The COVID-19 pandemic has been especially hard on restaurants and family entertainment centers, so you might expect a business that combines them both to be in a defensive mode right now. On the contrary, Chuck E. Cheese — the world-famous chain of arcade pizza parlors — is continuing to roll out a radical remodeling of all its locations, emphasizing interactive video technology and original seasonal content. Recently, the revamp arrived at Orlando’s International Drive, where we were able to interview Chuck E. Cheese CEO David McKillips, who recently took charge after a career that’s included SeaWorld, DC Comics, and Six Flags.
What brought you to Chuck E. Cheese in early 2020? That’s a really tough time to enter a CEO position. What’s it been like the last year and a half for you in this role?
Well, like everyone in the industry, it’s been certainly a challenging time, but I joined Chuck E. Cheese in January of 2020. And in March, as you know, we were closing our doors, and then thereafter, we went through a financial reorganization as well. The capital structure just wasn’t built to last through a pandemic. But we successfully navigated that. We emerged in the end of December, and then this year has been all about managing the recovery, keeping our employees and our guests safe. And now, reimagining the brand like you’re seeing today.
How has Chuck E. Cheese been coming out of this.You closed for a period of time; how many locations have you reopened now? What’s the trajectory been looking like for you in this last quarter?
We have all of our locations now open in the U.S. and Canada, and virtually all of them open in the international market, as well. So that’s a really good thing.
You know, during the pandemic, we had to think differently. We were one of the first national brands to launch a virtual kitchen, which the namesake is after Pasqually himself, so it’s “Pasqually’s Pizza and Wings.” That was one of the first virtual kitchens here that operates out of every single one of our locations. It was a way for us to continue to keep our people working and take care of them as we are reopening our doors and inviting guests back to the experience now.
At Chuck E., we’re all about entertainment. We’re all about games, and we compliment that with great food, but it’s all about celebration. So the birthday business is starting to come back, and we’re recovering in various areas on different trajectories. We opened up in California a lot later than we opened up here in Florida or in Texas, and so on and so forth. So we just manage a large fleet over 450 stores here in the United States. We’re managing through the supply chain, we’re managing through labor, and we’re delighting our guests, and that’s most important.
Talk to me a little bit about the redesign. This is the first one in the Orlando market, but you’ve been rolling out this model since even before the pandemic. What was the design philosophy when you were choosing to go with this renovation? What were the key features that you wanted to deploy?
So the company did various tests pre-pandemic. We looked at the performance of the locations, we looked at the insights from the guests with kids and moms, our core target audience, and then made a decision post-pandemic of how we’re going to reimagine this brand.
We wanted to bring technology into the experience, […] but the intent was all about entertainment. Anybody can build an arcade, but you just can’t build a Chuck E. Cheese. So he’s the star of the show. When you come in here, we wanted to make sure that we had the experience through the eyes of a five-year-old. We’ve got the best games — we’re actually the largest arcade in the world, we have two billion gameplays — so we want to make sure we have the best games in here. We have got a digital dance floor, floor-to-ceiling monitors now that are playing all original content from Chuck E. Cheese, plus third-party music content as well.
And then we really embraced technology. We launched a new app [where] you’re going to be able to order in-store, you can [now] order delivery and carry-out. We’ve got a brand-new loyalty program. We have cashless payment processing as well, and we just upgraded the technological advancements of the entire space.
Talk to me more about the entertainment content. I noticed that the puppet segments are really high quality, like Henson-quality work. Plus, you’ve got original video, and then there’s a seasonal component, too. What are your plans for keeping that kind of content fresh throughout the year?
I’ll start with seasonal. One of the core pillars of our new strategy was to celebrate the “four seasons of fun.” This is just like the theme park industry, which you know, I spent a couple decades working in. We really want to give you a reason to come multiple times throughout the year, and we’re doing that by redecorating the entire concept from an entertainment perspective, as well as some of the décor you see.
We’ve got “Springtastic;” “Chuck E. Cheese Summer of Fun;” our “Halloween Boo-tacular,” which we’re building to be the number one family entertainment Halloween destination for young kids and families — that’ll take time to build over the years — and we’re getting ready to debut what you’re seeing today, the “Winter Winner-land,” where every kid’s a winner. Every kid gets a game piece and we’re giving out thousands of prizes and millions of dollars in value. We’re really excited about that.
To talk about entertainment, we’ve really made a focus on the entertainment content and quality here at Chuck E. Cheese. So you’re 100% correct, it’s an elevated entertainment experience. You can see that from a technological perspective with the digital screens throughout the entire store as well as the interactive dance floor. We’re mixing the best of entertainment, music, and, of course, the star of the show is Chuck E. Cheese. We also feature this online, every Friday we do “Chuck E. Cheese Fun Break,” and we’re on YouTube Kids now with all of our content. During the pandemic, we dropped two albums that you can find on iTunes and Spotify as well.
So it’s transmedia; finding you at home and finding you in-store.
Absolutely. And for the first time ever, we took the characters outside the four walls. We did a five-city music tour and it was spectacular. We started here in Florida at Clearwater, at the beach, and we took them all over the country and it was really well-received by the guests.
Talk to me a little about games. What do you look for when you’re deciding what kind of arcade machines are going in? How do you keep up with the trends, and give something to kids that they can’t just get from a video game console or a smartphone that they have at home?
We have a great relationship with all the major manufacturers and we’re the largest purchaser of arcade games in the world, actually. We like to meet with all of them, and we’re really unique because […] we need games and rides and attractions for a younger-skewing audience, and then we also have kids that enjoy sports games and traditional arcade games as well.
We’re looking for big properties that we can look to develop and right now we’re thinking long-term and actually meeting with some of the IP holders, so the toy companies, the studios, to start to develop exclusive games for our audience specifically.
What’s most important for Chuck E. Cheese is we’re all about celebrating families and great moments together. So we want to really lean in on the multiplayer games where parents and kids can play together so that’s really, really important to us and that’s what we’ll be shopping for this year.
The Chuck E. Cheese I grew up with was the place with the animatronic characters, and based on pop culture ‘tributes’ like “Five Nights at Freddy’s,” or the Nicolas Cage film “Willy’s Wonderland,” there’s obviously still an adult audience that has a connection to the Chuck E. Cheese of the ’80s. Have you ever thought of doing something aimed at that audience that maybe isn’t coming here with their kids, but still has a connection to the brand?
Well, this brand has such a rich history and has been entertaining generation after generation now. Four generations have been through Chuck E. Cheese. We understand that animatronics are an important part of the innovation that once was the original Chuck E. Cheese, and continues to be. We’re always going to lean in on the importance of the character, and there could be a place down the line where we may reimagine that, but right now, through our insights and the new generation of Chuck E. Cheese guests, we’re looking to bring that in a digital format. But we certainly have over 300 restaurants right now that have the animatronics. We’ve only remodeled 100 of these locations.
But as the remodels happen, those animatronics are being retired?
They are being retired.
Is there a warehouse somewhere with all the old animatronics?
Some secrets I just can’t share.
That could be a movie!