For years, when money went missing from a Chuck E. Cheese cash register, if would set off a long and winding investigation for the company’s loss prevention team.
They’d pull footage from security cameras, upload and review it, then interview employees in an effort to pinpoint what happened. Cases could take days or weeks to resolve.
That is, until the food-and-games chain installed a camera system that uses AI to flag potential fraud as soon as it happens, giving loss prevention a head start.
“We're getting this data almost instantaneously,” said Nathan Hunstable, CIO of parent company CEC Entertainment, in an interview. “Now, when you start handling some of these, even if it's just interviewing or questions or creating policies, it's fresh.”
It's one of the many ways restaurants are using cameras and AI to monitor and analyze their business in real time.
The 600-unit Chuck E. Cheese began looking to upgrade its “archaic” security system back in 2020. The company saw how AI and camera technology were evolving and believed there was an opportunity there to improve its loss prevention process.
It began working with Envysion, a division of Motorola Solutions, to install a system in 2022, and will finish rolling it out to a final handful of stores this year.
Chuck E. Cheese can program the system to flag certain behaviors or actions at the point of sale, such as when a transaction is voided or when a cash drawer is popped. In these instances, the AI can tell whether there is a customer present, and if not, it can alert the loss prevention team of a possible violation. The video is correlated directly to POS data, so it can also earmark high-dollar transactions for review.
“If I'm doing a transaction that's over $500, let's just look at the video real quick and make sure that seems right,” Hunstable said.
Often, these actions or transactions are legitimate. Employees routinely have to void sales or open the drawer to count cash. And the system is sophisticated enough to know when something meets the criteria for fraud. It may get triggered dozens of times per day, but the number of cases that actually rise to the level of a review can range from the single digits to the dozens, depending on the store, Hunstable said.
The new tech has kept the loss prevention team just as busy as before, but it has allowed them to be more efficient with their time.
“They used to spend hours going through video and trying to get all this information together, whereas now, they can constantly be checking off cases that are more legitimate,” Hunstable said. That has enabled the team to cover more cases with the same head count.
The system has had an impact on Chuck E. Cheese’s bottom line, too. Though Hunstable said it’s hard to put a dollar amount on how much the company is saving or recovering thanks to the AI, “we’re seeing a difference in our P&L.”
It has also given the company more insight into what’s happening at the point of sale, prompting some new security measures.
For instance, Chuck E. Cheese has added guardrails around no sales on cash drawers, which is when an employee opens the drawer without processing a transaction. Now the chain limits how many times a staffer can do that or requires them to get a manager’s approval.
Hunstable said just having the AI in place has had a chilling effect on fraud.
“I do think that there's the Big Brother kind of piece,” he said. “[Employees] know we're looking, we're watching, and it filters around.”
He acknowledged that this sort of surveillance can have a negative connotation. But he noted that the chain has long had a security system in place, with 20 to 24 cameras in each store.
“Our risk analysis requires us to do that,” he said. “So I don’t necessarily think that [employees] probably have put too much thought into it.”
In addition to helping with loss prevention, there are many other uses of AI Chuck E. Cheese could explore, such as counting customers, tracking “dwell time” on games and even measuring customer sentiment: Did that interaction between Chuck and a visitor go well, or might the costumed character need a little coaching?
“We try to stay on the bleeding edge, especially around AI,” Hunstable said. “We're working on all kinds of things.”
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