After coming out on the other side of bankruptcy four years ago, Chuck E. Cheese is experiencing a resurgence, largely due to a bold revamp aimed at reintroducing its games and pizza to a new audience. In June 2020, during the early days after some states lifted their pandemic restrictions, CEC Entertainment, the parent company of Chuck E. Cheese, filed for Chapter 11 bankruptcy. They emerged months later with fresh leadership and unshackled from about $705 million in debt.
Facing the ever-present challenge of engaging kids—and their wallet-bearing parents—in an era dominated by iPads and smartphones, the company poured over $300 million into overcoming this hurdle. Recently, these efforts have started to yield positive results.
CEC Entertainment, which also oversees Pasqually’s Pizza & Wings and Peter Piper Pizza, reported eight consecutive months of growth in same-store sales, shared CEO Dave McKillips. Although it’s not a publicly traded entity, CEC shares its financial performance with bond investors. According to Reuters, the company’s annual revenue jumped from $912 million in 2019 to approximately $1.2 billion in 2023, despite having fewer Chuck E. Cheese locations open. The chain now operates 470 U.S. locations, down from 537 in 2019.
Maintaining this growth trajectory won’t be easy. Like other eateries, the chain must attract consumers who are dining out less frequently due to rising costs. Chuck E. Cheese also needs to capture the attention of children and parents in a fragmented media landscape.
Chuck E. Cheese, a beloved childhood destination known for its pizza, birthday celebrations, and the famous singing mouse mascot, has undergone a transformation post-bankruptcy. No longer will you find the animatronics, SkyTube tunnels, or paper tickets of the past. Instead, trampolines, a mobile app, and huge floor-to-ceiling screens have taken their place.
These changes were spearheaded by McKillips, who joined as CEO early in 2020, just before the pandemic temporarily closed all locations. By April 2021, the company secured $650 million through bonds, which was earmarked for revamping its restaurants.
“The company had been starved of capital for many years and desperately needed a makeover,” McKillips admitted.
Back in 2014, Chuck E. Cheese went private under Apollo Global Management. Five years later, there was an attempt to go public via a merger with a SPAC, but the deal was abruptly abandoned.
With new funds, the company re-evaluated the Chuck E. Cheese model, including its well-known animatronic band.
“We removed the animatronics,” said McKillips. “There was a lot of debate among legacy fans, but we had to evolve with kids who are used to consuming entertainment differently, with screens and short snippets.”
The menu also saw an upgrade with scratch-made pizzas, and partnerships were formed with popular kid-friendly brands like Kidz Bop, Paw Patrol, Marvel, and Nickelodeon for games. And then came the trampolines.
“We identified active play as a key opportunity,” McKillips noted, explaining the trend in family entertainment toward activity-based attractions like trampoline parks.
Starting with tests in Brooklyn, Miami, St. Louis, and Orlando, the trampolines were gradually introduced. By December, most Chuck E. Cheese locations had them installed. Unlike old attractions, the trampolines come with an additional charge.
After investing $350 million into the renovation, McKillips declared the transformation complete.
“We needed to fix the product, and now it’s fixed,” he stated.
Re-engaging adults familiar only with the Chuck E. Cheese of their youth has been another priority.
“You engage with us as a toddler and drift away after a few years, only to return many years later. We had to reconnect with a fresh generation of kids,” said McKillips, who added that the pandemic severely impacted their birthday party business, which has now rebounded.
As consumer spending began to slow last year, Chuck E. Cheese rolled out a tiered subscription program promising unlimited visits and discounts on food, drinks, and games—helping customers find value. Beginning at $7.99 monthly, the membership encouraged families to visit more often than the typical two or three times a year. The program’s success was evident with nearly 400,000 passes sold, compared to just 79,000 the previous year.
Following this triumph, a 12-month membership plan was launched, garnering over 100,000 sign-ups.
Envisioning even bigger things, McKillips’ ambitions for Chuck E. Cheese reach beyond its restaurant walls.
“There’s a certain iconic mouse in Orlando doing something right, and I see us on a similar path,” McKillips quipped.
With over 30 licensing deals in place spanning frozen pizzas to clothing, the company is exploring various entertainment partnerships to spotlight its mouse mascot.
And there’s more. Chuck E. Cheese is researching the potential of a game show and maintains a vibrant YouTube presence with videos centered on its characters. Six albums featuring Chuck E. Cheese himself are available on streaming services, with live, choreographed performances to boot.
“My ultimate dream would be a feature film,” shared McKillips.
Correction: An earlier version incorrectly stated figures related to the company’s current debt and remodeling investment.
