Randy Chandler
Chuck E. Cheese is a well-known family entertainment and dining franchise, with a unique offering of pizza, arcade games, and animatronic shows. The company was founded in 1977 by Nolan Bushnell, the co-founder of Atari, and has since expanded to over 540 locations worldwide. Despite facing financial challenges, including bankruptcy filings in 1984 and 2020, Chuck E. Cheese has remained a leader in the family entertainment industry. As of 2024, the company reported an annual revenue of $912.9 million and an average revenue per store of $1.5 to $2 million. To become a franchisee, individuals must meet specific financial requirements, including a minimum net worth of $1.5 million and $800,000 in liquid capital.
| Characteristics | Values |
|---|---|
| Annual Revenue | $912.9 million |
| Number of Employees | 10,001 |
| Revenue per Employee Ratio | $91,277 |
| Peak Revenue | $912.9 million in 2023 |
| Net Income in 2019 | -$28.92 million |
| Number of Locations Worldwide | Over 540 |
| Average Revenue per Location | $1.5 million to $2 million |
| Average Gross Sales per Location | $2 million |
| Minimum Net Worth to Become a Franchisee | $1.5 million |
| Minimum Liquid Capital to Become a Franchisee | $800,000 |
| Royalty Fee | 4% of gross sales |
| National Marketing Fund Contribution | 3% of gross sales |
| Total Investment Required to Open a Franchise | $1.17 million to $1.83 million |
What You'll Learn
Chuck E. Cheese's revenue and net income
Chuck E. Cheese, the nationally recognised leader in family entertainment and dining, has an annual revenue of $912.9 million. This figure was calculated by dividing the company's annual revenue of $912.9 million by its 10,001 employees, resulting in a revenue per employee ratio of $91,277. Chuck E. Cheese's peak revenue was $912.9 million in 2023.
The company, which is headquartered in Irving, Texas, operates a system of nearly 600 Chuck E. Cheese venues and more than 120 Peter Piper Pizza venues in 47 US states and 17 foreign countries and territories. The brand has an international presence in 17 countries and territories, with plans to expand its franchise globally.
In 2019, Chuck E. Cheese's generated approximately $912.87 million in revenue, up from $896.07 million the previous year. The company's net income for that year was a loss of $28.92 million.
Chuck E. Cheese is owned by CEC Entertainment, which was acquired by Apollo Global Management LLC in February 2014.
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The cost of starting a franchise
The cost of starting a Chuck E. Cheese franchise varies depending on the number of stores you plan to open. The company offers three investment options, each with its own minimum financial requirements in terms of net worth and liquidity.
For those interested in opening 1-5 stores, a minimum net worth of $2.5-$3.5 million and liquidity of $1.5-$2.5 million are required. If you're looking to open 5-15 stores, the minimum net worth increases to $4.5-$7 million, with liquidity requirements of $3.5-$5.5 million. Finally, for those aiming to open 15-25 stores, a minimum net worth of $7-$12 million and liquidity of $5.5-$9 million are necessary.
It is important to note that Chuck E. Cheese does not offer financing for franchise locations. However, financing options such as bank loans or bringing on additional equity partners are available.
In addition to the financial requirements, there are other crucial factors to consider when starting a Chuck E. Cheese franchise. The company looks for partners with proven success in running businesses in their market, although prior experience in restaurants or entertainment is not necessary. The ideal location for a franchise also plays a significant role in its success. The most successful sites are typically located in areas with an affinity for US brands, a lack of family entertainment options, and an urban population of kids and families who can afford Chuck E. Cheese.
The cost of starting a Chuck E. Cheese franchise is a significant investment, but with the right financial resources, business acumen, and strategic location, it can be a rewarding opportunity for those looking to enter the world of family entertainment and dining.
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The company's financial requirements for franchisees
To become a franchisee of Chuck E. Cheese, there are specific financial requirements that must be met. Prospective franchisees need a minimum net worth of $1.5 million, demonstrating financial stability to invest in and sustain the business. This requirement ensures that individuals have the necessary capital to establish and maintain their franchise effectively.
In addition to the minimum net worth, franchisees are required to have at least a minimum liquidity of $800,000. This liquid capital is essential for covering various expenses, such as real estate, construction, equipment, and initial setup costs. The total investment required to open a Chuck E. Cheese franchise ranges from $1.17 million to $1.83 million.
For those interested in opening multiple stores, Chuck E. Cheese offers three investment options. The first option is for opening 1-5 stores, which necessitates a minimum net worth of $2.5-$3.5 million and $1.5-$2.5 million in liquidity. The second option is for 5-15 stores, requiring a minimum net worth of $4.5-$7 million and $3.5-$5.5 million in liquidity. Lastly, the third option is for opening 15-25 stores, demanding a minimum net worth of $7-$12 million and $5.5-$9 million in liquidity.
It is important to note that Chuck E. Cheese does not offer financing for franchise locations. However, prospective franchisees can explore other financing options, such as bank loans or partnering with additional equity investors.
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The average revenue of a franchise
The average revenue of a Chuck E. Cheese franchise is between $1.5 million and $2 million per year. This figure can vary depending on the franchise's performance, operational efficiency, and marketing efforts. The franchise has a royalty fee of 4% of gross sales, which goes towards ongoing support and brand maintenance, and a contribution of 3% of gross sales to the national marketing fund.
The total investment required to open a franchise ranges from $1.17 million to $1.83 million, and prospective franchisees need a minimum net worth of $1.5 million, with at least $800,000 in liquid capital. The average gross sales for a franchise are approximately $2 million per location, and assuming a 15% operating profit margin, this can result in $300,000 EBITDA annually.
Chuck E. Cheese is a well-known family entertainment and dining franchise, combining pizza, arcade games, and animatronic shows. The brand has over 540 locations worldwide and is recognised as a top destination for children's birthday parties. The unique combination of food, entertainment, and live performances has helped differentiate the brand from its competitors.
The cost of starting a Chuck E. Cheese franchise includes various expenses such as real estate, construction, equipment, and initial setup. The size of an international location varies depending on the market, location type, and real estate availability but typically ranges from 1,000 m2 to 1,400 m2, with 55-85 arcade-style games.
The brand has specific financial requirements for prospective franchisees, including a minimum net worth and liquidity, which increase with the number of stores planned. For 1-5 stores, a minimum net worth of $2.5-$3.5 million and $1.5-2.5 million liquidity is needed. For 5-15 stores, the net worth requirement increases to $4.5-$7 million, with $3.5 million-$5.5 million liquidity. And for 15-25 stores, a net worth of $7 million-$12 million and $5.5 million-$9 million liquidity is necessary.
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The company's bankruptcy filings
Chuck E. Cheese, the well-known family entertainment and dining franchise, has faced financial challenges over the years, including bankruptcy filings in 1984 and 2020. The brand has managed to remain a leader in the family entertainment industry despite these setbacks.
The first bankruptcy filing occurred in 1984 when Pizza Time Theatre Inc., the company that owned Chuck E. Cheese at the time, reported a loss of $58 million incurred in 1983. The company's debts became insurmountable, leading to the Chapter 11 bankruptcy filing. The video game market crash in 1983 and the decline in the popularity of arcades in the United States significantly impacted the company's revenues.
Following the 1984 bankruptcy, the chain was acquired by Brock Hotel Corporation, the parent company of competitor ShowBiz Pizza Place, in 1985. This merger formed a new parent company, ShowBiz Pizza Time, Inc., which began unifying the two brands.
In 2020, CEC Entertainment, the owner of Chuck E. Cheese, faced financial struggles exacerbated by the COVID-19 pandemic and filed for Chapter 11 bankruptcy protection. The company had an estimated $1-2 billion in debt, and there was a possibility that all CEC properties would be forced to close if bankruptcy refinancing failed. CEC Entertainment solicited $200 million in loans to finance a restructuring under bankruptcy protection.
CEC Entertainment emerged from bankruptcy in 2021 under new ownership and leadership. The company was acquired by Monarch Alternative Capital, an investment firm, as part of a significant financial restructuring. The restructuring allowed CEC Entertainment to eliminate substantial debt and continue operations.
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Frequently asked questions
As of 2024, the net worth of Chuck E. Cheese's is unknown. However, the company's revenue is $912.9 million, and it has 10,001 employees.
The cost of starting a Chuck E. Cheese's franchise varies depending on the number of stores. For 1-5 stores, the investment ranges from $2.5 million to $3.5 million. For 5-15 stores, the investment is between $4.5 million and $7 million. And for 15-25 stores, the investment starts at $7 million and can go up to $12 million.
Prospective franchisees need a minimum net worth of $1.5 million and at least $800,000 in liquid capital.
A Chuck E. Cheese's franchise typically generates average gross sales of $2 million per location. With a 15% operating profit margin, this can result in an EBITDA of $300,000 per year.
