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Chuck E. Cheese's Pizza Time Theatre was an American family entertainment center and pizza restaurant chain founded in 1977 by Nolan Bushnell, who was also the co-founder of Atari, Inc. Pizza Time Theatre was the first family restaurant to integrate food with arcade games and animated entertainment.

After filing for bankruptcy in 1984, the chain was acquired in 1985 by Brock Hotel Corporation, parent company of competitor ShowBiz Pizza Place. The merger formed a new parent company, ShowBiz Pizza Time, Inc., of which the Pizza Time Theatre name was retired for the name Chuck E. Cheese's. That chain is still operating under the name of Chuck E. Cheese.

History[]

Prologue[]

The history of Chuck E. Cheese's begins with Nolan Bushnell. Bushnell grew up in Utah and while earning an electrical engineering degree from the University of Utah, Bushnell worked as a games division manager at the Lagoon Amusement Park. It was during this period that he learned the business side of the entertainment industry, studying the leisure habits of consumers and figuring out ways to market to those habits. Upon graduating, Bushnell left Utah and moved to California with the hopes of becoming an engineer for Disney.

When that attempt failed, he went to work for Ampex Corp, a video equipment maker in Redwood City, California. At Ampex Bushnell befriended a co-worker named Ted Dabney, and soon enough the two were in discussions about starting a business together - specifically a pizza parlor that incorporated Disneyesque entertainment. They soon began visiting local pizza parlors and scouting locations to see if they could feasibly turn this concept into reality. It was during this time that Bushnell and Dabney visited the University of Stanford's computer laboratory (SAIL) to see Spacewar! – the world's very first video game.

Bushnell had the idea to create a cheaper version of the game that could be marketed at the consumer level. With the pizza parlor idea sidelined, the two focused on developing a cost-effective Spacewar! clone, leaving Ampex Corp (having founded the company Syzygy to market the game they hoped to produce). In 1971 they successfully completed the game, which was titled Computer Space. The game, while not a complete flop, was far from what one would consider a success. Adding to their troubles, when attempting to incorporate Syzygy they discovered the name was already in use. Forced to adjust, they renamed their fledgling company Atari Inc.

Thanks to the programming help of a new Atari employee, Al Alcorn, the game PONG is developed as a follow-up to Computer Space. Although PONG was hugely successful when it was tested in a Sunnyvale pub, Atari was unable to raise venture capital forcing them to manufacture and market the game themselves. Although Atari soon found themselves successful, Dabney left the company in early 1973 after having a falling out with Bushnell.

Profits at Atari explode over the next few years and finding no other way to remain competitive in the growing video game market, Bushnell sells Atari to Warner Communications in 1976 for $28 million. During the sale of Atari, Bushnell also signed a 5-year non-competitive agreement. Bushnell remained as the head of Atari, but many of his ideas and pet projects wind up ignored by his new corporate bosses. One project, however, was given the green light.

Development[]

Included in the sale contract to Warner, they agreed to fund the building on one restaurant featuring Bushnell's concept of animated entertainment. Free to finally realize his pizza parlor dream, Bushnell began assembling a team of people to make it a reality. He created The Atari Restaurant Operating Division. This division explored several concepts including using antique Wurlitzer organs, creating an antique store themed restaurant, and so on. In the end Bushnell decided "aw heck, let's just go with the animals," and thus the entire concept was reverted back to his original idea – using audio animatronic characters in a pizza restaurant. One of Bushnell's first moves were to hire a man named Gene Landrum to become the Atari Consumer Division President and general manager of the Atari Restaurant Operating Division. Landrum had recently worked with Atari doing a market study for the Atari VCS (2600) and Bushnell entrusted him to flesh out the pizza parlor concept. Armed with a current copy of the International Association of Amusement Parks and Attractions (IAAPA) directory, Landrum began seeking people to build the animated puppets that they needed. The only company that responded to his request was a small outfit located in the high desert of California called Fantasy Forest Manufacturing. Fantasy Forest was owned by a man named Harold Goldbrandsen who was primarily a fabricator of mascot costumes. Although he wasn't exactly trained in building animated puppets, he believed he could figure it out as he went. When meeting with Bushnell and Landrum in Sunnyvale, he noticed they had a mannequin in the room wearing a rat costume - one he had last seen at IAAPA at the booth of a competitor. Bushnell had actually purchased this costume at IAAPA and, believing it was a coyote, had tentatively dubbed his new restaurant "Coyote Pizza". Once the costume was shipped and arrived at Atari, the long pink tail indicated it was actually a rat costume they had purchased. The costume had become a physical, tangible symbol of what Bushnell was hoping to create. Believing the restaurant would become so successful it would eventually compete with Disney, Bushnell named this costume Rick Rat, as "Rickey Rat" was a little too close to "Mickey Mouse" for legal comfort. After bringing Goldbrandsen on board to create the costume and animated puppets, Landrum hired Robert (Bob) Allen Black an artist who had worked previously with Atari. Black had drawn several cutesy looking cats, dogs, and other creatures - none of which passed any muster with Bushnell. During a meeting with Black, a frustrated Bushnell grabbed the head of Rick Rat, set it on his desk and said "here, draw something that looks like this." During this time Landrum was hard at work hammering out his vision of exactly how this new restaurant would be laid out, creating a presentational outline titled "The Big Cheese". It was not only one of the proposed restaurant titles, but also the name the mascot rat. The name wasn't meant to be however, as it was discovered that Marriott had already trademarked the name for its own chain of restaurants. Even though the trademark was on the verge of expiring from non-usage, Atari's legal department decided a new and unique name was needed. The name "Chuck E. Cheese" was eventually chosen, as it was both alliterative of Mickey Mouse and because it was a three-smile name - just saying it forced a person's mouth to smile.

Along with refining their mascot, a group of supporting characters was also developed. Crusty the Cat, a black and white baseball playing cat; Billy "Banjo" Boggs (soon renamed Jasper T. Jowls), a hillbilly hound dog; Pasqually, the Italian chef; and the Warblettes, a trio of singing magpies. These characters were the original Pizza Time Players and were soon fabricated into animated form by Goldbrandsen. To handle the technical side of animating the animatronics, Landrum hired Larry Emmons and the team at Cyan Engineering (often referred to as Atari Grass Valley) to design the control system to make the show work.

Pizza Time Theatre (1977-1984)[]

The first Chuck E. Cheese's Pizza Time Theatre opened on May 17, 1977, in San Jose, California (Winchester Blvd). The pilot location was a 5,000 square foot former brokerage building and was the first restaurant of its kind – offering a combination of pizza, animated entertainment, and an indoor arcade. The most unique aspect of the Pizza Time Theatre was of course the animatronic show - life-sized animatronic critters that were placed in faux picture frames around the showroom and entertained guests free of charge throughout the day. The Pizza Time Theatre was as innovational as it was groundbreaking and became an immediate success. Improvements and innovations continued to be tested at the pilot store including the addition of revolving guest characters who would periodically join the animated cast to keep the show fresh - Helen Henny in August 1977, Madame Oink in February 1978, and Foxy Colleen in October 1978. Other additions included an improved pizza ordering system called "NOTALOG", developed by Bushnell's former partner at Atari, Ted Dabney.

Despite the apparent success of the Winchester pilot store, the heads of Warner Communications were disinterested in the concept. They had purchased a video game company and were eager to shutter the restaurant so they could better focus on Atari's struggling entry into the home video game market. Warner finally sold the restaurant and concept ownership to Bushnell in June of 1978 for $500,000. Bushnell quickly incorporated the business into Pizza Time Theatre, Inc. and formed a team to open additional units. He placed himself as Chairman and immediately hired Landrum away from Atari to become President and Pizza Time's first employee. Other talent was soon secured - Greg Tilden became the Director of Technical Operations, Michael Hatcher became the Director of Entertainment, and Ray Davis was appointed Director of Engineering.

A second location was secured in San Jose on Kooser Road. This former grocery store was 19,000 square feet and nearly four times the size of the Winchester store. Containing over 100 video games, pinball machines, and other types of games, it was the country's largest pizza parlor upon opening. New attractions such as a cabaret room featuring Dolli Dimples, a piano playing hippo, and the Fantasy Forest Game Preserve (named after Goldbrandsen's Fantasy Forest company) were new additions for the Kooser store. A few changes to the cast of characters were also made, including changing out the Warblettes for the Mopsey Sisters, and swapping out Crusty the cat for a new purple monster character named Mr. Munch.

Back at Atari, Bushnell had become more and more frustrated with Warner's management and conservative market responses. They were slow to pursue new inventions such as the Atari 2600 home video game system, and Bushnell's unhappiness reached a peak in November 1978. He shortly thereafter left Atari, but the non-competitive agreement he signed 2 years earlier would come back to haunt him, as it barred him from competing with Atari in the video game world. Unable to compete in the arcade industry, his full attention became devoted to creating an empire of Pizza Time Theatre restaurants.

Bushnell aggressively began marketing the Pizza Time concept and trying to attract franchisees. Promotional paraphernalia was distributed via Pizza Time's PR firm Eesley Public Relations. In these various flyers, Pizza Time Theatre is touted as having the only computer-controlled 3D animation outside Disneyland, a fact which wasn't exactly true. Regardless, the high profit yields attract several clients such as Robert L. Brock. Bob Brock, President of Topeka Inn Management (TIM), took an immediate an interest in Pizza Time as his current company was focused on diversifying their enterprises. Brock was already wealthy from being the world's largest franchisee of Holiday Inn hotels in the United States. In late June of 1979, as a way of securing an exclusive franchise deal, Brock signed a $200 million dollar Co-Development Agreement with Bushnell. This contract gave Brock exclusive franchising rights to open Pizza Time Theatres in 16 states across the Southern and Midwestern U.S. The contract included a target of 285 stores, 200 to be operated directly by TIM and another 85 to be sub-franchised. For these stores, Topeka Inn Management would be the one setting forth the capital to build each restaurant, estimated at a million dollars apiece.

In the early 1980s, the restaurant franchise debuted in Australia under the name Charlie Cheese's Pizza Playhouse. The name change had to do with the common meaning of the word "chuck", which in Australia is a reference to the phrase "to throw up". Consecutively, Pizza Time Theatre, Inc. also opened at least one restaurant in Hong Kong and Singapore, which both closed shortly thereafter as a result of the initial company's 1984 bankruptcy.

Animatronic Pizza Wars[]

After a fallout Bushnell, Brock went on to develop Showbiz Pizza Place which was like Pizza Time Theater but with its own characters which were from a company named CEI, ran by Aaron Fector. It opened in 1980.

The souring relations between Bushnell and Brock quickly exploded into litigation. Pizza Time Theatre Inc sued TIM (and Brock personally) over breach of contract. TIM immediately issued a countersuit against Pizza Time Theatre (and Bushnell personally) on the grounds of misrepresentation. This contested battle remained pending in the California courts for over 2 years.

Just prior to the opening of ShowBiz's second store, they won the first round in court against Pizza Time Theatre. The court found that Pizza Time did not show proper evidence that ShowBiz was using trade secrets or competing unfairly. TIM also changed its corporate name to Brock Hotel Corporation (BHC) in April of 1980.

With the pending litigation hovering above both companies, Pizza Time and Showbiz embarked on an aggressive expansion plan. The number of new stores that open during 1980-1982 exploded; often times competing stores are opened within sight of one another. In order to stay ahead of their competitor and gain a greater market share of the pizza entertainment industry, both companies continue to innovate and enhance their entertainment, albeit with differing philosophies.

Pizza Time Theatre quickly jettisoned the original animatronic show format, commonly referred to as the "portrait" show and placed all the characters together on one single stage in order to improve the focus on the show. This new setup, complete with redesigned half-bodied animatronics, becomes known as the Balcony Stage. Whereas the the original portrait characters were designed by hand and had cosmetics constructed with latex and fiberglass, the new character cosmetics were instead made of wood, foam, and cloth. Along with the standardization of the inner mechs, this was all done purposely to ease both the manufacturing of the animation and make the production cost effective. This was done at the request of Bushnell, who knew a thing or two about cost savings from his experience building PONG machines in rapid fashion.

Also, during the early expansion, Pizza Time made additions and refinements to their entertainment as such, new guest stars were introduced including Sally Sashay in 1979 and Harmony Howlette in 1981. The cabaret shows were also expanded to include several new characters. New cabaret characters included Artie Antlers (1980), and B.B. Bubbles (1982). New lounge characters included Helen Henny (1979), The Beagles (1980), The King (1981), The Beach Bowzers (1982) and King Kat (1984). The Four Little Shavers also make rare appearances in the prototype Ice Cream Emporiums which were located in a few Pizza Time test locations. The diversity of these cabaret and lounge shows really helped to accent the fun of Pizza Time Theatre restaurants, making them more diverse – one store most likely had a different guest star and different cabaret or lounge show from a store across town.

Bankruptcy and Merger[]

In 1982 the contested lawsuit between Pizza Time and ShowBiz is settled out of court, with ShowBiz agreeing to pay Pizza Time a portion of its profits for the next 14 years – an expense estimated to be in the range of $50 million. Despite the settlement in favor of Pizza Time, the two companies still engaged in heavy competition. As the companies battled for customers, Bushnell placed Pizza Time in the hands of others while he invested his interest and time in other ventures.

When Pizza Time went public in 1981 it increased Bushnell's worth to somewhere in the range of $70 million – much of it in Pizza Time stock. Being an inventor and innovator, Bushnell's goals were to start a company, manage it to a stable and successful point, and then move onto new projects. It had come that time with Pizza Time Theatre, and Nolan handed the operation of the company over to others, while he founded a company called Catalyst Technologies to springboard his new products. Several new products came from this company such as Compower, Axlon, Etak, Androbot and Magna Microwave. These new products included shopping on computers using laserdisc, computer controlled navigational maps for vehicles, robotic children's toys, and life-size personal robots. Although these new ventures were semi-successful, the year 1983 would spell disaster for Bushnell and his personal projects and fortune. In the U.S. the great video game crash hits, mainly due to a massive amount of cheaply made and look-alike games which flooded the home market. Pizza Time Theatre lost $15 million while Atari, the video game giant, lost $539 million.

Much of Pizza Time's profits had been funneled into new ventures, opening new subsidiaries within the company such as Kadabrascope, which was to pioneer computer animation, Zapp's Bar and Grill, which was Pizza Time's foray into adult dining establishments, and Sente Games, which was Bushnell's long-delayed return to the arcade video game market. By July of 1983, Pizza Time was beginning to hemorrhage money, reporting their first loss ever at $3 million. Keenan and other board members attempted to stop the bleeding by closing unprofitable units and changing the pizza recipe to entice customers. Bushnell however believed that Sente would cure all of Pizza Time's troubles once he was able to debut the company, finally free from the non-compete agreement he was still bound by (which expired on December 9, 1983, at 10:08 a.m.) He also refused to let go of Kadabrascope and Zapp’s in order to free up cash for the company.

The successful year-end to 1983 that Bushnell had anticipated never came. As problems continued to mount, Bushnell resigned as chairman and CEO on February 1, 1984. Straddled with debt and losing close to $20 million per month, Pizza Time Theatre Inc. filed for Chapter 11 bankruptcy protection on March 28, 1984. Although ShowBiz had apparently won the "pizza war" against their competitor, they weren't in much better condition, having faced a months-long sales decline.

Ironically, the arguably most valuable asset left for Pizza Time's remaining estate was the settlement agreement that was still owed by ShowBiz. In a mutually beneficial maneuver, ShowBiz decided to embark on a merger with Pizza Time, swallowing up the remains of their assets beginning with much of their franchise system, and thus purging the debt that ShowBiz owed. In order to make this purchase, a 90% agreement was needed - of which Brock only owned 80% of ShowBiz (with CEI owning the other 20%, effectively giving Fechter veto power over any such changes). With Brock explaining to Fechter that this was the only way their company would survive, Fechter sold him 10% of his shares giving him the 90% needed to proceed. In order to make the purchase of Pizza Time, ShowBiz issued 4,000,000 shares of ShowBiz Pizza Place common stock as well as 500,000 shares of preferred stock to the creditors of Pizza Time. After acquiring the last of the Pizza Time assets, ShowBiz Pizza Place Inc. adopted the new name of ShowBiz Pizza Time Inc, effectively ending the original Pizza Time Theatre chain, as advertisements showcased the logo without the "Pizza Time Theatre" wordmark, as well as new stores opening as "Showbiz Pizza" from 1987 until 1990, when the succeeding chain, Chuck E. Cheese's, would rebrand to "Chuck E. Cheese's Pizza" in during that time frame. The succeeding chain, now called Chuck E. Cheese (As Chuck E. Cheese's until 2017), succeeded both Pizza Time Theatre and Showbiz Pizza.

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