Chuck E. Cheese
|NASDAQ: CHKY (1981–1984)|
|Industry||Family restaurant, fast food|
|Predecessor||ShowBiz Pizza Place|
|Founded||May 17, 1977|
San Jose, California, U.S.
Number of locations
|Gene Landrum (first president and COO)|
|Brands||Pasqually's Pizza & Wings|
|Owner||Apollo Global Management (2014—2020)|
Monarch Alternative Capital (2020—present)
Chuck E. Cheese is a chain of American family entertainment center restaurants based in Irving, Texas. The restaurants serve pizza and other menu items, and feature arcade games, amusement rides, and animatronic displays as a focus of family entertainment. The chain's name is taken from its main character and mascot, Chuck E. Cheese.
The first location opened in San Jose, California, as Chuck E. Cheese's Pizza Time Theatre, on May 17, 1977. The concept was created by Atari co-founder Nolan Bushnell, a pioneer of the video game industry. Pizza Time Theatre was the first family restaurant to integrate food and an arcade with animated entertainment. After filing for bankruptcy in March 1984, the chain was acquired by Brock Hotel Corp., parent company of competitor ShowBiz Pizza Place in May 1985, forming ShowBiz Pizza Time, Inc. In 1990, the company began unifying the two brands, renaming every location Chuck E. Cheese's Pizza. This process is also known as Concept Unification.  In 1994 the name was shortened to Chuck E. Cheese's, and ShowBiz Pizza Time, Inc. became CEC Entertainment, Inc. in 1998. In 2019, the restaurants' name was further shortened to Chuck E. Cheese. As of June 2020,[update] CEC Entertainment owned 541 Chuck E. Cheese venues in 47 U.S. states, four Canadian provinces, Guam and Puerto Rico.
The COVID-19 pandemic put significant financial strain on the company, and CEC Entertainment filed a voluntary bankruptcy petition under Chapter 11 in the Southern District of Texas on June 25, 2020. The announcement was coordinated with 47 states and 16 countries including the United States, Canada, Mexico, Chile, Saudi Arabia, United Arab Emirates and India.
Chuck E. Cheese's Pizza Time Theatre was founded by Atari founder Nolan Bushnell, who sought to expand video-game arcades beyond adult locations like pool halls to family friendly venues. His experience in the amusement park industry, and his fondness for Disneyland's Country Bear Jamboree, influenced his concept for Pizza Time Theatre. He has said, "It was my pet project ... I chose pizza because of the wait time and the build schedule—very few components, and not too many ways to screw it up." When his first animatronic show was being assembled, Bushnell learned the costume he'd bought for his main character, a coyote, was actually a rodent, prompting him to suggest changing the name from "Coyote Pizza" to "Rick Rat's Pizza". His marketing team believed a rat would not be appropriate to customers and proposed "Chuck E. Cheese" instead.
The first Chuck E. Cheese's Pizza Time Theater opened in San Jose, California, in 1977. In 1978, when Atari's then-corporate parent Warner Communications refused to open additional locations, Bushnell purchased the rights to the concept and characters from Warner for $500,000. Gene Landrum then resigned from Atari and was made the restaurants' president and chief operating officer. By late 1979, there were seven PTT locations, all in California. Its animatronics were produced fully in-house by PTT employees.
ShowBiz Pizza Place
To expand beyond California and the west coast, Bushnell began to franchise, resulting in a co-development agreement between himself and Robert Brock of Topeka Inn Management in June 1979. The agreement handed Brock exclusive franchising rights for opening Pizza Time Theatres in sixteen states across the Southern and Midwestern United States, while also forming a company subdivision, "Pizza Show Biz", to develop the Pizza Time Theatres.
Late in 1979, Brock became aware of Aaron Fechter of Creative Engineering, Inc. and his work in animatronics. In November 1979, he scouted Fechter's business and concluded that Creative Engineering's animatronics would be too strong a competition for Bushnell's work. Brock therefore requested that Bushnell release him from their co-development agreement, wishing to develop with Fechter instead. In December 1979, Brock and Fechter formed ShowBiz Pizza Place Inc., and Brock gave notice to sever his development relationship with Bushnell. ShowBiz Pizza Place was conceptually identical to Pizza Time Theatre in all aspects except for animation, which would be provided by Creative Engineering. ShowBiz Pizza Place opened its first location on March 3, 1980, in Kansas City, Missouri.
Upon the opening of ShowBiz Pizza Place, Bushnell sued Brock and Topeka Inn Management over breach of contract. Brock immediately issued a counter-suit against Bushnell, citing misrepresentation. The court case began in March 1980, eventually settling out of court with Showbiz agreeing to pay Pizza Time Theatre a portion of its profits over the following decade. During this period, Topeka Inn Management also changed its name to Brock Hotel Corporation and moved its headquarters to Irving, Texas. Both restaurants experienced increased success as the video game industry became more robust, and, to maintain competition, both franchises continually modified and diversified their animatronic shows.
Mergers and restructuring
In 1981, Pizza Time Theatre went public; however, the evolving video game industry and the video game crash of 1983 resulted in significant losses for Pizza Time Theatre, which lost $15 million in 1983. By early 1984, Bushnell's debts were insurmountable, resulting in the filing of Chapter 11 bankruptcy for Pizza Time Theatre Inc. on March 28, 1984. Brock then bought the foundering company, finalizing the purchase in May 1985 and merging the two restaurant companies into Showbiz Pizza Time Inc.
After the merge, both restaurant chains continued operating under their respective titles, while major financial restructuring had begun. During this period, Creative Engineering began to sever ties with ShowBiz Pizza Time (officially splitting in September 1990), resulting in the unification of the two brands. By 1992, all restaurants assumed the name of Chuck E. Cheese's Pizza. The name was then shortened to Chuck E. Cheese's by March 1995 after a redesigned concept. In 1998, Showbiz Pizza Time renamed itself CEC Entertainment, Inc. to reflect the remaining chain brand. CEC Entertainment has since acquired additional family restaurant properties, including 13 locations of the now-defunct Discovery Zone in 1999, and all locations of Peter Piper Pizza in October 2014. Peter Piper Pizza still operates under that name.
In the early 1980s, the restaurant franchise debuted in Australia under the name Charlie Cheese's Pizza Playhouse. The name change had to do with the common meaning of the word "chuck", which in Australia is a reference to the phrase "to throw up". Consecutively, Pizza Time Theatre, Inc. also opened at least one restaurant in Hong Kong and Singapore, which both closed shortly thereafter as a result of the initial company's 1984 bankruptcy.
As of June 2020, Chuck E. Cheese is operating 612 corporate and franchise stores as well as 122 Peter Piper Pizza restaurants. They are located in 47 states across the United States and in 16 countries and territories around the world.
Buyout and modern redesign
By 2012, CEC was struggling with decreasing revenue. They ran a rebranding campaign, changing the rat mascot into a rock star guitar-playing mouse. In-store restaurant sales continued to decline through 2013 but merchandising and box office revenue increased.
In February 2014, Apollo Global Management acquired CEC Entertainment, Inc. for $54 per share, or about $950 million. In October 2014, under Apollo Global Management, CEC Entertainment announced that they would purchase their Phoenix-based competitor, Peter Piper Pizza from ACON Investments.
In August 2017, the company began to pilot a new design concept at seven remodeled locations (three in Kansas City, three in San Antonio, one in Selma, Texas), branded as Chuck E. Cheese Pizzeria & Games. These locations feature more upscale decor with a "muted" interior color scheme, an open kitchen, the "Play Pass" card system to replace arcade tokens, and the animatronic stage show replaced by a dance floor area. These changes, along with expansions to food offerings, were intended to help the chain be more appealing to adults and encourage family dining as opposed to primarily hosting parties.
In 2019, the corporation announced it would go public on the New York Stock Exchange through a shell company, Leo Holdings Corporation, in which Apollo will still own 51% of. Bloomberg also reported that after going public, Chuck E. Cheese would no longer have animatronic animals as part of the entertainment. The proposed merger between CEC Entertainment and LEO Holdings Corporation has been terminated as of July 29, 2019.
The COVID-19 pandemic has been financially damaging to the parent company, and with an estimated $1–2 billion in debt, the possibility exists of all CEC properties being forced to close if bankruptcy refinancing fails. CEC Entertainment solicited $200 million in loans to finance a restructuring under bankruptcy protection. They also filed a voluntary petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas on June 25, 2020.
Since the company's inception, one of the primary draws for the business has been its video arcade offering inside restaurants. Within the arcade, customers can play coin-operated video games or redemption games, the latter of which involves games of skill that reward players in the form of tickets based on score. Tickets can be redeemed later for merchandise, such as candy and toys.
The coin-op games originally accepted brass tokens issued by the company, stamped with various logos and branding that evolved over time. The company experimented with a card access method as a replacement for tokens, which allowed customers to load credits onto a card that could then be swiped for access at arcade games and refilled later. It was tested under different names including "Chuck E.'s Super Discount Card" and "Chuck E. Token Card".
Characters and animatronics
Another primary draw for the centers since their beginning through to the mid-2010s has been its animatronic shows. There have historically been several different styles of animatronic shows in use within the company, details of which would vary depending on when the location opened, whether it was renovated, available room for animatronic stages, and other factors. Over the years, these animatronics have often been supplemented by (and in recent years been completely replaced by) costumed characters.
When the first location opened in 1977, the animatronic characters were featured as busts in framed portraits hanging on the walls of the main dining area. The original show featured Crusty The Cat (the first character to face retirement as he was soon replaced with Mr. Munch in 1978), Pasqually the singing chef, Jasper T. Jowls, the Warblettes, and the main focus of the show, Chuck E. Cheese. By 1979, many restaurants had also added "Cabaret" shows in separate rooms of each restaurant. One of the early Cabaret characters was Dolli Dimples, a hippopotamus who played the piano and sang in the blues/jazz style of performer Pearl Bailey. The in-house control system consisted of a 6502-based controller in a card cage with various driver boards was called "Cyberamics".
While Aaron Fechter separately produced Rock-afire Explosion animatronics for ShowBiz Pizza through the early 1980s, Bushnell and Pizza Time Theatre continued work on characters for their portrait format and newer balcony performance stage shows under the umbrella of the Pizza Time Players. In addition, more Cabaret shows modeled after actual music artists were released, such as the Beagles (The Beatles), The Beach Bowsers (The Beach Boys), and The King (Elvis). Many of these used tracks by the original music artists. Development on Cabaret concepts slowed greatly after Pizza Time Theatre Inc.'s bankruptcy in 1984 and its purchase by ShowBiz a year later. From 1985 to 1990, the merged company kept their brands (and their respective animatronics) mostly separate; Bushnell's Cabaret and balcony characters entertained at Pizza Time Theatre, and the Rock-afire Explosion continued at ShowBiz.
After Fechter refused to sign over the rights to the Rock-afire Explosion to Showbiz Pizza Time, Inc., "Concept Unification" was undertaken beginning in September 1990 and continuing through 1992, to eliminate Fechter's characters from ShowBiz locations. The animatronics used for ShowBiz's Rock-afire Explosion band were redressed as "Munch's Make Believe Band", with Chuck E., Jasper, Helen Henny, Munch, and Pasqually costumes replacing Fechter's Rock-afire characters. In the mid-1990s, the character Chuck E. Cheese began to see significant design changes. The vest (or suit), and derby hat he'd worn from the beginning was ditched for a baseball cap, casual shirt, and optional sneakers in an attempt to appeal to a younger audience.
Beginning in 1998, the animatronics show installed into new stores, referred to as "Studio C", consisted of a single animated Chuck E. Cheese character created by Garner Holt alongside large television monitors, lighting effects, and interactive elements. The other characters appear as puppets on the TV screens. The control system dubbed "Cyberstar" was re-designed from the ground up and produced by Dave Philipsen. The last animatronic stage mass-produced for Chuck E. Cheese, "Circles of Light", premiered in early 2012.
Elimination of animatronics
In July 2012, the longstanding rat mascot was rebranded, changing to a slimmer rock star mouse who plays electric guitar. Voice actor Duncan Brannan, who for 19 years had characterized Chuck E. Cheese as a wise-cracking rat from New Jersey, was replaced with Jaret Reddick, the frontman and guitarist for the pop punk band Bowling for Soup.
By 2015, the "Chuck E. Live" stage, which featured no animatronics at all, a modernized dance floor, and performances only with costumed characters, had been created. In 2017, the chain announced that animatronic shows would be removed entirely in favor of this design in seven pilot locations. After the pilot locations showed promise, retirement of animatronics at Chuck E. Cheese locations accelerated and continued through 2019, by which time 80 of its stores were expected to be retrofitted to the new design. Live costumed character performances, particularly of the Chuck E. Cheese character himself, are still widely used today even in locations where animatronics have been eliminated.
Pizza is the main focus of the restaurant portion of the business, but the menu features other items as well including cold-cut sandwiches, chicken wings, salad bar access, and desserts. In addition, some Chuck E. Cheese locations offer alcoholic beverages.
In March 2020, during the COVID-19 pandemic, the restaurant began selling pizza, wings, desserts and more through food delivery services under the virtual brand Pasqually's Pizza & Wings. The Pasqually name comes from a member of Chuck E. Cheese's animatronic band. While food sold under this brand comes from the same brick-and-mortar kitchens as Chuck E. Cheese, the company claims to use different ingredients and recipes that cater to a more mature audience. Practically all of the Chuck E. Cheese stores in the United States are selling and delivering food under this virtual brand.
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