Friday, October 16, 2020

Business Insider and CNBC explain the rise and fall of Chuck E. Cheese, a tale of the Retail Apocalypse and pandemic

"Looks like I have more stories to write about restaurants in distress during the pandemic. Stay tuned." That's what I told my readers as my conclusion to Ruby Tuesday and Sizzler file for bankruptcy, tales of the Retail Apocalypse and pandemic. Before I tell any new stories, I'm returning to an old one, Chuck E. Cheese. Business Insider told a condensed version of the story in The Rise And Fall Of Chuck E. Cheese.

With a combination of arcade games, pizza, and animatronics, Chuck E. Cheese became the go-to spot for kids' birthday parties in the '90s. But a $1 billion debt load and shuttered dine-in service due to the COVID-19 pandemic forced Chuck E. Cheese to file for bankruptcy in June. So what happened?
That's very much the same story that Company Man told, just with a bigger budget and more professional production values.* Both versions make clear a point I made in CNN Business explains retail bankruptcies and how private equity is gutting retail, tales of the Retail Apocalypse.
As I wrote in Company Man describes the decline of GNC, a tale of the Retail Apocalypse and pandemic, "Usually it's private equity leveraging a company and making it vulnerable to bankruptcy during downturns, which happened to KB Toys, Sears and KMart, Toys R Us, Art Van, J. Crew, and Chuck E. Cheese's." As the video pointed out, I should now add Neiman Marcus to the list. So, don't just blame Amazon and the COVID-19 pandemic for retail bankruptcies and closures; vulture capitalism plays a major part in the story as well.
As the video made clear, Chuck E. Cheese was already in trouble before the COVID-19 pandemic hit; the pandemic response was just the final straw.

Two days after Business Insider released their video, CNBC uploaded one of their own, which asked Can Chuck E. Cheese Survive Bankruptcy?

Chuck E. Cheese reigned as a favorite for kids birthday parties for over 40 years. But in June 2020, it filed for Chapter 11 bankruptcy and is reopening restaurants after nationwide closures in an attempt to entice families back. While indirect rivals such as Domino's and Papa John's have managed to recover some of their business, Chuck E. Cheese's struggles may be more than it can handle, as it tries to regain its footing in an industry ravaged by the pandemic.
While CNBC retold the history of Chuck E. Cheese, it also connected the chain's situation to those of its competitors and to the restaurant business as a whole, placing its bankruptcy in context. In particular, the relative success of Domino's and Papa John's, both of whom focused on take-out and delivery of high-quality, competitively priced pizza, pointed out the kind of restaurant operation that is succeeding in the current retail environment. Also, I did not know that Chipotle had invested so heavily in mobile ordering technology, which appears to have kept their overall revenues from dropping more than 10%. Meanwhile, Dave & Busters really looks like an adult version of Chuck E. Cheese and could suffer many of the same issues. At least it's publicly traded, so private equity won't have the same pernicious effect that it's had on so many other retail and restaurant chains I've written about here.

If CNBC answered its question about Chuck E. Cheese surviving bankruptcy, I don't remember it. However, Business Insider thought the company would. Stores reopening with safety measures in place support that conclusion. KOAA 5 in Colorado Springs showed some of them in Chuck E. Cheese locations reopen with safety measures in Colorado Springs.

Finding a way to safely and responsibly reopen is a challenge businesses still face during this global pandemic. News5 found out longtime family entertainment hub Chuck E. Cheese is trying to rebound in Colorado Springs.
That's encouraging. I wish Chuck E. Cheese luck; they'll need it.

I have more Retail Apocalypse stories to tell, but only after Sweetest Day and the Sunday entertainment feature. Stay tuned.

*That's not a knock on Company Man Mike; he does a great job for a one-man operation. It's just that it's hard to compete with the resources of a professional news organization.

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