Why Drive In Theatres Close

I recently saw a Milwaukee area CBS News report on the Keno Drive In Theatre going dark.  The reporters highlighted a rally at the site by supporters protesting the closing.  The overall theme of the rally and newscast suggested the Keno was a cherished public asset; the owners of the property should be sensitive to community needs and keep the theatre open.

The Keno Drive In opened in 1949 and still maintained its original wooden screen tower (its most distinctive feature).  Years ago, the property was sold to a developer, who leased it out to a third party (the same people who operate the Cascade over near Chicago) to run as a Drive In.  The Keno was the largest operating outdoor theatre in Wisconsin, capable of handling over 800 cars, and was located in the largest demographic area in the state: Milwaukee down through northern Illinois.  Naturally, it was the highest grossing (ticket sales) outdoor theatre in the state.

So why did the Keno close?  Shouldn’t a community asset be preserved for the good of the community?  In defense of the property owner, who has been demonized by many in the local press, he has every right to do whatever he wants with his property.  The Keno sits within a developed area and the land now has greater economic value with other uses.  Greater economic value to the owner and the community: property and sales taxes, necessary for providing children’s education and other government services, will increase if the property is developed.  If a Drive In theatre is so important to the community, the city or county can use tax dollars to build one.  Don’t hold your breath waiting for that to happen.  State, county, and local governments view Drive Ins like any other business: a source of tax revenue, not something on which to spend tax revenue.

One Drive In expert (?) interviewed by the local reporter parroted the common, but false, notion that high land prices is the major factor in the decline of Drive In theatres.  With most other profitable businesses, if the land under the facilities has increased in value such that it can be developed to better use, the owner sells his property and moves his business somewhere else.  There is still a lot of open land within a reasonable distance of Milwaukee.  The operators of the Keno, or any other investor, could have rebuilt the Keno in another nearby location.  A Drive In only requires 10 to 20 acres (for a single screen like the Keno), which could be obtained for between $100,000 and $200,000 (the last time I checked agricultural land prices).  Building out the theatre itself would take another $800,000, so you’re looking at an investment of over $1 million for a Drive In comparable to the Keno.  And that’s a conservative estimate.  Sure, you can build something smaller and cheaper out in the boonies where land goes for less, and there are a lot of small, run-down country Drive Ins for sale for a couple hundred thousand.  But the economics of the business are the same.  So it’s not high land prices that are to blame; Drive Ins close because they don’t generate enough revenue to justify the investment to keep them open.

And one big reason Drive Ins don’t generate enough revenue is because the general population doesn’t support them.  You wouldn’t know that from talking to people.  Everyone likes having a Drive In around and waxes poetically about their memories, but that doesn’t mean they actually go there.  When most strangers I encounter learn that I own the local Drive In, they go on about how wonderful it is and how much they love Drive Ins. And then in the same breath they say they’ll have to try and get out there some year, not even realizing the irony in their statement.  The harsh reality is that Drive Ins are similar to indoor theatres in that business rises and falls in response to the quality of the films coming out of Hollywood.  The economics of our business are further hampered by our seasonal nature (especially up here in the cold north) and the deleterious vagaries of the weather.  Drive Ins do have good, loyal patrons: just not enough of them. Most customers only come out if it’s a movie they really want to see, the weather is good, they don’t have something else to do, their kids aren’t acting up, their friends are coming along, and in general, the stars are perfectly in alignment.

That’s not to say Drive Ins are not profitable: some are.  But the level of profits, in a rational economic sense, doesn’t justify the level of investment and effort required to keep them operating.  Now, I’m not privy to every theatre’s income statement, but if you looked at the level of angst (outright whining and moaning) from practically every Drive In owner over the capital cost of converting to digital projection ($75,000 to $100,000 per screen), you could not possibly conclude that these theatres were anything more than marginally profitable.  In fact, many Drive Ins are either citing the cost of digital for closing, or begging for donations to buy the equipment: not the hallmark of a professionally run, profitable business.  And bottom line, if Drive Ins were profitable businesses, then investors would be out there building new ones.  All of the owners I know (a small and dying breed) operate their theatres as a labor of love, not to get rich.  But if any of them sold their theatres to development, I wouldn’t blame them a bit.

It’s unfortunate that the Keno closed, but Drive In fans in the area have other options: the McHenry Outdoor Theatre is a short drive away.  And that theatre still has its original screen tower.


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4 Responses to Why Drive In Theatres Close

  1. anneyohn says:

    I enjoyed the article on Why Drive Ins Close; I have many great memories as a child going to drive-in movies. I will have to say I have tapered off going to indoor theaters due to the high cost of movies these days and they are so accessible with cable/satellite.

  2. tjtang says:

    I grew up with the West Gate Drive-In in Racine and The Keno. When I moved to Milwaukee, I went to the 41 Twin and a couple of other ones that are also gone. Being an adult with a child, living in South Milwaukee would drive down to The Keno and we have actually drove up to your theater. And friends would come with us.

    Every time we would go to the Keno, we would have to wait in a very long line. It was very packed no matter what the weather. I have gone with it being 40 degrees out wrapped in blankets. So I am not sure where you get they are not supported when someone like me would drive 2 city’s down or all the way to your driven. And I am not the only one. I used to own a video game store and I would talk to the people about the Keno shutting down and they would tell me how they would go.

    No, I image it doesn’t make the most money in the world, I know my store didn’t either but to me they are a landmark. And I know Wisconsin has open actually brand new ones. And if I ever come in to a lot of money, I will open one myself.

    My son and other kids should have the enjoyment of family outings at a drive-in, where they can talk about the movie without bothering anyone else. Have popcorn while lying on the top of the car. Falling asleep in the middle of the 2nd movie. Being on a date and making out during the movie.

    The Millers wanted to put a Walmart on that spot and now they are being denied from the village. They also proposed some apartments and they were shot down on that too. Personally they might have screwed themselves. Being money hungry is never a good thing.

  3. jmkohlberg says:

    Some assumptions in the article are flawed. We operated the Keno and the issue isn’t that the property was sold or another use was found for the property. Issue is that theater was closed and torn without another use or being sold. Theater was profitable and paying a substantial rent to property owner. Property remains vacant not producing any benefit to the community or the property owner. And another flaw is the concept that Drive-ins are not a profitable venue. Our Cascade Drive-in West Chicsgo is continually in the top 10 grossing theaters in the country even a few times during the season being number one of all theaters in the world. Cars lined up for a mile to get into keno. Decision by land owner to tear down hoping his chances of development would have better chance if theater was gone and protests would subside. Total disregard for the community.

  4. jmkohlbergg says:

    What the article misses is the fact that the Keno was tore down with nothing to replace it. It could have been operating last last few years and producing income to the landowner.
    Keno was making a very nice profit but the landowner did not like the negative reaction from the residents so instead of having to deal with it in the future when he does find another use for the property he decided to close it down. He owned over 200 acres surrounding the Keno and did not have any monetary need to tear down and close the Drive-In. Its just a vacant piece of land now. This does not make sense. Our drive-In in Chicago has been in the top five grossing movie theaters in the country on several occasions and once this year was number one of all theaters in the country. Drive-Ins are still a thriving business. We have no problem if the commercial build up surrounding the theater creates an environment for a more monetary use of the property but to tear it down for nothing doesn’t make sense and when you have alternative areas to develop and save the Drive-In. The philosophy of well its ok to tear a Drive-In down cause you can just go spend a couple million to build another one elsewhere just doesn’t make sense. You need the familiarity of over 60 years at a location gives to your business. In this case it all doesn’t make any sense except greed and personal well being over the needs of the community.

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