Chuck E. Cheese parent CEC Entertainment reportedly is considering an IPO about three years after it was taken private by Apollo Global Management (APO) , but recent restaurant public offerings have disappointed investors.

Reuters recently reported that Chuck E. Cheese, the children's restaurant and entertainment chain, is prepping an offering for the second half of the year that could value it at over $1 billion, although the company hasn't yet hired underwriters.

Apollo agreed to pay about $950 million for Chuck E. Cheese in early 2014. Including the assumption of Chuck E. Cheese's outstanding debt, the deal was valued at about $1.3 billion.

Shortly after selling to Apollo, Chuck E. Cheese bought private equity-backed pizza chain Peter Piper for what sources told TheStreet sister publication The Deal was about $120 million.

Apollo doesn't have much experience in the restaurant sector. In 2013, shortly before acquiring Chuck E. Cheese, the firm sold CKE Restaurants, the parent of the Carl's Jr. and Hardee's concepts, to private equity firm Roark Capital. The target generated revenue of $3.9 billion and fetched about $1.75 billion, while Apollo paid $1 billion for it in 2010.

Last February, Moody's Investors Service downgraded Chuck E. Cheese's debt further into junk status, with the firm's Bill Fahy citing "persistently weak credit metrics" in his report.

"The downgrade also incorporates our view that the company's ability to material improve credit metrics over the intermediate term through operating performance alone will be challenging as soft consumer spending and intense competitive pressures persist," Fahy wrote.

Chuck E. Cheese, based in Irving, Texas, the downgrade report noted, is concentrated in California, Texas and Florida. Chuck E. Cheese owns and operates 522 locations in the U.S. and Canada, with an additional 58 franchised locations.

Fast-casual dining is a notoriously difficult business, with private equity-backed exits such as Shake Shack (SHAK) , Noodles & Co. (NDLS) and Bojangles' (BOJA) trading below their IPO prices.

In its most recent quarter, which ended Oct. 2, Chuck E. Cheese reported revenue of $228.1 million, up 2.8% year-over-year, with a net loss of $2.4 million, down 25% from the same period in 2015.

Dave & Buster's Entertainment (PLAY) , backed by Oak Hill Capital Partners, is also reportedly considering an offering. Chuck E. Cheese and Dave & Buster's have long been considered complementary businesses, with Chuck E. Cheese mulling an offer for its more adult-oriented peer in 2014. 

In response to the restaurant slowdown, Dave & Buster's has emphasized its entertainment business.

Dave & Buster's is "our favorite new unit growth story with an underappreciated, differentiated brand and business model with no real direct competitors," wrote Jefferies analyst Andy Barish after the company's presentation at the annual ICR conference. "We expect this to work to PLAY's advantage as we move later in the cycle, which along with continued focus on new, proprietary games/amusements backed by marketing, should drive growth and broad-based brand awareness to support incremental SSS and margin leverage on 50%-60% flow-through. New unit growth of 10%+ has been very productive as well."

In a similar vein, Piper Jaffray analyst Nicole Miller Regan recommended stocks whose "differentiated entertainment/social elements (such as Dave & Buster's unique 'Eat. Drink. Play. Watch' offering) are best positioned to deliver relative outperformance." She added that Dave & Buster's is "well-positioned to drive 10%+ domestic unit growth annually."

Since mulling the bid for Dave & Buster's, Chuck E. Cheese has introduced products, including wine, free Wi-Fi and lower-calorie pizza, in an effort to woo older customers.

Chuck E. Cheese and Apollo representatives did not respond to requests for comment.

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