A subscription program and trampolines mark Chuck E. Cheese's return to the spotlight.

• In 2020, CEC Entertainment, the parent company of Chuck E. Cheese's, filed for Chapter 11 bankruptcy.
• Since emerging from bankruptcy, the family entertainment chain has been planning a return and investing over $300 million to captivate the current generation.
• Under CEO Dave McKillips, some of the major changes include retooling pizza recipes, eliminating animatronics, and introducing trampolines.

Chuck E. Cheese is returning to the spotlight four years after bankruptcy, with a revamp of its games and pizza to appeal to a new audience.

In June 2020, as some states eased their pandemic restrictions, CEC Entertainment, the parent company of Chuck E. Cheese's, filed for Chapter 11 bankruptcy protection. The company emerged from bankruptcy later with new leadership and $705 million in debt freed.

Despite the subsiding of Covid, the company encountered another existential threat: determining how to entertain children and their paying parents in the era of iPads and smartphones. Over the past few years, the company has invested more than $300 million in addressing this challenge, and the returns have begun to show.

CEC Entertainment, comprising Pasqually's Pizza & Wings and Peter Piper Pizza, has experienced eight consecutive months of same-store sales growth and is now debt-free, as stated by CEO Dave McKillips. Despite not being publicly traded, the company shares its financial information with its bond investors.

Despite having fewer Chuck E. Cheese locations in the U.S., CEC Entertainment's annual revenue increased from $912 million in 2019 to approximately $1.2 billion in 2023, according to Reuters.

Winning over consumers and drawing the attention of children and parents in a fragmented media market will be challenging for Chuck E. Cheese, like all restaurants, as costs rise and sustaining growth becomes difficult.

Goodbye, animatronics

Nolan Bushnell founded Atari in 1977 in San Jose, and Chuck E. Cheese has since become a beloved childhood destination, famous for its pizza, birthday celebrations, and animatronic mouse mascot and band.

Chuck E. Cheese's stores underwent a makeover after exiting bankruptcy, resulting in a completely different appearance. The animatronics, SkyTube tunnels, and physical tickets have been replaced with trampolines, a mobile app, and floor-to-ceiling JumboTrons.

In January 2020, McKillips, a former Six Flags executive, joined the company just before lockdowns temporarily closed all its locations. By April 2021, the company had raised $650 million in bonds, which it used to fund its restaurants.

For many years, the company lacked capital and had not undergone any renovations, as stated.

In 2014, Apollo Global Management acquired Chuck E. Cheese as a private company. Recently, CEC Entertainment attempted to go public through a merger with a special purpose acquisition company. However, the deal was abandoned without any explanation.

The Chuck E. Cheese model, including its iconic animatronic band featuring Charles Entertainment Cheese and his friends, was scrutinized in a candid examination due to the new cash influx.

McKillips stated that the animatronics were removed, sparking a heated discussion among legacy bands. However, kids today consume entertainment in a completely different manner, growing up with screens and constantly changing bite-sized content.

The chain revamped its menu, opting for homemade pizzas. Kidz Bop was appointed as an official music partner. Additionally, other kid-oriented brands, such as Paw Patrol, Marvel, and Nickelodeon, joined forces with its games.

And then came the trampolines.

McKillips stated that growth in the family entertainment industry is mainly driven by activity-based businesses, such as trampoline parks and rock-climbing walls.

Chuck E. Cheese locations in Brooklyn, Miami, St. Louis, and Orlando were the first to test trampolines before they were introduced in 450 locations across the country. Unlike previous attractions such as ball pits and SkyTubes, customers must pay extra to use the trampolines. The ball pits were removed from Chuck E. Cheese locations in 2011, while SkyTubes lasted until approximately 2021.

The remodeling process for Chuck E. Cheese locations, which cost the company $230 million, is now complete, according to McKillips.

"The product was broken, but it's been repaired now," he stated.

Subscription spenders

Another focus has been to reintroduce the brand to customers, particularly adults who are familiar with the Chuck E. Cheese of their childhoods.

McKillips stated that the children come in at around three years old, leave around eight or nine, and do not return for 15 years. This necessitated the need to speak to a new generation of kids, as they were off-air during the Covid pandemic. As a result, they had to construct everything from scratch.

The pandemic negatively impacted Chuck E. Cheese's birthday business, but it has since recovered to its pre-pandemic levels.

As consumer spending decreased last year, McDonald's and Outback Steakhouse had to find a way to attract price-conscious customers.

Chuck E. Cheese introduced a two-month subscription program during the summer, which included unlimited visits, food, drink, and game discounts. The membership aimed to increase family visits beyond the usual two or three per year. The subscription starts at $7.99 a month, with additional tiers at $11.99 and $29.99 that offer steeper discounts and more games played.

"In 2024, we sold close to 400,000 passes during the same time period, indicating that consumers are willing to spend if they receive a great return on their investment, as stated by McKillips."

The company has sold over 100,000 12-month memberships since the fall, following up on the success of the passes.

An entertainment empire?

Beyond the confines of its restaurants, McKillips' greatest aspirations for the chain and its mascots remain untold.

McKillips stated, "Another adorable mouse in Orlando performs similarly, so we share the same perspective, but we're only at the beginning stage right now."

Chuck E. Cheese is considering various entertainment collaborations to make its mascot the main attraction, in addition to the 30 licensing agreements for products ranging from frozen pizzas to clothing, as stated by McKillips.

The company has considered the possibility of a game show, despite having a successful YouTube channel that focuses on its characters rather than its pizza or games.

Chuck E. Cheese's band performs live, choreographed concerts and has six albums available on streaming platforms.

McKillips stated that his dream is to have a feature film.