Q1 2025 The Marcus Corp Earnings Call
Good morning everyone, I'm Welcome to Marcus Corp. 1st Corp. Learning Computing School. My name is Lydia and I'll be your operator today.
Speaker Change: Joining us today are Greg Marcus, Chairman, President and Chief Executive Officer and Chad Paris Chief Financial Officer and Treasurer of Marcus Corporation. At this time I'd like to turn the program over to Mr. Paris for his opening remarks. Please go ahead, sir.
Thank you, operator.
Chad Paris: Good morning, everyone, and welcome to our fiscal 2025 first quarter conference call. I need to begin by stating that we plan to make a number of forward-looking statements on our call today, all of which we intend to qualify for the Safe Harbors from Liability Established by the Private Security's Litigation Reform Act.
Speaker Change: Our forward-looking statements may generally be identified by our use of words such as we believe, anticipate, expect, or words of similar import.
Speaker Change: Our forward-looking statements are subjects of certain risks and uncertainties which may cause our actual results to differ materially from those expected. Listeners are caution not to place undue reliance on our forward-looking statements.
Speaker Change: The risks and uncertainties which could impact our ability to achieve our expectations identified in our forward-looking statements.
Speaker Change: are included under the heading forward looking statements and the press release we issued this morning announcing our fiscal 2025 first quarter results. And in the risk factor section of our fiscal 2024 annual report on Form 10K, which you can access on the SEC's website.
Speaker Change: We will also post all regulation G disclosures when applicable on our website at MarcusCorp.com.
Speaker Change: In addition, we routinely post news releases and other information regarding developments at our company that impact our investors, customers, vendors and other stakeholders.
Speaker Change: You should look to our website, MarcusCorp.com as an important source of information regarding our company. We also refer you to the disclosures we provided in today's earnings press release regarding the use of adjusted EBDA, a non-GAAP measure used in evaluating our performance and its limitations.
Speaker Change: A reconciliation of adjusted EBDA to the nearest gap measure is provided in today's Relief.
Speaker Change: All right, with that behind us, let's begin. This morning, I'll start by spending a few minutes sharing the results from our first quarter with you and discuss our balance sheet and liquidity.
Speaker Change: I'll then turn the call over to Greg who will focus his prepared remarks on where our businesses are today and what we are seeing ahead. We'll then open up the call for questions.
Speaker Change: Our first quarter is always a seasonally challenging quarter in both of our businesses, with typically a lighter movie slate coming out of Hollywood and slower lead your travel at our Midwestern hotels during the winter months.
Speaker Change: As we headed into the year, we expected several dynamics to influence our results, some positive and some negative, with the net results that would achieve growth in our first quarter.
Speaker Change: First, with our physical quarter transitioning to a traditional calendar quarter ending on March 31st we had four additional operating days in both of our businesses compared to the prior year quarter that favorably impacted our reported growth.
Speaker Change: Two of these days were during the busy week in theaters between the Christmas and New Year's holidays and the other two days were during the slower period at the end of March.
Speaker Change: I'll get to the numbers in a moment, but the favorable impact of the calendar change played out as expected, and the impact of the shift in future quarters will be significantly less meaningful.
Speaker Change: Further details on our fiscal calendar change can be found in today's earnings release.
Speaker Change: 2. In theaters, we expected an improved movie slate would drive attendance growth compared to last year's Hollywood strike and plaque impacted slate.
Speaker Change: While the carryover of films from the holidays into the New Year certainly was better than a year ago, it wasn't enough to offset several films that underperformed expectations.
Speaker Change: particularly when comparing against last year's strong performance of Dune 2.
Speaker Change: As we will cover shortly, things turned around in a big way in April with several positive surprises but the first quarter box office came up short of our expectations.
Speaker Change: Finally, in the hotel division, we are navigating a major renovation at the Hilt Mill Walkie with a significant number of guest rooms out of service during the quarter.
Speaker Change: While this project is intentionally being done during our seasonally slower months, and we have the unique ability to shift business to our two other hotels in the market, we knew this was going to be an operational challenge.
Speaker Change: Our team navigated this exceptionally well, and as you will hear today, our hotel division results were able to overcome this headwind and achieve revenue and rev-part growth.
Speaker Change: I'll start with a few highlights from our consolidated results for the first quarter of fiscal 2025.
Speaker Change: Consolidated revenues of $148.8 million, increased $10.2 million or $7.4% compared to the prior year quarter, with revenue growth in both divisions.
Speaker Change: The four additional operating days due to the change in our fiscal quarter favorably impacted consolidated revenue by 9.2 million.
Speaker Change: Operating loss for the quarter was $20.4 million, a decline of $3.7 million compared to the prior year quarter.
Speaker Change: I'll cover the divisional operational results in a moment, but at a consolidated level, the operating loss was negatively impacted by a $1.8 million increase in depreciation expense primarily related to last year's hotel renovations placed in service.
Speaker Change: and was favorably impacted by a $1.4 million gain on the disposition of property during the quarter.
Speaker Change: Well, we don't like to backtrack. We always stress that the road back is not a straight line. And if there was a quarter to face challenges, this was the one as the overall impact the cash flow was small in the big picture of our expectations for the year.
Speaker Change: Turning to our segment results, I'll start this morning with our theatre division. First quarter fiscal 2025 total revenue of 87.4 million increased 7.5% compared to the prior year first quarter.
Speaker Change: The four additional operating days, including two significant days between the December holidays, favorably impacted theaters revenue by 7.1 million or 8.7 percent.
Speaker Change: For our fiscal first quarter, 2025, Comparable Theater Admission Revenue increased 1.3%, and Comparable Theater Attendance increased 6.9%, compared with our fiscal first quarter
on a straight calendar quarter basis.
Speaker Change: 1st quarter, 2025, comparable theater admission revenue decreased 14% and comparable theater attendance decreased 8% compared to the prior year 1st calendar quarter.
When using our comparable fiscal days, [inaudible]
Speaker Change: According to data received from ComScore and compiled by us to evaluate our first quarter results
Speaker Change: During our fiscal 2025 first quarter, compared to US box office receipts during our fiscal 2024 first quarter, indicating our performance trail the industry by approximately 1.8 percentage points.
Speaker Change: on a straight calendar quarter basis, we were also 1.8 percentage points below the performance of the U.S. Box Office.
Speaker Change: We attribute our lower box office performance primarily to the differences in our pricing strategies during the quarter compared to those of other major exhibitors, and we believe our 8% attendance decrease for the calendar quarter perform better than our peers in the industry.
Speaker Change: As you know, that attendance outperformance benefits us at the concession stand and anywhere else that attendance drives in silvery revenues such as pre-show advertising.
Speaker Change: We also believe that it drives more habitual movie going, which at this point on the road back is very important.
Speaker Change: Average admission price decreased 5.1% during the first quarter of fiscal 2025.
compared to last year.
Speaker Change: which was primarily due to an unfavorable ticket mix with an increase in child attendance, resulting from an increased number of family films compared to the first quarter last year, as well as the impact of our strategies to drive attendance through various value-oriented promotions and programs.
Speaker Change: that are designed to encourage repeat movie going that I just discussed.
Speaker Change: Our average concession, food and beverage revenues per person at our comparable theaters increased by 0.8% during the first quarter of fiscal 2025, compared to last year's first quarter, which was primarily due to inflationary pricing changes.
Speaker Change: During the first quarter of 2025, we faced two cross challenges compared to the first quarter last year.
Speaker Change: First, our top 10 films in the quarter represented approximately 66% of the box office in the first quarter of fiscal 2025, compared to 62% for the top 10 films in the first quarter last year.
Speaker Change: 6 of the top 10 films in our first quarter this year were 4th quarter releases that carried over into the first quarter, including the Holiday Blackbuster films.
Speaker Change: Our first quarter of 2025 also included five days during the week between the December holidays, which drove a higher proportion of our Q1 box office towards the holiday films.
Speaker Change: The higher film cost on these holiday blockbusters and a more concentrated film slate resulted in an approximately 2.4 percentage point increase in overall film cost as a percentage of admission revenues.
Speaker Change: In addition, our labor costs in the first quarter of 2025 were higher compared with the first quarter of 24.
As we shared on our first quarter call last year,
Speaker Change: Operating hours and staffing levels were significantly reduced during the first quarter of 2024, particularly during January and February .
Speaker Change: Due to a weaker film slate following the Hollywood strikes and a shorter carryover of holiday films
Speaker Change: With an anticipated improvement in the film slate in the first quarter of fiscal 2025, we returned to more traditional operating hours and staffing levels resulting in higher labor costs.
Speaker Change: In addition, the lower-that-expected opening weekend performance from certain films during the first quarter of 2025 resulted in reduced labor efficiency on the lower-that-expected attendance.
Speaker Change: While we believe that we can tighten up that performance in the future, once again we also see the normalized operating hours as an investment in repeat movie going.
Speaker Change: being reliably open for customers when they can come is important, and as a ten and three build, it will allow us to build from a bigger attendance base.
Speaker Change: As a result of these two cost pressures, theater division adjusted even during the first quarter of fiscal 2025 was 3.7 million compared to 6.2 million in the prior year quarter.
Speaker Change: Turning to our hotels and resorts division, revenues were $61.3 million for the first quarter of fiscal 2025.
Speaker Change: Total revenue before cross reimbursements at our seven owned hotels increased over 4.3 million or 8.9% over the first quarter of fiscal 2024.
Speaker Change: The four additional operating days due to the change in our fiscal quarter favorably impacted hotels revenue by 2.1 million.
Speaker Change: Offset by an 8% increase in our average daily rate or ADR.
Speaker Change: Our average fiscal 2025 first quarter occupancy rate for our own hotels was 50.3%.
Speaker Change: Our occupancy rate decrease was negatively impacted by the Hilton Milwaukee renovation while guestrooms were out of service.
Speaker Change: While we were able to shift business to our two other hotels, the Pfister and St. Kate, to mitigate the impact of the renovation on the overall portfolio, on peak weekend nights there was some occupancy displacement from business turned away due to the reduced available rooms.
Speaker Change: We estimate that the renovation negatively impacted our Rev Park growth by nearly 4 percentage points during the first quarter.
according the data received from Smith Travel Research.
Speaker Change: Comparable Competitive Hotels in our markets experienced rev-part growth of 6.7% for the first quarter of 2025, compared to the first quarter of fiscal 24, indicating that our hotels underperformed the competitive set by 5.6% percentage points. [inaudible]
Speaker Change: Our lower performance relative to the competitive sets results primarily from group displacement at the Hilton Hill Walkie, while under renovation.
Speaker Change: which we believe unfavorably impacted Rev Par by nearly four percentage points while favorably impacting competing hotels Rev Par growth by one percentage point.
Speaker Change: After adjusting for the impact of the Hilton Milwaukee renovation, we believe our hotel's Reb Park growth was within less than 1% point of the competitive set and attribute this slightly lower performance the new hotel room supply within one of our markets.
Speaker Change: When comparing our RIF part results to comparable upper-up scale hotels throughout the United States,
Speaker Change: The upper upscale segment experienced an increase in rev power of 2.8% during our first quarter compared to the first quarter of 24.
Speaker Change: indicating that our hotels underperformed the industry by 1.7 percentage points but outperformed the industry by 2 percentage points when adjusting for the estimated impact of the renovation.
Speaker Change: With the continued growth in group business and events, our banquet in catering operations continue to grow with food and beverage revenues up 10% in the first quarter of fiscal 2025 compared to the prior year.
Speaker Change: Hotel's other revenues grew 11.4%, primarily due to improved ski season at Grand Geneva Resort and Spa, and from fees generated from an all-hotel group buyout at one of our condo hotel properties.
Speaker Change: Finally, hotels adjusted EBDA increased 1 million in the first quarter of fiscal 2025 compared to the prior year quarter.
Speaker Change: Shifting the cash flow in the balance sheet, our cash flow from operations was a use of cash of 35.3 million in the first quarter of fiscal 2025 compared to cash used by operations of 15.1 million in the prior year quarter.
Speaker Change: With the increase in cash used primarily due to the timing of payments of accounts payable, following a stronger holiday period, and the lower EBITDA.
Speaker Change: As a reminder, our cash flow from operations in the first fiscal quarter is historically impacted by seasonal changes in working capital, resulting from the slowdown in our businesses following the peak holiday season and by the timing of various year end accounts payable
Speaker Change: Total capital expenditures during the first quarter of fiscal 2025 were 23 million, compared to 15.4 million in the first quarter of 2024.
Speaker Change: A large portion of our capital expenditures during the first quarter were invested in the Hilton Milwaukee renovation with the balance going to maintenance projects in both businesses.
Speaker Change: Our capital investments and renovations projects have progressed as planned and we continue to expect capital expenditures for fiscal 2025 of 70 to 85 million, recognizing that the timing is several of our planned expenditures are still just estimates at this time.
Speaker Change: We are finalizing the scope and timing of various projects in the second half of the year and the actual timing of these projects will impact our final capital expenditure number for the year. We will update our capital expenditure estimates as the year progresses.
Speaker Change: Our balance sheet remains strong and we ended the first quarter with 12 million in cash and over 192 million in total liquidity with a debt to capitalization ratio of 31% and net leverage of two times.
Speaker Change: Finally, as we announced in today's release, during the quarter, we repurchased approximately 424,000 shares of our common stock for 7.1 million in cash.
Speaker Change: Our strong balance sheet and confidence in our businesses gives us the ability to continue investing in our businesses and pursuing growth while returning capital to shareholders through our quarterly dividend and opportunistic share repurchases.
Speaker Change: We will continue to allocate capital with a balanced approach that supports our strategic priorities while pursuing investments that provide the most attractive long-term returns to shareholders.
With that, I'll now turn the call over to Greg.
Thanks, Chad. Good morning, everyone.
Greg Marcus: As we entered 2025, our plans for the year projected growth in both of our businesses.
Greg Marcus: In theaters, we expected a stronger movie slate to drive significant growth, while in hotels we expected a stable macroeconomic environment supporting slow but steady growth.
Greg Marcus: While our outlook for the full year remains positive and optimistic, our path to the year looks a little different today than it did as we began the first quarter.
Greg Marcus: In theaters, while the first quarter didn't play out as expected, in April , he made up the lost ground versus last year, and then some.
Greg Marcus: and the summer head looks strong. In hotels, the first quarter seated our expectations and while bookings remain strong, economic uncertainty has elevated.
Excuse me.
Greg Marcus: It's periods like these, and I'm glad that we have a diversified business model that can provide a counterbalance when conditions may change in one of our businesses.
Greg Marcus: I'm excited for the seasonal ramp up coming in the months ahead and our teams are ready to execute. We're maintaining our focus on long-term value creation while managing the short-term dynamics.
I'll start with a theater exhibition.
Speaker Change: While the first quarter box office got off to a better start than last year with improved carryover of the Holiday Films.
Greg Marcus: including family content that played well in our markets. The first quarter-lag big contributions for major ten-pole films.
Greg Marcus: As I've said many times before, it's difficult to predict which individual films are going to work, and they're always going to be surprised as both positive and negative. With that said, one quarter does not make a year, and over time we continue to expect growth.
Greg Marcus: To illustrate this point, through the first two months of 2025, the domestic box office was up 19% over last year.
Greg Marcus: One month later, at the end of the first quarter, the domestic box office was down 12%.
Greg Marcus: Now after a very strong April , the industry is up nearly 16% through this last weekend and we're building momentum heading into the busy summer movie going season.
Greg Marcus: We remain focused on driving attendance through our programs that promote an incentivized repeat movie going and continue to believe our strategy is showing early signs of positive results.
Greg Marcus: For the second quarter in a row, our comparable feeder attendance growth was better than most of our national peers, and this will continue to be an area of focus.
Greg Marcus: While Box Office growth relative to the nation is one of the several measures we look at to evaluate our performance, we're also focused on optimizing total revenue growth, including ancillary revenue and the ultimate contribution that each incremental customer brings to the bottom line. [inaudible]
Greg Marcus: and I discussed last quarter. While these pricing strategies create a short-term headwind to our mission per caps, which were down in the first quarters we expected, we believe that they are important drivers of long-term future attendance.
Greg Marcus: in addition, we believe it is important to be thoughtful on pricing in a potentially slowing economy, and we will approach future pricing changes with this in mind.
Greg Marcus: We continue to optimize our regular ticket prices in our markets to ensure we remain competitive and offer an attractive value to all types of customers.
Roberts, while capturing the premium during our peak demand periods.
Greg Marcus: In addition to our focus on attendance, our team has also been executing several investment projects focusing on increasing per capita revenues.
Greg Marcus: First, we recently completed the conversion of three new screen exotatoriums, a theater is in Illinois, Minnesota, and Ohio, adding to our initial test location in Wisconsin.
Greg Marcus: Anderson. Customers have enjoyed the immersive experience of the 270-degree panoramic screen, they extend the projection to the side walls for select scenes, and we're excited to expand this premium large format offering to additional locations.
Greg Marcus: The new ScreenX Auditorium is premiered on May 1st in time for the weekend opening of the Thunderbolts and enjoyed large crowds and strong customer demand.
Greg Marcus: Second, we are currently under construction to add confessional stance to three of our dining movie tabern locations in New York, Pennsylvania, and Kentucky.
Greg Marcus: These locations previously only offered customer's concessions, food and beverage ordering through our mobile app or at the bar for delivery of your seat.
Greg Marcus: Buying a walk-up concession stands where customers can order all food and concession items as well as pick up for mobile concession orders and self-service soda, we expect to capture higher per capita concession sales while streamlining labor from our service delivery model at these locations.
Greg Marcus: We piloted, pilot concession stands at three other movie tavern locations and we expect these three additional locations to operate with a new model by the middle of the summer.
Greg Marcus: In April , we were with our theater team at CinemaCon and once again, our studio partners, film directors and town all continue to reaffirm the importance of theatrical exhibition.
and our own elevating their content.
Greg Marcus: Not only do we continue to see an increasing supply in the pipelines in the major studios, but it was truly exciting to see the serious commitment to theatrical exhibition from Amazon MGM with a film slate that seemed to grow over the next few years.
Greg Marcus: While there is an important ongoing industry discussion regarding the appropriate length of the exclusive theatrical window, there is wide acknowledgement that theatrical exhibition plays a critical role to the overall movie and media ecosystem.
Greg Marcus: Second, we got a closer look at the film slate for the rest of the year and into 2026, and we remain very optimistic about the coming interactions.
Greg Marcus: As I alluded to earlier, Afer was a great positive surprise in several ways.
Greg Marcus: Of course, everyone is thrilled with the record breaking a Minecraft movie, but the month was much more than that. With the amateur, the king of kings and sinners all exceeding pre-opening industry projections, and holding very strong in the following weeks.
Greg Marcus: and in addition, the 20th anniversary re-release of Star Wars Episode 3 Revenge of the Sith, with a 25 million dollar weekend contribution to the box office. It's a great example of just how much audiences prefer to see movies in the big screen.
Greg Marcus: Summer movie season kicked off last weekend with the opening of the Thunderbolts, which continued the string of strong openings that began in April , and will be followed by a number of big titles, including Mission Impossible, The Final Reckoning, F1, Jurassic World, Rebirth, Superman, and the Fantastic Four.
Greg Marcus: The summer will also be full of widely appealing family features such as Lilo and Stitch, how to train your dragon, ilio, smurfs, and the bad guys to.
Greg Marcus: The Fallen Holiday Film Slaid is also exciting with Tron Aries, Wicked for Good, Zotopia II, and Avatar Fire and Ash just to name a few. There are many more great films coming noted in today's earnings release.
Greg Marcus: Looking even further at the 2026 film slate also looks strong with major franchises, including Avengers Doomsday, Spider-Man 4, Super Mario Bros. Movie 2, Moana, Juman G3, Toy Story 5, Mega Minions in the Mandalorian and Groove just to name a few.
Greg Marcus: and Summary. We remain positive and optimistic about the road ahead and the long-term future for the industry and our future business.
Moving to our hotel's and resorts divination.
Greg Marcus: You've seen the segment numbers and Chad shared some additional detail on the performance metric.
Greg Marcus: Clarks, including our continued rev-part growth and strong average daily rate growth.
Greg Marcus: As we discussed in past years, there is significant seasonality in our hotel business, given that most of our company own hotels are located in the Midwest.
Greg Marcus: We offer lose money in this division during the winter months and in the first quarter of fiscal 2025 we achieved $1 million of positive adjusted EBITDA which benefited from the four extra days in the quarter and improved winter weather that helped the ski season
Greg Marcus: There were a few notable items in the quarter I would like to highlight.
Greg Marcus: We were able to drive higher rates this quarter due to our continued focus on an optimizing revenue management.
Greg Marcus: The stronger weekend demand due to the improved ski season at Grange Neva, we were able to drive a significantly higher transient rate.
Speaker Change: In addition, we were able to create some rate compression in the Milwaukee market with the reduced available room count due to the Hilton renovation. While this helped us with ADR, the renovation negatively impacted occupancy in Ravpart during the quarter as Chad described.
Speaker Change: Rare Park grew at four of our seven-owned hotels with average daily rate growth at five hotels and occupancy growth at two out of seven hotels resulting in overall rare park growth of 1.1%.
Speaker Change: The walkie hosted the opening weekend, first and second rounds of the men's NCAA basketball tournament and our properties hosted four of the eight teams playing advisor for them.
Speaker Change: While we don't get this event every year, it's a great event for the market to host in March during one of our seasonally slower months, and the proximity of our hotels to the arena make them an attractive option for the teams and fans.
Speaker Change: Group business during the quarter was generally stable and our team is doing a great job capturing our share of the group business.
Speaker Change: The bookings continue to look solid, with our Group Room Revenue Bookings for Physical 2025, or Group Pace in the Year for the year running just slightly ahead of what we were at this time last year, even when including the RNC Group Business in the prior year.
Speaker Change: That was the Republican National Convention. Even more encouraging group room pace for 2026 is up 20% of the head of what we wore at this time last year for the next year out.
Speaker Change: McWit and catering pace for the remainder of fiscal 2025 is similarly ahead of where we were at this time last year.
Speaker Change: Finally, a quick project update on the Hill and Milwaukee renovation. The project continues to progress as planned and as of today we've completed and returned to service approximately 65% of the 554 guest rooms we will be renovating.
Speaker Change: We are in track to have the remaining rooms back in service by June 30th with the meeting space involved with innovation the continuing later into the summer.
Speaker Change: The newly renovated rooms look fantastic and when we are done with the project our historical hotel will feel like new. It will be a great compliment to the city's newly expanded convention
Speaker Change: As our old television heads into the busier spring and summer travel months, we believe the investments we are making in our properties puts us in a great position to win in our markets.
Speaker Change: Well, if not yet seen any meaningful change in demand or significant cancellations of group business that our portfolio tells, it's important to acknowledge the increased level of economic uncertainty compared to just a few short months ago.
Speaker Change: Our portfolio of upper upscale Midwest hotels in primarily drive two destinations.
has historically experienced less volatility than coastal fly-to markets.
Speaker Change: With that said, if we begin to see softness, we are prepared to react and adjust quickly.
Speaker Change: Finally, we've discussed several of the investments we've made in both, we're making in both businesses, and this plan, this is going to be a significant year for capital expenditures as we reinvest in our assets for future growth and long-term return.
Speaker Change: The edition of Chad Disgust, we also allocated capital discord to re-return to shareholders through opportunistic share repurchases.
Speaker Change: We have confidence in our businesses and a strong balance sheet that allows us to move quickly when we see good opportunities and this is one example of us executing when we see great value in our stock.
Speaker Change: Over the last four quarters, we've now returned over 25 million or approximately 78 cents per share to shareholders between our quarterly dividend and sharey purchases. We will continue to balance investing in our businesses for future growth and returning capital to you, our shareholders.
Speaker Change: Before we open the call for questions, I want to once again thank all the people that work so hard every single day making our ordinary days extraordinary for our guests.
Speaker Change: We talk a lot about the investments that we make in our businesses
Speaker Change: We can never lose sight of the fact that our people are our most important <expletive> .
and they proved that once again in the score.
Speaker Change: with that at this time, Chad and I will be happy to open up the call for any questions you may have.
Speaker Change: Thank you. Please press star for the number one if you'd like to ask a question and ensure your devices are muted locally when it's your turn to speak. If you change your mind, your questions are already been answered. You can withdraw from the queue by pressing star off or by the number two.
Speaker Change: As the first question comes from Patrick Sholl, from Eric Wold with Texas Caputus Curities, please go ahead to your line, Jason.
Patrick Shaw: Thank you. Good morning, guys. A couple of questions. I guess first off...
Chad, you mentioned that...
Speaker Change: Concessions per page when we're up, you know, let's look at a percent 28 on inflationary pricing changes. I guess with with that indicate that that either incidents and or basket size declined. And if so, do you read that is more. Yeah.
Patrick Shaw: Slate Driven, or a shift in kind of consumer spending level over here.
Patrick Shaw: Eric, the change in F&B per caps really was almost entirely pricing and we just did less of it this year than we have the last few years with higher levels of inflation.
Patrick Shaw: on an incidence and on a basket size, not a lot of change to this quarter.
Patrick Shaw: really nothing worth mentioning. So it's pretty pretty similar to what we saw a year ago.
Patrick Shaw: Okay, and it's just in general, what are your views on your ability to take price if you need to if a certain, you know, inputs start getting pressure on the cost. It's time.
Patrick Shaw: Yeah, I mean, we've done a lot of price in the last three years and candidly our customers have been willing to do it on an experience out at home and have spent.
Patrick Shaw: and we haven't seen negative impacts from it. That being said in a softening environment and macroeconomic environment, we're going to be thoughtful about it, but you know, our experience now has a couple of years has been we've been able to manage through it and pass it through as needed.
Patrick Shaw: Got it. And then just follow up question, kind of somewhere on the hotel to the north side. I guess as you get towards the end of the the Hilton Milwaukee renovation there this year. Here.
Patrick Shaw: to give you that is providing an opportunity to take price at that location or view it more as
Patrick Shaw: You know, a billy to hold price and some kind of a renovation that needed to happen to be bigger competitive, I guess, and then just a kind of larger picture. How competitive do you do that market and become it once the, you know, the convention center demand continues to ramp.
Patrick Shaw: You know, I think it's, I think you actually, your last point is what really highlights it because I think I think it's a little bit of both. I think that we, you know, we had to do the renovation.
Patrick Shaw: It was time. So a piece of work is just keeping you in place. But, you know, part of it was an investment knowing what was coming with the Convention Center.
Patrick Shaw: and we're seeing, and the initial result of what's going on in the Convention Center will look good, we're seeing good, we're seeing the bookings happen, and we should be a beneficiary of that. We will have the, we will be the first choice hotel. I mean, we just have, we'll have the newest, nicest hotel convention, connected to the Convention Center.
so that should benefit us.
and Fister and now Hilton Milwaukee.
Patrick Shaw: and what we tend to see once we complete them is that...
Patrick Shaw: You win the group business when you're redoing the meeting spaces and the banquet and ballroom spaces and so
Patrick Shaw: because you're the newest venue in the market and so I would expect that we should be able to win on group business at Hilton Milwaukee certainly more than we have in the last several years just because the products gonna be fresh and there's a premium related to that. [inaudible]
Robert. Thank you both.
Speaker Change: Next in here, we have Patrick Sholl with Barrington Research. Please go ahead.
Patrick Scholl: Hi, good morning. This is a question on ticket price. I'm curious if you could also provide any detail on the impact of the Marcus Movie Club subscription product and the impact that that's had is consumers have taken that up.
Speaker Change: You know, we're pleased with the initial results and it's still just so such early days as we've talked about before, Pat, and the impact right now is maps is very minimal.
Speaker Change: We may not see the level of penetration that they've seen because our Tuesday program is so strong and so we're able to cover a chunk of the discount customer on Tuesday. But people like the program and we like the value of providing, and we like the direction of going.
Speaker Change: Okay, and on the hotel side, with the group pace coming in, it sounds like so far up year over year.
Speaker Change: just on a reported basis from what you're talking. Could you talk about, like, if that's, like, driven by a specific market, if that's, like, as you've talked about that?
Speaker Change: Convention Center in Milwaukee. That's the main driver. It's more broad-based in terms of your Midwest markets.
Greg Marcus: I would say it really gets to one of my earlier comments is in the properties that we recently renovated and refresh in the years that follow you tend to win on group business and so we are doing really well at Grand Geneva.
Greg Marcus: and then even it's some of our assets that aren't most recently renovated, St. Kate has been a nice job of capturing business so it's...
Greg Marcus: It's a number of our key properties. I wouldn't say it's across all markets. Each market sort of has its own dynamics and some of that is driven by events that are happening in the market more than specific assets, but we're seeing it in several different places across the portfolio.
Okay. Thank you.
Speaker Change: Just as a reminder, if you'd like to ask a question today, please press star followed by one on your telephone keypad.
Speaker Change: Our next question comes from Mike Hickey with Benchmark Company. Please go ahead.
Mike Hickey: Hey, Greg Hickey, nice quarter guys, obviously tough conditions. Thanks for taking our questions. And I guess on Q2.
Mike Hickey: It looks like the whole slate here is sort of rocking Minecraft centers, obviously very strong in April Thunderbolts kicked off the summer slate. Great. Also, I think exceeded most people's expectations. Just curious in your view.
Mike Hickey: What's driving the strength here and how durable do you think it is and why should we sort of expect the momentum to continue? I think Greg, you called out 26 is also looking good. So just curious all the pieces to that outlook.
Mike Hickey: Look, I think it's a couple of things, first of all.
Mike Hickey: Hickey. Although subjective quality has been very good, you know, and not just not just the ten pole films, you know. I really enjoyed the amateur. I thought it was really good.
Speaker Change: You had a weekend, it was two weekends ago, your four films, all about $20 million dollars.
You know, that we haven't seen in a long time
Speaker Change: and that shows something broad-based, that's healthy for the market because that means you're attracting different demos, you get more people back to the movies, that's really good. And then you had my favorite thing, everyone always says to me at some point, what are you most of you going forward to? And I always say, I don't know, I'm looking forward to the surprise.
Speaker Change: was the surprise at this score so far. I'm looking forward to more of it. Not many people look at it, Ryan Cooler, you know it's going to be a good, you feel like it should be a good movie with Michael B. Jordan, but it was great and I went and saw it and thoroughly enjoyed it and it was...
Speaker Change: It was a surprise and so we never know what's coming our way. The surprise is both directions sometimes as we saw in the first quarter but overall you know seeing that that breadth of product.
Speaker Change: You're obviously being very opportunistic on your pricing and you see that in the headwinds
Speaker Change: sort of opportunistic on price reductions led by promotions to sort of offset the recessionary impact on your consumers.
Speaker Change: You know, I think really what it is. It was something that we picked up probably in, you know, over probably the last ten years was a real focus on the importance of attendance.
Speaker Change: and how that, that really box office, obviously you don't take people to the bank, you take the money to the bank, and so we ultimately look at what the box office is, but not just the box office, because you know...
Speaker Change: I could charge the most in the whole business and drive four people to the door, but then only those four are buying concessions and being subjected to advertising and all the different ancillary ways we make money.
Speaker Change: So, and that's just the health of more people going to the movies building up that habit. So, we just have had a big focus on attendance and trying to make sure that we are, that we're striking the right balance, you know, having that hotel side and that's makes us think a lot about revenue management so we maximize revenue.
but they're also in...
Speaker Change: in attendance matters, and you saw the results showing that. We led the league in attendance growth, or it was supposed to be in attendance.
Speaker Change: and changing attendance. And we believe that's a long-term investment. We'll continue to tweak and we constantly are looking to pricing and it's getting more and more complex and more and more thoughtful.
Speaker Change: I'm going to say this half jokingly, but I really hope AI just tells us what the charge is. One of these days. But we think it should help.
Speaker Change: and I see on the attendance, I guess, you know, one of the...
Greg Marcus: Pushbacks is a movie door when you go into the theater, Greg, and there's big lines at the concession stand. It kind of...
Speaker Change: You know, we're making maybe you want to skip it. So I guess attendance is great, but so how do you manage that incremental boost in attendance?
Speaker Change: at the concession stand, whether it's maybe through digital purchases or maybe unique ways to sort of manage the congestion of all the people going into concessions.
Yeah, you actually hit the nail on that, it's we believe
Speaker Change: and the time is coming and we're working on it right now, the digital will be the solution to that, getting more people. We know that our basket size increases when people are digitally and our per caps should go up.
Speaker Change: We think that's where it's going to go. I can't tell you for sure. We're still in early days, but that will help reduce those lines.
that you bring up.
Bye.
Speaker Change: Cool. Last question. Thanks, guys, for taking all these. Just on the labor expense impact.
Speaker Change: You know the higher labor costs from increased operating hours wrote to the last year, which is obviously being influenced by the strike impact in quarter. Can you provide more details on staffing levels how they're trending and whether that labor pressure will continue in Q2 or later in the year? Thanks, guys.
Speaker Change: Yeah, Mike. I mean, I think a lot of this really gets to the cop in the quarter in particular how much we rained in operating hours and tightened
Speaker Change: Call it mid-January in really late February going into the launch of Dune where we really batten down the hatches and manage labor tightly.
Speaker Change: The operating hour increase was 7% year over year in the quarter on comparable days, so that gives you a sense of
Speaker Change: of how much we tightened it last year. I would characterize our staff our operating hours this year in the first quarter as more of a return to normal than that.
Speaker Change: You know, we extended them. That being said, you know, we do have some opportunity to improve labor efficiency. That's probably where.
...reacting very quickly when things don't.
Speaker Change: Don't pan out as you expect in attendance. Reaction time there, there's some room for improvement but I I think that what we see in Q1 is is not something that I would model going forward. It was more a need of a secrecy of the comp in the quarter.
Yeah, I mean, it's a tough balance, right?
Speaker Change: You know, you want people to work because you want to be able to have a staff when you need it so that the concession lines aren't so long when the people show up and yet to this side of it is you want to control your expenses when there's nobody showing up.
Bless.
Speaker Change: What, you know, but could we do better? Yeah, we could do better. I know we could and the team is focused on that, but it's tough balance and we can deal with every day.
Greg Marcus: Greg, wild card question for you. I don't think Trump's listening to this call. Nick maybe is, but you know, obviously there is.
Greg Marcus: There's some commotion noise yesterday on the tariff commentary, but I think you know if anything you did highlight that we've lost a lot of jobs in the US.
Greg Marcus: on the film development side, particularly in L.A. So a lot of development going international. I guess if you did have his year here and you wanted to make a recommendation on how you could sort of get reinvestment back in the U.S., what would you say?
and bye.
Greg Marcus: We're a fragile business, you know, the whole industry we know has had some challenges, and Dr. DeNoHarm.
Speaker Change: Thank you. At this time, it appears there are no other questions, so I'd like to turn the call back to you Mr. Paris for any additional or closing comments.
Chad Paris: Alright, thank you. Well, we'd like to once again thank everyone for joining us today. We look forward to talking with you once again in early August when we report the second quarter until then.