The parent company of Chuck E. Cheese and Peter Piper Pizza declared bankruptcy on Thursday, making it the largest and most well-known restaurant company casualty of the coronavirus pandemic.
CEC Entertainment listed assets and liabilities in the range of $1 billion and $10 billion. The company plans to use the bankruptcy to restructure its balance sheet and renegotiate with creditors, including landlords and lenders.
The company, which operates more than 600 Chuck E. Cheese locations and 120 Peter Piper restaurants, is owned by Apollo Capital Management, which has been in talks for weeks on a potential restructuring of the company. The restaurants will continue to operate during the bankruptcy process, though less than a third of the company's restaurants have reopened.
“The Chapter 11 process will allow us to strengthen our financial structure as we recover from what has undoubtedly been the most challenging event in our company’s history,” Dave McKillips, CEC’s CEO, said in a statement.
The chains saw sales plunge in March when the coronavirus forced states around the country to shut down dining rooms.
Given its heavy reliance on dine-in customers, particularly games-playing kids and families holding birthday parties, Chuck E. Cheese has had particular difficulty with the pandemic and has been seen as having a long road to recovery.
CEC has nearly $1 billion in debt, a legacy of Apollo’s 2014 buyout of the company. In recent years the private equity firm has been looking to exit its investment in the company. It was considering an initial public offering in 2017 and last year had a reverse merger deal with Leo Holdings that would have taken the company public.
That reverse merger fell through.
CEC’s heavy debt load has left it little room for error as those sales and earnings plunged beginning in March.
The company hired advisors in May, and earlier this month gave retention bonuses to key executives, including McKillips and President Roger Cardinale.
Several restaurant companies have filed for bankruptcy as a result of the pandemic, including the owner of Bravo Cucina Italiana and Brio Tuscan Grille, as well as Souplantation and Sweet Tomatoes.
More bankruptcy filings are expected over the coming months as leases and loan payments come due and private equity firms decide whether to reinvest in their holdings.
UPDATE: This story has been updated to include comment from CEC’s CEO.
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