There was a time when Chuck E. Cheese was the destination
of choice for any birthday. It had everything a kid could dream of:
pizza, arcade games and animatronics. They quickly became an industry giant. But their shine wouldn't last forever. Soon, Chuck E. Cheese would go from the place
to be, to a failing company. So to survive, they came up with
a fake sob story about an orphan who couldn't remember his birthday. People loved it. It had saved Chuck E. Cheese –– or so they thought. February 5, 1943. The story behind the invention of Chuck E. Cheese begins in Clearfield Utah where
cement contractor Clarence Bushnell and teacher Delma welcomed their son
to the world, a boy named Nolan.. And he discovered that
passion for tinkering with technology in a ball of fire. At a young age, Nolan scoured rusty
airplanes for parts , and even built a rocket with explosive results. But it wasn’t the only passion
he discovered in his early years. At just eight-years-old, Nolan
got his first taste of business when he went from door to door,
selling strawberries for his mother. At only 11, Nolan combined his passions
and became an entrepreneur, starting his very own TV repair business. Then, tragedy struck. Nolan’s father passed away. At just 15-years-old, Nolan became
the breadwinner for his family, which meant taking control of
his father’s contractor company. He managed it for a time, but
eventually decided to sell the business off and return to TV repairs
until he graduated high school. And once he graduated, Nolan followed his
love of tinkering and studied electrical engineering at the University of Utah. Two years into his studies, he got
a job at the Lagoon Amusement Park. Early into the job, Nolan was made
a games division manager, a position where he learned A skill set which
would change the course of his life: How to draw customers in to an arcade
and keep them coming back for more. Before we get into the next
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set out for the job of his dreams: Working on Disney animatronics. However, Disney wouldn’t
hire recent graduates. So Nolan packed his bags and
moved to Silicon Valley instead. There, in the heart of California’s
bustling economy, Nolan found a job at one of California’s biggest movers and
shakers, electronics company Ampex. There, he met and befriended
someone who would change his life, fellow engineer, Ted Dabney. But even in his new career, Nolan
couldn’t shake his old dream. So, since Disney didn’t hire
him, he decided that he would make his own version of Disney. Nolan thought of a pizzeria with
arcade games and animatronics. He pitched the idea to Ted, and
together the two visited pizza parlors to get a grasp of the business. However, the idea proved too expensive
for what limited resources the two had. But soon, another trip would introduce
Nolan to a whole different industry… During a visit to the University
of Stanford’s computer lab, Nolan and Ted had the chance to play
the early video game, Spacewar!. Nolan was struck by inspiration. What if he made a cheaper
version of the game and sold it? The two left Ampex and invested $250
each to create a new company, Atari. They made their own game called
Computer Space, and licensed it to arcade company, Nutting Associates. It was the first coin-operated
video game and an instant success. The game brought in $3 million
in sales and even appeared in the hit film, Soylent Green. Nolan had just made history,
and he was about to do it again thanks to one simple mistake… The success of Computer Space put
Nolan on the path to making video games, and to make more he hired an
engineer named Allan Alcorn and put him to work on a training project. The idea was simple, a game where
two paddles bounced a ball between them, trying to score on each other. The end result was a ping-pong game called
“Pong”, and when placed at a local bar, the coinbox filled in just three days. Pong was a hit, so much of a hit that
while Nolan hadn’t meant to sell the game at first, he changed his mind
at the sound of the coinbox filling. But investors weren’t interested in
Pong, so Nolan decided Atari would just have to handle things themselves. The company hand built 13 units,
then 36, then 125, and the game just kept getting bigger and bigger. In fact, Pong had gotten big enough to
get noticed for all the wrong reasons. Nolan had taken the idea for Pong from
the video game console, the Magnavox Odyssey, and Magnavox wasn’t happy. Two years after Pong launched,
they sued Atari, and the two companies settled out of court. Meanwhile, Atari kept making
games, including new arcade games and a Pong home console. A year later, Nolan sold out. He sold Atari to Warner Communications
for $28 million, but was kept on as CEO. With more resources now, Nolan took
a chance and pitched his animatronic pizza parlor idea to Warner. He received a cold response. But Nolan was determined. He made a clever sales pitch about how
his restaurant would market Atari games. Warner finally agreed, but
because they owned Atari, they owned the restaurant too. A year later, while Atari was focused
on releasing its first cartridge-based console, Nolan remained focused
on his restaurant, settling on the name “Pizza Time Theatre” and
deciding it needed an animal mascot. But Nolan would soon find his mascot
was not what he thought it was… Nolan had bought what he thought was
a coyote costume at a convention, only to discover when it arrived that he
had actually purchased a rat costume. As usual, Nolan didn’t let it
get him down and moved forwards with a rat as Pizza Time’s new
mascot who soon had a famous name. Chuck E. Cheese. The first Pizza Time Theatre
opened in San Jose California. It featured a family friendly dining
atmosphere with $120,000 worth of arcade games and $10 pizzas. The pizzas were expensive, double
the price of fast food pizzas. But Nolan didn’t mind, to him Pizza TIme
Theatre wasn’t just a pizza parlor with animatronics and games, it was a suburban
Disneyland, one kids could visit every few weeks instead of every few years. But Warner didn’t see it his way. Instead, Warner thought Pizza Time
Theatre was getting in Atari’s way and was ready to close the doors. Nolan, however, was
eager to keep them open. So, he did the only
thing he could think of: He left. Nolan put together half a million
to buy the restaurant out, and soon after left Warner all together over
frustrations he had with management. But thanks to a non-competitive clause, he
was barred from the video game industry. So he focused all his attention
on Pizza Time Theatre. The next year, Nolan aggressively
marketed Pizza Time, attracting franchisees and opening new locations. Each new location brought in rave
reviews and thrilled audiences with its Disneyland-like entertainment. It seemed like Pizza Time Theatre
would just keep growing and growing… Only for Nolan to get stabbed in the back. Location by location, franchise
after franchise, Pizza Time Theatre continued its growth
towards becoming an industry giant. And then a deal came along that
promised to fast track its ascent. Robert Brock, the president of
Topeka Inn Management, noticed the brand’s growth and wanted in. He signed a deal to franchise 200
locations, but soon wanted to be more than just a slice of Pizza Time. He wanted the whole pie. So he made his own competing
chain named Showbiz Pizza (Showbiz Pizza Theme Song) and the moment he found someone to make him
animatronics, Robert canceled the deal. Nolan was livid. Pizza Time sued both Topeka Inn
Management and Robert for breach of contract, and Robert responded with
a countersuit against Pizza Time and Nolan for misrepresentation. Yet as the legal battle brewed,
Pizza time was facing another issue. It was struggling to
hold onto its customers. People preferred the better animatronics
at ShowBiz, and only a year in the new competitor was bringing in $1.5 million,
577% more than what Pizza Time was making. Even worse, with more
competition, the novelty of Pizza Time Theatre had worn off. Nolan decided that the path to victory
was to outgrow the competition, so he opened a new location every five days. Within the same year, Pizza Time had
grown from seven locations to 88, almost half of them company-owned. But the next year, Nolan caught a break. The lawsuit was settled out of court, and
ShowBiz agreed to pay Pizza Time a portion of their profits for the next 14 years. It was a huge victory, but Nolan
soon learned that in business, surviving is a never-ending battle. Because a year later, the $3.2
billion video game industry crashed. Sales of video games
fell by 97% in the U.S. alone, and arcades closed
across the country. That year, Pizza Time lost $15 million. While the board tried to save
their sinking ship by closing unprofitable stores, Nolan became
convinced he had the solution: Sente, his new video game company. Now free from his non-competitive
agreement, Nolan was sure that his new games would draw in customers. Unfortunately his optimism
failed to pay off. Even with the new Sente games,
sales refused to improve. After failing to revive his company, Nolan
resigned as Pizza Time’s chairman and CEO. Three months later, the chain filed for
bankruptcy and what assets remained were bought out by an unexpected buyer: Topeka
Inn Management, renamed Brock Hotel Corp. While ShowBiz was also facing financial
troubles thanks to the video game crash, merging with Pizza Time saved
it from having to continue to give away a portion of their profits. After the merger was completed, Brock
Hotel appointed Richard Frank as CEO to save both ShowBiz and Pizza Time. Over the next five years, Robert closed
100 locations, improved food quality, and rebranded the restaurants as “Chuck E. Cheese’s Pizza”. Under its new name, Chuck E. Cheese’s numbers began to improve. But it wasn’t long until the pizzeria
fell back into another battle for survival against a new competitor:
Discovery Zone — an indoor jungle gym and entertainment center. Over the next two years, Chuck E. Cheese tried to compete by introducing
new attractions like Skytubes. And then, history repeated itself. Discovery Zone filed for
bankruptcy, and Chuck E. Cheese was happy to buy
out its remaining assets. Once again, Chuck E. Cheese was the dominant family
entertainment center in the U.S. One year later, sales
were booming and Chuck E. Cheese was spreading further with
more locations opening their doors. But this success wasn’t
enough to ensure survival. The Great Recession struck
America, and Chuck E. Cheese’s profits tumbled. In the hopes of bringing in more
customers, the company gave its beloved mascot a tragic backstory:
an orphan who doesn’t know when his birthday is and celebrates others’
to make up for his own sad childhood. Two years later, Chuck E. Cheese was bought out. Apollo Global Management acquired
the pizzeria for $950 million. With the new leadership came
major changes: a new, modern design; upscaled features; and the
replacement of the old animatronics with a new electronic dance floor. This fresh new look brought with
it hopes for a fresh start, and then the COVID-19 pandemic hit. Restaurants across the globe were forced
to close their doors, and Chuck E. Cheese was no exception. The company tried to keep the
lights on by offering delivery and takeout under the name, Pasqually’s
Pizza & WIngs, but it wasn’t enough. Two months later, Chuck E. Cheese’s filed for bankruptcy
for the second time. As for Nolan, he’s now retired from
the business and is said to be focused on releasing a line of NFTs: digital
tokens that claim ownership of things such as art, music, and videos. This is the story of how Chuck E. Cheese went from being the place with
everything a kid could dream of — pizza, arcade games and animatronics — to a
company that was failing so badly that its new owners made up a sad backstory for its
beloved mascot to bring in more customers. For more stories on the biggest
names in business, make sure to subscribe and ring that bell so
that you never miss an episode! Remember to get an amazing discount on Kamikoto's elegant steel knives with our code, HOOK50 on kamikoto.com/HOOK50 today!
