​Chuck E. Cheese Restaurant Buyout Worth $950M​​

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January 16, 2021

Business News

Chuck E. Cheese restaurant chain has agreed to a buyout worth $950m on Jan. 16, the parent company announced. The buyout comes from an affiliate of Apollo Global Management, which will also assume the company’s outstanding debt.

Chuck E. Cheese restaurant approves buyout of $950m

CEC Entertainment and its franchisees run 577 Chuck. E. Cheese locations in 47 states and 10 foreign countries or territories. For the investor group — known for fixing troubled chains, then re-selling them years later — the question is simple: Can it possibly rekindle the faded Chuck E. Cheese magic from a buyout of $950m?

When Chuck E. Cheese was founded in 1977 by Atari founder Nolan Bushnell it was an outside-the-box concept that totally wowed kids with its arcade games, animatronic shows and carnival-like atmosphere. However, over the decades, analysts say, the concept mostly failed to evolve with the times — and never figured out a way to also appeal to what might be it’s most important market of all: parents.

“While Chuck E. Cheese has left a mark on American culture, it appears to have lost its way,” says Jason Wright, group strategy director at the VIA Agency, a full service marketing agency in Portland, Maine. “They never seem to update, revise or re-brand,” which is why the Chuck E. Cheese buyout comes at a $950m surprise.

Unlike Disney, which clearly knows the secret formula for making both parents and kids happy, Chuck E. Cheese could never figure out the parent part of the equation. While kids walk in ready to rock n’ roll, many parents reluctantly walk in holding their ears — just hoping to survive the next 90 minutes, or so, of sensory overload.

“Parents don’t enjoy it so much — so it’s hard to get them in the door,” says Lynne Collier, managing director at the investment firm Sterne Agee. Maybe if there was more parental entertainment, too, like at Dave & Busters, the chain could have wider appeal, she says. And it needs to somehow expand beyond weekend, birthday celebrations and attract more week-day business. “But it’s a good brand — it’s not completely broken,” she says.

Chuck E. Cheese changes are coming for this buyout of $950, and that does mean a chain that can appeal to parents. This would be kids games that actually have some educational element, Wright suggests. “Something can be fun — and still have educational value,” Wright says.

If nothing else, Wright says, it would be hard to find a 20-something who isn’t at least familiar with the brand. “The brand awareness with Millennials has got to be through the roof,” he says.