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What will Chuck E. Cheese look like post-bankruptcy?

Expect the food-and-games chain to be more focused on tech and at-home experiences as it navigates the most challenging period in its history, CEC Entertainment’s CEO says.
Photograph: Shutterstock

A generation ago, Chuck E. Cheese was the place with the ball pit and the animatronic band and the lukewarm pizza consumed by children so they could keep playing games.

Today, the ball pit is gone and Chuck E. Cheese himself is sidelined from walking the floor due to COVID. Even the company’s pizza recipe has been reimagined to reach a wider audience.

The pandemic has sped up the pace of change for the eatertainment brand and its parent company CEC Entertainment, which in June became the first major chain to declare bankruptcy amid the coronavirus crisis, the company’s CEO David McKillips said in an interview with Restaurant Business Monday.

As the Irving, Texas-based company, which also operates Peter Piper Pizza and delivery-only Pasqually’s Pizza, navigates bankruptcy proceedings, it is re-envisioning the future of its 43-year-old food-and-games concept Chuck E. Cheese.

“Everything we’re doing, we want to have in-store, at home and online,” McKillips said.

Case in point: Parties.

Birthday parties have historically made up 15% of Chuck E. Cheese’s revenue, McKillips said. Due to capacity restrictions, the number of birthday parties that can be held at each location per day is greatly reduced.

“We are significantly down in our birthday parties right now, in the comp basis,” he said. “We’ve pivoted to delivery birthdays at home.”

In addition to at-home birthday packages with games and online components, the chain has added half-birthday party options and is in the midst of promoting Halloween party packages that feature a partnership with kiddie entertainment mainstay Kidz Bop.

At-home offerings include goodie bags, tickets for future game play, branded tableware and photo backdrops.

McKillips declined to provide specific sales metrics but said the off-premise parties are “very good” for Chuck E. Cheese.

“We’re seeing a lot of repeat orders,” he said.

Long-term, CEC Entertainment is mulling ways to capitalize on Chuck E. Cheese and his character friends in other socially distanced ways, possibly pursuing merchandising deals or even animated features, McKillips said.

“He’s one of the preeminent intellectual properties in the world that hasn’t had the opportunity yet for entertainment licensing and merchandising programs,” he said. “It’s not in the near future; it’s in the long-range plan. I get so excited thinking about it.”

Given the realities of the pandemic, it’s little wonder why Chuck E. Cheese is continuing to pursue off-premise business channels. The brand currently has 336 locations open for dine-in, carryout and game play, he said. About 450 units total are operating as carryout and delivery-only stores, he said, with all of those offering menu items from CEC Entertainment’s virtual Pasqually’s Pizza concept.

Chuck E. Cheese has permanently closed 47 stores during the pandemic, he said.

“We’re not in the business of closing locations, so we’re actively working with our landlords and leaseholders to keep our portfolio of stores open,” he said.

Pre-pandemic, Chuck E. Cheese focused almost entirely on its on-premise  business. But it has quickly shifted gears, McKillips said.

“This company was not set up for an off-premise strategy,” he said. “We quickly pivoted. We signed agreements with all the major delivery companies to make sure we have a presence there. We launched a value meal for carryout.”

In-store, paper tickets have been replaced by e-tickets systemwide to reduce touch points for consumers. More technology is expected to be introduced, too.

“Eventually, you’ll be able to order directly from your phone, utilizing QR codes,” he said.

McKillips joined the struggling company just seven months ago and has visited more than 200 stores in recent months, talking about the technological changes and the Chapter 11 proceedings.

“Communication continues to be the absolute most important thing we do,” he said. “It’s been quite a run.”

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