Chuck E. Cheese’s Strange Currencies Come up in Bankruptcy Court

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Chuck E. Cheese’s Strange Currencies Come up in Bankruptcy Court

The whole odd episode would make great subject material for an economics podcast or paper.

As anyone who’s been to Chuck E. Cheese undoubtedly knows, the children’s entertainment destination uses a bizarre system of multiple currencies. You show up, you exchange money for coins, you use those coins to play games there, you play the games to win tickets, and then use the tickets to obtain prizes. You cannot buy tickets with money, nor with coins, nor can you exchange money or coins for prizes. The prizes, for the most part, are not worth nearly as much as the money the customer paid three steps earlier. But getting there is supposed to be part of the fun, especially if you’re a kid.

The coins, at one point a few years ago, were swapped out by the company in exchange for cards that held their value. But at any rate, it’s a system that’s served the chain well for its more than four-decade history, ever since it opened as Chuck E. Cheese’s Pizza Time Theatre in California in 1977.

That was, until the company suffered years of major financial strain that was exasperated by the coronavirus pandemic, and filed for bankruptcy back in June. Per Restaurant Business Online, the chain listed assets and liabilities in the range of $1 billion and $10 billion, and planned at the time to restructure operations and renegotiate with its creditors. This followed several years of instability, including the chain’s purchase by Apollo Global Management in 2014 and a planned merger with shell company Leo Holdings Corporation that fell apart last year.

Now, Chuck E. Cheese’s coin-and-ticket currency system has come up as part of that bankruptcy.

According to a report Wednesday in Bloomberg Law, Chuck E. Cheese’s parent company has asked a bankruptcy court to approve its plan to destroy 7 billion paper prize tickets that are left over in its supply chain as a result of the pandemic.

The report, which cited a filing with the U.S. Bankruptcy Court for the Southern District of Texas, said that the 7 billion tickets are enough to “fill approximately 65 forty-foot cargo shipping containers,” and that destroying them alone would cost $2.28 million. Three vendors have agreed to destroy the tickets, rather than delivering them or “releasing them to the public,” as the latter move would possibly lead to chaos in the market for Chuck E. Cheese prizes.

The filing also said that Chuck E. Cheese, in locations that have reopened during the pandemic, have moved to phase out both the tickets and the machines, known as “munchers,” that count and sort them. It’s unclear what method the company is now using for the tickets-for-prizes portion of its prize system.

This follows a report back in April, from a Reddit user in Philadelphia, that a company doing business on food delivery apps as “Pasqually’s Pizza and Wings” was in fact a Chuck E. Cheese location, serving Chuck E. Cheese food.

Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Image: Reuters