The end of the 1970s witnessed the emergence of an innovative business model that would revolutionize the restaurant industry, especially speaking of family-friendly places to eat, we are referring to theme restaurants that had a “boom” with the arrival of Chuck E. Cheese’s and years later, with the appearance of ShowBiz Pizza Place.
The history of Chuck E. Cheese’s has left great lessons for entrepreneursand despite several bankruptcy filings or the obsolescence of its concept due to technological advances, the company currently has a presence in nearly 19 countries through franchisees.
The birth of Chuck E. Cheese’s
Nolan Bushnellco-founder of Atari, a company that could be considered the pioneer of the video game industry, realized that the restaurant sector was missing something: fun. This is how he developed a concept in which food, video games and entertainment coexisted at the same time and under the same roof.
With the customer experience as its priority, in 1977 the first Chuck and cheese‘Pizza Time Theater located in San José, California, an innovative space within the family restaurant category where the little ones could eat one of their favorite dishes such as pizza, while enjoying a show starring animatronics or playing on the arcade machines. ; quite an event for the time.
The novel business model, coupled with the boom that Atari and similar video game companies were experiencing, led the company to expand throughout the United States. But this did not go unnoticed and a new player entered the arena in 1980: ShowBiz Pizza Place.
The rat competition
Initially, the company founded by Robert L. Brock and Aaron Fechter signed a million-dollar contract with Pizza Time Theatre, Inc., led by Bushnell and owner of Chuck E. Cheese’s, to open nearly 280 locations in 16 states in that country; However, after seeing that another company was making more advanced animatronics, they canceled the contract and opened their own restaurants.
Unlike Chuck E. Cheese’s, they offered a greater variety of pizzas, as well as an entire band with full-body characters (Chuck the mouse only had half his body, from the torso to the head) who performed live concerts.
The battle broke out one year after the launch of ShowBiz, in 1981, in terms of locations Chuck E. Cheese’s had the lead, but in annual revenue, Robert L. Brock’s company surpassed its opponent. But the worst was yet to come…
Arcade video games on the decline and first bankruptcy
Although at the beginning of 1980 arcade games were still relevant, in the middle of the same decade history was radically transformed with the arrival and popularization of computerized video games thanks to Nintendo, who created consoles and cartridge games to be enjoyed from the comfort of home. .
Under this context, Chuck E. Cheese’s decided that its strategy should be to continue its expansion by opening more and more stores, this ended in over-indebtedness that led them to declare bankruptcy in 1984.
Contrary to the pioneers, ShowBiz and its ability to adapt and change in the face of the circumstances that arose, were able to survive and even buy its opponent for $35 million dollars. This not only represented another chance at life for Chuck E. Cheese’s but also a of growth.
Following the acquisition, all ShowBiz restaurants were transformed into Chuck E. Cheese’s locations, and since then, the company has experienced ups and downs, from expansion, acquisitions, rebranding, to another bankruptcy filing.
This last episode occurred in 2020, where as a result of the forced closures due to the COVID-19 pandemic, the company could not stay afloat and with a doubt close to two billion dollars, they had to declare bankruptcy again. .
Despite everything, experts assure that the company will remain in force, in fact, in our country they have a presence in more than 11 cities and the opening of more establishments is planned.
Brand building and rebranding, lessons from the Chuck E. Cheese’s case
As strange as it may seem due to bankruptcy filings, acquisitions, obsolescence of its business attractions and more, Chuck E. Cheese’s still maintains a presence today, why is this? There are several lessons we can take:
1) Strategic growth
Contrary to what happened with Nolan Bushnell’s company, which opted for the increase in branches in the midst of the decline of the arcade video game industry, ShowBiz understood the context that surrounded them and the need to act based on it, that is, renew or direct your efforts to other senses such as betting more on the customer experience with children’s parties, animatronic shows and more.
2) Brand building
Although ShowBiz was the one that survived in terms of business, on a brand level it was Chuck E. Cheese’s that prospered. A solid reputation and remaining in the collective imagination, especially among children’s audiences, contributed to its continued presence almost 47 years after its founding.
3) Rebranding
Life changes and brands must too, in terms of image, this famous themed restaurant has constantly modified its appearance (logo, mascot and more) to adapt to tastes, interests and trends, and thus remain current.
4) Adaptation to changes
And not only in terms of image, this case shows the importance of knowing how to read the market, foresee possible changes and act accordingly.
Throughout the life of a company there will be an infinite number of challenges, which can be an opportunity to evolve and grow, or they can be the breaking point.
Take some of the lessons from the Chuck E. Cheese’s case and prepare your company to overcome any obstacles it may present.
Daniela Ramos Communicator and mother. With 10 years of experience, I have been able to tell stories related to business, personal finances, work culture, entrepreneurship and technology.