UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


                                    FORM 10-Q


(Mark One)

     |X|  Quarterly  report  pursuant  to Section 13 or 15(d) of the  Securities
          Exchange  Act of 1934 for the  quarterly  period  ended  July 1, 2001.
          -------------

     |_|  Transition  report  pursuant to Section 13 or 15(d) of the  Securities
          Exchange Act of 1934 for the transition  period from  _____________ to
          _______________.

                         Commission File Number 0-15782


                             CEC ENTERTAINMENT, INC.
             (Exact name of registrant as specified in its charter)


               Kansas                                  48-0905805
  (State or other jurisdiction of                  (I.R.S. Employer
   incorporation or organization)                  Identification No.)


                            4441 West Airport Freeway
                               Irving, Texas 75062
                    (Address of principal executive offices,
                               including zip code)


                                 (972) 258-8507
                         (Registrant's telephone number,
                              including area code)


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the preceding 12 months (or such shorter  period that the registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes |X| No |_|

         At July 1, 2001, an aggregate of 27,886,257  shares of the registrant's
Common  Stock,  par value of $.10 each  (being  the  registrant's  only class of
common stock), were outstanding.







<PAGE>


                         PART I - FINANCIAL INFORMATION



Item 1.  Financial Statements


                             CEC ENTERTAINMENT, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS





                                                                          Page

Consolidated balance sheets.............................................     3

Consolidated statements of earnings and comprehensive income............     4

Consolidated statement of shareholders' equity..........................     6

Consolidated statements of cash flows ..................................     7

Notes to consolidated financial statements..............................     8



















                                       2


<PAGE>
<TABLE>
<CAPTION>


                                                       CEC ENTERTAINMENT, INC.
                                                     CONSOLIDATED BALANCE SHEETS
                                                  (Thousands, except share amounts)

                                                                                          July 1,         December 31,
                                                                                            2001              2000
                                                                                      ------------      -------------
                                                                                       (unaudited)
 <S>                                                                                      <C>               <C>
 ASSETS

  Current assets:
     Cash and cash equivalents......................................................     $  3,467          $  7,300
     Accounts receivable............................................................        5,853            12,778
     Inventories....................................................................       12,077             8,436
     Prepaid expenses...............................................................        5,106             4,419
     Deferred tax asset.............................................................        1,205             1,205
     Assets held for resale.........................................................        2,156             4,211
                                                                                        ---------         ---------
       Total current assets.........................................................       29,864            38,349
                                                                                        ---------         ---------

  Property and equipment, net.......................................................      371,912           338,408
                                                                                        ---------         ---------

  Notes receivable from related party ..............................................        1,489             1,526
                                                                                        ---------         ---------

  Other assets......................................................................       14,651            11,092
                                                                                        ---------         ---------
                                                                                        $ 417,916         $ 389,375
                                                                                        =========         =========

  LIABILITIES AND SHAREHOLDERS' EQUITY

  Current liabilities:
     Current portion of long-term debt..............................................    $     111           $ 6,102
     Accounts payable and accrued liabilities.......................................       38,218            38,616
                                                                                        ---------         ---------
          Total current liabilities.................................................       38,329            44,718
                                                                                        ---------         ---------

  Long-term debt, less current portion..............................................       44,555            47,030
                                                                                        ---------         ---------

  Deferred rent.....................................................................        3,396             3,491
                                                                                        ---------         ---------

  Deferred tax liability............................................................       10,229             7,708
                                                                                        ---------         ---------

  Other liabilities.................................................................        1,725             1,725
                                                                                        ---------         ---------

  Commitments and contingencies

  Redeemable preferred stock, $60 par value, redeemable for $2,888 in 2005..........        2,486             2,431
                                                                                        ---------          ---------

  Shareholders' equity:
     Common stock, $.10 par value; authorized 100,000,000 shares; 35,309,663
          and 34,585,454 shares issued, respectively ...............................        3,531             3,459
     Capital in excess of par value.................................................      191,438           177,828
     Retained earnings .............................................................      212,565           175,217
     Accumulated other comprehensive loss ..........................................          (84)              (30)
     Less treasury shares of 7,423,406 and 7,039,506, respectively, at cost.........      (90,254)          (74,202)
                                                                                        ---------         ---------
                                                                                          317,196           282,272
                                                                                        ---------         ---------
                                                                                        $ 417,916         $ 389,375
                                                                                        =========         =========
</TABLE>

                 See notes to consolidated financial statements.

                                       3
<PAGE>

<TABLE>
<CAPTION>

                                                       CEC ENTERTAINMENT, INC.
                                                CONSOLIDATED STATEMENTS OF EARNINGS
                                                      AND COMPREHENSIVE INCOME
                                                            (Unaudited)
                                               (Thousands, except per share amounts)

                                                                                             Three Months Ended
                                                                                     ---------------------------------
                                                                                     July 1, 2001       July 2, 2000
                                                                                     ------------       ------------

<S>                                                                                     <C>                <C>
Food and beverage revenues...................................................           $  85,693          $ 78,654
Games and merchandise revenues...............................................              40,979            39,463
Franchise fees and royalties.................................................                 694               862
Interest income, including related party income of $41 and  $26,
   respectively..............................................................                  51                54
                                                                                         --------          --------
                                                                                          127,417           119,033
                                                                                         --------          --------

Costs and expenses:
   Cost of sales.............................................................              58,215            53,915
   Selling, general and administrative expenses..............................              17,187            16,939
   Depreciation and amortization.............................................               8,303             8,122
   Interest expense..........................................................                 597               880
   Other operating expenses..................................................              22,901            19,404
                                                                                         --------          --------
                                                                                          107,203            99,260
                                                                                         --------          --------

Income before income taxes...................................................              20,214            19,773
                                                                                         --------          --------

Income taxes:
   Current expense...........................................................               7,055             6,940
   Deferred expense..........................................................                 828               732
                                                                                         --------          --------
                                                                                            7,883             7,672
                                                                                         --------          --------

Net income ..................................................................              12,331            12,101

Other comprehensive income, net of tax:
   Foreign currency translation..............................................                  25                29
                                                                                         --------          --------
Comprehensive income.........................................................            $ 12,356          $ 12,130
                                                                                         ========          ========


Earnings per share:
   Basic:
     Net income .............................................................            $    .44          $    .45
                                                                                         ========          ========
     Weighted average shares outstanding.....................................              27,945            26,768
                                                                                         ========          ========
   Diluted:
     Net income  ............................................................            $    .43          $    .44
                                                                                         ========          ========
     Weighted average shares outstanding.....................................              28,785            27,612
                                                                                         ========          ========

</TABLE>


                 See notes to consolidated financial statements.

                                       4

<PAGE>
<TABLE>
<CAPTION>


                                                        CEC ENTERTAINMENT, INC.
                                                CONSOLIDATED STATEMENTS OF EARNINGS
                                                      AND COMPREHENSIVE INCOME
                                                            (Unaudited)
                                               (Thousands, except per share amounts)

                                                                                            Six Months Ended
                                                                                      -------------------------------
                                                                                      July 1, 2001       July 2, 2000
                                                                                      ------------       ------------
<S>                                                                                     <C>               <C>
Food and beverage revenues...................................................           $ 196,515         $ 172,483
Games and merchandise revenues...............................................              92,356            86,030
Franchise fees and royalties.................................................               1,620             1,754
Interest income, including related party income of  $83 and $49,
   respectively..............................................................                 134               113
                                                                                        ---------          --------
                                                                                          290,625           260,380
                                                                                        ---------          --------

Costs and expenses:
   Cost of sales.............................................................             126,682           115,465
   Selling, general and administrative expenses..............................              38,485            36,935
   Depreciation and amortization.............................................              16,589            16,218
   Interest expense..........................................................               1,307             1,641
   Other operating expenses..................................................              46,062            39,722
                                                                                         --------          --------
                                                                                          229,125           209,981
                                                                                         --------          --------

Income before income taxes...................................................              61,500            50,399
                                                                                         --------          --------

Income taxes:
   Current expense...........................................................              21,464            17,690
   Deferred expense..........................................................               2,521             1,864
                                                                                         --------          --------
                                                                                           23,985            19,554
                                                                                         --------          --------

Net income ..................................................................              37,515            30,845

Other comprehensive income, net of tax:
   Foreign currency translation..............................................                 (54)               63
                                                                                         --------          --------
Comprehensive income.........................................................            $ 37,461          $ 30,908
                                                                                         ========          ========


Earnings per share:
   Basic:
     Net income .............................................................            $   1.34          $   1.14
                                                                                         ========           =======
     Weighted average shares outstanding.....................................              27,845            26,819
                                                                                         ========           =======
   Diluted:
     Net income  ............................................................            $   1.30          $   1.11
                                                                                         ========           =======
     Weighted average shares outstanding.....................................              28,672            27,618
                                                                                         ========           =======

</TABLE>


                 See notes to consolidated financial statements.

                                       5
<PAGE>


<TABLE>
<CAPTION>

                                           CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                                             (Unaudited)
                                                (Thousands, except per share amounts)


                                                                                         Amounts             Shares
                                                                                       ----------         ----------
<S>                                                                                     <C>                  <C>
Common stock and capital in excess of par value:
   Balance, beginning of year..............................................             $ 181,287            34,585
   Stock options exercised.................................................                 9,679               720
   Net tax benefit from exercise of stock options..........................                 3,827
   Stock issued under 401(k) plan..........................................                   176                 5
                                                                                         --------           -------
   Balance, July 1, 2001...................................................               194,969            35,310
                                                                                         --------           =======

Retained earnings:
   Balance, beginning of year..............................................               175,217
   Net income..............................................................                37,515
   Redeemable preferred stock accretion....................................                   (51)
   Redeemable preferred stock dividend, $2.40 per share....................                  (116)
                                                                                         --------
   Balance, July 1, 2001...................................................               212,565
                                                                                         --------

Accumulated other comprehensive loss:
   Balance, beginning of year..............................................                   (30)
   Foreign currency translation............................................                   (54)
                                                                                         --------
   Balance, July 1, 2001...................................................                   (84)
                                                                                         --------

Treasury shares:
   Balance, beginning of year..............................................               (74,202)            7,040
   Treasury stock acquired.................................................               (16,052)              383
                                                                                         --------           -------
   Balance, July 1, 2001...................................................               (90,254)            7,423
                                                                                         --------           =======

Total shareholder's equity.................................................             $ 317,196
                                                                                         ========
</TABLE>









                 See notes to consolidated financial statements.

                                       6

<PAGE>

<TABLE>
<CAPTION>

                                                       CEC ENTERTAINMENT, INC.
                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                             (Unaudited)
                                                             (Thousands)


                                                                                               Six Months Ended
                                                                                       ------------------------------
                                                                                       July 1, 2001      July 2, 2000
                                                                                       ------------      ------------
<S>                                                                                      <C>               <C>
Operating activities:
   Net income ...............................................................            $ 37,515          $ 30,845
   Adjustments to reconcile net income to cash provided
     by operations:
   Depreciation and amortization.............................................              16,589            16,218
   Deferred income tax expense...............................................               2,521             1,864
   Tax benefit from exercise of stock options and stock grants...............               3,827               390
   Compensation expense under stock grant plan...............................                                   380
   Other ...................................................................                  401              (117)
   Net change in receivables, inventories, prepaids, payables and
     accrued liabilities.....................................................               2,496             3,124
                                                                                         --------          --------
         Cash provided by operations.........................................              63,349            52,704
                                                                                         --------          --------

Investing activities:
   Purchases of property and equipment.......................................             (51,125)          (43,224)
   Disposition of property and equipment.....................................                                   835
   Additions to notes receivable.............................................                (796)             (834)
   Payments received on notes receivable.....................................                 833               259
   (Increase) decrease in assets held for resale and other assets............              (1,265)            3,718
                                                                                         --------          --------
         Cash used in investing activities...................................             (52,353)          (39,246)
                                                                                         --------          --------

Financing activities:
   Payments on debt .........................................................              (8,466)           (7,245)
   Exercise of stock options ................................................               9,679             1,213
   Redeemable preferred stock dividends......................................                (116)             (119)
   Purchase of treasury stock ...............................................             (16,052)           (5,980)
   Other ....................................................................                 126                80
                                                                                         --------          --------
         Cash used in financing activities...................................             (14,829)          (12,051)
                                                                                         --------          --------

Increase in cash and cash equivalents .......................................              (3,833)            1,407
Cash and cash equivalents, beginning of period...............................               7,300             2,731
                                                                                         --------          --------
Cash and cash equivalents, end of period.....................................            $  3,467          $  4,138
                                                                                         ========          ========

</TABLE>








                 See notes to consolidated financial statements.

                                       7
<PAGE>


                             CEC ENTERTAINMENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1.    Interim financial statements:

      In the opinion of management,  the accompanying  financial  statements for
the  periods  ended  July 1,  2001  and July 2,  2000  reflect  all  adjustments
(consisting  only of normal recurring  adjustments)  necessary to present fairly
the  Company's  financial  condition,  results of  operations  and cash flows in
accordance with generally accepted accounting principles.

      Certain  information  and footnote  disclosures  normally  included in the
consolidated financial statements prepared in accordance with generally accepted
accounting  principles have been omitted. The unaudited  consolidated  financial
statements  referred to above should be read in  conjunction  with the financial
statements and notes thereto  included in the Company's Form 10-K filed with the
Securities and Exchange Commission for the year ended December 31, 2000. Results
of  operations  for the  periods  ended  July 1,  2001 and July 2,  2000 are not
necessarily indicative of the results for the year.


2.    Earnings per common share:

      Earnings per common  share were  computed  based on the  weighted  average
number of common and potential common shares  outstanding during the period. Net
income  available  per common share has been  adjusted  for the items  indicated
below,  and earnings  per common and  potential  common  share were  computed as
follows (thousands, except per share data):

<TABLE>
<CAPTION>
                                                                    Three Months Ended         Six Months Ended
                                                                ------------------------    ----------------------
                                                                July 1,         July 2,     July 1,         July 2,
                                                                 2001          2000          2001             2000
                                                               ---------     ---------     ---------      --------
<S>                                                            <C>            <C>          <C>            <C>
Net income ............................................        $ 12,331       $ 12,101     $ 37,515       $ 30,845
Accretion of redeemable preferred stock................             (25)           (25)        ( 51)           (51)
Redeemable preferred stock dividends...................             (57)           (60)        (116)          (119)
                                                               --------       --------     --------       --------
Adjusted income applicable to common shares............        $ 12,249       $ 12,016     $ 37,348       $ 30,675
                                                               ========       ========     ========       ========

Basic:
    Weighted average common shares outstanding.........          27,945         26,768       27,845         26,819
                                                               ========       ========     ========       ========

    Earnings per common share..........................        $    .44       $    .45     $   1.34       $   1.14
                                                               ========       ========     ========       ========

Diluted:
    Weighted average common shares outstanding.........          27,945         26,768       27,845         26,819
    Potential common shares for stock options
        and stock grants...............................             840            844          827            799
                                                               --------       --------     --------       --------
    Weighted average shares outstanding................          28,785         27,612       28,672         27,618
                                                               ========       ========     ========       ========

    Earnings per common and potential
        common share...................................        $    .43       $    .44     $   1.30       $   1.11
                                                               ========       ========     ========       ========
</TABLE>

                                       8
<PAGE>


Item 2: Management's  Discussion and Analysis of Financial Condition and Results
     of Operations

Results of Operations

Second Quarter 2001 Compared to Second Quarter 2000

      A summary of the results of  operations  of the Company as a percentage of
revenues for the second quarters of 2001 and 2000 is shown below.

                                                         Three Months Ended
                                                  -----------------------------
                                                  July 1, 2001     July 2, 2000
                                                  ------------     ------------
      Revenues...................................       100.0%        100.0%
                                                      -------       -------
      Costs and expenses:
         Cost of sales...........................        45.7          45.4
         Selling, general and administrative.....        13.5          14.2
         Depreciation and amortization...........         6.5           6.8
         Interest expense........................          .5            .7
         Other operating expenses................        17.9          16.3
                                                      -------       -------
                                                         84.1          83.4
                                                      -------       -------
      Income before income taxes.................        15.9          16.6
      Income tax expense ........................         6.2           6.4
                                                      -------       -------
      Net income ................................         9.7%         10.2%
                                                      =======       =======

      Revenues

      Revenues  increased  7.0% to $127.4  million in the second quarter of 2001
from $119.0  million in the second  quarter of 2000 due primarily to an increase
in the number of Company-operated  restaurants.  During 2000, the Company opened
31 new  restaurants  and closed one  restaurant.  During the first six months of
2001,  the  Company  opened  13  new  stores,  acquired  one  restaurant  from a
franchisee and closed two  restaurants.  Comparable store sales of the Company's
Chuck E. Cheese's  restaurants which were open during all of the second quarters
of 2001 and 2000 declined  1.0%.  Management  believes that the primary  factors
impacting the comparable store sales decline were unseasonably mild temperatures
and lower  precipitation  this spring,  a significant  increase in receipts from
children-oriented movies during the second quarter of 2001 and the soft economic
environment. Menu prices increased 2.7% between the periods.

       Costs and Expenses

      Costs and expenses as a percentage  of revenues  increased to 84.1% in the
second quarter of 2001 from 83.4% in the second quarter of 2000.

      Cost of sales increased as a percentage of revenues to 45.7% in the second
quarter  of 2001 from  45.4% in the  comparable  period  of 2000.  Cost of food,
beverage and related supplies as a percentage of revenues  increased to 13.0% in
the second  quarter of 2001 from 12.7% in the second  quarter of 2000  primarily
due to higher cheese costs which were  partially  offset by the increase in menu
prices. Cost of games and merchandise decreased to 4.5% in the second quarter of
2001 from 5.2% in the second  quarter of 2000 due  primarily  to adjusted  prize
ticket categories. Store labor expenses as a percentage of revenues increased to
28.2% in the second  quarter  of 2001 from  27.5% in the second  quarter of 2000
primarily due to the decline in comparable store sales.

      Selling,  general and administrative  expenses as a percentage of revenues
decreased  to 13.5% in the  second  quarter  of 2001  from  14.2% in the  second
quarter of 2000 due primarily to a decrease in corporate overhead costs.

                                       9
<PAGE>



      Depreciation  and  amortization  expenses  as  a  percentage  of  revenues
decreased to 6.5% in the second  quarter of 2001 from 6.8% in the second quarter
of 2000  primarily  due to a change in selected  depreciable  lives.  During the
first  quarter of 2001,  the estimated  remaining  useful lives of certain fixed
assets were changed  based on a review of  historical  asset  utilization.  This
change  in  estimate  resulted  in  a  reduction  of  depreciation   expense  of
approximately  $550,000  or $.01 per  share  after  income  taxes in the  second
quarter of 2001.

      Interest  expense as a  percentage  of  revenues  decreased  to .5% in the
second quarter of 2001 from .7% in the second quarter of 2000 due to a reduction
in outstanding debt and reduced interest rates.

      Other operating expenses increased as a percentage of revenues to 17.9% in
the second  quarter of 2001 from 16.3% in the second  quarter of 2000  primarily
due to higher utility costs and the decline in comparable store sales.

      The Company's effective income tax rate was 39.0% in the second quarter of
2001  compared to 38.8% in the second  quarter of 2000  primarily  due to higher
estimated state tax rates.

      Net Income

      The Company had net income of $12.3 million in the second  quarter of 2001
compared  to $12.1  million in the second  quarter of 2000 due to the changes in
revenues and expenses  discussed above. The Company's diluted earnings per share
decreased to $.43 per share in the second quarter of 2001 from $.44 per share in
the second quarter of 2000.


First Six Months of 2001 Compared to First Six Months of 2000
-------------------------------------------------------------

      A summary of the results of  operations  of the Company as a percentage of
revenues for the first six months of 2001 and 2000 is shown below.

                                                       Six Months Ended
                                                ------------------------------
                                                July 1, 2001      July 2, 2000
                                                 -----------      ------------
      Revenue..................................     100.0%           100.0%
                                                  -------          -------
      Costs and  expenses:
          Cost of sales........................      43.6             44.3
          Selling, general and administrative..      13.2             14.2
          Depreciation and amortization........       5.7              6.2
          Interest expense.....................        .4               .6
          Other operating expenses.............      15.9             15.3
                                                  -------          -------
                                                     78.8             80.6
                                                  -------          -------
      Income before income taxes...............      21.2             19.4
      Income tax expense ......................       8.3              7.6
                                                  -------          -------
      Net income ..............................      12.9%            11.8%
                                                  =======          =======

      Revenues

      Revenues increased 11.6% to $290.6 million in the first six months of 2001
from $260.4 million in the first six months of 2000 primarily due an increase in
the number of  Company-operated  stores and an  increase  of 2.7% in  comparable
store  sales of the  Company's  Chuck E.  Cheese's  restaurants  which were open
during  all of the first six  months of both  2001 and 2000.  During  2000,  the
Company opened 31 new restaurants  and closed one  restaurant.  During the first
six  months  of 2001,  the  Company  opened  13 new  restaurants,  acquired  one
restaurant from a franchisee and closed two  restaurants.  Menu prices increased
approximately 2.5% between the periods.

       Costs and Expenses

      Costs and expenses as a percentage  of revenues  decreased to 78.8% in the
first six months of 2001 from 80.6%in the first six months of 2000.

                                       10
<PAGE>

      Cost of sales  decreased as a percentage of revenues to 43.6% in the first
six months of 2001 from 44.3% in the  comparable  period of 2000.  Cost of food,
beverage and related supplies as a percentage of revenues  remained  constant at
12.6% in both the first six months of 2001 and the first six months of 2000. The
impact of higher  cheese costs was largely  offset by the increase in comparable
store  sales and the  increase  in menu  prices.  Cost of games and  merchandise
decreased  to 4.5% in the  first  six  months of 2001 from 5.2% in the first six
months of 2000 due to adjusted prize ticket categories.  Store labor expenses as
a percentage of revenues remained constant at 26.5% in both the first six months
of 2001 and the first six months of 2000.

      Selling,  general and administrative  expenses as a percentage of revenues
decreased  to 13.2% in the first six  months of 2001 from 14.2% in the first six
months of 2000 due a reduction in advertising and corporate overhead expenses as
a percentage of revenues.

      Depreciation  and  amortization  expenses  as  a  percentage  of  revenues
decreased  to 5.7% in the  first  six  months of 2001 from 6.2% in the first six
months of 2000 primarily due to a change in selected  depreciable lives.  During
the first quarter of 2001, the estimated remaining useful lives of certain fixed
assets were changed  based on a review of  historical  asset  utilization.  This
change  in  estimate  resulted  in  a  reduction  of  depreciation   expense  of
approximately $1.1 million or $.02 per share after income taxes in the first six
months of 2001.

      Interest  expense as a  percentage  of  revenues  was .4% in the first six
months of 2001 compared to .6% in the first six months of 2000  primarily due to
a reduction in debt outstanding and reduced interest rates.

      Other operating expenses increased as a percentage of revenues to 15.9% in
the  first  six  months  of 2001  from  15.3% in the  first  six  months of 2000
primarily due to an increase in utility costs.

      The Company's  effective income tax rate was 39.0% in the first six months
of 2001  compared  to 38.8% in the first six  months  of 2000  primarily  due to
higher estimated state tax rates.

      Net Income

      The  Company  had net  income of $37.5  million in the first six months of
2001  compared  to $30.8  million  in the  first  six  months of 2000 due to the
changes in revenues and expenses discussed above. The Company's diluted earnings
per share  increased  17.1% to $1.30  per share in the first six  months of 2001
compared to $1.11 per share in the first six months of 2000.


Financial Condition, Liquidity and Capital Resources

      Cash  provided by  operations  increased to $63.3 million in the first six
months  of 2001 from  $52.7  million  in the  comparable  period  of 2000.  Cash
outflows from  investing  activities for the first six months of 2001 were $52.4
million primarily related to capital expenditures.  Cash outflows from financing
activities for the first six months of 2001 were $14.8 million primarily related
to repayment of borrowings on the Company's line of credit and the repurchase of
the Company's common stock. The Company's  primary  requirements for cash relate
to planned capital  expenditures,  the repurchase of the Company's  common stock
and debt  service.  The Company  expects that it will satisfy such  requirements
from cash provided by operations  and, if necessary,  funds  available under its
line of credit.

      In 2001, the Company plans to add 30 to 34 stores including new stores and
acquisitions  of  existing  stores  from  franchisees.   The  Company  currently
anticipates  its cost of opening such new stores to average  approximately  $1.8
million per store,  which will vary  depending  upon many factors  including the
size of the stores and  whether  the  Company  acquires  land or the store is an
in-line or freestanding  building.  In addition to such new store openings,  the
Company plans to expand the seating capacity of 7 to 10 high sales volume stores
in 2001,  including stores which will receive an enhanced showroom package.  The
Company also plans to complete  Phase III upgrades in  approximately  100 to 110
stores this year at an average  cost of  approximately  $220,000 to $230,000 per
store.  A Phase III upgrade  generally  includes a new toddler play area,  skill
games and rides, kiddie games and rides, sky-tube  enhancements,  and prize area
enhancements with ticket counting machines. During the first six months of 2001,
the Company opened  thirteen new  restaurants,  acquired one  restaurant  from a
franchisee,  expanded 3  restaurants  and  completed  Phase III  upgrades  in 55
restaurants.  The Company currently estimates that capital expenditures in 2001,

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<PAGE>

including  expenditures  for new store openings,  existing store  expansions and
equipment investments,  will be approximately $104 million. The Company plans to
finance these  expenditures  through cash flow from  operations  and  borrowings
under the Company's line of credit.

      In 1999, the Company  announced that it planned to purchase  shares of the
Company's common stock at an aggregate  purchase price of up to $25 million.  In
July 2001,  the Company  announced  completion  of this plan and  approval of an
additional plan to purchase shares of the Company's common stock at an aggregate
purchase price of up to $25 million.

       The Company's credit facilities  consist of a $75 million line of credit.
Interest  under the $75 million line of credit is dependent on earnings and debt
levels of the Company and ranges from prime or, at the Company's  option,  LIBOR
plus 1% to 1.75%.  Currently,  any borrowings under this line of credit would be
at the  prime  rate or LIBOR  plus 1%. As of August  14,  2001,  there was $39.0
million in  borrowings  under this line of credit.  The  Company is  required to
comply  with  certain  financial  ratio  tests  during  the  terms  of the  loan
agreements.

      Certain statements in this report, other than historical information,  may
be considered forward-looking statements within the meaning of the "safe harbor"
provisions  of the  Private  Securities  Litigation  Reform Act of 1995,  and is
subject to various risks,  uncertainties and assumptions.  Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect,  actual  results  may differ  from those  anticipated,  estimated  or
expected.  Among the key factors that may have a direct bearing on the Company's
operating  results,  performance  or  financial  condition  are its  ability  to
implement  its  growth  strategies,   national,   regional  and  local  economic
conditions affecting the restaurant/entertainment  industry,  competition within
each of the restaurants and entertainment  industries,  success of its franchise
operations, negative publicity, fluctuations in quarterly results of operations,
including seasonality and government regulations.


   Item 3. Quantitative and Qualitative Disclosures about Market Risk

      The  Company is subject to market  risk in the form of  interest  risk and
foreign  currency  risk.  Both  interest  risk  and  foreign  currency  risk are
immaterial to the Company.

























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<PAGE>


                           PART II - OTHER INFORMATION



Item 1.    Legal Proceedings.

          On June 2, 2000, a purported class action lawsuit against the Company,
entitled  Freddy  Gavarrete,  et al. v. CEC  Entertainment,  Inc.,  dba Chuck E.
Cheese's,  et al., Cause No. 00-08132 FMC (RZx) ("Gavarrete"),  was filed in the
Superior Court of the State of California of the County of Los Angeles.  On July
27, 2000,  the lawsuit was removed to the United States  District  Court for the
Central District of California.  The lawsuit was filed by one former  restaurant
manager purporting to represent restaurant managers of the Company in California
from 1996 to the present.  The lawsuit alleges violations of state wage and hour
laws involving unpaid overtime wages and seeks an unspecified amount in damages.
On  July  31,  2001,  the  Court  denied  the   plaintiff's   motion  for  class
certification.  The Company believes the lawsuit is without merit and intends to
vigorously defend it.


Item 2.  Changes in Securities.

      None to report during quarter for which this report is filed.


Item 3.  Defaults Upon Senior Securities.

      None to report during quarter for which this report is filed.


Item 4.  Submission of Matters to a Vote of Security Holders

         On June 28, 2001, at the Company's annual meeting of shareholders,  the
Company's shareholders  re-elected Michael H. Magusiak and Walter Tyree to serve
the Company as  directors.  The  following  votes were cast with  respect to the
election of these directors:

                                       For             Withheld
          Michael H. Magusiak       25,916,073         195,369
          Walter Tyree              25,915,987         195,455

     Richard M. Frank,  Richard T. Huston, Tim T. Morris, Louis P. Neeb, Cynthia
I. Pharr, Walter Tyree, and Raymond E. Wooldridge's terms of office as directors
of the Company continued after the meeting.


         The  shareholders  also  approved  an  amendment  to  the  Non-Employee
Directors  Stock  Option Plan  ("Directors  Plan")  that:  (a) extended the time
period in which the  options may be  exercised  from five (5) to seven (7) years
after the  options  were  granted,  (b)  extended  the time  period in which the
options may be exercised from ninety (90) days to six (6) months after the death
of an  Optionee,  and (c)  granted a limited  right for  Optionees  to  transfer
options  only  to  his  or her  Immediate  Family  if  the  option  contract  or
certificate  allows for such a transfer,  the Optionee  obtains the  Committee's
prior  written  consent  for  such  transfer,   and  the  Optionee  receives  no
consideration for such transfer. The votes cast with respect to this proposal to
authorize an amendment to the Directors Plan were as follows:

              For             Against        Abstain           No Vote
           23,589,796        2,501,939        19,706                0


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<PAGE>

         The shareholders  also approved an amendment to the Directors Plan that
increased in the number of shares of Common Stock that would  annually be issued
to  non-employee  Directors  under the Directors  Plan from 2,500 to 4,000.  The
votes cast with  respect to this  proposal  to  authorize  an  amendment  to the
Directors Plan were as follows:

               For             Against       Abstain           No Vote
           23,562,638         2,529,685       19,118               0


         The shareholders  also approved an amendment to the 1997  Non-Statutory
Stock Option Plan ("Employees Plan") that: (a) extended the time period in which
the options may be  exercised  from ten (10)  business  days to thirty (30) days
after the termination of an Optionee's employment,  (b) extended the time period
in which the  options may be  exercised  from three (3) months to six (6) months
after the death of an Optionee, and (c) granted a limited right for Optionees to
transfer  options only to his or her Immediate  Family if the option contract or
certificate  allows for such a transfer,  the Optionee  obtains the Stock Option
Committee's  prior written consent for such transfer,  and the Optionee receives
no consideration for such transfer. The votes cast with respect to this proposal
to authorize an amendment to the Employees Plan were as follows:

               For              Against       Abstain           No Vote
           24,071,728          2,018,012       21,702               0

         The shareholders  also approved an amendment to the Employees Plan that
increased  the number of shares of Common  Stock  which may be issued  under the
Employee Plan from  3,087,500 to 4,387,500.  The votes cast with respect to this
proposal to authorize an amendment to the Employees Plan were as follows:

              For              Against        Abstain           No Vote
           21,137,158         4,955,097        19,187               0


         The  shareholders  also  approved an amendment to the  Incentive  Bonus
Program ("Bonus Plan") for eligible  employees of the Company  (excluding  Field
Operators,  and  Training  and  Recruiting  managers)  to  receive  a bonus as a
percentage of their gross base salary during a particular fiscal year. Under the
Bonus Plan, the Compensation  Committee (which  administers the Bonus Plan) will
establish a Target  Bonus for each  eligible  employee no later than March 15 of
the fiscal year for which the Target Bonus is  determined.  For 2001, the Target
Bonus may range from a high of 100% of gross base salary to a low of 2% of gross
base salary. For 2002 and thereafter,  the Target Bonus may range from a high of
200% of gross base salary to a low of 2% of gross base  salary.  Bonuses will be
paid in the event the Company  achieves the  preestablished  target cash on cash
return for the fiscal year. The Compensation Committee will determine the target
cash on cash  return  for the  fiscal  year not later than March 15. The cash on
cash return for  purposes  of this Bonus Plan means the fiscal  year's cash flow
(income before taxes plus depreciation,  amortization and pre-opening  expenses)
minus the prior fiscal year's cash flow divided by the weighted average increase
in capital expenditures  (including pre-opening expenses).  The employee's Bonus
Potential will equal 100% of the Target Bonus  established  by the  Compensation
Committee if the Company's  actual cash on cash return equals the target cash on
cash return  established by the Compensation  Committee.  If the Company exceeds
the target cash on cash return,  each employee's  Bonus Potential will equal the
employee's  Target  Bonus  increased by an  additional  four percent (4%) of the
Target Bonus for each one  percentage  point that the actual cash on cash return
exceeds the target  established by the  Compensation  Committee.  If the Company
fails  to  attain  the  cash  on cash  return  established  by the  Compensation
Committee,  the Bonus  Potential  for each  employee  will equal the  employee's
Target  Bonus  decreased  by four  percent (4%) of the Target Bonus for each one
percentage  point that the actual cash on cash return  falls short of the target
established by the Compensation  Committee.  In no event will a bonus be paid if
the  actual  cash on cash  return  is  less  than  twenty  percent  (20%)  for a
particular  fiscal  year.  The  votes  cast with  respect  to this  proposal  to
authorize an incentive bonus program for eligible  employees of the Company were
as follows:

                                       14
<PAGE>

            For              Against       Abstain           No Vote
        23,126,163          2,970,733       14,546               0


Item 5.  Other Information.

      None to report during quarter for which this report is filed.


Item 6.  Exhibits and Reports on Form 8-K.

      a) Exhibits

          None.

      b)   Reports on Form 8-K

          None filed during the quarter for which this report is filed.


                                       15
<PAGE>





                                   SIGNATURES




     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                        CEC ENTERTAINMENT, INC.



Dated: August 14, 2001                   By:  s/ Rodney Carter
                                            -----------------------------------
                                            Rodney Carter
                                            Executive Vice President, Chief
                                            Financial Officer and Treasurer




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