Chuck E. Cheese May Need Help to Avoid Bankruptcy
With closed locations and a lot of debt, CEC Entertainment Inc. weighs its options.
Based on evidence from Domino’s and Pizza Hut, a pandemic that forces people to rely on takeout and delivery would seem to actually be a good time to sell pizza. Just don’t tell that to Chuck E. Cheese.
A little while ago, they were called out for stealthily rebranding on delivery sites in order to convince people that they were ordering good pizza. Now, the children’s birthday party spot is in a position where they might be forced to consider bankruptcy.
According to the Wall Street Journal, Chuck E. Cheese parent company CEC Entertainment Inc. has had discussions with its lenders about a potential $200 million loan that would “finance a stay in bankruptcy” and essentially keep the company from going under. Additionally, they plan to pay out nearly $3 million in “retention bonuses” for top executives. Restaurant Business Online says the three executives receiving the bulk of the bonuses would either have to stay at their current jobs for the next twelve months—or for 30 days following a corporate restructuring.
In case you couldn’t piece together why CEC Entertainment is seeking a $200 million loan to avoid bankruptcy, the pandemic has created some significant business challenges for a company almost entirely dependent on the dine-in experience. Covid-19 forced the closure of 610 Chuck E. Cheeses across 47 states, ruining any momentum after a 2019 that saw same-store sales increase after two years of stagnation.
The Journal says CEC has been exploring its options since April, with things like refinancing, restructuring, and even bankruptcy on the table. As the company has accumulated nearly $1 billion in debt with only revenue from “Pasqually’s Pizza” coming in, they’re clearly in dire straits.
So will young Zoomers and whatever the hell we call the generation that comes after them get to experience the combination of entertainment and cheese that Chuck E. Cheese provides, or will they just have to get all of their thrills at home and online? For now, that’s in the hands of some creditors.