Iconic Movie Theater Chain Files Bankruptcy, Citing Pandemic Woes

The iconic Metropolitan Theaters Corp. has become the latest casualty of the movie theater industry’s struggles in the wake of the COVID-19 pandemic, filing for Chapter 11 bankruptcy protection in late February. The Los Angeles-based theater chain cited financial distress stemming from temporary closures during the pandemic in 2020.

This led to a prolonged slowdown in in-person moviegoing even after theaters reopened. Coupled with significant lease obligations and other ongoing business expenses, the company has been forced to close some locations and restructure its affairs through the bankruptcy process, according to the theater operator’s filings.

Prolonged Struggles Following Pandemic

The temporary closure of Metropolitan Theater’ locations during the height of the pandemic in 2020 dealt a major blow to the company’s financial stability. Even after theaters reopened, attendance remained low as people were hesitant to return to public spaces.

The company was unable to generate enough revenue to offset significant lease and operating expenses. Two underperforming theaters in Colorado and Idaho were shuttered in 2022 in an attempt to curb losses, but it was not enough.

Additional Challenges

Labor disputes within the film industry from May to November 2023 further reduced the number of movies released and added strain to the struggling theater business. The company anticipates the trend will continue into 2025, with 11% fewer films projected for 2024.

This will likely lead to a drop in box office revenue for the year. Metropolitan Theaters currently operates 16 theaters and 87 screens across California, Colorado, and Utah, including two IMAX auditoriums. The company hopes the bankruptcy process will allow them to restructure debt, renegotiate leases, and make operational changes to ensure the long-term viability of the business.

Slow Recovery and Ongoing Challenges

Even after reopening, theater attendance remained depressed due to health concerns and the popularity of streaming services. The industry is forecasting box office revenue to drop 11% in 2024 due to fewer major film releases.

Labor disputes between May and November 2023 caused further disruptions. The movie theater industry was already facing challenges from streaming services before 2020, but the COVID-19 pandemic accelerated the crisis.

Restaurant Chains Impacted

Among the restaurant chains that filed for bankruptcy protection were Chuck E. Cheese, a pizza and arcade chain geared toward children; Garden Fresh Restaurants, the parent company of buffet chains Souplantation and Sweet Tomatoes; and Fresh Acquisitions, which operates HomeTown Buffet and Old Country Buffet.

The social distancing requirements and temporary closures made it difficult for many dine-in restaurant concepts to continue operating during the pandemic. Some were unable to recover even after reopening with safety measures in place.

Regal Cinemas Also Struggled and Filed Bankruptcy

Regal Cinemas, owned by Cineworld, encountered financial difficulties during the COVID-19 pandemic and subsequent years. According to court documents, temporary theater closures in 2020 due to the pandemic negatively impacted the company financially, and business remained slow after reopening due to decreased in-person movie viewing.

To mitigate substantial losses, Regal Cinemas closed two underperforming locations in 2022, in Aspen, Colorado, and Hailey, Idaho. However, lease obligations and operating costs continued to strain the company’s financial stability.

According to court filings, labor disputes within the film industry from May to November 2023, including strikes by the Writers Guild of America and Screen Actors Guild-American Federation of Television and Radio Artists, further impaired the company.

Efforts to Reorganize and Restructure

In light of these considerable difficulties, Metropolitan Theaters filed for Chapter 11 bankruptcy protection in February 2024 to restructure its business. The petition listed $26.5 million in assets and liabilities.

The company aims to renegotiate and potentially terminate certain theater leases as part of its reorganization. Metropolitan Theaters currently operates 16 locations with 87 screens across California, Colorado, and Utah, including two IMAX auditoriums. The chain was founded in 1923 in Los Angeles during the silent film era.

What Does This Mean for the Future of Movie Theaters?

The Chapter 11 bankruptcy filing of Metropolitan Theaters Corp. highlights the precarious situation of movie theaters in the United States.

The long-term viability of brick-and-mortar cinemas has been called into question as streaming services provide convenient at-home options and the lingering effects of the coronavirus pandemic continue to dampen attendance.

Covid-19 Accelerated Inevitable Changes

Industry observers note that movie theaters were already facing pressure from streaming services before the public health crisis. The pandemic accelerated changes in consumer behavior that threaten the traditional cinema model.

Although some audiences have returned to theaters, box office receipts have not rebounded to pre-pandemic levels. Labor disputes within the film industry have also delayed upcoming releases, further straining theater operators.

A Push for Adaptation

While streaming options are unlikely to replace the movie theater experience altogether, cinemas must adapt to shifting viewing habits. Offering premium features like luxury seating, expanded concession menus, and virtual reality experiences may entice patrons.

Flexible subscription models provide another avenue for nurturing customer loyalty. Although the road ahead remains uncertain, strategic investments in the customer experience can help revitalize movie theaters. With time and innovation, the industry can rebound from a period of hardship and usher in a new golden age of cinema.

Saying Goodbye To A Legend

The iconic Metropolitan Theaters Corp. has become the latest casualty of the movie theater industry’s struggles in the years since the COVID-19 pandemic began in 2020. Metropolitan Theaters filed for Chapter 11 bankruptcy protection in February 2023, citing the slow recovery of in-person movie attendance, significant lease obligations, and business expenses that have strained finances.

The company joins a growing list of theater operators that have filed for bankruptcy as the industry continues to feel the ripple effects of the pandemic. With fewer major film releases expected in 2024 due to production delays, the outlook remains challenging.