Chuck E. Cheese Approaches Bankruptcy, Could Have to Close All Stores
The popular children's restaurant is nearly $1 billion in debt, the Wall Street Journal reported.
After months of keeping their doors shut amid the coronavirus pandemic, popular kid's restaurant Chuck E. Cheese may not ever reopen.
The brand behind the food-and-games establishment, CEC Entertainment, is nearly $1 billion in debt and is trying to approach lenders for a $200 million loan to keep the business afloat, according to the Wall Steet Journal.
On Friday, the brand announced it would be offering its top executives retention bonuses with the hopes that they would stay on in trying times.
CEC said it would pay nearly $3 million total to three executives, including $1.3 million to CEO David McKillips, the Securities and Exchange Commission filing showed.
The Texas-based restaurant currently operates 610 locations in 47 states but had to close its stores when the pandemic struck, making it extremely difficult for the company to raise capital.
In April, the brand said they were considering refinancing, bankruptcy and restructuring after the pandemic began to cause strain on the restaurant industry, the WSJ reported.
According to The Takeout, some 17,000 workers were laid off in March.
In an attempt to make money during the pandemic, the store masqueraded as Pasqually's Pizza and Wings on delivery apps, a reference to one of Chuck E. Cheese's bandmates.
Employees who were kept on board helped to operate Pasqually's as a takeout brand.
But Chuck E. Cheese is not the only restaurant chain to struggle amid the global health crisis.
Some outposts of IHOP, Denny’s, Ruby Tuesday, TGI Fridays and more have permanently shuttered due to hardships brought on by the pandemic.
CFRA Holdings, a franchisee operating 49 IHOP locations, filed for bankruptcy in early May and cited the coronavirus as the primary reason, according to FSR Magazine.
Aziz Hashim, the founder and managing partner of Ruby Tuesday owner NRD Capital, told Restaurant Business the pandemic will likely spur the closure of many more restaurants.
A Denny’s franchisee, Feast American Diners, closed 15 locations of the popular breakfast chain while locations of the Indianapolis-based chain Steak ‘n Shake and of TGI Fridays have also closed down permanently due in part to the pandemic.