They didn't, they gained more spaces.
South University Petes expanded/absorbed Spectrum Jewlers next door, and finally closed doors after getting the basement space across the street in The Galleria Mall. It burned down years after it was closed...total shithole and some "interesting" people living upstairs.
"Upstairs" Petes on William, old Micky Rats as seen above, closed in probably late 1999. Some silly employees playing cards for quarters on the pool table may or may not have had anything to do with it, but the police did take evidence and contact owners (you may or may not be welcome for that).
Petes moved in to Packard location after taking over for Tony who also owned a Players Choice in Northville. Tony still owns a camera shop in Livonia last I heard...I bought my RBION from him after unknowingly answering a CL add.
Before Tony Brad owned it when it was named "Double Focus," as the owner owned a camera shop "Focus Photo" in town.
Petes dumped that location and I think moved those games to Galleria & South U Petes...probably around 97-98?
At the height there were 4 Petes in Ann Arbor, 1 in East Lansing, and 1 in Lansing.
That space has been absorbed by Expresso Royale/Atlanta Bread Company...whatever the hell is there now.
This was in addition to many other arcade locations in town over the years.
Study Break in the Union, Simulation Station, Great Escape, Bicycle something,