Atari co-founder Nolan Bushnell, responsible for creating the first widely recognized video game, Pong, headed a project in the mid-1970s for Atari to launch the first arcade-oriented, family restaurant with computer-programmed animatronics. At a time when arcades were popular in bowling alleys and bars, Bushnell sought to expose younger audiences to arcade games. In 1977, Atari opened the first Chuck E. Cheese's Pizza Time Theatre in San Jose, CA. The concept was an immediate success, and after leaving Atari in 1978, Bushnell purchased the Pizza Time restaurant, forming a new company, Pizza Time Theatre Inc.

As Bushnell marketed the franchise, hoping to expand into new markets, the concept attracted high-profile clients such as Robert L. Brock, known for his extensive portfolio of Holiday Inn hotels. In 1979, Brock signed a multi-million-dollar franchising agreement with Pizza Time Theatre Inc., planning to open as many as 280 Chuck E. Cheese's locations across 16 states. Shortly thereafter, Brock noticed that companies such as Creative Engineering, Inc. (CEI) were designing more advanced animatronics, and was concerned that competitors would emerge with better technology. Bushnell had reassured Brock at the signing of the franchising agreement that the company's technology would continue to evolve. However, prior to the opening of his first location, Brock decided to void the agreement with Pizza Time and form a partnership with CEI.

The first ShowBiz Pizza Place opened in Kansas City, Missouri on March 3, 1980. The Brock Hotel Corporation owned 80% of ShowBiz Pizza Place, while the other 20% was owned by CEI, which produced the chain's animatronics show, The Rock-afire Explosion. By September 1981, there were 48 company-owned outlets and 42 franchises. The company moved its headquarters to Irving, Texas in 1982.

In 1984, Chuck E. Cheese's Pizza Time Theatre filed for Chapter 11 bankruptcy, and its assets were purchased by ShowBiz parent company Brock Hotel Corp. The two operations merged, and the newly formed company was named ShowBiz Pizza Time, Inc. – a combination of the names of the previous two companies. However, both restaurant chains continued operating as separate entities.

Richard M. Frank joined the company as president and chief operating officer in 1985. In 1986, he was named chairman and chief executive officer of the restaurant division. Based on customer research, Frank instituted a number of changes to appeal to younger children and parents. Specific measures included increased lighting, a redesigned food menu, table service, self-serve fountain drinks, a revamped ride selection, and distinct toddler areas. However, relations between ShowBiz and Creative Engineering began to deteriorate. Aaron Fechter, founder of CEI and creator of The Rock-afire Explosion, would later claim in 2008 that the fallout was due to a demand by Showbiz to own CEI's licensing and copyrights to the animatronics show. Fechter says he refused, since Showbiz didn't offer monetary compensation for the rights. Despite the refusal, CEI's creative control was jeopardized, as ShowBiz had the ability to program the characters and replicate their voices, allowing them to make changes to the skits. ShowBiz later returned the recording rights to Fechter following CEI's Liberty Show production (in commemoration of the Statue of Liberty's centennial in 1986), but they did not return the programming rights.

In 1989, ShowBiz Pizza Time became a public company with its stock market launch. The following year, it severed all ties with CEI and began restructuring the restaurant chains under "Concept Unification". The change consisted of removing the Rock-afire Explosion animatronic show from their restaurants, and converting it into a new show called "Chuck E. Cheese & Munch's Make Believe Band", featuring the Chuck E. Cheese's Pizza Time Theatre characters. In addition, all ShowBiz Pizza locations in the U.S. were rebranded as Chuck E. Cheese's, effectively ending the "ShowBiz Pizza" brand. By 1992, the conversion was complete, and ShowBiz Pizza Time became known as CEC Entertainment, Inc. In 1998 the company moved its stock from NASDAQ to NYSE. After Aaron left ShowBiz, he had a deal with Pistol Pete's Pizza a restaurant similar to Chuck E. Cheese's to have the Rock-afire Explosion, Pistol Pete's bought a handful of Rock-afire shows for their restaurants, sadly majority of the Pistol Pete's locations were closed in the mid to late 90's due to the popularity of Chuck E. Cheese's at the time. after that more restaurants added the Rock-afire Explosion Like Circus Pizza, Funtime Pizza, Billy Bob's Wonderland, until they all shut down except For one Billy Bob's Wonderland location in Cracker Barrel Dr, Barboursville, which it's Rock-afire Explosion was in very poor condition until 2014 As of January 2019, the show is still in very poor condition. The characters’ masks were melting, Mitzi Mozzarella had a broken arm, Beach Bear wore a walkaround head (which before that he was in a plastic bag), and Looney Bird didn’t work. The show underwent a mechanical and cosmetical restoration by Brayon Giles and Anthony Ybarra until they were fired in late 2019. Since their firing, the condition quality of the RAE in the store was (and has since been) going downhill. in 2008 Chris Thrash, a Phenix City, Alabama car salesman Opened ShowBiz Pizza Zone, It was a restaurant and arcade fashioned after a ShowBiz Pizza Place location that operated in Phenix City, Alabama. It featured an entire fully operational Rock-afire Explosion, which he funded with money he raised by working multiple part-time jobs. It also had arcade games. The place had everything a ShowBiz Pizza would have in the 80's. Although chris' attempt to bring back ShowBiz Pizza was cool, the prices were too low to keep the place in operation. On May 30, 2010, Chris had to close down ShowBiz Pizza Zone. Chris later sold his show back to Aaron, who then sold it to a theme park in South Korea. There is no information of how chris is doing today, but there is a rumor going around stating that he isn't doing to good. In the 1990s, an update to the band, known as "The New Rock-afire Explosion", was created, using new, smaller animatronics known as "miijins", as well as other features such as revolving stages and dance choreography. However, relatively few customers purchased the show.

Fechter terminated all of his employees over several years, with the last 3 being terminated in 2003. In the mid 2000s, spurred by the growing online Rock-afire fan community, Fechter reunited some of the Rock-afire performers and began to program shows set to fan-requested songs. Videos of the performances—posted to YouTube upon completion—are credited with helping to further revive interest in the group and ShowBiz Pizza, and spurred individuals who owned their own Rock-afire bands to begin programming new shows themselves.

Several Rock-afire performers went on to careers of their own: Shalisa James is currently a member of the a cappella group Toxic Audio, while Burt Wilson was better known as Bubba Wilson, a member of The Monsters in the Morning radio show. Both Rick Bailey and Jeff Howell have been active as musicians in the Orlando area. Duke Chauppetta helped sing with Adam Kent-Isaac on a song called Divina. In 2019, the American experimental avant-metal synth-doom band Pinkish Black released an album exploring themes of anxiety, futility and emptiness that one of the band members claims to have felt when ShowBiz Pizza rebranded back to Chuck E. Cheese when he was a child.