It’s gotten much harder to run a movie theater these days. Especially if you’re a small, family-owned operator.

For those paying close attention to the industry, the recent ownership change at the Showplace Icon Theatre & Kitchen doesn’t really come as a surprise. Late last week, Milwaukee-based Marcus Corp. – the fourth largest theater chain in the nation – announced that it’s taking over the Showplace Icon in St. Louis Park’s Shops at West End.

The place formally closed on June 30, but Marcus is aiming for a quick turnaround and plans to reopen July 8.

Mark Gramz, president of Marcus Theatres, said his company is working with Hempel Real Estate Group – which bought Shops at West End in late 2022 – on a “smooth transition.”

“That’s a rapid transition between operators,” Gramz said in a phone interview with TCB. During the brief closure, Gramz said that Marcus has been busy updating signage and preparing to roll out several promotional programs, such as its daily $7 matinees for seniors and children.

Gramz said his team was aware that Chicago-based Kerasotes Theatres – which operates just four Showplace Icon theaters throughout the U.S. – had been struggling financially, “as we all kind of have been.” Kerasotes, which sold off a big part of its business to AMC more than a decade ago, is now closing all four of its remaining theaters, film industry news site IndieWire reported this week.

“It’s been a struggle for everyone,” Gramz said.

But the St. Louis Park theater also marked a new opportunity for Marcus. The company operates seven theaters in total in Minnesota, and only three are in the Twin Cities metro. Those locations are all in farther-flung suburbs: Rosemount, Shakopee, and Oakdale.

“From a geographical point of view, we’ve been east and south, and now we’re closer to Minneapolis on the west side,” Gramz said. “We’re excited to be there.”

In terms of size, Kerasotes and Marcus are markedly different companies. Marcus is publicly traded, and, per its 2023 annual report, the company operated 79 theaters across the country at the end of last year. Marcus Corp. also runs a separate hotel business.

Eric Wold, a San Francisco-based senior analyst at B. Riley Securities who monitors the movie theater business, said that Kerasotes’ challenges are “not unique.” He pointed to the recent sale of the Alamo Drafthouse chain to Sony Pictures.

Many smaller, family-run theater chains already struggled a lot during pandemic, he noted. Pandemic-related assistance, meanwhile, has run out. Then, theater operators were hit with a “double whammy:” the Hollywood writers’ and actors’ strikes last year, which significantly cut down on the number of new titles to show.

Wold said he wouldn’t be surprised if more smaller operators get scooped up by larger, publicly traded companies in the future. AMC has done several already, he noted.

There’s evidently still value left in movie theaters in shopping malls, especially for unique properties like Showplace Icon. When the Shops at West End opened in 2009, the Showplace Icon Theatre “was one of the very earliest bar/movie theater renovations,” Mpls.St.Paul Magazine’s Stephanie March noted last week.

Wold said that in these cases, “landlords don’t have a lot of options.”

“We’re out of the time period where you’ve got big-box retailers at shopping malls,” he said. “If a movie theater closes, there’s really not much you can put in its place, so your best option is to try to renegotiate a lease with someone else who wants to take it over.”

While it’s been a struggle for small movie theaters, it hasn’t exactly been smooth sailing for the big dogs, either. For its part, Marcus reported a $12 million loss in 2022, though it did net a profit in the following year. Wold said that Marcus’s movie theater business is still well below pre-pandemic levels, though its hotel arm has improved considerably.

Much like patrons of the performing arts, many movie theatergoers simply fell out of the habit over the pandemic.

The Fourth of July weekend, meanwhile, is generally seen as a big moneymaker for movie theaters, which makes the timing of Kerasotes’ exit puzzling. But it’s possible the company’s lease expired, and it didn’t really have a choice.

Industry wide, Wold doesn’t expect box office revenues to begin growing again until the fourth quarter of the year and into 2025. “It’s tough for these smaller theater chains to push through until that point, especially if they’re built for a much larger box office in the past,” he said.