Nostalgia and curiosity peaked moviegoer interest this summer—and theaters, which were plagued during the pandemic, saw a major revival. In fact, AMC Theatres reported its best quarterly earnings in its 103-year history this week, largely thanks to the mass attendance at the Barbie and Oppenheimer movies, which had box office sales of $1.4 billion and $947 million, respectively.
AMC, the largest movie chain in the world, posted $1.4 billion in total revenue for the third quarter, up more than 45% year-over-year.
“AMC was literally in a different ballpark of accomplishment than many third-party observers anticipated,” Adam Aron, AMC chairman, president, and CEO, said during the Leawood, Kansas-based Fortune 100 company’s third-quarter earnings report on Wednesday. “The entire quarter was rejuvenating for AMC. Moviegoers returned to AMC theaters and ever increasing numbers in the third quarter of 2023 in response to both our studio partners’ efforts to increase the quantity and quality of new releases.”
But it wasn’t just “Barbenheimer” that made the third quarter a blockbuster for AMC. Building up cash reserves and shedding unsuccessful locations helped the mega movie theater chain continue its pandemic recovery.
“We’ve been maniacal in building up our cash reserves,” Aron said. “For those trying to understand how AMC successfully has been defying gravity these past three and a half years: Having ample cash on hand is the secret sauce.”
Plus, during the third quarter, AMC added one new theater for every three it closed. That brings the total number of locations closed since the pandemic began to 156 and total new locations opened to 57. This nets a reduction of 99 locations.
However, third-quarter rents were 5.6% below the same period in 2019, Sean Goodman, AMC executive vice president of international operations and chief financial officer, said during the earnings call. AMC did not respond to Fortune’s request for comments on how many lease negotiations were underway and how much the company had saved as a result. However, Aron said during the earnings call that the company had “renegotiated our rents downwards to the tune of tens of millions of dollars of benefits a year.”
“This portfolio rationalization together with ongoing landlord negotiation has unequivocally resulted in a more profitable theater portfolio,” he added.
The company still has a deferred rent balance of $74.2 million as of the end of the third quarter, Goodman said, but AMC plans to reduce it by another $20 million by year’s end.
“We had to get more efficient because during the ravages of the pandemic. We had no revenues,” Aron said. “We’ve gotten this company to be much leaner than it ever was before.”
With thinning margins, many movie theater chains have started adding more to the experience to attract consumers, like heated lounge chairs, new screens, and specialty foods.
Plus, the new Taylor Swift movie has been a smash hit and is helping to revive theaters and malls—both commercial real estate mainstays that tanked during the pandemic. In fact, The Eras Tour helped AMC notch its highest single-day ticket revenue ever at more than $100 million within 24 hours of tickets to the film going on sale.
Other theaters, however, couldn’t stay above water and have been flipped for retail and other mixed-use developments.
Plus, there is the continuing tension between theaters and streaming platforms. But the Barbenheimer craze brought millions back to theaters. In fact, a July report by the National Association of Theatre Owners showed that more than 200,000 people purchased tickets to see Barbie and Oppenheimer on the same day during opening weekend alone.
“In the eyes of consumers, a strong theatrical release backed up by a big marketing campaign creates value when they are picking what to watch wherever they end up watching the movie,” Jackie Brenneman, president of The Cinema Foundation, wrote in the 2023 State of the Cinema Industry report. “When the movies are there, the audiences are there.”