December 01, 2022
David McKillips, CEO of CEC Entertainment
Rebooting Games, Food and Entertainment – David McKillips, CEC
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Not many know CEC Entertainment, but they know Chuck E.Cheese. This globally recognized entertainment and dining brand has seen it’s fair share of reboots since its founding days in Silicon Valley back in the 1970’s. A company that hosts half a million birthday parties and two billion game plays every year, their slogan, “Where a kid can be a kid everyday ®” has been repeated (or sung) in most every American household with kiddos. Part of a system of family destinations under the bigger umbrella of CEC Entertainment, the brand boasts over 600 restaurants around the globe.
With a new CEO joining in January 2020, David McKillips jumped headfirst into a Chuck-E Ball Pit—just as the global pandemic forced all of their locations to close. His decades of experience in family entertainment at Six Flags, DC Comics, Sea World and Sesame Place, were just what the doctor (or the board) ordered for this hands-on transformation and financial restructuring.
A nightmare of a situation for a first-time, location-based entertainment CEO to encounter on day one, David led the company from an ineludible Chapter 11 filing to quickly launching Pasqually’s Pizza—all while (more importantly) rebooting the iconic brand into a global platform. Together with Chuck E. Cheese, Peter Piper Pizza (a growing regional fresh-made pizza restaurant), and Pasqually’s Pizza and Wings(one of the first virtual kitchen delivery-only brands) the group employs 13,000 people in a market that’s projected to be over $40 billion by 2027.
To uncover and unpack some of CEC’s reboot story, David and I had this fascinating chat on The Reboot Chronicles podcast.
A Headful of Ideas Won’t Cut It
Hoping to embrace the new challenge a first time CEO role brought in, McKillips was all geared to execute several things by March 2020. Leveraging his expertise in the entertainment industry, he was overflowing with new ideas and innovative options until COVID-19 hit hard and “we were closing every single door. By the end of June, the balance sheet just couldn’t support being closed operationally, and we had to file for a debt restructuring Chapter 11, which we ultimately were successful in terms of emerging by the end of the year. We’ve now set ourselves up for the new chapter at Chuck E.Cheese, but it was tumultuous. We have a great team, a great leadership on the ground and at the corporate level.”
A Responsive Remarkable Journey
To move that quickly and save a company certainly speaks volumes of this leader’s experience, plus the move to financially restructure and emerge out of bankruptcy underscores strategic brilliance as well. When it was time to reopen doors post pandemic mayhem, David and team set themselves up with “a strategy of six areas of growth for the company.”
“The first and most important was to invest back in the business. Chuck E.Cheese is a 44 year old brand, with lot of nostalgia. Every single guest young or old has some type of relationship with the brand through generations. It could have been their first birthday party, an after school event, mom or dad weekend out, and so on. As I looked at the business, I was like – how are we going to relate to a new generation of kids who are powered by the small screen, the big screen and video games and how do we combine moments for parents and kids to play together. We went though a deep dive in terms of remodeling the experience. We got the technologically forward design – interactive dance floors, a big Jumbotron, a TV network, all new games and amenities for mom and dad.”
Advancing the operation further, the company moved from the forever nostalgic “old paper tickets to an E-ticket system”, saving time and benefiting financially. A huge innovative approach that paved the way for the business to go to the core customer segment and say “when you’re ready to put on your jacket and hat, you can pick a prize and leave”. Net result: happy moms, greener cleaner sustainable outcomes, financially savvy, and most importantly offering a robust adult experience after a couple of hours easily of high-energy, action-packed entertainment for the kids.
Innovation Streak Begins
A brand new loyalty club with a million and a half members is the how the brand is keeping in touch with guests and is building the vital one to one relationship. “We use this as a springboard for promotion around our four seasons events, including our big summer pass. All the benefits are on your loyalty pass. For years, Chuck E. Cheese has been coupon driven, and now we have brought those coupons into a gated environment rewarding our most loyal members.”
Gaming has been the forefront at this entertainment venue for years. In an era of staring at screens in restaurants, using screens as a fulfillment device, making it interactive and entertaining is astounding. Not to fight the phone or the idea, instead leverage it, and kind of help bring the journey home with them via the loyalty club program and of course, the multitude of digital pictures every family clicks!
“Gaming is ultimately the heart and soul of Chuck E. Cheese, it’s about the entertainment, the music. Formerly it was the animatronics, now it’s about the interactive play between the dance floor and the Jumbotron to the music and the partnerships we are bringing. We are an entertainment venue, the majority of our dollars generated come from gaming. We take it really seriously. It’s all about participatory play, parents and kids playing together. That is so important to our brand.”
Three levels of arcade setup – skill games, sport games and traditional arcade games all are “super important”; Segregated sections for younger pre-school audience in their rides so they’re “not in conflict with some of the older kids” running around round up David’s thought process on the way the brand sees their venue offering entertainment to its audience in varied age groups. Building stuff seeing it from the lens of a five to seven year old so they can reach and enjoy their gaming station, is an added step tailor made for the younger audience.
Most nimble of the innovation outcomes is the Pasqually’s story—a silver lining during COVID times for the company. “How are we going to keep this brand going” gave birth to bringing “in home entertainment of Chuck E.Cheese”, delivering home a birthday party with pizza, a cake, and sending prizes home, plus link into the YouTube channel and still get that Chuck E.Cheese experience. It’s not the same as coming to Chuck E.Cheese, but during COVID “we all looked at how are we going to survive. We already had this great character named Pasqually and that’s now our virtual kitchen Pasqually. We are looking for continued innovation. Many other companies have followed in our footsteps.”
Expanding international footprint, the brand now has 86 locations open today in 17 countries and territories worldwide. Creating lifelong experiences for kids and families involves a lot of effort to say the least, and even more so to establish the brand as the #1 for family entertainment and value. Helping celebrate more than half a million “happy” birthdays and also contributing to societal causes donating more than $19 million to schools through fund raising are some standout attributes for the company. Offering sensory sensitive experience in partnership with “Autism Speaks”, a wholesome “Kid Check ®” safety system and with more community engagement events like “entire playground project”, there’s certainly more to look for and like David echoes,
“Chuck E. Cheese has this incredible niche. Anybody can open an arcade but not a Chuck E. Cheese. There’s something wonderful about our brand that combines entertainment, great food, a place to celebrate the moments and then we’ve got Chuck E. Cheese – he’s an incredibly powerful character as part of the overall experience.”
