How does Chuck E. Cheese stay relevant following bankruptcy?
Chuck E. Cheese has seen a lot in 44 years. The namesake rodent at America’s leading children’s entertainment center and pizza chain has watched generations grow up, playtime trends evolve and video games move from the arcade to the home. He’s even seen his own image change, from a rat in the company’s early days to a mouse after a rebranding campaign.
The fact he’s still here is a testament to his employer’s surprising perseverance.
Sitting in front of what appears to be an Impressionistic take on Chuck E. Cheese, complete with a bowler hat and bowtie, David Mckillips, chief executive of Chuck E. Cheese parent company CEC Entertainment, credits the company’s longevity to its embrace of technology. It’s an ideology, he said, that stems from its founder, video game titan Nolan Bushnell of Atari fame.
“We keep embracing innovation decade after decade,” Mckillips said. “We don’t have ball pits anymore. But we have the greatest video games and arcade games and interactive dance parties.”
The path has not been easy for Chuck E. Cheese — which has two Columbusarea locations — especially recently. Just in the last year and a half, there were months of restaurant shutdowns during the pandemic, the permanent closure of more than 30 locations and a filing for bankruptcy protection. Yet its culture of adaptation has kept Chuck E. Cheese alive when some of its competitors have died young.
The first Chuck E. Cheese opened in 1977 in San Jose, California, and quickly proved a hit. The children’s game center and pizza parlor with the distinctive animatronic animal band expanded, thanks in part to the rising popularity of video games, according to a 2017 case study published in the Journal of Business Cases and Applications.
Chuck E. Cheese’s parent company went public in 1988 and by 2005, Chuck E. Cheese had grown to 500 locations.
But by the early 2010s, sales started to slow, leading to a revamp of the main character himself in 2012. Chuck E. Cheese lost his ‘90s-chic fingerless gloves, the backward baseball cap and casual shorts and took on a more rocker appearance with jeans and an electric guitar.
A rebrand didn’t solve all the chain’s problems. In 2014, CEC Entertainment was acquired by private equity firm Apollo Global Management in a leveraged buyout. The firm invested in an effort to make its 577 restaurants more palatable.
Over the years, Chuck E. Cheese has changed its menu to include new kinds of pizzas, such as pies with mushrooms and fresh spinach and kid-geared desserts such as multicolored unicorn churros. The chain also tried to better appeal to adults by serving alcohol, a move that could boost sales but also may have led to increased altercations at its restaurants, according to the 2017 case study. (”Consider the following description of the restaurant offered by an
Among the big leases signed in the metropolitan area in recent months, only a few represent a net gain, as opposed to a tenant moving from one existing Columbus office to another.
The biggest recent lease of new office space here is by the financial firm Upstart, which leased 240,000 square feet in the Easton area vacated by Alliance Data Systems early in the pandemic.
Experts hope the rise of new companies in Greater Columbus, especially in the health and financial technology industries such as Upstart, will help fill empty offices.
“On a macro level, we’re seeing this in all the major gateway markets,” said Phil Pelok, a senior vice president in the Columbus
office of the commercial real estate firm CBRE.
“It’s driven by technology returning to offices. That seems counterintuitive because technology is allowing us to work remotely, but the tech sector is actually driving the growth to return to the office.”
In addition to Upstart, Pelok cited Andelyn Biosciences, which leased more than 40,000 square feet in Dublin from Vantrust.
“Columbus is a hotbed for biotech now,” he said.
Traditional users offer a different story.
“There was a time when you saw a large absorption, it was coming from something already in town, a law firm, an insurance company, a bank,” Pelok said. “That’s not the case now.”
In fact, recent leases suggest that traditional office tenants may be downsizing their offices in the wake of the pandemic. The accounting firm Deloitte, for example, is taking slightly less space in the Peninsula project than the company now leases in the Continental Plaza at 180 E. Broad St. And BMW is taking considerably less space in the new Grandview Crossing development than it now occupies in Hilliard.
The big question facing landlords moving forward is whether other firms will shrink their office needs as their leases come due.
“I’m seeing on renewals more downsizing than upsizing,” said Wayne Harer, executive managing director of the commercial real estate firm Newmark. “That could make backfilling a challenge.”
The average lease signed in the Columbus area this year has been for 3,600 square feet, compared with 4,600 square feet before the pandemic, said Ptacek, with Costar.
Nonetheless, she and others remain bullish on the market.
“It does appear at this point that the market is stabilizing,” Ptacek said. “If you look at fourth-quarter absorption, we’re now in positive territory. I don’t know where we’ll end the year, but it’s definitely better than than last quarter.”
But, she and others acknowledge, there is no formula for predicting this pandemic office market. While many in the industry expect companies to pull people back into offices for the sake of the company culture and communication, the future remains unclear.
“If you ask 10 real estate folks or 10 companies, you’ll get 10 different answers,” Harer said. “Companies are trying to figure this out. They want to make people happy so they don’t leave, so they want to allow them some sort of work-from-home part of the time at least.”
jweiker@dispatch.com, @Jimweiker