The company operating the Alamo Drafthouse dine-in movie theaters in North Texas has declared bankruptcy, suddenly closing its six locations. Franchisee filed for Chapter 7 bankruptcy.
Abrupt closings
Franchise owner Bill DiGaetano emailed employees that the DFW chain has permanently closed its doors. This will impact around 600 workers in Texas, including Dallas, Richardson, Las Colinas, Lake Highlands, Denton, and Woodbury in Minnesota. According to reports, the franchisee, Two is One, One is None, LLC, will offer workers references.
Reasons for bankruptcy
The press release cited the pandemic, high fees, poor attendance, and the Hollywood writers and actors’ strikes as reasons to file for Chapter 7 bankruptcy. DiGaetano said in a statement that the beginning of 2024 was the worst-performing quarter in movie-going history.
The initial filing was in 2021
The Austin-based Alamo Drafthouse parent company initially filed for bankruptcy in March 2021 after a debt caused by the pandemic. While the company managed to survive thanks to equity firms, things are different now. Still, other Alamo Drafthouse locations operate normally, with continued expansion plans nationwide.
Box office sales
Theaters never recovered after the Covid-19 pandemic. Box Office Mojo data shows that Memorial Day Weekend attendance was 42% below 2019. Regal Cinemas owner Cineworld also struggled. In 2022, the company closed 50 Regal theaters but emerged from bankruptcy in the summer of 2023.
CMX Cinemas emerged from bankruptcy protection
Cinemex Holdings USA, the Miami-based parent of CMX Cinemas and owner of 41 movie theaters nationwide, filed for Chapter 11 bankruptcy in April 2020. After negotiating with creditors, the theater chain emerged from bankruptcy in December of the same year.
Metropolitan Theatres also filed for Chapter 11 bankruptcy
L.A.’s oldest theater, which began working over 100 years ago, filed for Chapter 11 bankruptcy protection earlier in 2024. The Los Angeles-based movie house chain reportedly experienced a 20 percent drop in ticket sales. The family-owned business claimed it could not keep up since $2.6 million in rent drains all resources.
Alamo Drafthouse had an increase in income in 2023
Alamo Drafthouse, a dine-in movie theater chain, cleared $134M at the 2023 box office, around 25 percent more than in 2022. In March, Deadline reported that it was looking for a buyer. The Austin-based company has 41 theaters and 17 franchise-owned sites in 13 states.
Alamo Drafthouse experience
The theater chain originated in 1997 and offers fine-crafted beer, cocktails, and award-winning meals. It is known for its innovative design, creative programming, and unique food and beverage offerings, making it a unique cinematic experience. The company offers discounts for specific age groups and professions.
Alamo Drafthouse spokesperson spoke up
A spokesperson for Alamo Drafthouse expressed disappointment in franchisees, but they remain dedicated to other locations. The statement added that the company was heartbroken but is working toward reopening the Alamo Drafthouse Cinema in the cities where it was closed.
2024 is predicted to be worse than 2023
In 2023, box offices earned $9 billion, $1 billion less than the typical $10 billion. This year’s earnings are estimated at $8 billion despite a 15% ticket price increase that did not improve theater performance.
Franchise fees
In 2023, franchise fees made up 10% of DiGaetano’s company’s $3.7 million in sales. Due to contractual obligations, Two is One, One is None had to keep the most unprofitable locations open, which negatively affected our overall businesses, DiGaetano explained.
Bankruptcies on the rise
Bankruptcy filings rose 16 percent during the 12 months ending March 31, 2024. Business filings rose 40.4 percent. Among companies that filed in recent months were Red Lobster, Express, The Body Shop, Chuck E., and more. In total, 18,926 filed for bankruptcy in 2023, though these numbers were far worse in 2010.
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