold more than 100,000 passes.
Entertainment empire?
McKillips’ biggest dreams for the chain and its mascot lay outside the four walls of its restaurants.
“Orlando has another cute mouse that’s doing great, so I look at us the same way, but we’re just getting started now,” McKillips said.
In addition to 30 licensing deals for merchandise ranging from frozen pizza to apparel, McKillips said Chuck E. Cheese is also exploring different entertainment partnerships to feature its mouse mascot.
That’s not all. The company has looked into the possibility of hosting a game show. it has a Prolific YouTube channelthe film focuses on its characters rather than the pizza or the game.
Additionally, Chuck E. Cheese himself has six albums on streaming platforms, and his band also performs live, choreographed concerts.
“My dream is to make a feature film,” McKillips said.
