The Public Mouse: Chuck E. Cheese's Financial Status

Chuck E. Cheese's parent company, CEC Entertainment, was set to go public in 2019 through a merger with Leo Holdings, a publicly-traded special purpose acquisition company. The deal would have seen CEC Entertainment, which owns 750 Chuck E. Cheese and Peter Piper Pizza stores, traded on the New York Stock Exchange under the ticker CEC. However, the merger deal fell through in July 2019, with no reason given for the termination. As a result, Chuck E. Cheese's parent company remains private and is not a public company.

Chuck E. Cheese's parent company, Queso Holdings, merges with Leo Holdings

In April 2019, Queso Holdings, the parent company of CEC Entertainment, which owns Chuck E. Cheese and Peter Piper Pizza, announced a merger with Leo Holdings, a publicly-traded special purpose acquisition company. The deal would have seen CEC Entertainment return to the public market, trading under the ticker CEC on the New York Stock Exchange.

The merger was expected to close in the second quarter of 2019, with Leo Holdings changing its name to Chuck E. Cheese Brands Inc. and CEC Entertainment becoming a subsidiary. The deal would have valued CEC Entertainment at $1.4 billion, with proceeds going towards paying down the company's debt, which stood at 978.9 million as of December 30, 2018.

However, in July 2019, Queso Holdings terminated the proposed merger without disclosing a reason. The merger would have been the first time a restaurant company entered the public market in four years, and it is unclear what CEC Entertainment planned to do following the termination of the deal.

CEC Entertainment anticipates a $1.4 billion valuation

CEC Entertainment, the parent company of Chuck E. Cheese, anticipates a $1.4 billion valuation following its merger with Leo Holdings Corporation, a publicly traded special purpose acquisition company. This valuation is expected to be reached after the deal closes, with Leo Holdings providing $300 million in cash to CEC Entertainment to pay down its debt.

The merger, announced in April 2019, marks the return of Chuck E. Cheese to the public market after being taken private by Apollo Global Management in 2014 for approximately $948 million. As part of the merger, Leo Holdings will change its name to Chuck E. Cheese Brands Inc., and CEC Entertainment will be a subsidiary, trading under the ticker symbol "CEC" on the New York Stock Exchange.

CEC Entertainment's anticipated $1.4 billion valuation is based on its recent financial performance and growth prospects. In its 2018 fiscal year, the company reported revenue of $896 million across its 750 venues, including Chuck E. Cheese and Peter Piper Pizza brands. In the first quarter of fiscal 2019, CEC Entertainment reported preliminary same-store sales growth of 7.7%, driven primarily by the launch of its All You Can Play initiative, which allows parents to buy time blocks for their children to play instead of purchasing tokens.

The company's focus on investing in its business, including store remodels, updated technology, and menu revamps, has contributed to its positive momentum. Under Apollo Global Management's ownership, CEC Entertainment has made significant capital investments in PlayPass technology, store remodels, and new initiatives like All You Can Play, positioning the company for continued growth.

The executive team at CEC Entertainment, led by CEO Tom Leverton, will remain in place following the merger. Apollo Global Management, as the largest shareholder, will retain approximately 51% ownership of the newly formed company. Lyndon Lea, a founding partner of Lion Capital, and Andrew Jhawar, a senior partner with Apollo, will serve as co-chairmen of the Chuck E. Cheese board.

The company's revenue was $896 million in 2018

CEC Entertainment, the parent company of Chuck E. Cheese, generated a revenue of $896 million in fiscal 2018 across its 750 venues. This included 606 Chuck E. Cheese locations across 47 US states and 14 countries, as well as 144 Peter Piper Pizza units in six US states and Mexico. The average annual sales per Chuck E. Cheese store were approximately $1.6 million.

The company's revenue rose to $912.9 million in 2019, and its peak revenue of $912.9 million was recorded in 2023. Chuck E. Cheese has 10,001 employees, with a revenue per employee ratio of $91,277.

In 2018, over half of the company's revenue came from entertainment and merchandise, with the remaining 45% from food and beverages. Chuck E. Cheese's parent company, CEC Entertainment, was acquired by Apollo Global Management LLC in 2014 for about $948 million.

In 2019, Chuck E. Cheese's parent company was set to go public through a merger with Leo Holdings, a publicly-traded special purpose acquisition company. This would have made it the first restaurant company to enter the public market in four years. However, the deal was terminated in July 2019, and the company's plans after the collapse of the merger are uncertain.

Chuck E. Cheese was taken private in 2014 by Apollo Global Management

Apollo Global Management's acquisition of Chuck E. Cheese's parent company, CEC Entertainment, marked a shift in focus for the brand. During its time as a private company, CEC Entertainment invested significantly in its menu, stores, and entertainment offerings to modernise the brand. This included replacing tokens with RFID cards and introducing an "all you can play" model, allowing parents to pay for entertainment by time. The company also launched a loyalty program and partnered with delivery platforms to bring Chuck E. Cheese food to customers' homes.

In addition to these operational changes, CEC Entertainment also worked to revitalise the brand image. This included remodelling stores, introducing updated technology, revamping the menu to include coffee drinks, premium beer, and wine, and refocusing advertising to appeal more directly to parents.

The efforts made by Apollo Global Management and CEC Entertainment during this period paid off, with sales at CEC stores—including Chuck E. Cheese and Peter Piper Pizza—projected to grow 7.7% in the first quarter of 2019. This success set the stage for Chuck E. Cheese to once again become a public company in the future.

Chuck E. Cheese has over 600 stores globally

Chuck E. Cheese is indeed a public company, with plans to go public announced in 2019. The company's parent, CEC Entertainment, merged with Leo Holdings, a publicly traded special purpose acquisition company. This merger was expected to close in the second quarter of 2019, marking the first time a restaurant company entered the public market in four years.

CEC Entertainment owns and operates over 600 Chuck E. Cheese stores globally, with a presence in 47 states and 14 countries. In addition to its extensive network of Chuck E. Cheese locations, CEC Entertainment also owns Peter Piper Pizza, further bolstering its reach in the restaurant industry.

The decision to go public was driven by the desire to pursue growth opportunities and enhance the guest experience. Chuck E. Cheese has been working on remodelling its stores, introducing new products, and expanding its international presence. The company has also made significant investments in modernising its brand, including replacing tokens with RFID cards and introducing an "all you can play" model.

The merger with Leo Holdings, a special purpose acquisition company (SPAC) with no assets, allowed CEC Entertainment to access the public market. SPACs use proceeds from an IPO and bank financing to take privately held consumer companies public. The combined company trades under the ticker symbol "CEC" on the New York Stock Exchange.

The move towards public trading was expected to provide Chuck E. Cheese with greater financial flexibility to pursue its growth strategies and enhance its position in the competitive landscape. With over 600 stores globally, Chuck E. Cheese has established a solid foundation, and the public offering presented an opportunity to build on this success.

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