Chuck E. Cheese is struggling to bounce back from the financial damage of the business shutdown caused by the COVID-19 pandemic.
After shuttering all its 610 locations in 47 states in mid-March, Chuck E. Cheese, which currently has more than $900 million in debt, is reportedly looking to raise money to avoid filing for bankruptcy.
According to The Wall Street Journal, the chain of family entertainment centers has been talking to lenders in hopes of securing a $200 million loan, which will be partially used as retention bonuses for its executives and other key employees to make sure that none of them will leave the company during these trying times.
In April, Chuck E. Cheese’s parent company CEC Entertainment said that it was exploring a number of financial bail-out options to save the “eatertainment” chain, revealing that refinancing, bankruptcy, and restructuring were all being considered. Restaurant Business reported that three different advisory firms were hired to evaluate and assist CEC Entertainment’s primary brand.
As stated in an SEC filing, based on Chuck E. Cheese’s Key Employee Retention Program (KERP), CEO David McKillips will get $1.3 million; President J. Roger Cardinale will receive $900,000; and executive vice president and CFO James Howell will be gifted with $675,000 if they stay in their current roles through the earlier of either 12 months or 30 days following a potential restructuring. In addition to McKillips, Cardinale, and Howell, an additional 25 employees have entered into KERP, but details on their compensation were not indicated in the filing.
The Takeout reported that over 17,000 workers of CEC Entertainment were laid off following the closures of all Chuck E. Cheese locations. And because Chuck E. Cheese’s current business model isn’t really designed in a world where a pandemic continues to rage on, it’s possible that all of the chain’s locations will not reopen at all.
CEC Entertainment, however, has kept a number of Chuck E. Cheese’s employees on board to sell pizza under a new business called Pasqually’s Pizza & Wings.
“CEC Entertainment, Inc. recently launched Pasqually’s Pizza & Wings nationwide,” a Chuck E. Cheese spokesperson told Food & Wine in April. “Pasqually’s Pizza & Wings, named after another favorite member of Munch’s Make Believe Band, shares kitchen space with the Chuck E. Cheese restaurant, ensuring high-quality, fresh ingredients. Pasqually’s Pizza & Wings’ recipes use fresh, homemade pizza dough, just like Chuck E. Cheese, but it is a different pizza that features a thicker crust and extra sauce, giving consumers a more flavorful, more premium pizza experience. While Pasqually’s Pizza & Wings recipes are currently only available for delivery, select items might be added to the Chuck E. Cheese menu in the future.”