Chuck E. Cheese, hit hard by pandemic, files for bankruptcy

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Chuck E. Cheese, the restaurant chain that became a Mecca for children and a crucible for many of their parents, is filing for bankruptcy protection.

Parent CEC Entertainment Inc, acquired by private equity firm Apollo Global Management Inc. in a 2014 leveraged buyout, has more than 600 Chuck E. Cheese outlets and over 120 Peter Piper Pizza venues.

CEC said it has reopened 266 company-operated Chuck E. Cheese and Peter Piper restaurants, but did not elaborate on how willing parents are to again host birthday parties and other gatherings with so many cities still under tight restrictions on crowds.

It did say Thursday that it will continue to reopen locations while it negotiates with debt and lease holders.

Chuck E. Cheese has three locations in Indianapolis, at 10021 E. Washington St., 8804 U.S. 31 South and 5501 E. 82nd St. It also has a restaurant in Avon, at 9931 E. U.S. 36.

“The Chapter 11 process will allow us to strengthen our financial structure as we recover from what has undoubtedly been the most challenging event in our company’s history” said CEO David McKillips in a prepared statement.

The service industry, which includes restaurants, has been devastated by the pandemic. This month, the Institute for Supply Management reported that the sector shrank for a second month in May.

Restaurants that can offer takeout have done so but those that rely on dining in, like Chuck E Cheese, have been hammered. People go to Chuck E. Cheese for parties and to let children loose on dozens of video and Skee-Ball machines and other games.

At one point, perhaps recognizing its disadvantage, some Chuck E. Cheese locations began offering food delivery on apps like Grubhub under the alias “Pasqually’s Pizza & Wings.”

CEC said it will continue to pay employees and continue benefits programs, honor guest gift cards, and uphold franchising and licensing agreements.

CEC’s franchised locations operate under separate legal and financial structures and are not included in the Chapter 11 filings, the company said.

Irving, Texas-based CEC was originally incorporated under the name ShowBiz Pizza Place Inc. The company changed its name in 1998 to CEC Entertainment and today its franchisees operate venues with locations in 47 states and 16 foreign countries and territories, according to its website.

A plan to take CEC’s parent company Queso Holdings Inc. public through a merger with shell company Leo Holdings Corp. was abandoned last year. That deal valued the firm at about $1.4 billion.

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