The History of Chuck E. Cheese's and ShowBiz Pizza

The history of Chuck E. Cheese’s and ShowBiz Pizza begins with Nolan Bushnell. Nolan grew up in Utah and while earning an electrical engineering degree from the University of Utah, Nolan worked as a games division manager of an amusement park. It was during this period that Nolan learned the business side of the entertainment industry, and was introduced to the very first video game. Upon graduating, Nolan left Utah and moved to Silicon Valley.

Nolan Bushnell, with the help of developer Al Alcorn, invents the video game ‘Pong’. Nolan and his partner Ted Dabney are unable to raise venture capital, and are forced to market the game themselves. At age 27 with $500 Bushnell along with Dabney found Atari. 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. Nolan stayed on as head of Atari, but many of his ideas and pet projects are ignored by his corporate bosses.

It is during this time that Atari launches the first Pizza Time Theatre, and the country is introduced to Chuck E. Cheese. Bushnell’s concept for the Pizza Time Theatre stemmed from several sources. The idea was to introduce video games to a younger audience in a place where family atmosphere reigned supreme. Bushnell found that there were insufficient places that a family could go to and young kids could play games in public, as most arcade games were located in bowling alleys and bars. Bushnell’s experience in the amusement park industry was also very influential to the entertainment aspect of Pizza Time Theatre, as was Bushnell’s love of Disney. Nolan had actually been turned down several times for employment by Disney, as he wanted very much to work there after graduating college.

The first Chuck E. Cheese’s Pizza Time Theatre opens in 1977 in San Jose, CA, 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 is the animatronic show, which entertains guests who are dining and waiting for orders. This group of life-sized animatronic critters contained the Warblettes, Jasper T. Jowls, Pasqually, Crusty the Cat, and the flagship character Chuck E. Cheese. The name ‘Chuck E. Cheese’ was designed to make a person’s mouth smile when they said it. These comical vaudevillian characters existed in a large showroom, hanging out of wall portrait frames on various walls and corners of the room. The show would run only at certain times during the day, and the characters and shows were quite different from they way they exist today. Pasqually would call out the pizza orders, and Chuck E. Cheese was always seen with his trademark cigar. Ultimately, the Pizza Time Theatre was as innovational as it was groundbreaking and becomes an immediate success. Containing over 100 video games, pinball machines, and other types of games, it is the country’s largest pizza parlor. Pizza Time Theatre is also touted as having the only computer controlled 3D animation outside Disneyland, a fact which wasn’t exactly true.

There were actually several companies involved in the animatronic business, one of which was Creative Engineering Inc. out of Orlando, FL, headed by Aaron Fechter. Aaron was hailed to be a technical genius, taking apart a radio at age 4, putting it back together at age 5, having a television repair business at age 11, and earning a bachelors degree in finance from the University of South Florida at age 19. Fechter founds Creative Engineering in early 1975 for the purpose of producing a small car called the ‘Jutta’ that got 90 miles on a gallon of gas. While trying to find financial backing to mass produce the Jutta, Fechter begins inventing other items such as the ‘Leaf Eater’ to raise capital. It is during this period that Fechter is commissioned to build an electronic control system to operate the guns and targets of an automatic shooting gallery. He is also commissioned to build a new control system for an animatronic horse. Unfortunately he is never paid for the work completed on the target range and horse controls, so partly out of revenge and also by seeing a potentially vast market; Fechter begins creating animatronics for the amusement park industry. With his father as a financial investor, he enters the market of designing and creating animated characters – some of the first being The Scab, Willie Wabbit, Friendly Freddy, Count Dracula, and Lazlo.

Fechter begins attending the annual International Association of Amusement Parks and Attractions (IAAPA) conventions starting in 1976. At the 1977 IAAPA show in November, Fechter is introduced to Nolan Bushnell who tells him of a concept that would utilize animated characters in a pizza restaurant operation. Bushnell displays interest in purchasing only characters without a control system, saying that Fechter’s characters were better in an artistic sense, but he could build a superior control system. Knowing that Bushnell was fully capable of taking apart conductors and finding out how a show worked, Fechter was afraid that Bushnell would quickly run him under, and so he politely declines his offer.

Back at Atari, Bushnell becomes disgusted with Warner’s management and conservative response to new innovations. They are slow to pursue new inventions such as the Atari 2600 home video game system, and Bushnell’s unhappiness reaches a peak in November 1978. He leaves 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. Fortunately Pizza Time Theatre was doing well and Atari wasn’t interested in pursuing it, so Nolan buys it out and begins operation of the company under the title Pizza Time Theatre Inc.

At the 1978 IAAPA convention, Fechter unveils his newest animatronic creation – the Wolf Pack 5, a group of singing animals that was inspired by the Rocky Horror Picture Show. The Wolf Pack 5 sang a range of 50’s and 60’s do-wop and it’s characters included the Wolfman, Fats Gorilla, Dingo Starr, Beach Bear, and Queenie the Fox. Another discussion occurs between Fechter and Bushnell. This time, Bushnell congratulates him for building a good show and asks him if he would like to sell his company. Again Fechter declines, but Bushnell leaves a final invitational offer to involve Aaron in the operation of Pizza Time Theatre, if interested.

Bushnell aggressively begins marketing the Pizza Time concept and as Pizza Time Theatre becomes successful they begin to franchise. The high profit yields attract several clients such as Robert L. Brock. Bob Brock, President of Topeka Inn Management, takes an interest in the Pizza Time as his current company is focused on diversifying their enterprises. Brock was already wealthy from being the world’s largest franchisee of Holiday Inn hotels in the U.S. In 1979, as a way of securing an exclusive franchise deal, Brock signs a multi-million dollar Co-Development Agreement with Bushnell. This contract gives Brock exclusive franchising rights to open Pizza Time Theatres in 16 states across the Southern and Midwestern U.S. There is no absolute number of restaurants that are agreed to be developed, but a target range of about 280 stores is planned. For these stores, Topeka Inn Management would be the one setting forth the capital to build each restaurant, estimated at a million dollars apiece.

As Brock begins to take a personal and financial standpoint with the development of his locations, he begins to alter the concept in order to better protect his investment against competitors. Brock wants everything to be the best for his Pizza Time Theatre franchises – the food, the environment, and the animation. Topeka Inn Management also creates a company subdivision which becomes known as Pizza Show Biz – this division was to be in charge of developing the Pizza Time Theatres within TIM. As Brock begins to research and explore his options for opening his first franchise, members of his firm alert him to the presence of Aaron Fechter and Creative Engineering Inc. In late November 1979, Brock travels to Orlando to meet Fechter and learn about his animatronics and operation. Upon arriving, Brock was surprised to find not “a kid making junk in his garage,” as Bushnell had characterized Fechter, but a company that employed 25 people and created far better animation than what was currently in Pizza Time Theatres. Impressed by Creative’s animation, Brock explains to Fechter that he is unhappy with Bushnell’s animation, but that Bushnell assured him that in time the animation will become better an better. However, with Brock’s first Pizza Time Theatre franchise only a few months from opening, Brock becomes nervous of the thought that Creative’s superior animation might be utilized by future competitors. His plans begin to change.

Two weeks after meeting with Fechter, Brock contacts Bushnell and demands out of the Co-Development Agreement on the grounds of misrepresentation. Bushnell refuses to release Brock from the contract, so Brock begins discussions with Fechter about the formation of a new company which would be jointly controlled by Topeka Inn Management and Creative Engineering Inc. In December of 1979, Brock breaks ties with Bushnell and declares the Co-Development agreement void. He signs a Pre-Incorporation agreement with Fechter to create ShowBiz Pizza Place Inc. ShowBiz was to be 80% owned by Brock and 20% by Creative. Having already considered the Co-Development Agreement void, Brock outlines a plan to begin using Creative’s animation with the opening of their second store. The first store, scheduled to open in the Antioch shopping center in Kansas City, would utilize Pizza Time Theatre animation. This gave Creative the time and opportunity to create a new animatronic show that would be exclusively used for ShowBiz.

As the franchisee equipment and supplies arrive at Antioch, Brock makes a last minute decision to not use Pizza Time animation at all, and the Pizza Time Characters are turned away and shipped back. Creative is thus forced to supply the animation for the new store and chooses to install the Wolf Pack 5. At ShowBiz’s request, Creative alters the original Wolf Pack 5 showtape to include references to the new restaurant and changes Queenie into Mini Mozzarella because ShowBiz wanted a mouse to go with the ‘pizza’ theme of the restaurant.

ShowBiz Pizza Place opens its doors on March 3, 1980 in Kansas City, MO, and is located in the Antioch shopping center. ShowBiz is very similar to Pizza Time Theatre and uses many supplies and decorations obtained directly from Pizza Time, however there are some key differences. The Wolf Pack 5 show entertains guests every few minutes with a short show throughout the day. Within ShowBiz is also another room which is known as the ‘disco room’ and contains a separate Wolfman character. Billy Bob is also introduced at the 1st ShowBiz and exists not on stage as an animated character, but in walk-around character form. Billy Bob is loosely based on a character from Creative’s Hard Luck Bears animatronic show. At the request of Stan Emerson, president of ShowBiz, Billy Bob is dressed in red and yellow overalls to match the color scheme used by the restaurant. The souring relations between Bushnell and Brock overshadowed by the millions of dollars at stake explode as Brock opens his first restaurant. Bushnell, already on alert, sues Brock and Topeka Inn Management over breach of contract. Brock immediately issues a counter-suit against Bushnell for misrepresentation. The court case begins in March of 1980 and remains pending in the California courts for over 2 years.

Just prior to the opening of ShowBiz’s second store, they win 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. Topeka Inn Management also changes its name to Brock Hotel Corporation during this period.

In July of 1980 ShowBiz opens its second store in Jacksonville, FL which contains Creative’s ShowBiz-exclusive show The Rock-afire Explosion. The Rock-afire is a combination of the Wolf Pack 5 and the Hard Luck Bears and contains the characters Rolfe & Earl, Duke Larue, Fats Geronimo, Beach Bear, Mitzi Mozzarella, Billy Bob, and the Looney Bird. One key difference that set the Rock-afire apart from Pizza Time’s show was that it had three stages. The three stage format gave more flexibility with the way shows could be presented – one stage could perform by itself, or different combinations of stages could be used to increase the theatrical aspect of the entertainment. Another change made to the second store is the alteration of the disco room which became the sports room. The Wolfman is also removed from this side room, and a large television screen is added allowing parents, who want to escape the animation, a chance to watch sports or soap operas while their children played.

Pizza Time Theatre also begins to alter it’s animation during the late 1970’s and early 1980’s. During the era of the Wall Portrait setup, new characters are introduced to keep the show lively and fresh. Crusty the Cat is replaced by Mr. Munch the ‘purple pizza eater’ in the main cast. The Warblettes are switched out for a short period with the Mopsey Sisters – a trio of singing mops. Also Pizza Time Theatre brings in special female guest stars during the Wall Portrait era including Foxy Colleen, Helen Henny, and Madam Oink. Pizza Time also begins to experiment with cabaret shows which operate separately from the main stage show – the first of these being Dolli Dimples, a piano playing Hippo.

Both Pizza Time and ShowBiz begin to enjoy major success as the video game industry hits new peaks. As major expansion begins at both restaurants, Chuck E. Cheese and Billy Bob are heavily promoted and become recognized by more and more people across the U.S. The number of new stores that open during 1980-1982 explode; often times 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.

Pizza Time Theatre makes the decision to discontinue the Wall Portrait setup and place all the characters together on one single stage, to improve the focus on the show. This new setup, complete with redesigned half-bodied animatronics, becomes known as the Balcony Stage. New guest stars are introduced such as Harmony Howlette and Sally Sashay. The cabaret shows are also expanded to include new retrofits to create several new characters. Joining Dolli are B.B. Bubbles, Artie Antlers, The King, The Beagles, and The Beach Bowsers. The Little Shavers also make rare appearances in the Ice Cream Emporium which is located in a few Pizza Time test locations. The diversity of these cabaret shows really helped to accent the fun of Pizza Time Theatres, because it made them more diverse – one store most likely had a different guest star and different cabaret show from a store across town.

ShowBiz also makes some key changes to the Rock-afire stage. The characters are refined to include new cosmetics and new costume changes. The spelling on certain characters’ names such as Fatz and Dook are changed, all in an effort to streamline the shows and mass produce them in a standardized format. Merchandise with character names and artwork is produced and vinyl records of the Rock-afire’s songs are sold in the gift shops. By the beginning of 1982, Creative gets the go-ahead from ShowBiz to begin production of a new character named Uncle Klunk, and by the end of 1982 Creative gives Mitzi and Beach Bear new voices. This new cast of Rock-afire singing talent would remain the same for the next decade.

Eventually the lawsuit is settled out of court, and ShowBiz agrees to pay Pizza Time Theatre 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 engage in heavy competition. As the companies battle for customers, Bushnell puts Pizza Time Theatre in the hands of others while he takes interest in other ventures.

Pizza Time went public in 1981 and 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 market. Pizza Time Theatre loses $15 million while Atari, the video game giant, loses $539 million. While Pizza Time’s profits begin to plunge, Bushnell is busy on the road promoting and taking orders for his personal robots Bob and Topo, both products of Androbot. To fund this venture, Bushnell took loans from Merrill Lynch which was backed by his stock in Pizza Time. When Pizza Time hemorrhaged in 1983, Bushnell’s holdings dropped from $23 million to $9 million. By 1984 Bushnell had racked up $22.8 million in debt against Pizza Time to fund Androbot and other ventures. That year Pizza Time Theatre Inc. filed for bankruptcy under Chapter 11. Bushnell leaves the company. Just as Chuck E. Cheese is on the brink of extinction, Pizza Time Theatre is given a breath of life from an unsuspecting place. As means of repaying the funds owed to Pizza Time Theatre, ShowBiz Pizza Place buys them out and takes the doomed restaurant under their wing. The new company formed becomes ShowBiz Pizza Time Inc. – a combination of the two former company names. For the first time, Billy Bob and Chuck E. Cheese begin to appear together on advertisements and merchandise. After the merger, both ShowBiz and Pizza Time restaurants continue operating under the different titles.

Amidst the damage taken by Pizza Time and the continuing video game slump, innovation takes a back seat to survival. Uncle Klunk finally makes his appearance at ShowBiz in 1984, but is only placed in a few locations. During Christmastime, he is retrofitted to become Santa Claus. However, profits do not show significant increase and Klunk is quickly discontinued and becomes one of the last ‘new’ characters to appear at either restaurant. New innovations such as a Mitzi that can dance, and a Dook that has enhanced wrist and arm movements are never given a chance.

In 1985 Richard M. Frank joins the company as president and begins to undertake major financial restructuring. Focus is placed on food quality, execution, parent & children satisfaction, marketing, and finances. Unprofitable stores are shut down, and corners are cut to help insure financial security during these economically harsh times. As company funds become reallocated to different departments and purposes, relations between Creative Engineering and ShowBiz begin to sour. The creative control once held by Fechter become stifled, as ShowBiz learns how to program the Rock-afire shows – at one point going so far as to produce their own in-house showtapes using vocal impersonators. ShowBiz also takes more creative control from Fechter by producing what is known as the Billy Bob Interactive Animator which allows employees to control the movements on Billy Bob and talk to the audience.

Eventually Creative Engineering gets ShowBiz to discontinue the use of showtapes not recorded by Creative. In 1986 Creative makes one final attempt to regain control over programming rights by showcasing their programmed version of the Liberty Show. However, in a classically ironic scenario, all the programming from the Liberty show is erased in a late night ‘celebration’. By the time Dick Frank arrived on the morning flight, all the reprogramming that was accomplished was the flood lighting. Creative Engineering never programmed another show for ShowBiz.

During 1986 profits begin to increase and marketing becomes aggressive. Major remodeling of the restaurants is undertaken, and measures are taken to keep as much control of the company in-house as possible. In 1987, the company opens its first new store in over 3 years. Plans were also made to unify the restaurants and bring them under the new banner and logo “ShowBiz Pizza”. This new arrangement was confusing because some ShowBiz Pizza restaurants used the Rock-afire animation and others under the same title used Pizza Time animation.

A few of the existing Pizza Time franchises used outside animation such as the Family Album and Hot Fudge shows because of the availability shortage of Pizza Time animation during the company’s slow years. By the late 1980s, these stores received the new Chuck E. Cheese stages – the first new stages to be produced since the Balcony stage in the early 1980s. The two new stages were very similar and used retrofitted Balcony characters. One was the Porch stage which housed all the characters together on a porch façade of a house. The second stage was the Rocker stage which was very similar, except Helen and Jasper were seated in rocking chairs.

The Rock-afire stage was also altered slightly during this time. Billy Bob’s stage was changed from Smitty’s Super Service Station to the ShowBiz Pizza Campground. Creative had begun selling the Rock-afire to outside restaurant competitors, so with ShowBiz losing its exclusive rights, this made the Rock-afire’s at ShowBiz unique. Experimentation also began with phasing out the Rock-afire completely. One of the first moves was to introduce new licensed characters to the stage. After considering characters such as Garfield, Spider-man, and Superman, ShowBiz decided on Yogi Bear. After almost 2 years of negotiation and production, Yogi Bear appeared in place of Billy Bob on stage at 3 test stores.

Many of these arrangements were made in preparation of the company’s future plans. ShowBiz became publicly traded in 1988 and that year sales increased 8.3%. A new standardized show format was implemented system wide and was known as the ‘Birthday Wave’ format. This new format consisted of shows that were 8-12 minutes long and were designed to make birthday shows easier to execute. By showing a birthday show at a certain time, several parties could be served in one wave. The new ‘cyberstar’ system was introduced to accent this new format and included video monitors to compliment the characters on stage. These new changes were minor however in comparison to a final streamlining effect known as Concept Unification.

By September of 1990 all ties with Creative Engineering are broken and nine ShowBiz stores are remodeled to resemble Chuck E. Cheese characters. As profits seem to stay steady and in many cases increasing, more and more Rock-afire stages are converted into Munch’s Make Believe Band. The Porch and Rocker stages are also transformed into a similar version of the Make Believe Band. Concept Unification lasts for approximately two years, and by 1992 all restaurants are united under the identity of Chuck E. Cheese’s Pizza.

The early 1990s brought outside competition which forces Chuck E. Cheese’s to adapt in order to compete in the new market. Discovery Zone begins to become a major competition, as it is an entertainment center targeted toward children, but with a very different theme. Discovery Zone is an indoor jungle gym with many hands on activities aimed at children. Chuck E. Cheese takes steps to imitate DZ including adding sky tubes and more play areas in an attempt to make Chuck E. Cheese’s Pizza more appealing to younger crowds.

By 1995 the company changes its name to simply “Chuck E. Cheese’s” and adopts bright colors. Chuck E. himself is officially changed from a rat to a mouse and is given a new kid-friendly image. The new changes are successful and the company decides to stick with the new formatting. With all units now completely themed to Chuck E. Cheese, ShowBiz Pizza Time Inc. becomes Chuck E. Cheese Entertainment Inc. in 1998. In July of 1999, Discovery Zone files for Chapter 11 bankruptcy and CEC Entertainment buys them out, eliminating its only major competitor and securing themselves as the dominant family entertainment center in the U.S.

Chuck E. Cheese’s is still to this day working toward streamlining their restaurants toward a more unified and standardized restaurant. In 1997 a new test stage called the Awesome Adventure Machine was test marketed. Although the stage was too complex and unstable, it paved the way and gave rise to the newest Chuck E. Cheese stage show known as Studio C. Studio C has only an animated Chuck E. and the other characters exist on television monitors. The original plan was to install this stage system-wide by 2002, but a slowing economy, along with other factors, have slowed implementation as well as forced Studio C to be scaled down as well. As of 2004 there are at least 6 different animatronic shows at locations across the U.S. – The 1-stage, 2-stage, 3-stage, Road stage, Studio C Alpha, and Studio C Beta. New test locations were also introduced without an animatronic show at all. Instead of having a show, these new ‘small town’ Chuck E. Cheese’s had an all you can eat buffet, a costumed Chuck E. on the floor at all times, and a charge for admission at the door. Ultimately these locations were given a scaled down version of Studio C which suggests that the influence of animated characters is still important.

Epilogue – Chuck E. Cheese’s exists today as the premiere family restaurant entertainment center. Despite the hardships faced by a weakened economy, Chuck E. Cheese has held strong and continues to be successful. Creative Engineering after being pushed out of the ShowBiz operation sold the Rock-afire to several competitors which achieved only minor success, and many of which have since folded. Innovations such as the New Rock-afire with its Mijjin-type dancing characters failed to gain much attention and spin-off restaurants franchised by Creative such as Billy Bob’s Wonderland and Looney Bird’s have stayed alive, although many have struggled in recent years. With the Rock-afire Explosion being only a shadow in Creative’s past, Fechter is now involved with an automated karaoke machine called the Star Launcher. Nolan Bushnell was left financially crippled after the default of Pizza Time Theatre. He spent the next ten years paying back Merrill Lynch. Just as Bushnell was ready to make a comeback with the influx of the internet explosion in 1995, he was wrongly sued by Merrill Lynch over a remaining $500,000. The suit scared away investors from his new pet project, and Bushnell remained in debt until 1997, losing his house and most of his possessions in the process. Today Bushnell is poised to make another comeback with the founding of Uwink.com – a company that produces coin operated entertainment games, all linked via the internet.