By Soma Biswas and Heather Haddon

Chuck E. Cheese, the pizza and entertainment chain synonymous with children's birthday parties, filed for bankruptcy protection Wednesday after the Covid-19 pandemic shook its family-friendly business model to its core.

Owned by Apollo Global Management Inc. and known for ball pits, arcade games and an anthropomorphic mouse mascot, the company has recently started to reopen some locations, according to a letter to employees viewed by The Wall Street Journal. The reopenings didn't come soon enough to avert a bankruptcy filing, clouding the future of 741 Chuck E. Cheese and affiliated Peter Piper Pizza stores world-wide.

Soon after the pandemic closures, Chuck E. Cheese parent company CEC Entertainment Inc. signaled a possible bankruptcy filing, saying it was exploring options including chapter 11 and had hired restructuring advisers.

The chain got rid of the ball pits last year, but it still faces an existential threat from Americans' embrace of social distancing. With a business dependent on hosting hundreds of kids, the company faces an uncertain future due to parents' anxieties about contagion.

Chuck E. Cheese has its believers, though.

Several potential buyers have been circling ahead of the bankruptcy, including Dave & Buster's Entertainment Inc., the arcade-cum-restaurant chain that has faced its own troubles since restrictions on public gatherings went into effect, according to people familiar with the matter. John Catsimatidis, a New York supermarket magnate and Chuck E. Cheese bondholder, is also interested and could team up with a venue operator, one of the people said.

Dallas-based Dave & Buster's, which has a business model that is similar to Chuck E. Cheese's but is aimed at adults, views the chain as a possible way to expand food and games to a younger suburban demographic, another of the people said. Dave & Buster's was expanding its number of locations before the pandemic hit.

Chuck E. Cheese couldn't immediately be reached for comment.

Apollo took Chuck E. Cheese private for $948 million in 2014 and acquired Peter Piper Pizza later that year. CEC Entertainment executives have said that competition from newer kid-oriented venues, such as bounce houses, has hurt sales.

The private-equity firm had planned to take CEC Entertainment public through a reverse merger last year, valuing the company at around $1.4 billion before pulling the proposal when competitors posted weak sales.

Chuck E. Cheese said it would use the bankruptcy process to continue talks with financial backers and landlords on a balance-sheet restructuring that supports the reopening of locations and longer-term strategic plans.

The Journal this month reported the company was fielding interest from potential buyers and was also in talks with its lenders to raise money in an effort to avoid a bankruptcy filing.

Of the stores owned by CEC Entertainment, 266 had reopened as of Wednesday. Franchised locations, which operate under separate legal and financial structures, aren't included in the chapter 11 filing.

Write to Soma Biswas at soma.biswas@wsj.com and Heather Haddon at heather.haddon@wsj.com