Chuck E. Cheese (CEC Entertainment)
From Invertopedia, the encyclopedia of how things fail
CEC Entertainment, the parent of Chuck E. Cheese and Peter Piper Pizza, filed for Chapter 11 on June 25, 2020 after venue closures from the coronavirus pandemic[1][3]. The 43-year-old chain was struggling even before the pandemic[2]. Apollo had taken it private in a $948 million deal in 2014, and a 2019 merger with a special purpose acquisition company that would have taken it public collapsed[1]. Same-store sales fell 21.9% in the quarter ended March 29, normally its busiest[1].
The kill shot
The filing blamed COVID, but the chain went into the pandemic already weak, and its owner's last attempt to refinance by going public had failed.
The company called the pandemic the most challenging event in its history and said Chapter 11 would let it strengthen its financial structure[2]. In a filing in early April the company said it was not paying rent[1].
The inversion
Buy a business in decline with debt and you have bet that nothing will go wrong for years.
References
- ^ “Chuck E. Cheese parent files for Chapter 11 bankruptcy”. CNBC, June 25, 2020. Filing, Apollo's 2014 deal, SPAC collapse, sales drop, rent.
- ^ “Pandemic takes a bite, Chuck E Cheese files for bankruptcy”. Associated Press via FOX 4 Dallas, June 25, 2020. Age, pre-pandemic struggles, restaurant count, CEO statement.
- ^ “Chuck E. Cheese Hits Ch. 11 Following COVID-19 Closures”. Law360, June 25, 2020. Chapter 11 filing in Texas after COVID closures.