With the exception of a few cinema chains, Chuck E. Cheese's is the largest operator of location-based entertainment facilities in North America. As of February 11, 2002, they had 405 stores; 353 company owned and operated and 52 franchises.
It all started 25 years ago when Nolan Bushnell created Chuck E. Cheese's Pizza Theater and opened the first one in San Jose, California in 1977. Then, in 1979, Bob Brock, an entrepreneur who owned several Holiday Inn hotel chains, started his own chain of similar restaurants called Showbiz Pizza Place. In 1984, Bob Brock purchased the Chuck E. Cheese's Pizza Time Theater chain after they filed for Chapter IX Bankruptcy reorganization and merged it into Showbiz Pizza Time, Inc. The two concepts were operated under their separate brand identities until 1992 when all the stores are remodeled as Showbiz Pizza and the existing Rock-afire Explosion shows in the old Showbiz Pizza Place stores were replaced with new Chuck E Cheese character shows. Finally in 1993, Showbiz Pizza Time changed the name of all their restaurants to Chuck E Cheese's Pizza and in 1998, changed their corporate name to CEC Entertainment, Inc.
Chuck E. Cheese's (CEC) is really a hybrid concept, often referred to as eatertainment. Their stores combine a pizza restaurant that also includes subs and salads with token-operated games and redemption, soft-contained-play, an animatronic show and birthday parties. CEC says they target families with children between the ages of 2 and 12. Our observations are that they really appeal to 2 to 8's.
The restaurant industry looks at CEC as a pizza restaurant or a pizza and games concept. CEC is the world's 22nd largest restaurant chain and the 5th largest pizza chain based upon 2001 sales. Their 2001 revenues were $562,227,000, 10% higher than in 2000. Per store sales increase 5.09% for the one year period ending June 30, 2002.
The restaurants are located in shopping centers or freestanding buildings and range in size from 8,000 SF to 14,000 SF. White Hutchinson estimates the average size of newer units is 12,000 SF. New stores cost an average of $2.0 million to open.
Food, which includes a large part of birthday party revenues, represents 2/3's of sales, games 30% and merchandise 3%.
White Hutchinson has uncovered the following additional information from company reports and other sources:
CEC is experimenting with two new concepts. In 2001, they opened a full-service, 260 seat, casual dining restaurant in Lewisville, Texas named TJ Hartford's Sports Grille. CEC is planning to open a 2nd one later this year. Earlier this year, CEC open a 6,100 SF Chuck E. Cheese's Buffet restaurant in Waco, Texas. The restaurant is a new prototype for smaller markets and eliminates the animatronics and the soft-contained-play. Basically the new CEC prototype is a buffet-pizza and games concept.