This Iconic Family Restaurant Just Made a Huge Comeback After Near Collapse
If you are a kid during the 1980s and lived near a Chuck E. Cheese, you likely have lots of memories of watching animatronic bands, shoving coins into slots of pinball machines, eating lots of pizza at birthday parties, and the tagline of a commercial telling you that the entertainment restaurant was a place where "a kid could be a kid." The chain thrived and then survived for decades, but many believed that the pandemic in 2020 would be the death of it. However, thanks to new management and makeover, Chuck E. Cheese is making a comeback in a significant way.
Chuck E. Cheese Was Hit Hard During the Pandemic
Just weeks before the pandemic, David McKillips became CEO of the brand. As the restaurant is hands-on and interactive, many people boycotted it for fear of getting sick, and sales plummeted. CEC Entertainment Inc., the parent company, filed for Chapter 11 bankruptcy protection in June 2020 due to financial strains relating to the pandemic as the cause of bankruptcy.
They Made Major Changes Right After
However, in 2021, the brand started reinvesting money in a rehab of restaurants, spending a whopping $350 million, McKillips told CNBC on Jan. 22. They also made an effort to appeal to lower-income families, making the experience more affordable.
They Started a Subscription Program and Sold Passes
For example, the brand started a monthly subscription program with tiered options, offering discounts on games, drinks, and food. For $7.99 per month, they offer unlimited visits and up to a 20% discount on food, and then for $11.99 and $29.99 per month, you get more games and more significant discounts. They also tested a 12-month pass, selling over 79,000 passes across nearly 600 locations in 2023 and over 400,000 in 2024.
They Renovated Spaces
As for renovations, they replaced outdated animatronics with large jumbotrons featuring live character programs and added trampoline zones. They also ordered digital ordering kiosks.
They Started "Catering to a Brand New Generation of Kids"
"It's all new for us," McKillips told CNBC. "We're catering to a brand new generation of kids who are growing up and consuming entertainment in a different way."
They Went Through "One of the Most Aggressive Transformations in the World"
"When I joined, the product was dated, and the competition was growing. Some of our units hadn't been touched in a dozen years. COVID allowed us to pause on what we wanted to do and restructure. The bones have always been good, the brand is solid, but there hadn't been investments, and deploying capital to overhaul the company became our priority," McKillips added to Nation's Restaurant News. "We went through one of the most aggressive transformations in the world."
The Investments Are Paying Off
The investment is starting to pay off. While unit count decreased by 8% and sales are down by 3.3% since 2018, there has been a 6.7% sales increase, to about $370.1 million, and a 0.2% domestic unit count increase, from 2022 to 2023, according to Technomic Ignite data. "There's a tremendous amount of innovation in the category, which is exciting, but we are also in a time period where consumers have to make choices," he said. "Forty-six percent of parents are cutting back on out-of-home entertainment. That's concerning for us, but we're disciplined on who we are and focusing on our core audience. It also makes us focus on delivering value back to consumer and our value proposition."
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