The pizza chain where a kid can be a kid is now looking to destroy 7 billion of its famous prize tickets after filing for bankruptcy this past summer due to the steep drop in business during the COVID-19 pandemic.
According to the New York Post, Chuck E. Cheese parent-company CEC Entertainment said in a court filing on Monday that the heavy supply of prize tickets are no longer needed. The tickets are valued at $9 million—$0.0013 per ticket.
The industry’s “rapid move toward contactless service” amid the COVID-19 pandemic accelerated CEC’s efforts to phase out the paper tickets, along with the “muncher” machines that count them, in favor of electronic tickets, the company said.
But CEC had placed orders for tickets based on how many it had needed before the virus hit, causing “enough tickets to fill approximately 65 40-foot cargo shipping containers” to build up in the supply chain, according to the filing.
CEC asked a Texas bankruptcy court to approve settlements allowing three of its vendors to scrap the excess tickets at a cost of about $2.3 million, roughly $1 million less than the cost of circulating them.
The company also got assurances through its negotiations with vendors that the tickets would not be circulated to the general public, according to the court filing.
In the court filing, James A. Howell, CEC’s chief financial officer, said that the company had to ensure the tickets did not circulate in the general public due to their high value of redemption.
“Since prize tickets are redeemable by guests at significantly higher value than the cost of prize tickets, the debtors instead need to arrange for the destruction of the remaining stock of prize tickets in the supply chain to mitigate any risk of these tickets being circulated to the general public,” Howell said.
Three months after the government shut down the U.S. economy due to the COVID-19 pandemic, the pizza and arcade franchise Chuck E. Cheese filed for bankruptcy to offset the massive losses it incurred. According to Newsweek, the franchise accrued nearly $1 billion in debt with 527 locations in 47 states.
“Founded in 1977, the kids party playhouse has suffered in recent years and the Coronavirus pandemic has really put a strain on their finances,” the outlet reported. “The company apparently tried to sell pizzas under the bogus name of ‘Pasqually’s’ on Grubhub and Seamless in some regions, but that probably won’t save the entire enterprise.”
Should Chuck E. Cheese flounder, it will be the second major business to go under due to the sweeping COVID-19 restrictions that have rendered buffets, arcades, and playgrounds literally untouchable. In May of this year, the popular buffet chain Souplantation, known as Sweet Tomatoes outside of Southern California, regretfully announced it will be closing all locations permanently due to the pandemic.
Following Souplantation’s unfortunate announcement, fast-food chain Steak N Shake announced it would be closing 10% of its locations due to the shutdowns.
In March, the National Restaurant Association predicted that 11% of restaurants could be closing permanently. Hudson Riehle, the Association’s senior vice president of research, said the data shows the industry is in “uncharted territory.”