Studio Movie Grill, the 33-unit movie theater-restaurant chain, declared Chapter 11 bankruptcy on Sunday after the pandemic sapped the company of much of its sales.
The Dallas-based company, which just two years ago received a $75 million investment and was one of the fastest growing companies of its kind in the U.S., said the pandemic drained much of its cash reserves. It has just $100,000 in cash, according to court documents.
The filing is compiled in dozens of individual bankruptcy filings in U.S. Bankruptcy Court in Dallas.
Studio Movie Grill hopes to use the bankruptcy process to renegotiate with its lenders, landlords and movie studios to survive the pandemic.
“It remains unknown how long the COVID-19 pandemic will persist and how long the market effects will continue thereafter,” William Snyder, chief restructuring officer for Studio Movie Grill (SMG), wrote in a court document filed Sunday. “SMG anticipates that demand for its services will remain very tenuous until theaters are able to return to full capacity and major motion pictures resume being released for first-run theater showings.”
The pandemic has been bad for restaurants and worse for the movie theater industry. The theater chain giant AMC warned that it may not survive the pandemic, while Regal Cinemas recently suspended operations at all of its locations.
It’s easy to see why: Sales at theaters are just a fraction of what they were a year ago. According to data from the financial information firm Facteus, movie theater sales have been down at least 83% every week for the last three months, and as much as 95%.
The pandemic has forced the closure of theaters in many states. Movie studios have delayed several films the chains rely upon for their business. Theater chains have taken steps to get customers in, but consumers are also worried about the pandemic.
Brian Schultz founded SMG in 1993. The chain operates a full-service bar and features a full-service menu of burgers, chicken and bento boxes at theaters featuring luxury recliners, laser projection and buttons on seats to call servers.
In 2018 the company was the fastest growing company-owned theater chain. It received its $75 million investment from TowerBrook Capital Partners in 2019.
SMG closed all of its theaters for three months and, even now, just 21 of its theaters are open, at a limited capacity. The company said it has worked to cut expenses and lease expenses to improve cashflow. It also took steps such as leasing its theaters to private rentals. SMG has more than $100 million in secured debt.