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Episode: Chuck E Cheese vs ShowBiz Pizza | Broken Robots | 2

Author: Wondery
Duration: 00:37:52

Episode Shownotes

It’s 1982, and after months of bitter fighting, Nolan Bushnell of Chuck E. Cheese’s Pizza Time Theater and Robert Brock of ShowBiz Pizza Place finally strike a legal truce. With the video game market crashing and the novelty of their brands fading, Chuck E. Cheese faces mounting debt and is

forced to file for bankruptcy. ShowBiz Pizza, also feeling the economic strain, realizes their only chance to survive is by merging with their former rival. But is combining forces enough to revive these ailing businesses? Be the first to know about Wondery’s newest podcasts, curated recommendations, and more! Sign up now at https://wondery.fm/wonderynewsletterListen to Business Wars on the Wondery App or wherever you get your podcasts. Experience all episodes ad-free and be the first to binge the newest season. Unlock exclusive early access by joining Wondery+ in the Wondery App or on Apple Podcasts. Start your free trial today by visiting wondery.com/links/business-wars/ now.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Full Transcript

00:00:00 Speaker_02
Wondery Plus subscribers can binge all episodes of Business Wars Disney Under Siege early and ad-free right now. Join Wondery Plus in the Wondery app or on Apple Podcasts. June 1980, San Francisco. In the U.S.

00:00:21 Speaker_02
District Court, Chuck E. Cheese's attorney gingerly sips his scalding coffee and steals a glance at the Showbiz Pizza Place lawyers to his left. It's been six months since hotelier Robert Brock broke ranks with Chuck E. Cheese.

00:00:35 Speaker_02
Since then, he's started Showbiz Pizza Place, a rival chain with its own cast of animatronic entertainers, led by the bass-strumming bear Billy Bob.

00:00:45 Speaker_02
But now, Chuck E. Cheese's is out to persuade the court to stop Brock from opening any more Showbiz restaurants. The court falls silent as the judge enters. Good morning.

00:00:57 Speaker_02
We're here for the case of Pizza Time Theater Incorporated versus Showbiz Pizza Place Incorporated. I understand the plaintiff wants a preliminary injunction ahead of the case being heard in full? Chuck E. Cheese's attorney stands.

00:01:10 Speaker_02
That's correct, Your Honor. Showbiz Pizza's actions threaten irreparable harm to the business of Chuck E. Cheese. Chuck E. Cheese? Who's Chuck E. Cheese? Sorry, Your Honor.

00:01:21 Speaker_02
Pizza Time Theater operates as Chuck E. Cheese's Pizza Time Theater, and is commonly known as Chuck E. Cheese. I see. Please continue. Showbiz Pizza is in breach of a franchise agreement it signed with my client last summer.

00:01:35 Speaker_02
As part of this agreement, Showbiz was given access to trade secrets, including floor plans, financial projections, and insights from years of expensive research into the animatronics, which are the main attraction for families to pizzerias of this nature.

00:01:52 Speaker_02
Chuck E. Cheese's attorney pauses to take a sip of water for dramatic effect. Your Honor, my client has sued for damages. But while we wait for the case to be heard, Showbiz is capitalizing on its bad faith actions.

00:02:05 Speaker_02
An injunction will protect my client from further damage from this shameless imitator. The judge turns to the Showbiz legal team. Hmm, and I suppose you object? Yes, your honor, the plaintiff's claims of irreparable harm are overblown.

00:02:21 Speaker_02
My client is developing showbiz pizza in regions where there are no Chuck E. Cheese restaurants and therefore cannot damage its business.

00:02:30 Speaker_02
I also note the plaintiff's counsel has yet to present the court with evidence to support its allegations against us. The judge thinks for a moment and then renders a verdict.

00:02:40 Speaker_02
A preliminary injunction requires an immediate and proven threat to the offended party, and in this case, I am not convinced that is so. There is little direct competitive threat that cannot be remedied once the case has been heard in full.

00:02:54 Speaker_02
Therefore, I reject this request. As the court rises, Showbiz's attorney smiles. He's more than justified his fee today.

00:03:05 Speaker_02
Robert Brock is planning to spend millions expanding Showbiz Pizza fast, and this injunction request was the last roadblock to his plan. And now that there's nothing stopping Brock, Nolan Bushnell's Chuck E. Cheese is going to feel the heat.

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00:05:23 Speaker_02
On the last episode, Nolan Bushnell left Atari and started the Chuck E. Cheese's Pizza Time theater chain.

00:05:29 Speaker_02
Its combo of pizza, arcade games and animatronic entertainment proved so popular that hotel tycoon Robert Brock signed up to open hundreds of franchise locations.

00:05:40 Speaker_02
But then, Brock ripped up the deal and joined forces with inventor Aaron Fechter to start a rival chain called Showbiz Pizza Place. His new venture has a friendly bear mascot called Billy Bob.

00:05:53 Speaker_02
Now, it's rat versus bear in a race to top this new segment of kids' entertainment. This is Episode 2, Broken Robots. It's April 1981, and in a ritzy office in downtown San Francisco, Nolan Bushnell pops a bottle of champagne.

00:06:18 Speaker_02
The sharp-suited investment brokers around him applaud as the foam bursts and Bushnell starts pouring glasses. One of the investment brokerage's partners raises his glass. Congratulations, Nolan.

00:06:30 Speaker_02
Chuck E. Cheese's Pizza Time Theater is now a public company. Bushnell raises his champagne glass. He spent months preparing to take Pizza Time Theater public, and it's gone better than even he imagined.

00:06:48 Speaker_02
When he first pitched Chuck E. Cheese's initial public offering to big-shot investors, he hoped to raise just over $8 million. But demand was so high, the companies now walked away with $12.5 million.

00:07:01 Speaker_02
But these investors aren't just buying into the restaurant's fat pizza profits. They're buying Bushnell. Ever since Space Invaders landed in the arcades in 1978, America's gone video game crazy. Galaxian, Asteroids, and Pac-Man are all the rage.

00:07:20 Speaker_02
And that makes Chuck E. Cheese's stock hotter than its pizzas. Because Bushnell's not just building a restaurant chain. He's building the biggest arcade chain in America, in the form of Chuck E. Cheese's.

00:07:32 Speaker_02
And once he's done that, he's going to funnel its profits into building a tech empire to rival the biggest tech giant, his old company Atari.

00:07:42 Speaker_02
He sees a future where Chuck E. Cheese serves more pizza than Pizza Hut, gives birth to new cartoon stars, creates video games, and even makes robots. But for his plan to work, he needs to keep Chuck E. Cheese ahead of Showbiz Pizza.

00:07:59 Speaker_02
Right now, there are 27 Chuck E. Cheese restaurants, but Showbiz is closing the gap fast. Robert Brock's opened 13 Showbiz Pizza restaurants in the brand's first year, and he's gunning to have 45 open by the end of 1981.

00:08:15 Speaker_02
So Bushnell's going to use the money from the IPO to step up the opening of new Chuck E. Cheese restaurants. He's also fighting back by making Chuck E. Cheese even more family-friendly.

00:08:27 Speaker_02
Unaccompanied teenagers are now barred, Chuck no longer smokes, and new animatronic characters are being introduced, including the King, a lion that impersonates Elvis Presley.

00:08:40 Speaker_06
You know, I want to thank Chuck E. Cheese for inviting me down here to play. This is always my favorite place to play. Chuckie, this song's for you.

00:08:51 Speaker_02
But Bushnell's also hopeful that his legal team can deliver a knockout blow to Showbiz. October 1981, Topeka, Kansas. In his office, Robert Brock listens as his company's legal counsel relays the bad news from San Francisco.

00:09:11 Speaker_02
This morning, Showbiz and Chuck E. Cheese went head-to-head in court again. But unlike last time, it's Showbiz that's taken a beating. The judge also ruled that several of our defenses are not permissible.

00:09:25 Speaker_02
It's not a total wipeout, but we'll have to review our strategy before the jury trial in the spring." Brock stews quietly. With this courtroom victory, Bushnell's got him on the ropes. Chuck E. Cheese is seeking damages of $150 million.

00:09:42 Speaker_02
That's a sum big enough to sink showbiz and Brock's hotel business. Brock fumbles for a sliver of hope. Okay, okay, so we've had a setback. It happens. But it's what the jury thinks that matters. What did the mock jury say?

00:09:58 Speaker_02
We've held four pretend trials so far, and the results are mixed. One found in favor of Pizza Time Theater and awarded $50 million in damages. Brock recoiled slightly at the thought of paying such a staggering sum. Well, what about the other three?"

00:10:15 Speaker_02
In those, just over half of jurors backed us, around a quarter sided with Pizza Time Theater." Brock sinks in his chair and closes his eyes. The path to victory in this court case is getting dangerously narrow.

00:10:29 Speaker_02
Brock contemplates the situation for a moment and then opens his eyes. I don't like these odds. Not when the entire company's on the line. Do you think Pizza Time Theater will agree to a settlement that won't involve shutting down Showbiz?

00:10:45 Speaker_02
Well, I suspect they'd want a pound of flesh, but yeah, I think so. This legal battle taints their appeal to investors, too. Good, good. Then let's open talks. If there's a way to mollify them without losing Showbiz, we should take it.

00:11:01 Speaker_02
Our animatronics are superior and we know food service better. I'd prefer to fight them in the marketplace than in the courthouse.

00:11:17 Speaker_02
A few days later, Showbiz's attorneys meet with Chuck E. Cheese's legal team to start the process of trying to hammer out a deal both sides can live with.

00:11:26 Speaker_02
And while the lawyers haggle, Bushnell is pushing ahead with his plan to turn Chuck E. Cheese into the foundation of a new tech empire. April 1982, Hollister, California.

00:11:43 Speaker_02
In Chuck E. Cheese's new factory, Bushnell watches with pride as his company's first coin-operated game rolls off the production line.

00:11:51 Speaker_02
The game is a version of skeeball called Chuck E. Cheese Roll, where players have to roll a ball up an incline and into holes to score points. And it's the first step in Bushnell's plans to get back into the games business.

00:12:05 Speaker_02
As part of his exit deal with Atari, Bushnell agreed not to re-enter the video game business until the fall of 1983. And now he's laying the groundwork for a speedy return to the booming industry he started.

00:12:20 Speaker_02
This 35,000 square foot factory is the size of two hockey rinks and it's got space to spare. And when Bushnell's non-compete deal with Atari expires, it'll use that space to start making arcade video games.

00:12:34 Speaker_02
Bushnell's even decided on the name for Chuck E. Cheese's new video game division, Sente. And like Atari, it's a Japanese word from the board game Go that means having the initiative.

00:12:47 Speaker_02
But Bushnell's also about to start a computer animation division, which he's calling Cadabrascope. Its job will be to make cartoons starring the Chuck E. Cheese crew and help turn Bushnell's rat mascot into the new Mickey Mouse.

00:13:02 Speaker_02
Bushnell is also funding promising tech startups working on everything from satellite navigation systems to robot servants for the home.

00:13:10 Speaker_02
And with Chuck E. Cheese's annual revenues closing in on $100 million a year, it feels like his big game plan is coming to fruition. Brock might see showbiz as a chance to make big pizza profits, but for Bushnell, Chuck E. Cheese is way more.

00:13:28 Speaker_02
It's about building the world of tomorrow. June 1982, a law office in San Francisco. After months of negotiation, the lawyers of Pizza Time Theater and Showbiz Pizza Place are done talking. Billy Bob and Chuck E. Cheese are ready to make nice.

00:13:53 Speaker_02
Robert Brock reaches into his suit pocket and removes an expensive pen. He then looks to the opposite side of the table where Nolan Bushnell is sitting. I'm very glad we reached an agreement. I just hope you stick to this one."

00:14:08 Speaker_02
Brock ignores the slight and starts signing the contracts laid out in front of him. After two and a half years of legal warfare, he's just glad it's over. But to end the dispute, Showbiz is paying a high price.

00:14:24 Speaker_02
Under the terms of the settlement, Showbiz will have to pay $750,000 up front. It will also have to pay Chuck E. Cheese a cut from its gross sales for the next 14 years. In all, Brock expects this settlement to cost his company $50 million.

00:14:43 Speaker_02
But while Bushnell scored a victory today, Brock's not down. He's convinced that showbiz will prevail. And now that the company's no longer distracted by legal disputes, he's going to go all out to turn Billy Bob into a superstar.

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00:17:34 Speaker_02
Showbiz's animatronics guru Aaron Fector hurries out of the terminal and towards the waiting helicopter. He's dressed as a bear and wearing red and yellow striped overalls. Under his arm, he's carrying the head of Billy Bob.

00:17:48 Speaker_02
And that's because tonight, Vector will become Billy Bob, the animatronic rock star beloved by kids across the nation. Vector reaches the helicopter, clambers inside, and straps himself in. He puts on the headphones and hears the pilot's voice.

00:18:05 Speaker_03
Welcome aboard. We'll be at Showbiz in two minutes.

00:18:09 Speaker_02
The helicopter ascends and then banks right, zooming over the suburbs of Dallas. Vector cranes his neck to see the streets below. Closing in fast, he sees their destination, the 100th Showbiz Pizza Place Restaurant.

00:18:24 Speaker_02
Tonight is its grand opening celebration, and Billy Bob is the star attraction. The pilot comes over the radio.

00:18:31 Speaker_03
Get ready, we're about to land.

00:18:34 Speaker_02
The helicopter draws level, hovering right above the landing spot next to the Showbiz pizza place. Vector sees hordes of excited kids and their parents waiting below.

00:18:44 Speaker_02
He removes his headphones, picks up Billy Bob's head, and pulls it down over his own head. The helicopter touches down and Vector jumps out and pretends to be shocked by the crowds.

00:18:59 Speaker_02
The crowd of preteen fans scream in delight at the arrival of Billy Bob. Vector then runs towards the nearby stage, pausing to shake hands and dance as he goes.

00:19:09 Speaker_02
Vector hurries onto the stage where other musicians from Showbiz's animatronic house band, The Rockafire Explosion, are waiting. Vector heads to the microphone, ready to play some good old rock and roll for the crowd.

00:19:23 Speaker_02
Inside his costume, Fechter can't stop grinning. Billy Bob is now a star, an idol to millions of American kids. Soon, he imagines the lovable bear he created will be topping the music charts and starring in Hollywood movies.

00:19:41 Speaker_02
Chuck E. Cheese might have twice as many restaurants, but the animatronic pizza craze is only just getting going.

00:19:48 Speaker_02
Kmart, Sega, and even Atari owner Warner Communications are leaping on the bandwagon and opening their own kids' entertainment pizzerias. As far as Vector's concerned, the sky's the limit and everything's going swell. And Chuck E. Cheese agrees.

00:20:07 Speaker_02
By November 1982, Chuck E. Cheese is riding high. It's talking up the idea that it'll be selling more pizza than Pizza Hut in a few years and expanding into Canada, Australia, Hong Kong and France.

00:20:21 Speaker_02
And it's also just launched a first major TV ad campaign, back with a new slogan, Smile America.

00:20:31 Speaker_05
You can smile America with Chuck E. Cheese. You can smile America with Chuck E. Cheese. Food and games and all kinds of features for a taste of pizza time theater. You can smile America, smile America. You can smile America with Chuck E. Cheese.

00:20:59 Speaker_02
But in December 1982, just weeks after the Smile America slogan debuts, shocking news hits. After years of supersonic growth, Atari has fallen short of Wall Street's earnings and growth expectations.

00:21:15 Speaker_02
The video game market is now oversaturated, and kids are growing bored of the aging Atari 2600 console. And with Atari struggling, investors rush to pull their money out of video games. Banks call in the loans of over-leveraged game startups.

00:21:34 Speaker_02
Within weeks, the video game industry is withering fast and dragging down every business connected to it. And thanks to the large video game arcades inside every restaurant, that includes Chuck E. Cheese and Showbiz.

00:21:56 Speaker_02
It's July 1983, and Nolan Bushnell's on the deck of a race yacht that's speeding across the Pacific Ocean. Up ahead, he can see the shoreline of Hawaii coming into focus.

00:22:08 Speaker_02
He maneuvers his baseball cap to shield his eyes from the midday sun and spots the white tower of the Diamond Head Lighthouse. A smile breaks across his bearded face. That's the finish line, and there are no other boats in sight.

00:22:22 Speaker_02
He and his crew are about to win the Trans-Pacific Yacht Race. He yells to his crewmates. Land ho! Bushnell glances up at the sail billowing above him. On it is the winking face of Chuck E. Cheese, the rat that made this victory possible.

00:22:42 Speaker_02
Because below deck, this yacht packs a satellite navigation system that Bushnell's funded with his games and pizza fortune. A fortune now estimated to be 200 million dollars. At the harbor, a large crowd greets Bushnell and his crew.

00:22:59 Speaker_02
Women in grass skirts drape leis around their necks. Well-wishers move in to shake their hands and slap their backs. And as they do, Bushnell notices a man in a suit pushing through the crowd and waving an envelope. Mr. Bushnell! Mr. Bushnell!

00:23:15 Speaker_02
But before the man can reach him, two of his crew rush him. One grabs him by the feet, the other under his arms. They carry him to the water's edge and start swinging him back and forth. On the count of three, they hurl Bushnell into the water.

00:23:38 Speaker_02
By the time Bushnell drags himself out of the water, the man in the suit is waiting for him and holding out the envelope. But Mr. Bushnell, I have an urgent telegram for you. Bushnell opens the envelope.

00:23:51 Speaker_02
Inside is a one-line message from Chuck E. Cheese headquarters. It reads, Bad news in the second quarter. Bushnell's heart skips a beat.

00:24:02 Speaker_02
For the past few months, he's been focused on the company's new ventures and left the operations at his pizza chain to his executive team.

00:24:09 Speaker_02
As far as he knew, Chuck E. Cheese's second quarter results were going to serve up more good news for investors. But if the restaurant business is now in trouble, then so is Bushnell.

00:24:21 Speaker_02
Because without those big pizza profits bankrolling everything, the new tech empire he's building will be toast. The following day, Chuck E. Cheese headquarters, Sunnyvale, California.

00:24:39 Speaker_02
In the boardroom, Nolan Bushnell leans back into his chair, smoking his pipe as the company's president walks him through the company's now shaky finances. In the second quarter, the company lost more than $3 million and watched its revenues dive 17%.

00:24:55 Speaker_02
It's a perfect storm of problems, Nolan. The rapid decline in the video game markets hit us hard. Kids just aren't into games like they used to be. Also, we expanded too fast.

00:25:07 Speaker_02
We're now in direct competition with showbiz in many places, and there are now too many places where there's more than one kids' entertainment restaurant within 10 miles.

00:25:16 Speaker_02
When there's more than one of us within a 10-mile radius, there's just not enough customers to go around. The finance chief cuts in. High inflation's another factor. Our pizza's expensive and families are economizing right now.

00:25:29 Speaker_02
It's also pushing up our food and labor costs. Bushnell looks at his executive team. Well, what should we do? We need to scale back, shut unprofitable locations, slow expansion, rework the pizza recipe to control costs. Bushnell stops puffing his pipe.

00:25:49 Speaker_02
I thought we had kept ingredients costs pretty low." The company's president looks uneasy. Uh, we decided to improve the pizza, use whole milk mozzarella as parents were complaining the food was lousy.

00:26:01 Speaker_02
That increased our food costs by around three to four percent. Bushnell looks at the team in disbelief. Who cares what the parents think about the pizza? This is a kid's entertainment restaurant. Parents choose when to go, kids choose where to go.

00:26:17 Speaker_02
That's basic to what we do. Being a Chuck E. Cheese should piss parents off." Bushnell thinks for a moment. Until now, he had assumed Chuck E. Cheese's restaurants were on autopilot and it would be smooth sailing. But now, it's in trouble. Anything else?

00:26:37 Speaker_02
The finance chief speaks up again. Well, another problem is a lot of cash being diverted into funding new and as yet unprofitable divisions like the video game arm. Bushnell scowls. Sente is not the problem. It's the solution.

00:26:52 Speaker_02
It's going to revolutionize the arcade business. It's our next source of major growth. But we have to do something. Okay, okay. shut the unprofitable stores, go back to cheap pizza, and slow the pace of expansion.

00:27:07 Speaker_02
We just need to hold on until Sente launches. After that, we'll be fine. It's September 30th, 1983, and in a huge warehouse in Fremont, California, Bushnell's throwing a no-expense-spared party.

00:27:27 Speaker_02
The entire place has been decorated to look like a jungle, complete with palm trees, dirt, faux rivers, and miniature volcanoes. Animals from Marine World's Africa USA theme park are being led around the building.

00:27:41 Speaker_02
And in the center of the room, there's a huge box on a stage with a large digital alarm clock hanging above it. Nearby, two arcade game distributors from Illinois watch in disbelief as an animal trainer leads a lion right past them.

00:27:56 Speaker_02
Whoa, I've never seen a lion this close before. Not sure I want to again. Hey, you seen Nolan anywhere? Come to think of it, no. Just then, an announcement fills the warehouse. Would everyone please assemble near the alarm clock.

00:28:14 Speaker_02
The 300 guests head through the pop-up jungle and gather around the large crate beneath the alarm clock. The clock hits 1008. And then, a tall, grinning man with a raggedy beard bursts out of the box. Nolan Bushnell is in the building.

00:28:34 Speaker_02
Bushnell stands on the stage and thrusts his pipe into the sky.

00:28:38 Speaker_03
I'm free! I'm free! Thank God I am finally free!

00:28:44 Speaker_02
For seven years, Bushnell's been shut out of the video game business by a non-compete deal with his former company, Atari. But now that deal has expired, and that means his new video game company, Sente, can start work.

00:28:59 Speaker_02
Today, I return to the industry I started with Atari, but I'm returning with a new vision. A vision that will reignite the arcade business. Sente is a new approach. Right now, arcades buy game machines only to have to buy a new one six months later.

00:29:16 Speaker_02
But Sente works differently. Instead of buying the machine, you lease the machine, and the machine can play multiple games. If you want to change a game, you just insert a different cartridge. It's like an Atari 2600 for the arcade hall."

00:29:32 Speaker_02
The two distributors from Illinois look at each other and grin. For months, the arcade trade has been all doom and gloom. This feels like the first ray of hope they've seen for some time. One of them shouts out to Bushnell, Where do I sign?

00:29:51 Speaker_02
Soon there will be a line of arcade distributors waiting to place orders for Bushnell's new game machines, even though none of them have seen a single game Sentey's made.

00:30:01 Speaker_02
But Bushnell's about to discover that this promising launch won't be enough to rescue Chuck E. Cheese.

00:30:13 Speaker_02
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00:31:56 Speaker_02
In the Chuck E. Cheese boardroom, Nolan Bushnell feels something he rarely feels. A sense of doom. He's used to being the dashing entrepreneur, succeeding through sheer ambition and chutzpah. But now, defeat seems inevitable.

00:32:12 Speaker_02
In the last four months of 1983, Chuck E. Cheese lost $75 million. The excitement about Sente died the moment its games failed to live up to Bushnell's hype. Its computer animation division, Cadabroscope, has spent a fortune getting nowhere.

00:32:31 Speaker_02
And last month, top Silicon Valley venture capitalist Don Valentine quit the board to distance himself from the impending disaster. One of the Pizza Time board members levels with Bushnell. Nolan, radical actions needed to save this business.

00:32:48 Speaker_02
Our banks and creditors are losing faith in us. We need to shut stores, close Cadabroscope, and sell Sente. Bushnell shudders at the thought of losing Sente, but the board members not finished talking. Also, it would help if you resign from the board.

00:33:08 Speaker_02
Bushnell nods. He might own 19% of the company, but if investors, banks, and creditors have lost faith in him, it really is over. Still, he will leave his pizza venture $35 million better off than when he started it.

00:33:30 Speaker_02
Bushnell's exit is too little, too late. A few weeks later, the Bank of California runs out of patience. It demands Chuck E. Cheese pay back $50 million of debt immediately.

00:33:43 Speaker_02
Six days later, Chuck E. Cheese files for Chapter 11 bankruptcy protection to stop the bank from seizing the entire business. But showbiz is floundering too. The novelty of animatronic entertainment is fading. The video game boom is now a bust.

00:34:02 Speaker_02
Inflation is increasing costs and forcing parents to cut back. And showbiz has another problem that's depressing profits. It's legal settlement with Chuck E. Cheese. Every month it must hand a slice of its revenues over to its biggest rival.

00:34:18 Speaker_02
But upon hearing the news that Chuck E. Cheese is facing bankruptcy, Showbiz founder Robert Brock hits on a wild idea to save his ailing pizza chain.

00:34:36 Speaker_02
A few weeks later, in Orlando, Florida, Robert Brock is visiting the workshop of Aaron Fechter, the man behind Showbiz's animatronics. And he's hoping to get the 30-year-old inventor to buy into his plan. Aaron, as you know, showbiz is in trouble.

00:34:52 Speaker_02
But I have a solution." Vector looks relieved. To him, Brock is a kind of father figure, and it's good to know he's figured out a way to get the show back on the road. Great. What's the solution? We buy Chuck E. Cheese. What? What? Why? Why save them?

00:35:12 Speaker_02
Someone else might buy them. They might restructure their debt and exit Chapter 11, but if we buy them out, we'll own the whole market, and we won't have to keep paying them a cut of our sales, so it'll instantly improve our finances."

00:35:27 Speaker_02
But what about Billy Bob?" Brock sighs and sighed. He's trying to save the business and thousands of people's jobs, infectors fretting about a fur-covered robot. Still, Brock knows that to Vector, Billy Bob and his band are like family.

00:35:45 Speaker_02
Aaron, this changes nothing for your characters. The companies will merge, but we'll continue with both brands. We might save money by using the same red sauce, but that's as far as it'll go.

00:35:58 Speaker_02
Vector relaxes a little bit, but the idea of Billy Bob and Chuck E. Cheese as friends unnerves him. Billy Bob is shy and kind, a good role model for kids. But Chuck? Chuck is a scruffy, streetwise rat." Vector frowns. I don't like it.

00:36:17 Speaker_02
Aaron, it's the only way to save your characters. What if I disagree? I still own the characters. I can stop you from using them. Also, I can veto this merger. Yes, you could. But if you do that, both Showbiz and Chuck E. Cheese are finished.

00:36:39 Speaker_02
Aaron, this is about survival. It's not ideal, but it's the only way. Brock places a reassuring hand on Vector's shoulder. Vector takes a deep breath and surrenders to the inevitable. Fine.

00:36:53 Speaker_02
If that's what it takes to save Billy Bob, I'll approve the deal. In October 1984, Showbiz buys the Chuck E. Cheese brand, its best-performing restaurants, and its network of franchisees.

00:37:12 Speaker_02
Every Chuck E. Cheese left behind is shut down, and its equipment sold off at rock-bottom prices. Brock also buys out most of Fector's steak in Showbiz.

00:37:23 Speaker_02
The combined company is renamed Showbiz Pizza Time, and a former executive from the steakhouse chain Steak & Ale, executive Richard Frank, is hired as its CEO. Over the next few years, Frank nurses both brands back to health.

00:37:39 Speaker_02
He stems the losses by shutting around 100 of its least profitable restaurants. He increases the focus on preteens by reducing the space for video games to make room for more kiddie rides, ticket redemption games, and play areas.

00:37:53 Speaker_02
In parallel, Showbiz Pizza Time owner Brock Hotel Corporation restructures the debts it built up while expanding Showbiz. The deal sees debts of $100 million shrink to just $30 million. But as part of the deal, Robert Brock resigns from the company.

00:38:12 Speaker_02
In 1986, Showbiz Pizza Time turns a corner. Sales start rising again, and soon after, it cautiously starts opening new locations.

00:38:22 Speaker_02
In 1988, it launches a national TV ad campaign to get kids coming back to Chuck E. Cheese with a fresh slogan, where a kid can be a kid.

00:38:33 Speaker_04
Where can a kid kid around? Billy! Where can he act like a clown? Billy! Oh, what a face! There's just one place for a silly kid! But it's not just Chuck E. Cheese that's using that slogan. Showbiz Pizza is too.

00:39:09 Speaker_07
It's tough being a big kid. The bus driver hollered at me. I lost my lunch money. My teacher told me I wasn't living up to my full potentiality. And I don't even know what that means.

00:39:21 Speaker_05
But at Showbiz Pizza, you can act like a kid. You can have more fun than you ever did. You can giggle. You can wiggle. You can flip your lid. Showbiz Pizza, where a kid can be a kid.

00:39:40 Speaker_02
It's the first step toward combining the two brands. And in 1989, the company realizes the cost of running two separate brands doing the same thing is a cost it could do without. So it decides to unite the two concepts.

00:39:56 Speaker_02
But to make that work, the company decides it has to own the rights to Billy Bob and the Rockafire Explosion. So it tells Vector to sign over the rights or watch his characters get fired. Vector refuses to sell.

00:40:12 Speaker_02
The Billy Bob cartoons, record deals, and live tours he imagined haven't come to pass. But these characters are more than intellectual property to him. He believes in his creations and has poured his heart and soul into them, and they're not for sale.

00:40:29 Speaker_02
So, Showbiz carries out its threat. It systematically removes Billy Bob and his band from its stages and replaces them with a cast from Chuck E. Cheese. And in 1993, the final showbiz pizza place becomes a Chuck E. Cheese.

00:40:48 Speaker_02
The New Jersey Rat might have lost the business war, but it's proven that just like the real-life rodents, it's got a knack for long-term survival. Over the next 30 years, Chuck E. Cheese sees its fortunes rise and fall time and time again.

00:41:07 Speaker_02
It's been bought, sold and spun out, skirted with bankruptcy, bought franchised restaurants and sold them off again. But despite the ups and downs, it's still a mecca for American kids.

00:41:20 Speaker_02
Today there are still almost 500 Chuck E. Cheese restaurants and every year half a million kids celebrate their birthdays there. but it's no longer the animatronics that bring them in.

00:41:31 Speaker_02
The stiff, clunky robot musicians have given way to a digital dance floor and a TV wall where a computer-generated Chuck and his band rock the house. And these days, he's no longer a streetwise New Jersey rodent.

00:41:45 Speaker_02
His official biography says he's really an orphan who never had a birthday party of his own. So when he won $50 in a video game competition, he started Chuck E. Cheese so he could throw parties for other children. And he's no longer a rat, either.

00:42:01 Speaker_02
These days, he's a mouse. If you like Business Wars, you can binge all episodes early and ad-free right now by joining Wondery Plus in the Wondery app or on Apple Podcasts. Prime members can listen ad-free on Amazon Music.

00:42:20 Speaker_02
Before you go, tell us about yourself by filling out a short survey at wondery.com slash survey. From Wondery, this is episode two of Chuck E. Cheese versus Showbiz Pizza for Business Wars.

00:42:36 Speaker_02
We've used many sources for this season, including showbizpizza.com. If you're interested in hearing more about pizza rivalries, make sure to check out our season on Pizza Hut versus Domino's. A quick note about recreations you've been hearing.

00:42:49 Speaker_02
In most cases, we can't know exactly what was said. Those scenes are dramatizations, but they're based on historical research. I'm your host David Brown. Tristan Donovan of Yellow Ant wrote this story, researched by David Walensky.

00:43:01 Speaker_02
Our producers are Emily Frost and Grant Rudder. Sound design by Ryan Potesta. Fact-Checking by Gabrielle Drolet. Our Managing Producer is Desi Blaylock. Our Senior Producers are Karen Lowe and Dave Schilling. Our Senior Managing Producer is Ryan Lohr.

00:43:15 Speaker_02
Our Executive Producers are Jenny Lauer Beckman and Marsha Louis. For Wonder.

00:43:28 Speaker_00
I'm Tristan Redmond, and as a journalist, I've never believed in ghosts.

00:43:32 Speaker_00
But when I discovered that my wife's great-grandmother was murdered in the house next door to where I grew up, I started wondering about the inexplicable things that happened in my childhood bedroom.

00:43:41 Speaker_00
When I tried to find out more, I discovered that someone who slept in my room after me, someone I'd never met, was visited by the ghost of a faceless woman.

00:43:49 Speaker_00
So I started digging into the murder in my wife's family, and I unearthed family secrets nobody could have imagined. Ghost Story won Best Documentary Podcast at the 2024 Ambies and is a Best True Crime nominee at the British Podcast Awards 2024.

00:44:03 Speaker_00
Ghost Story is now the first ever Apple Podcast Series Essential. Each month, Apple Podcast editors spotlight one series that has captivated listeners with masterful storytelling, creative excellence, and a unique creative voice and vision.

00:44:17 Speaker_00
To recognize Ghost Story being chosen as the first Series Essential, Wondery has made it ad-free for a limited time only on Apple Podcasts. If you haven't listened yet, head over to Apple Podcasts to hear for yourself.