It was another difficult quarter for Marcus Theatres as its parent company, The Marcus Corporation, continues to struggle in recovering lost ground from the impact of the Covid-19 pandemic.
Although revenue and attendance remain to be far from their pre-pandemic levels, Marcus Theatres is better financially situated than other exhibitors during the pandemic thanks in large part to its real estate holdings, which include most of its cinema sites. “We believe this remains a significant advantage for us relative to our peers as it keeps our monthly fixed lease payments low and provides significant underlying credit support for our balance sheet,” said Greg Marcus, president and CEO of The Marcus Corporation.
Marcus Theatres reopened 80 percent of its theatres in late August as the exhibition industry anticipated the return of new studio releases, starting with The New Mutants, Unhinged, and Tenet. The circuit was forced to close 17 locations in early October, as sudden release schedule changes resulted in a scarcity of new studio titles. Marcus has since reopened four locations, bringing its footprint of open cinemas to 59 theaters, about 66 percent of its total circuit. Decreased demand, however, has limited operations to Tuesdays, Fridays, Saturdays, and Sundays.
In those open theaters, the circuit reported an increase in average concession spend per person of 28 percent compared to the same quarter the previous year. “We’ve always believed in long lines that the concession stand can result in some customers choosing to skip the lines and that by concessions,” said Marcus CFO Douglas Neis. “The reality is that with reduced attendance lines are not long, and that has likely contributed to our higher per capita revenues. We also believe that the emphasis we’re placing on encouraging guests to purchase their concessions and food and beverage ahead of time, either online or you using their mobile app is also contributing to our increased per capita revenues. While the first reason will eventually go away as attendance increases, the second reason is the potential will be long-lasting, which is very encouraging.”
In a recent survey of its loyalty members, Marcus Theatres found 96 percent of those who had returned to the cinema responded favorably to their experience. Executive leadership at the company cited that word of mouth as an important factor leading to the circuit’s recovery but also stressed that the lack of new studio releases had slowed down efforts to get more patrons through their doors. 60 percent of respondents in the survey indicated the lack of appealing titles as their main reason in not returning to the cinema.
“The major film studios have been cautiously awaiting the reopening of major movie markets before releasing new movies,” said Rolando Rodriguez, chairman, president and chief executive officer of Marcus Theatres. “We are encouraged by the recent news that theaters can reopen in portions of New York State, a significant market for the film industry and home to our Movie Tavern Syracuse Cinema. We are also encouraged by the increases in our theater attendance during the past two weeks as we have been able to offer guests a greater number and variety of films. Our hope is that these are steps in the right direction as we head into the traditionally popular holiday season.”
Ultimately, Greg Marcus believes the recovery will hinge on how much the pandemic can be tempered in the coming months, “Not only will that increase consumer willingness to go to the movies, but will further encourage the studios to follow through and release their films with confidence that there will be a willing audience ready to attend and see their content the way it was meant to be seen.”