CEC Entertainment, the parent company of Chuck E. Cheese, is preparing for a billion-dollar IPO which could hit the markets during the second half of the year, reports Reuters.
Food and Entertainment – In a Kid-Friendly Environment
Founded in 1977 by Atari founder Nolan Bushnell, the Irving, Texas-based company today operates more than 600 Chuck E. Cheese and more than 140 Peter Piper Pizza stores, with presence across 47 U.S. states and 11 other nations. (For more, see Key Financial Ratios for Restaurant Companies.)
Based on the punch-line “Where A Kid Can Be A Kid,” Bushnell’s vision was to expand the video gaming destinations from adult spots and pool centers to venues suitable for kids and families. The family entertainment establishment offers quick service food items like pizza and wraps, clubbed in the entertaining atmosphere of arcade games, fun rides, bumper cars, and animated robotic displays like those found in theme parks.
The four decade long journey of the company has had its fair share of ups and downs. It filed for bankruptcy in 1984, has changed its name thrice, has ranked among top five pizza chains, and was bought over by private equity player Apollo Global Management for $1.3 billion in 2013. (See also: 4 Quick Service Restaurants for Your Portfolio.)
Apollo is now talking to the banks to list the company on the stock exchange, which could value it at more than $1 billion, including debt, though the underwriters are yet to be appointed.
While many fast-growing restaurant chains have hit the markets since 2014, most are trading below their IPO offer prices. The segment of quick service restaurants and casual sit-down dining has struggled due to declining customer traffic and increasing operational costs attributed to high rentals and minimum wages. However, the closest competitor running similar entertainment center chain, Dave & Buster's Entertainment Inc. (PLAY), has gained 66% in the last year.
The IPO of the forty year-old company is expected to garner a lot of attention across investors of all age groups, and fond memories should keep interest high. (For more, see Do Fast Food Franchises Mean Fast Returns?)