A cinema now closes locations following an unexpected bankruptcy, resulting in a total of 600 workers losing their job.
Alamo Drafthouse Cinema will close a total of five venues in North Texas and one in Minnesota, leaving at least 600 workers unemployed.
The Austin-based movie theater company is known for its amenities like recliner seating, a full restaurant-style menu, and slinging cocktails.
“We are deeply saddened to find it necessary to take this step,” Alamo Drafthouse Cinema said in a statement.
“We are grateful to all our employees who put in the work, day in and day out to produce a special movie-going experience and to our many loyal customers for whom it was a pleasure to provide such a special experience.”
The six movie theater locations abruptly shut down operations at 5am on Thursday, according to a message from the franchise to employees circulating on social media.
The company, which is operated by Two is One, One is None, LLC, said it lost more than $1 million in 2023.
Alamo Drafthouse Cinema has other locations across Texas, including Austin, Corpus Christi, Houston, Laredo, Lubbock, and San Antonio.
However, Minnesota lost its only location in Woodbury.
The movie theater company said it would work on allocating another location in Minnesota.
“We are working as quickly as possible to get Alamo Drafthouse Cinema back up and running in these cities,” the company added.
All other locations, including those in New York, Virginia, Chicago, Washington DC, Missouri, Nebraska, North Carolina, California, and other parts of Texas, were unaffected.
The movie theater business has struggled to recover since the 2020 Covid-19 pandemic, which saw cinemas across the nation close their doors for nearly a year.
Although the worldwide box office saw its best year in 2023, it’s still 15 percent behind its average pre-pandemic years before 2019, according to Deadline.
This year’s box office is expected to fall 7%.
Regal, which is viewed as the second-biggest movie theater company in America, closed 14 locations nationwide last summer.
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Other Economy News Today
An essential company now files a surprising bankruptcy after miscalculating demand for its inventory after the Covid-19 pandemic.
Supply Source Enterprises, a leading provider of branded and private label cleaning products and personal protective equipment, on May 21 filed for Chapter 11 protection to seek a sale of its assets.
Supply Source brands include The Safety Zone and Impact Products.
The Guilford, Connecticut debtor listed $50 million to $100 million in assets in its petition and $180 million in funded debt, which includes $80 million owed on a term loan credit facility, $60 million owed on an asset-based loan, and about $40 million in unsecured debt.
Before the Covid-19 pandemic, which generated huge demand for cleaning supplies and personal protective equipment in 2020, Supply Source had been consistently profitable with stable single-digit growth, according to a declaration from the debtor’s Chief Restructuring Officer Thomas Studebaker.
Once the pandemic hit in 2020, the debtor had substantial growth due to high demand for safety, hygiene and sanitation products
The debtor reported adjusted Ebitda of $93 million in 2020 which was nearly a 300% increase over the previous year.
However, the company’s financial performance deteriorated in subsequent years.
Based on the unprecedented demand in 2020, the company commissioned an industry study in early 2021 that concluded that the Covid-19 pandemic would fundamentally change the cleaning supplies and protective equipment industry and market for its products.
The study also estimated that the company’s Covid-related growth would likely be sustained through 2024.
In contemplation of continued customer demand at elevated prices, based on the study’s data, the debtor increased purchases of inventory even though the costs were higher due to supply chain constraints during the pandemic.
Despite the study’s assurance that growth would be sustained for years, the pandemic’s positive effect on the market faded by the end of 2021 and demand for PPE decreased to normal rates, reports TheStreet.
The reduction in demand led to large amounts of excess inventory that the company could not sell in the same quantities and prices.
The excess inventory forced the debtor to secure additional storage space, which increased storage costs.
These factors tightened the company’s liquidity and led to a decline in annual revenue in 2023 by 26% from 2022, resulting in a negative 2023 Ebitda of $13 million.
The debtor’s liquidity issues led to it being overdrawn on its asset-based loan facility by $30 million.
The ABL lender in February 2024 swept the debtor’s bank accounts, further impacting the company’s financial distress.
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Also Read: This Massive Mall Retailer Is Now Closing In California
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