Bankrupt - Chuck E Cheese's

one claims it's the company's only chance for survival PW Kodak is filing for chapter 11 bankruptcy protection [Music] what's up guys my name is Jake and welcome to the 19th episode of bankrupt for those who grew up over the last 20 30 or 40 years or those who were parents during that time then you'll probably look back on the family entertainment giant Chuck E cheese with a Rosy sense of nostalgia it was the place where a kid could be a kid with their endless games Sky tubes pizza and slightly off-putting animatronics it was the quintessential indoor entertainment brand that reached across the world and occupied a presence in over 700 locations but it's also been a company that has struggled for decades born from a love of themed entertainments which ultimately spawned copycats and fierce competition they fought hard in the 1980s through an animatronic war and were eventually the subjects of a corporate buyouts and two separate bankruptcies the latest being in 2020 so today join me as we discover where Chuck E Cheese came from hear from those who knew the company best and find out how despite its very troubled past it's still chugging along today this episode of bankrupt is sponsored by nebula get 40 off an annual subscription by going to nebula.tv Bright Sun films it all started in the mid-1970s with a man named Nolan Bushnell he was the co-founder of the video game company Atari which had seen a great deal of success in the early 70s Nolan had a Fascination in robotics and all things engineering right alongside his obvious passion for video games he saw the massive Revenue video arcades were making during this time a direct offshoot of how successful Atari had become so Bushnell came up the idea to add in a restaurant element to the arcade formula conceptualizing a pizza establishment that merges both a restaurant and an arcade a place where people can burn through quarters while they wait for their food but it wouldn't just be any generic arcade or pizza place this would be a family-friendly dining experience and would be the instrument for Nolan to build out an amusement park-like atmosphere harnessing the engineering magic of animatronics like he loved in Disneyland this was all essentially a passion project for him something he kept on the sidelines while waiting for the right time to execute his vision that time came when the Atari company was purchased by Warner Communications in 1976. in that acquisition they also purchased the restaurant concept Nolan had been developing Warner ultimately agreed to build out this restaurant concept and in 1977 using the rat mascot character the company had already been testing out Chuck E cheese Pizza Time theater had opened in San Jose California the restaurant opened as a large wood panel-lined space able to sit a few hundred people and was filled with the late greatest and greatest Atari game machines the numerous long tables with upholstered picnic benches occupied most of the center floor space but the headliner here was the show space where Chuck E cheese and his animatronic friends would perform shows out of frames recessed in the walls it was kind of like a jankier version of Country Bear Jamboree in Disney except while this was still intended to be for families Chuck E cheese himself would be smoking a cigar and talking in a New Jersey accent all while looking ever so slightly threatening regardless Bushnell's business model paid off children love the space and families packed in the large restaurants using the 20 minutes it took for pizzas to be made by spending the tokens at the many arcade machines ultimately a year after opening Bushnell would leave Atari but he still saw a ton of Promise in the Pizza Time brand especially given its early success just a year in he believed in it so much that he bought the name and the right rights from border Communications for five hundred thousand dollars Nolan then set his sights on expansion and he figured he can do that by franchising the restaurant formula where he knew a few people were already interested Robert Brock was one of them he was the owner of the Brock Hotel Corporation a successful Hospitality management company which was also looking to expand Chuck E cheese Pizza Time theater was Brock's perfect business venture to pursue and he became very interested in building out these restaurants all across the markets he was familiar with so the two men signed a co-development agreement to build over 200 Pizza Time restaurants across the country at this point the restaurant chain only occupied six locations in California and one in Nevada but Robert Brock's enthusiasm for the company began to wane as he discovered what he thought was a better bet to hedge his money on in late 1979 he was introduced to an engineer named Aaron fetchter who had just displayed his animatronic character show at ayapa Brock was now thinking that fetchter's work in animatronics was far more advanced than bushnells fetchter was also working on something that he called the rockafire explosion a fully life-sized animatronic character band Brock was so impressed by this that he envisioned his own family entertainment restaurant utilizing fetchter's highly Advanced animatronics so Brock wanted out of his Pizza Time contract following a two-year-long legal battle Brock eventually got his way agreeing to breach their contracts with the intent to build his own restaurants the settlement they agreed on only stipulated that Brock would have to pay fees based on annual gross revenue for the use of the restaurant concepts for predetermined number of locations so Brock and Finster went out and built their own restaurant in 1980 called ShowBiz Pizza Place their mascot was named Billy Bob a large country every bear that I think is probably equally as threatening but despite being nearly a carbon copy of pizza time's business model Showbiz was a hit the full-sized fully programmable rock-afire explosion band was a crowd pleaser and dwarfed the framed animatronics Pizza Time was still featuring with the immense success of their first location and a ton of capital from Brock's Hotel Corporation within just a year over 80 new locations had been opened all of these introducing this new entertainment concept to new parts of the country and thus quickly capturing and dominating that market share Chuck E cheese Pizza Time theater on the other hand was in a losing battle Fortune published an article in 1982 showcasing the revenue between both these companies with Chuck E Cheese's restaurants averaging 250 thousand dollars less than the average Showbiz restaurants though interestingly it also Illustrated how lucrative these restaurants were with Pizza Hut only making three hundred and twenty thousand dollars per store Chuck E cheese was even on average generating more Revenue than the average McDonald's restaurant by now Chuck E cheese had more than 110 locations and Bushnell was intending to expand the brand even further hoping to open at least a thousand locations by 1990. he then brought the company public in 1981 and with this new IPO he focused on chain-wide revamps to the structure of the Chuck E cheese experience incorporating new modern arcade machines building new play areas for children and most importantly revamping their animatronics to better compete with Showbiz they did this by building new full-sized characters in a new stage environment we're growing because we've made it fun for the family to dine out together with wholesome food and entertainment in the most unique format this side of Disney World this stock offering generated around around 36 million dollars in new cash though weirdly the company claimed that around 30 percent of their stockholders were individual parents who purchased shares on behalf of their children they even produced annual reports just for kids anyways with new cash in hand Chuck E cheese pizza time was in a rush to capture more market share before Showbiz could so Bushnell continued to expand Chuck E cheese at Breakneck speed constructing and opening restaurants at a rate of nearly two a week over 200 locations would ultimately open by the end of 1983 but with all of this expansion the company reported losses of over 80 million dollars the average revenue per location had decreased severely and with mounting competition from ShowBiz Pizza along with other new chains with similar Concepts like Bullwinkles the finances of Chuck E cheese were reaching a critical points the video game Crash of 1983 had made things much worse and with the enormous debt from the expansion campaign and a sluggish stock price the company ran out of liquid cash and was forced to declare chapter 11 bankruptcy it appeared that Chuck E cheese Pizza Time theater had a very troubled future ahead and that was if they can emerge from the restructuring Pizza Time was close to losing 20 million dollars a month and soon after Alan Bushnell had resigned as CEO it appeared that Chuck E cheese was headed for chapter 7 that being the Final Chapter for the company but then in a pretty shocking turn of events Chuck E Cheese's very competitor the chain that essentially stole their idea and expanded well beyond their initial reach had returned in 1984 Robert Brock and the now successful chain of ShowBiz Pizza had offered to buy the entire company for 35 million dollars with basically no other option and Alan Bushnell now gone the offer was accepted the two brains were merged and the new parent Corporation became ShowBiz Pizza Time Incorporated while this was a pretty shocking turn of events and showed the strength of their corporate power in reality Showbiz was also struggling as the market conditions didn't just apply to Chuck E cheese but Showbiz was Cash rich and in a much better place so they scooped up their largest competitor and now the company was poised to dominate The Family Restaurant Market in the following years Brock would depart from his own company and a new CEO was brought in to manage the future for the two brands or really I guess his job was more to keep them from falling apart ShowBiz Pizza Time was bleeding money they were unable to pay leases interest payments were barely being met and they diverted all revenue just to make payroll over 100 locations would close between both brands during this time and remember the Brock Hotel Corporation was also under this umbrella and also in financial trouble ultimately outside capital investment was injected into the company and their debt was refinanced to shave off more than half of it by the mid 80s a focus was put on the customer and how they experienced Showbiz and Chuck E cheese the quality of food was drastically increased as was the quality of service families would receive lighting was increased as were the number of Windows to make the space feel more alive and less dark and dingy really a bunch of new customers satisfaction initiatives were introduced during this time as marketing now shifted away from the animatronic characters and more to how all members of the family can now have fun does this allowed new life to be breathed into the chain and customers took notice by 1988 the company was spun off into its own entity and away from the Brock Hotel Corporation by now the brands were moving towards a univ notification knowing that the agreement between them and the company that produced the animatronics for rockifier explosion was coming to an end new stages were now being fitted into the Chuck E cheese locations the first non-balkity animatronic stages yet by 1990 the plan was coming together and it made sense to pick one of the two Brands to focus on for marketing and brand reach ultimately Chuck E cheese was the stronger of the two Brands and over the next two years all of the existing Showbiz pizzas were rebranded into Chuck E cheese this essentially marked the end for the ShowBiz Pizza name the rockafire explosion animatronics were then reskin to the characters of Chuck E cheese and Friends many of them becoming the Munch's make-believe Band by the end of 1993 the corporation had over 325 locations across North America and while Revenue fell a bit this year compared to the Resurgence it was seen through the early 90s it didn't deter the company from continuing to remodel their location and focus on child safety policies including the novel concept of banning smoking in their family-oriented locations wow while this was a step in the right direction for cleaning up their in-store atmosphere alcohol was still on the menu for adults which probably fueled an uptick in violence at their locations though on the upside free attractions were also being added like the sky tubes an elaborate series of Tunnels for kids to Traverse through really an addition that seemed necessary for all of their locations to better compete with Rivals like Discovery Zone and McDonald's things were beginning to turn around in a very positive way for the corporation by 1998 they had finally changed their name to better reflect their overall brand now becoming CEC entertainment Revenue was on the rise surpassing 370 million dollars and investors took notice of their long-term vision and the work that had been done to bring the company back up from the verge of Bank meanwhile Discovery Zone had gone under a story I've already covered in its own episode of bankrupt and CEC entertainment swooped in and acquired a great deal of assets from them CEC stock had now doubled and from the consumer side a new generation of kids absolutely loved this place through the early 2000s Chuck E cheese had huge brand recognition across North America now with over 400 total locations Investments were being made all across the chain from new attractions and games to a new toddler Zone along with constant improvements to the overall customer experience it was the place to host your birthday party and for me as someone who grew up during this time I Remember by time here finally hundreds of thousands even billions of kids all across the continent also happen to agree and this all reflected in their overall sales by 2004 a new company logo was introduced while some locations began receiving updates however ever not all of them and cutbacks across the chain began to be noticed primarily in the animatronics which in some cases had been scaled back with limited movements all new and updated stores by this point were only installing one Chuck E cheese animatronic figure while several shows had been replaced by what they called the circle of Lights clearly the animatronics were costing too much to maintain and management had now figured that customers wouldn't care as much if they scaled things back and saved on the maintenance costs in the short term and in a lot of cases customers didn't really notice in a way that would affect attendance and the birthday party Hub of the early 2000s kept a steady stream of net revenue crossing the 800 million dollar Mark in 2008 just as they were approaching 500 worldwide locations but through the recession the company intensified their cutbacks and focused on implementing new premium attractions that cost money they did this by removing previously free attractions like the toddler Zone and the Beloved Sky tubes they were replaced by these new attractions ones that caused tokens to play like bumper cars by 2012 sales had begun to slump losing around 2 percent of the sales they had posted the year prior corporate wanted to make some changes so they decided to Rebrand things then got very flat a thinner word Mark was introduced along with Chuck's mascot caricature becoming two-dimensional he also became a different species while he retained a similar appearance he was now turned into a CGI Rockstar Mouse which also included a voice change this rebranding didn't go over well and sales didn't show any signs of recovery then in comes Apollo Global Management a massive private Equity Firm that has taken High Equity shares in companies like Oceana Cruises region Seven Seas cruises AMC Great Wolf Resorts and hare's entertainment they saw a promise in restructuring CEC entertainment to now better accommodate the revolving door of generations of kids so they bought up 335 million dollars worth of their stock and borrowed another billion dollars to fully acquire the company and take it private as you might recall this is what happened with Toys R Us as well with an outside private Equity interest buying up a controlling stake in the company just like with that acquisition CEC entertainment would also now have to take on the billion dollar debt load Apollo took out to purchase the brand not exactly the best thing you want to do when sales are slumping and just put on a billion dollars worth of debts this was no problem though according to their new owners as the company got to work figuring out new ways to boost profit margins and renovate locations they also acquired Peter Piper Pizza another family entertainment brand and almost instantly gave it the same boarding logo treatment that Chuck E cheese had suffered through speaking of which their logo was also changed in 2017. now to better reflect the changing brand strategy that strategy came to a head that year in the form of Chuck E cheese 2.0 this was a total rethink for the brand essentially a clean sheet design approach renovating restaurants with flat interior design and muted colors both inside and out many of the larger attractions would be removed as well as the Beloved animatronics in most cases they would be replaced by an interactive LED floor display a large screens would occupy sections of the wall all while the iconic gold tokens had been switched for plastic cards and the menus had been enhanced for better appeal to parents I think the general consensus amongst fans and some consumers was that it looked awful I tend to agree with that sentiment as it looked very flat and modern though in my opinion in in a very ugly way one that likely won't age very well it sucked the remaining quirkiness or fun out of the design for these locations leaving behind a rather generic looking family facility and we all know kids love generic looking family facilities you know it was definitely a disappointing thing for 2.0 because I think it was ironically announced on their 40th anniversary it was like fourth anniversary yay and then here's our new way of what we're gonna do and it just was kind of like a big slap in the face from a consumer I would probably like the 2.0 but from a fan point of view it's disappointing to see what's happening despite the negative press this new approach was receiving CEC doubled down on it continuing to roll it out Across America spending as much as 570 thousand dollars per location by this point Chuck E cheese had failed to pay off any of its debts merely just getting by in interest payments the costly Renovations and high expenses caused them to lose money every year apart from 2017 and as the decade was nearing a close in 2019 the company had managed to keep revenue somewhat steady approaching the one billion dollar mark across their now 741 stores despite all of this success it also meant they failed to pay off any of that billion dollars worth of debt in fact they were only adding to it by investing in the 2.0 Renovations so with their plans not exactly working out the way they had hoped it seems that Apollo wanted to dilute their stake in the company and find new cash and new investors all with the intention to bring CEC back to the public stock markets to do that they made a deal with a British private Equity Firm who was going to merge CEC entertainment into a shell Corporation they had set up the appraised value for the company was at 1.4 billion dollars just a hundred million more than what Apollo had originally invested however by July 2019 the deal had been scrapped and the hopes the company had for new cash to pay off debt had been erased along with dreams of a new IPO but even without all of these plans the company was still hanging on it would take a massive worldwide disaster to hinder the brand and really what were the odds of that by 2020 the pandemic had forced the closure of basically every single restaurant they owned remember this is a business model that is based around dine-in food birthday parties and arcade machines all closed contact activities meaning they were forced to close through March the company furloughed thousands of employees and took on massive Financial losses they scrambled to find uses for their idle locations like utilizing their kitchens as ghost restaurants serving under the name Pasquale's Pizza on delivery apps eventually the chain did reopen in phases but with a limited capabilities focusing on their draw of pizza and other menu items to get people to dine in or take out unfortunately for them most people don't visit Chuck E cheese just for the food and the corporation's liquid cash was running out and it was very quiet very that we had maybe like a handful of people all day it just felt really weird it felt like it felt like post-apocalyptic weird feeling to it with barely any Revenue coming in they had to meet payroll make lease agreements and make interest payments among many other liabilities they rushed to find Outside funding and attempt to secure a large enough loan to keep enough cash on hand but as they failed to do so it became too late on June 25th 2020 CEC entertainment had filed for chapter 11 bankruptcy protection despite the company being almost an entirely different entity than it was in the 80s this was the Brand's second insolvency honestly it kind of took all this by shock it sent the whole Community to produce Community into frenzy everyone was like freaking out everyone was like oh no this is the end yeah everyone was just panicking for the next year the company continued to reopen stores as they navigated their way through the chapter 11 bankruptcy by Jamie January of 2021 CEC actually made it through their bankruptcy as a new LLC entity declaring they had successfully paid off over 700 million dollars of their debt and had a stable 100 million dollars in liquidity this also meant that Apollo's majority stake in the company had been diluted effectively making Monarch alternative Capital the new owners of the company with the dust settled from this bankruptcy and their restaurants all across America Now open and once again generating income the company continued with their store Renovations CEC had also set their focus on International expansion opening new stores in the Caribbean with sights set on the Middle East and South America domestically the companies still continue to operate over 550 locations as well as 120 Peter Piper pizza restaurants the latter also being an area of interest for the corporation as they unveiled the Peter Piper Pizzeria a more mature and modern take on the same formula only this is more focused on the food and has a fraction of the gaming space inside it's still kind of looking boring but whatever and that brings us to today CEC entertainment is a battered company and one that is seen to have been on a noticeable decline for the past 20 years but even before that the corporate drama and the rivalries that ultimately form the corporation that stands today is a testament on how great the idea really was it was formed from a love of both video games and their earliest form and the unique programmable magic that animatronics could provide to a space going to Chuck E cheese Pizza Time theater and later ShowBiz Pizza Place was an experience that you couldn't replicate anywhere else outside of maybe the Disney parks it was like having your own weird Enchanted Tiki room in your hometown celebrating your birthday with your friends and these characters and playing in the endless fun that awaits you in their massive restaurants children and parents were both impressed and very often satisfied with the whole experience so even after the corporate battles and takeovers once all the dust was settled and the two competitors became one through the 90s and early 2000s the Bots inside Chuck E cheese were still a unique and novel show to go see for millions of kids across the country they became beloved by many and garnered huge fan bases who remember them fondly some sharing their experiences and boasting praise for the brand While others archiving restoring and tinkering with tired animatronics and getting them going once again it really is such a cool and Lasting concept for so many people but management was changing and so was their priorities in what they thought the brand was cost saving initiatives were then implemented across the company those animatronics and the maintenance Associated were expensive to keep around and I'll be honest by the early 2000s they were looking a little tired ever so slightly creepy but even today there are still full bands that exist like this location in the Toronto area on one hand it's cool to see this relic of the past but on the other hand it's looking pretty outdated don't get me wrong though I truly do appreciate this kind of stuff the animatronics played a huge part in What made the brand so successful it was a quirky Oddity that made them stand out it was something you couldn't find anywhere else it gave their locations character literally but the problem was is that management never first saw their long-term value in fact they saw them as liabilities and chose not to make them a part of the Brand's long-term image and chose not to update them in any way the animatronics were instead removed in many cases once the company pushed their 2.0 plan the result was some of the most terrifying images of dismembered Chuck E cheese robots left to rot in the desert you probably remember seeing this picture and all of this likely didn't help the public image of their characters instead their locations were stripped of all classic theming and have taken on a generic looking Bland space that doesn't really stand out in the increasingly crowded markets remember the animatronics set them apart and continued to be a novel concept for many of locations across America when they removed them and created a generic looking space what's really the point of going to a Chuck E cheese over anyone else then tons of competitors doing basically the same thing as Chuck E cheese have sprouted up not to mention their existing competitor like Dave and Busters so the future of the brand is a little unclear will their modern take on the Brand's image be enough to carry them through the next decade and will that powerful name be enough to see success in other Global markets since they're now a private company it's hard to actually gauge their financial stability I think the original appeal to North America's youth made sense and positioned the brand as a unique experience you couldn't get anywhere else but with kids today I'm not really sure if you can say that anymore that along with the number of negative press stories as well as the consistent stream of brawls that end up on YouTube it really puts the brand in a depreciating States but when you step back and look at all of this it has been a fascinating and vibrant story thus far with lots of people passionate about where the company came from some have done incredible work on archiving The Past particularly showbizpizza.com who's been an excellent digital resource if you want to find out more about the company and have been a great help for this video them along with the rest of these communities keep the passion of the original Chuck E cheese alive and well and only because of that Community are we able to relive the Golden Era for this unique and nostalgic company perhaps it's the only reason why the modern day audience and kids are so interested in the brand so now it's either a brand that confirms the beliefs of these private Equity firms and sticks around for the foreseeable future or it's the place where the kids that could be kids have finally grown up if you follow my personal account on Twitter then you'll know that I'm a big fan of walkable and master plan cities almost to an annoying point I love master planned communities and European cities that in my eyes are the best examples of what makes a great City so I have been watching City beautiful's appropriately named show great cities I particularly love the story of Central Park and how it was created as one of the first major Urban Park Designs which emulated the feeling of Farmland with Ravines Bridges and Meadows a place that ultimately made New York city so much more livable it's a fantastic and beautifully presented series that dives deep into iconic downtowns around the world and you can only find it on nebula nebula is a Creator made and create or run platform where you can find original shows like great cities along with many others from some of your favorite online creators you can even find my channel including all of my videos ad free my videos are also shown on nebula a few days before they go live here on YouTube there's also now nebula classes courses to learn from your favorite content creators all of this is included with a nebula subscription and if you want to get 40 off an annual subscription for yourself you can use my special link nebula.tv bright Sun films a link will also be in the description below thanks for sticking with me on this incredibly long episode of bankrupt and there's so much more to come so subscribe to the channel if you're interested anyway guys my name is Jake and thank you very much for watch [Music] thank you [Music] foreign

Channel: Bright Sun Films

Views: 1,386,793

Keywords: showbiz pizza, chuck e cheese, chuck-e-cheese, chuck e. cheese, chuck e cheese animatronics, animatronics, chuck e cheese song, scary, chuck e cheese scary, malfunctions, dead company, dead store, showbiz pizza bankrupt, jake williams, bright sun films, story of, history, 2020, 1980's, interview, scary chuck e cheese, chuck e cheese commercial, chuck e. cheese's, chuck e cheese pizza, abandoned chuck e cheese, abandoned store, chuck e cheese 1977, chuck e cheese store tour

Id: BbI3zOm2BkE

Length: 31min 55sec (1915 seconds)

Published: Fri Jul 14 2023