An M&A news item stood out this morning: A private equity firm announced Thursday it has agreed to acquire CEC Entertainment, the operator of nearly 600 Chuck E. Cheese's restaurants, in a deal worth about $1.3 billion. The firm, Apollo Global Management, which is run by leveraged-buyout pro Leon Black, has also agreed to assume the hundreds of millions of dollars of debt the pizza-parlor chain has accumulated.

It's remarkable to think that this pizza chain, known for its oddball combination of robotic dancing animals, games, rides, pizza, wings, and wine (for the adults) has been entertaining children (and their parents) for two generations now. It's in 47 states and 10 countries. And it's often forgotten that it was the brainchild of the prototype of modern tech entrepreneurship, Nolan Bushnell, a founder of Atari and inventor of Pong. He's behind four other companies as well: Etak, ByVideo, Axlon, and uWink, another company that integrates tech-minded entertainment and dining. (He's also known as the man who gave Steve Jobs his first job.)

Bushnell has penned articles and has been a columnist for Inc. for various stretches of the magazine's history. And every now and then a reporter would turn an eye on him. This feature from 2009 illuminates Bushnell's ingenious logic behind getting the business started:

In that light, it's easy to understand how Bushnell could go from something as hip as Atari to something as wacky as Chuck E. Cheese's. Bushnell figured that the games he had been marketing to bars, bowling alleys, and pool halls needed a venue that was cleaner, safer, and more fun. In Chuck E. Cheese's, he imagined a video game company that would control the means of distribution--in this case, pizza parlors with arcades inside--just as the old-style movie studios had owned the theaters. Pizza was only the pretext. As far as Bushnell was concerned, he was starting the new Disney. 

Of course, Bushnell's vision, which began with a single San Jose pizza parlor opened in 1977 as a subsidiary of Atari, was decidedly different from the goodhearted earnestness of Disney. The company's mechanical mascot, who entertained diners with a sort of cabaret routine, was the eponymous rat, Chuck E. Cheese. He was a large, surly, cigar-smoking smart aleck--a robotic incarnation of Bushnell himself. What Chuck E. Cheese's offered was a massive arcade where parents could deposit their children and then enjoy some adult time--that is, if you ignored the robotic dog doing Elvis impersonations and focused instead on the fact that the place served wine and beer.

We also dusted off some of the Inc. bound-issue archives to find a cover of the magazine featuring Bushnell, and, lo! There he was on one of the very first issues of the magazine. Another lo! There beside him on a 1979 cover is a massive mechanical rat.



Published on: Jan 16, 2014