The added convenience for customers will prove crucial for Chuck E. Cheese, which took a major loss in the early days of the pandemic because of its reliance on experiential dining. CEC Entertainment, the parent of Chuck E. Cheese saw comparable venue sales drop 94 percent from March 17 to March 26 when dining and arcade rooms first closed. In a SEC filing, the company said that historically, merchandise and entertainment revenue have accounted for approximately 56 percent of revenue at company-operated venues.
In April, the company furloughed many of its hourly employees and about 65 percent of its support center staff. CEC formed a restructuring committee to evaluate alternatives before declaring for bankruptcy in late June.
The brand recently received $200 million in financing from its first lien lenders to lift itself out of bankruptcy.
"We are pleased to have reached agreement with a substantial majority of our first lien lenders on a comprehensive balance sheet restructuring that will support our re-opening and longer-term strategic plans," McKillips said. "This agreement and financing demonstrate our creditors' confidence in our go-forward business plan and will enable CEC to complete this financial restructuring process in a timely manner."
In addition to technological innovation, Chuck E. Cheese has also implemented several measures to ensure health and safety in the new normal. Temperature checks are required for employees and customers. Everyone is asked to wear a mask, plexiglass separates customers and workers at the front counter, and arcades are sanitized every 30 minutes.
Additionally, instead of using a hand stamp at the kid check station, each customer is asked to take a “kid check selfie.” Seats are limited, and games are spaced at a minimum of 6 feet. Consumers must also use hand sanitizer before entering the location, and stations will be set up throughout the dining and gaming rooms.
As of now, the character program is paused, but McKillips says Chuck E. Cheese will be back.
“We ask our guests on a constant basis for feedback,” McKillips says. “We’ve got insights in all of our regions. … Word of mouth is spreading. We’re communicating in our social channels, as well. And slowly, we’re inviting our guests back to our entertainment experience.”
The CEO says the brand is also looking for more ways to integrate gaming outside the four walls to drive customers back to restaurants. When units first closed in March, Chuck E. Cheese unveiled two gaming apps where children can win virtual tickets to redeem at stores. The brand also launched a new concept called the “Fun Break,” which includes weekly activities for parents and kids to enjoy.
McKillips explains that time wasn’t on Chuck E. Cheese’s side amid the pandemic, but the company moved quickly and leveraged a strong management team to carry out the necessary adaptations.
All of it was in an effort to improve the customer experience.
“We are cognizant that we’ve got moms with young kids, and we want to make sure we welcome them and show that we’re safe, we’re clean, we’ve got the greatest safety protocols in the industry,” McKillips says.