The Best Movie Theater Chain Is Looking To Sell
The Alamo Drafthouse theater chain is looking for a buyer. The dine-in-theater chain famous for no-talking and yes-drinking has reached out to various Hollywood studios trying to gauge their interest in a possible acquisition. Whether any studios are taking the bait is unknown at this time.
Alamo’s upscale movie-going experience isn’t cheap to maintain. The chain has reportedly been looking for a buyer for a while now as the already high costs associated with its business model continue to rise. According to an anonymous source, the chains’ “top locations” make a decent amount of money, but “It’s a very expensive operation that they are running.”
Alamo Drafthouse tends to operate in cities like Brooklyn and San Francisco, where the larger pool of potential customers is offset by steeper operating costs. The theaters in these larger cities have to deal with expensive liquor licenses and strict health inspections on top of whatever rent they pay for each location. Additionally, the chain is forced to keep its auditoriums relatively small because, as the source claims, Alamo “can’t serve all that food to a 500-seat theater.”
Movie Theaters Are In Trouble
Meanwhile, box-office grosses haven’t returned to pre-pandemic numbers. Hollywood took in $8.9 billion domestically last year, still a far cry from 2019’s haul of $11.3 billion. This year might be even worse, with domestic figures for the first quarter of 2024 coming in at $1.44 billion—ten percent less than in 2023 and a whopping forty percent lower than the same quarter in 2019.
That means even less business for the already struggling Alamo Drafthouse brand. In March 2021, Alamo filed for bankruptcy following a year-long shutdown thanks to COVID. As a result, the chain was sold to Altamont Capital Partners just three months later. That sale, less than three years ago, led to some underperforming theaters being closed permanently. It’s entirely possible that another sale could result in even more Alamo Drafthouse locations being shut down.
The chain has reportedly been looking for a buyer for a while now as the already high costs associated with its business model continue to rise.
The chain currently has 40 locations in 13 states. Many of those theaters bolster their ticket sales with a gift shop selling movie-related memorabilia and arcade games. While neither of those experiences is exclusive to Alamo Drafthouse, one thing is: director Q&As.
Alamo is often the preferred destination for filmmakers wanting to hold advanced screenings of their new films or even special presentations of old ones. Last spring, for instance, studio A24 held a surprise showing of Beau Is Afraid, followed by a Q&A held by director Ari Aster and moderated by Oscar-winning actress Emma Stone. The special event took place at a NYC-based Alamo Drafthouse location and was simulcast to all of the other Alamo theaters.
In March 2021, Alamo filed for bankruptcy following a year-long shutdown thanks to COVID.
Events like the one above make for good press but, sadly, don’t seem to bring in enough extra dough to justify the current owners keeping the franchise. One can only speculate as to how a new owner might better capitalize on the Alamo Drafthouse business model without any drastic changes. The problem with upscale, niche theaters like Alamo that offer premium food and adult beverages is that the majority of theatergoers still look for the cheapest tickets available when seeing a film in the theater.
It’s a catch-22 for the chain, as downscaling the Alamo Drafthouse experience would remove what makes the theater unique and alienate customers who are looking for a premium movie-going experience. Likewise, making their theaters just like every other theater would now put Alamo Drafthouse in direct competition with all of the other nationwide theater chains. On the other hand, the current business model is clearly not working in today’s economy.
Alamo Drafthouse itself has so far declined to make any comments about a potential sale.
