- CEC Entertainment, parent company of Chuck E. Cheese and Peter Piper Pizza, has drawn interest from potential buyers. Those suitors reportedly include New York grocery owner John Catsimatidis, who has some CEC bonds, and a group of bondholders, who offered over $100 million in investments and to keep it out of bankruptcy, according to The Wall Street Journal, which cited people familiar with the matter.
- A spokesperson for CEC told The Wall Street Journal that the company is continuing to look into strategic alternatives to better position it for long-term success and to recover from the impact of COVID-19.
- CEC has been reopening its venues with 100 out of 741 units across both brands expected to resume operations by mid-June.
The novel coronavirus pandemic has been particularly difficult on eatertainment chains like Chuck E. Cheese that rely heavily on dine-in traffic, especially if they offer in-person games. In April, the company reportedly was in discussions with its lenders to raise money to avoid bankruptcy and was seeking a $200 million loan. In early May, the company sued a Dallas landlord to avoid eviction after it asked for rent abatements in mid-March, but then paid its April rent in full.
The company started the year on more solid footing after it increased comparable venue sales by 2.7% in 2019 and boosted revenues to over $912 million from over $896 million after building on its All You Can Play family platform and expansion of its remodel program, according to an earnings release. The company was planning to introduce domestic promotional initiatives, global franchise expansion and debut entertainment and licensing efforts, CEO David McKillips said in the release.
But these plans were likely put on hold as the company closed its dining rooms following dine-in restrictions and stay-at-home orders that lasted through May in most markets. During the pandemic, the company pivoted to offer third-party delivery and carryout and debuted family packages and birthday celebration packages, but it has not been enough to make up for its losses.
This isn’t the first time the company is faced with a buyout deal. Over a year ago, CEC Entertainment’s parent company Queso Holdings and its controlling stockholder, Apollo Global, were in talks to merge with Leo Holdings and go public, but the deal fell through. That deal would have provided proceeds to pay down $300 million in debt.
If a new deal does occur, it could put the company in a stronger position, especially if the acquiring company helps pay down CEC's debt and help it avoid bankruptcy.