Some of us, if we were lucky, grew up with a moviehouse down the street; a place like the one George Bailey ran past in “It’s a Wonderful Life” (“Merry Christmas, moviehouse!”). They were homey havens where owners knew their regular patrons, neighbors greeted each other in the popcorn line, and beloved movies settled in for long, comfortable runs.
In Seattle, most of those places have disappeared, but just a few survive in a landscape now dominated by downtown or suburban multiplexes. One of them is the Ark Lodge Cinemas in Columbia City, occupying a former Masonic lodge built in the 1920s. It’s a quirky, cozy place, with dark wood trim, meandering hallways and wine-colored walls; and it boasts four theaters, one of which, the Prestige Room, is an inviting lounge with jewel-toned velvet armchairs.
The Ark Lodge is just what you might want down the street in your neighborhood — but since it opened in 2012, the theater has struggled for viability. And its struggles illustrate the challenges of operating an independent moviehouse at a time when audiences are changing and competition is fierce from shiny multiplexes that increasingly boast amenities like beer and wine, reclining seats and expanded food menus.
“In movie economics, you’re living and dying with every opening weekend,” said Ark Lodge owner/operator David McRae.
Lately, his theater has been dying more often than not. With box-office receipts that are down 60% from last year, McRae started a sales drive last month. (Initially, he referred to it on Twitter as a fundraiser, but he has since corrected the word choice: The Ark Lodge is a for-profit business, and he’s looking not for donations but purchases.) The goal is to sell $50,000 worth of gift cards by the end of this month and to increase the number of customers walking in the door. At the end of the first week of September, McRae said the gift-card drive had reached about a third of its goal.
McRae, who’s been running the Ark Lodge since it reopened (it had a previous life for seven years as Columbia City Cinema) and is now halfway through a 15-year lease, said the extra cash will help “catch up on bills that we need to catch up on.” Those bills include rent (which some months, he said, gets paid a little late), utilities, equipment maintenance and general maintenance, such as repairs after a recent break-in.
He’s also hoping to create a cash cushion for the final quarter of the year. October through December is the most profitable time for a movie theater, with holiday blockbusters and Oscar-bait prestige movies arriving weekly — but for a small theater like the Ark Lodge, it’s also an expensive one. Those movies’ studios often require significant upfront payments to guarantee sales, particularly when booking with smaller, struggling theaters. The payments are an advance on royalties paid out of every ticket sold, a rate that McRae said is generally 60% or more. From the percentage that remains, plus any concession sales, McRae needs to pay the rent, his staff (about 10 employees, most of them part time) and the myriad expenses connected to running a small business.
Chatting in the Prestige Room on a late-summer morning, McRae said the theater has never recouped the costs of renovating the building to get it up to code for its reopening nearly seven years ago. To pay its way, he said, the Ark Lodge would need to gross about $25,000 per week in tickets and concession, and “our typical weeks are way below that.” And this year has been worse than most; he’s seen a nearly 60% drop in business in 2019 compared to this time last year. (2018 was greatly boosted by “Black Panther,” a phenomenal hit for the Ark Lodge and many other theaters.)
McRae partly attributes the revenue decline in recent years to several changes: fewer families, more young residents whose preference is to stream a movie at home, more people finding that the cost of a movie ticket is too high. He’s started $6 Wednesdays (a regular adult ticket is $13), hoping to draw more budget-minded folk, but so far the numbers haven’t been what he hoped.
“Robbing Peter to pay Paul”
McRae’s challenges are shared by many other independent theaters nationwide — a majority of the 600 members of the National Association of Theatre Owners have moviehouses or small chains boasting fewer than 10 screens. They’re competing against both mid-size chains and the behemoths of the industry: AMC and Regal which, together, control 50% of all moviehouses nationwide.
Of the Seattle area’s few theaters that aren’t part of a national chain, several belong to the small local chain Far Away Entertainment, which owns the Varsity, Admiral and seven others outside the city. These theaters, some of them in historical buildings, are old-school neighborhood or small-town places; many have been in operation for decades. Jeff Brein, managing partner for Far Away, said that some of his theaters do better at the box office than others, and having a chain allows a certain amount of “robbing Peter to pay Paul.”
“If some of our more fancy theaters can bail out the others, we’re happy to do that and it seems to work for us,” Brein said. “If we were all alone out there, it’s much more of a challenge.” He noted that the Admiral has seen a big uptick at the box office since its recent renovation, and that, in general, his theaters do better when they’re upgraded. “Audiences these days, they seem to be more comfortable in newer seats, in auditoriums with newer carpeting and newer drapes,” he said.
Others have gone the nonprofit route, such as Northwest Film Forum, Grand Illusion Cinema and the Seattle International Film Festival’s theaters. And some, like Central Cinema and the new Beacon just down the street from the Ark Lodge, follow a different business model entirely; they don’t show first-run films.
The closest parallel to the Ark Lodge — a single-location independent cinema — is Ballard’s Majestic Bay, locally owned and operated by the Alhadeff family. Like the Ark Lodge, it’s a small multiplex (three screens) in a neighborhood location. But it’s a relatively new building (the historical Bay Theatre, in disrepair, was demolished in 1998 and rebuilt) and doesn’t face the challenges that McRae’s aging, converted building brings.
And, as operator Aaron Alhadeff confirms, the prominent old-Seattle family has sufficient resources to weather the ups and downs of the business. (His father, Kenny Alhadeff, is a longtime Seattle business executive and philanthropist who is chair of his personal company, Elttaes Enterprises, and of the Alhadeff Family Charitable Foundation.) “For our family, the reason we built the theater was for community and for people to come together, not to make money,” Aaron Alhadeff said. In more practical terms, that means that when the theater needs something — for example, as it recently did, new seats — it gets it.
McRae, working on a tighter budget, struggles when a projector needs a major part (as one recently did, to the tune of $15,000), or when a movie flops badly and he doesn’t make back the advance he paid to the studio. For example, Disney’s “Aladdin” drew very few moviegoers when it opened at the Ark Lodge. (Both McRae and Alhadeff cited a dwindling number of young families coming to their theaters, likely due in part to real estate values pricing them out of the neighborhoods.) That meant, McRae said, that he couldn’t afford the advance of Disney’s next film, “The Lion King,” and therefore missed out on the revenue that might have brought.
A tricky time
Born into the business — his parents were movie-theater operators, and McRae grew up helping them run the Cine-Mond in Redmond — McRae has watched the industry’s ups and downs for decades. He remembers a time when movies didn’t have to prove themselves on opening weekend — nowadays, he says, too many good small movies (recent examples he cites are “Booksmart” and “Late Night”) die too quickly, not getting time to build an audience. At the Ark Lodge, where he can move a film from a smaller screen to a bigger one, he occasionally can keep an art-house movie for a long time — as he did most recently with “The Last Black Man in San Francisco,” which played for 11 weeks.
Some of his highest-grossing films, McRae notes, have been smaller-scale ones. His recent top 10 includes not just “Avengers: Endgame” and “Captain Marvel” but “The Last Black Man in San Francisco,” “Amazing Grace,” “If Beale Street Could Talk,” and “The Favourite”; an appealing range of titles reflecting the diversity of his audience.
It’s a tricky time for remaining independent moviehouses, and adaptations may be needed in response to changing audience expectations. Alhadeff cited the Majestic Bay’s recent change to larger seats (though not recliners) and reserved seating, saying it was “imperative to compete” in the market. And McRae is looking into serving beer and wine at the Ark Lodge, as many cinemas now do. It’s problematic — there’s neither space for a separate bar nor funds for renovations to create one, and he’s concerned about losing the ability to hire high-school students, many of whom have found first-job experience at the theater. But people are asking for it, he says, and “we’d like to get to that point.”
But meanwhile, the sales drive continues, and McRae’s encouraged by some strong presales for “Downton Abbey.” And he’s heartened by the neighborhood’s response to his call for help. “People are coming in to buy popcorn and chat with us to provide moral support and ideas,” he said. “That, as always, is the best part of being a neighborhood business, the immediate feedback and support we get from our friends and neighbors.” George Bailey couldn’t have said it better.
Ark Lodge Cinemas, 4816 Rainier Ave. S., Seattle; 206-721-3156, arklodgecinemas.com