MARCUS CORP (MCS)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Special Note Regarding Forward-Looking Statements

Certain matters discussed in this Quarterly Report on Form 10-Q and the accompanying Management’s Discussion and Analysis, are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements may generally be identified as such because the context of such statements include words such as we “believe,” “anticipate,” “expect” or words of similar import. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which may cause results to differ materially from those expected, including, but not limited to, the following: (1) the adverse effects future pandemics or epidemics may have on our theatre and hotels and resorts businesses, results of operations, liquidity, cash flows, financial condition, access to credit markets and ability to service our existing and future indebtedness; (2) the availability, in terms of both quantity and audience appeal, of motion pictures for our theatre division (including disruptions in the production of films due to events such as tariffs or a strike by actors, writers or directors or future pandemics); (3) the effects of theatre industry dynamics such as the maintenance of a suitable window between the date such motion pictures are released in theatres and the date they are released to other distribution channels; (4) the effects of adverse economic conditions in our markets; (5) the effects of adverse economic conditions on our ability to obtain financing on reasonable and acceptable terms, if at all; (6) the effects on our occupancy and room rates caused by the relative industry supply of available rooms at comparable lodging facilities in our markets; (7) the effects of competitive conditions in our markets; (8) our ability to achieve expected benefits and performance from our strategic initiatives and acquisitions; (9) the effects of increasing depreciation expenses, reduced operating profits during major property renovations, impairment losses, and preopening and start-up costs due to the capital intensive nature of our business; (10) the effects of changes in the availability of and cost of labor and other supplies essential to the operation of our business; (11) the effects of tariffs that are implemented or merely threatened on our costs; (12) the effects of weather conditions, particularly during the winter in the Midwest and in our other markets; (13) our ability to identify properties to acquire, develop and/or manage and the continuing availability of funds for such development; (14) the adverse impact on business and consumer spending on travel, leisure and entertainment resulting from terrorist attacks in the United States or other incidents of violence in public venues such as hotels and movie theatres; and (15) a disruption in our business and reputational and economic risks associated with civil securities claims brought by shareholders. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Our forward-looking statements are based upon our assumptions, which are based upon currently available information. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this Form 10-Q and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

RESULTS OF OPERATIONS

General

For fiscal 2024 and prior periods, we reported our consolidated and individual segment results of operations on a 52- or 53-week fiscal year ending on the last Thursday in December, dividing our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. Fiscal 2024 was a 52-week year with 364 operating days, beginning on December 29, 2023 and ending on December 26, 2024.

Beginning on December 27, 2024, our fiscal year changed to a calendar fiscal year ending on December 31 of each year. Accordingly, effective for our fiscal year ending December 31, 2025, our quarterly results were three month periods ending March 31, June 30, September 30 and December 31. Fiscal 2025 was a 370 operating day year beginning on December 27, 2024 and ending on December 31, 2025 (comprised of five operating days between December 27-31, 2024, plus 365 operating days in calendar year 2025). Fiscal 2026 is a 365 operating day year beginning on January 1, 2026 and ending on December 31, 2026.

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The second quarter of 2026 and 2025 consisted of the three month periods beginning on April 1 and ended on June 30. The first half of fiscal 2026 consisted of the six month period beginning on January 1, 2026 and ended on June 30, 2026 and included five fewer operating days compared to the prior year fiscal first half. The first half of fiscal 2025 consisted of the period beginning on December 27, 2024 and ended on June 30, 2025 (comprised of five operating days between December 27-31, 2024, plus 181 operating days in the calendar first half of 2025).

Our primary operations are reported in the following two business segments: movie theatres and hotels and resorts. Within this MD&A, amounts for totals, subtotals, and variances may not recalculate exactly within tables due to rounding as they are calculated using the unrounded numbers.

Overall Results

The following table sets forth revenues, operating income (loss), other income (expense), net earnings (loss), and net earnings (loss) per diluted common share for the second quarter and first half of fiscal 2026 and fiscal 2025 (in millions, except for per share and variance percentage data):

Revenues increased during the second quarter and first half of fiscal 2026 compared to the second quarter and first half of fiscal 2025 due to increased revenues from both our theatre division and hotels and resorts division. First half revenues increased despite the fact that the first half of fiscal 2026 included five less operating days compared to the first half of fiscal 2025, negatively impacting revenue growth by approximately $15.3 million.

Operating income during the second quarter of fiscal 2026 improved by $14.1 million compared to the second quarter of fiscal 2025, primarily due to increased revenues before cost reimbursements from both our theatre division and hotels and resorts division, a $0.6 million decrease in corporate expenses and a $0.3 million decrease in depreciation expense. Operating income (loss) during the first half of fiscal 2026 improved by $15.2 million compared to the first half of fiscal 2025 due to increased revenues from both our theatre and hotels and resorts divisions, decreased corporate expenses, and a $0.3 million decrease in depreciation expense, partially offset by a $5.3 million unfavorable impact as a result of five fewer operating days. Operating income (loss) during the first half of fiscal 2026 was negatively impacted by a $0.2 million loss on disposition of property, equipment and other assets, compared to a $1.2 million gain on disposition of property, equipment and other assets related to the sale of surplus land during the first half of fiscal 2025.

Corporate expenses during the second quarter of fiscal 2026 decreased $0.6 million compared to the second quarter of fiscal 2025, primarily due to decreased incentive compensation expenses, decreased professional fees related to tax, and audit, partially offset by personnel and benefits cost inflation, increased non-cash stock compensation, director compensation, and increased legal professional fees. Corporate expenses during the first half of fiscal 2026 decreased $0.2 million compared to the first half of fiscal 2025 due to decreased professional fees related to tax, audit, and legal services, and decreased incentive compensation expenses, partially offset by increased non-cash stock compensation, personnel and benefits cost inflation, and director compensation.

Our interest expense totaled $2.7 million and $5.4 million for the second quarter and first half of fiscal 2026, respectively, compared to $3.0 million and $5.8 million for the second quarter and first half of fiscal 2025, respectively. The decrease in interest expense during the second quarter and first half of fiscal 2026 was primarily due to decreased borrowings and a decrease in non-cash amortization of deferred financing costs. Changes in our borrowing levels due to variations in our operating results, capital expenditures, acquisition opportunities (or the lack thereof) and asset sale proceeds, among other items, may impact, either favorably or unfavorably, our actual reported interest expense in future periods, as may changes in short-term interest rates.

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We recognized investment income of $0.1 million during the second quarter and first half of fiscal 2026, compared to $0.4 million and $0.5 million during the second quarter and first half of fiscal 2025, respectively. Variations in investment income were due to changes in the value of marketable securities.

We did not have any significant variations in other expenses and equity losses from unconsolidated joint ventures during the second quarter and first half of fiscal 2026, compared to the second quarter and first half of fiscal 2025.

Net earnings (loss) and net earnings (loss) per diluted common share improved during the second quarter and first half of fiscal 2026 compared to the second quarter and first half of fiscal 2025, resulting primarily from an increase in operating income as described above.

We reported income tax expense of $8.1 million for the second quarter of fiscal 2026 compared to expense of $2.7 million for the second quarter of fiscal 2025. We reported income tax expense of $0.5 million for the first half of fiscal 2026 compared to a benefit of $4.6 million for the first half of fiscal 2025. Our fiscal 2026 first half effective income tax rate was 50.8% compared to our fiscal 2025 first half effective income tax rate of 32.7%. The effective income tax rate for the first half of 2026 was negatively impacted by discrete tax items related to stock option exercises. The effective income tax rate in both fiscal 2026 first half and fiscal 2025 first half was negatively impacted by excess compensation subject to deduction limitations. We anticipate that our ef

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Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General

Beginning in fiscal 2025, our fiscal year changed to a fiscal year ending on December 31 of each year. Fiscal 2025 was a 370 operating day year beginning on December 27, 2024 and ending on December 31, 2025 (comprised of five operating days between December 27-31, 2024, plus 365 operating days in calendar year 2025). Accordingly, for our fiscal year ended December 31, 2025, our quarterly results were for three month periods ended March 31, June 30, September 30 and December 31.

For fiscal 2024 and prior periods, we reported our consolidated and individual segment results of operations on a 52- or 53-week fiscal year ending on the last Thursday in December, dividing our fiscal year into three 13-week quarters and a final quarter consisting of 13 or 14 weeks. Fiscal 2024 was a 52-week year with 364 operating days, beginning on December 29, 2023 and ending on December 26, 2024. Fiscal 2023 was a 52-week year with 364 operating days, beginning on December 30, 2022 and ending on December 28, 2023.

Fiscal 2026 will be a 365 operating day year beginning on January 1, 2026 and ending on December 31, 2026, with quarterly results for the three month periods ending March 31, June 30, September 30 and December 31.

Our first fiscal quarter typically produces the weakest operating results in our hotels and resorts division due primarily to the effects of reduced travel during the winter months. The quality of film product in any given quarter typically impacts the operating results in our theatre division. Our second and third fiscal quarters generally produce our strongest operating results because these periods coincide with the typical summer seasonality of the movie theatre industry and the summer strength of the lodging business. Due to the fact that the week between Christmas and New Year’s Eve is historically one of the strongest weeks of the year for our theatre division, the specific timing of the last Thursday in December has historically impacted the results of our fiscal first and fourth quarters in that division. Due to the transition in our fiscal year during fiscal 2025 described above, the first quarter of fiscal 2025 included five days during the week between Christmas and New Year’s Eve, and the fourth quarter of fiscal 2025 included the entire week between Christmas and New Year’s Eve.

Our primary operations are reported in two business segments: theatres and hotels and resorts. This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) generally discusses fiscal 2025 and

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fiscal 2024 items and year-to-year comparisons between fiscal 2025 and fiscal 2024. Discussions of fiscal 2023 items and year-to-year comparisons between fiscal 2024 and fiscal 2023 that are not included in this MD&A can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2024. Within this MD&A amounts for totals, subtotals, and variances may not recalculate exactly within tables due to rounding as they are calculated using the unrounded numbers.

Current Plans

Our aggregate cash capital expenditures, acquisitions and net purchases of interests in, and contributions to, joint ventures were $83.2 million during fiscal 2025, compared to $83.3 million during fiscal 2024 and $38.8 million during fiscal 2023. We currently estimate that cash capital expenditures during fiscal 2026 will be in the $50 - $55 million range, with significant investments in our hotels division now behind us as discussed below. We will, however, continue to monitor our operating results and economic and industry conditions so that we may adjust our plans accordingly.

Our current strategic plans include the following goals and strategies:

Theatres

•Maximize and leverage our current assets. We have invested approximately $340 million to further enhance the movie-going experience and amenities in new and existing theatres over the last ten years. These investments have included:

◦DreamLoungerSM recliner seating additions. As of December 31, 2025, we offered all DreamLounger recliner seating in 66 theatres, representing approximately 86% of our company-owned theatres. Including our premium, large format (PLF) auditoriums with recliner seating, as of December 31, 2025, we offered our DreamLounger recliner seating in approximately 88% of our company-owned screens, a percentage we believe to be the highest among the largest theatre chains in the nation.

◦UltraScreen DLX®, SuperScreen DLX® (DreamLounger eXperience) and ScreenX conversions. As of December 31, 2025, we had a total of 126 PLF screens at 64 of our theatre locations (31 UltraScreen DLX auditoriums, one traditional UltraScreen® auditorium, 87 SuperScreen DLX auditoriums - a slightly smaller screen than an UltraScreen but with the same DreamLounger seating and Dolby Atmos sound - four ScreenX auditoriums, and three IMAX® PLF screens). In fiscal 2023, we introduced our first ScreenX auditorium featuring 270-degree projection providing guests with an immersive viewing experience, and we added three additional ScreenX auditoriums at additional theatres in fiscal 2025. As of December 31, 2025, we offered at least one PLF screen in approximately 83% of our company-owned theatres, once again a percentage we believe to be the highest percentage among the largest theatre chains in the nation. In addition, as of December 31, 2025 we offered more than one PLF screen in approximately 62% of our company-owned theatres, which we believe gives us significant operational flexibility to maximize revenue by showing more than one major film on PLF screens at a theatre, particularly during opening weekends for films and at peak times during the year. Our PLF screens generally have higher per-screen revenues and draw customers from a larger geographic region compared to our standard screens, and we charge a premium price to our guests for this experience.

◦Signature cocktail and dining concepts. We have continued to further enhance our food and beverage offerings within our existing theatres. We believe our 50-plus years of food and beverage experience in the hotel and restaurant businesses provides us with a unique advantage and expertise that we can leverage to further grow revenues in our theatres. As of December 31, 2025, we offered bars/full liquor service under the concepts Take Five Lounge, Take Five Express and The Tavern at 48 theatres, representing approximately 62% of our company-owned theatres. In select locations without a Take Five Lounge outlet, we offer beer and wine at the Zaffiro’s Express outlet. As of December 31, 2025, we also offered one or more in-lobby dining concepts, including the pizza concept Zaffiro’s® Express and hamburger and other Americana fare concept Reel Sizzle, in 39 theatres, representing approximately 68%

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of our company-owned theatres (excluding our in-theatre dining theatres). We also operate three Zaffiro’s® Pizzeria and Bar full-service restaurants.

◦In-theatre dining concepts. As of December 31, 2025, we offered a complete menu of drinks and chef-prepared salads, sandwiches, entrées and desserts at 20 theatres, representing approximately 26% of our company-owned theatres, through two service models. At 14 theatres we offer in-theatre dining operating under the BistroPlex® and Movie Tavern by Marcus brands with ordering at the bar, online, mobile app/web, and in select locations with servers, for food delivery to seats. In addition, at 6 theatres with in-theatre dining operating under the Movie Tavern by Marcus and Marcus Theatres brands, we also offer the same complete menu available to order at the concession stand in addition to ordering with online, mobile app/web for delivery to seats or pickup at the concession stand.

Including these dining concepts, as of December 31, 2025, we offered one or more expanded food & beverage option in 59 theatres, representing approximately 77% of our company-owned theatres.

◦In-lobby concession stands. In addition to these dining concepts, all of our Marcus Theatres locations offer traditional concessions sold through in-lobby concession stands. While all of our Movie Tavern by Marcus locations offer in-theatre dining, in fiscal 2022 we began adding in-lobby concession stands to acquired Movie Tavern by Marcus locations to enhance concessions sales and reduce labor costs. As of December 31, 2025, we operated in-lobby concession stands at six of our 20 in-theatre dining locations.

During fiscal 2026 and beyond, we expect to execute on a number of strategies to further maximize and leverage our existing assets. These strategies are expected to include:

◦Opportunistically expanding the number of our PLF formats described above to meet consumer demand. Our guests have shown a strong preference for viewing blockbuster films on the largest screen available. Our goal is to have multiple PLF auditoriums in as many theatres as physically and financially viable in order to provide PLF formats to our guests for more than one blockbuster film at a time.

◦Expanding and evolving our food and beverage operations described above. We will continue to test new concepts and enhance our existing concepts in order to provide further options to our guests and increase our average concession/food and beverage revenues per person. In fiscal 2025, we began testing new lobby concession stand queuing line configurations that integrate merchandise displays for grab-n-go candy, snacks, select food items and souvenir merchandise as part of the queuing line. We expect to expand the use of these queuing line merchandise displays to additional theatres in fiscal 2026. Strategies may also include expanded sports programming, live bingo and other entertainment options in our signature bars. Additionally, we expect to continue refining the service model at our Movie Tavern by Marcus locations to optimize the use of servers, mobile ordering, and/or add additional concession stands and maximize our food and beverage revenues. In fiscal 2025, we began testing QR code mobile food and beverage ordering for delivery to seats at select in-theatre dining locations. We expect to expand the number of locations with QR code mobile ordering, both for seat delivery and for concession stand order pickup, in fiscal 2026.

◦Evolving and investing in what we believe to be our best-in-class customer loyalty program called Magical Movie RewardsSM (“MMR”). We currently have approximately 6.9 million members enrolled in the program. Approximately 50% of all box office transactions and 44% of total transactions in our theatres during fiscal 2025 were completed by registered members of the loyalty program. We believe that this program contributes to increased movie-going frequency, more frequent visits to the concession stand, increased loyalty to Marcus Theatres and, ultimately, improved operating results. In fiscal 2026, we plan to further enhance loyalty data insights on customer preferences, habits and tendencies, facilitating more targeted and effective marketing efforts that are tailored to MMR members.

◦Modernizing pricing strategies based upon consumer demand. We currently offer a number of very successful pricing promotions, including “Value Tuesday,” “Student Thursday” and a “Young-at-Heart” program for seniors on Friday afternoons. During fiscal 2024, we also introduced an Everyday Matinee for seniors and children, offering a discounted admission for showtimes before 4 p.m. and have continued to make strategic price alterations to the program throughout fiscal 2025 to optimize revenue. We believe these promotions have increased movie going frequency and reached a customer who may have stopped

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