Marcus Corp – ‘DEFM14A’ on 8/22/97

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Definitive Proxy Solicitation Material — Merger or Acquisition   —   Schedule 14A
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Document/Exhibit                   Description                      Pages   Size 

 1: DEFM14A     The Marcus Corporation                                67±   290K 

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DEFM14A
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
 of 1934
(Amendment No. ____)

Filed by the Registrant [X]                                               
Filed by a Party other than the Registrant [  ]                           

Check the appropriate box:                                                

[  ] Preliminary Proxy Statement                                          
[  ] Confidential, for Use of the Commission Only (as permitted by Rule   
14a-6(e)(2))                                                    
[X ] Definitive Proxy Statement                                           
[  ] Definitive Additional Materials                                      
[  ] Soliciting Material Pursuant to Section  240.14a-11(c) or Section    
240.14a-12                                                      

THE MARCUS CORPORATION
(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):                        

[  ] No fee required.                                                     

[  ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.                                                             

    1)   Title of each class of securities to which transaction applies:
          Common Stock, $1 par value, of The Marcus Corporation; and Class
  B Common Stock, $1 par value, of The Marcus Corporation.

 2)   Aggregate number of securities to which transaction applies:
      425,959 shares of Common Stock and 299,547 shares of Class B
Common Stock.  See Exhibit A attached hereto.         

     3)   Per unit price or other underlying value of transaction computed
     pursuant to Exchange Act Rule 0-11 (Set forth the amount on
 which the filing fee is calculated and state how it was
determined):  See Exhibit A attached hereto.          

     4)   Proposed maximum aggregate value of transaction:  $18,319,026.50

5)   Total fee paid:  ______________                            

[X]  Fee paid previously with preliminary materials.                      

[  ] Check box if any part of the fee is offset as provided by Exchange   
    Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously.  Identify the previous filing by       
   registration statement number, or the Form or Schedule and the date
of its filing.                                                  

1)  Amount Previously Paid:                                     

2)  Form, Schedule or Registration Statement No.:               

3)  Filing Party:                                               

4)  Date Filed:                                                 

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THE MARCUS CORPORATION

[LOGO]

 250 East Wisconsin Avenue, Suite 1700
 Milwaukee, Wisconsin 53202-4220
______________________________________
 NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
 To Be Held September 29, 1997
 _____________________________________
To the Shareholders of                                                    
THE MARCUS CORPORATION:                                         

NOTICE IS HEREBY GIVEN THAT the 1997 Annual Meeting of
Shareholders of THE MARCUS CORPORATION ("Company") will be held on Monday,
September 29, 1997 at 10:00 A.M., local time, at The Pfister Hotel, 424   
East Wisconsin Avenue, Milwaukee, Wisconsin, for the following purposes:  

1.   To elect eight directors for the ensuing year.             

  2.   To consider and act upon a proposal to approve and ratify the
   Agreement and Plan of Reorganization dated June 30, 1997,
  between The Marcus Corporation and Guest House Inn, Inc.
       ("GHI"), which provides for the issuance of (a) approximately
          425,959 shares of Common Stock to GHI (based on the closing sale
   price of the Company's Common Stock on the New York Stock
          Exchange on May 29, 1997 and subject to adjustment), in exchange
      for all of the real estate and operating assets owned by GHI
         (net of the book value of GHI's assumed stated liabilities) and
  (b) 299,547 new shares of Class B Common Stock to GHI in
         exchange for and cancellation of the existing 299,547 shares of
       Class B Common Stock owned by GHI, and to amend the Company's
      Articles of Incorporation to permit the one-time issuance of
        299,547 new shares of Class B Common Stock in exchange for and
       cancellation of the 299,547 existing shares of Class B Common
Stock owned by GHI.                                   

3.   To consider and act upon a proposal to amend the Company's 
        Articles of Incorporation to increase the number of authorized
      shares of Common Stock from 30,000,000 to 50,000,000 and the
  number of authorized shares of Class B Common Stock from
20,000,000 to 33,000,000.                             

4.   To consider and act upon any other business which may be   
         properly brought before the meeting or any adjournment thereof.

       Only holders of record of the Common Stock and Class B Common
Stock as of the close of business on August 8, 1997 will be entitled to   
notice of, and to vote at, the meeting and any adjournment thereof.       
Shareholders may vote in person or by proxy.  The holders of Common Stock 
will be entitled to one vote per share and the holders of Class B Common  
Stock will be entitled to ten votes per share on each matter submitted for
shareholder consideration.                                                

     Shareholders are cordially invited to attend the meeting in
person.  Even if you expect to attend the meeting in person, to help      
ensure your vote is represented at the meeting please complete, sign, date
and return in the enclosed postage paid return envelope the accompanying  
proxy which is being solicited by the Board of Directors.  You may revoke 
your proxy at any time before it is actually voted by notice in writing to
the undersigned or by voting in person at the meeting.                    

         Accompanying this Notice of 1997 Annual Meeting of Shareholders
is a form of proxy and Proxy Statement.                                   

                               On Behalf of the Board of Directors

               Thomas F. Kissinger
                         General Counsel and Secretary
Milwaukee, Wisconsin                                                      
August 22, 1997                                                           

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THE MARCUS CORPORATION
[LOGO]
__________________________

 PROXY STATEMENT
__________________________

 For
1997 Annual Meeting of Shareholders 
 To be Held September 29, 1997

       This Proxy Statement and accompanying form of proxy are being
furnished to the shareholders of THE MARCUS CORPORATION ("Company")       
beginning on or about August 22, 1997 in connection with the solicitation 
of proxies by the Board of Directors of the Company ("Board") for use at  
the Company's 1997 Annual Meeting of Shareholders to be held on Monday,   
September 29, 1997 at 10:00 A.M., local time, at the Pfister Hotel, 424   
East Wisconsin Avenue, Milwaukee, Wisconsin, and at any adjournment       
thereof (collectively, "Meeting"), for the purposes set forth in the      
attached Notice of 1997 Annual Meeting of Shareholders and as described   
herein.                                                                   

          Execution of a proxy given in response to this solicitation will
not affect a shareholder's right to attend the Meeting and to vote in     
person.  Presence at the Meeting of a shareholder who has signed a proxy  
does not in itself revoke a proxy.  Any shareholder giving a proxy may    
revoke it at any time before it is exercised by giving notice thereof to  
the Company's Secretary in writing, by notifying the appropriate personnel
at the Meeting in writing or by voting in person at the Meeting.  Unless  
so revoked, the shares represented by proxies received by the Board will  
be voted at the Meeting in accordance with the instructions thereon.  If  
no instructions are specified on the proxy, the votes represented thereby 
will be voted (i) FOR the Board's eight director nominees set forth below;
(ii) FOR the approval of the Agreement and Plan of Reorganization dated   
June 30, 1997 between the Company and Guest House Inn, Inc. and the       
associated amendment to the Company's Articles of Incorporation permitting
the one-time issuance of 299,547 new shares of Class B Common Stock in    
exchange for and cancellation of the 299,547 existing shares of Class B   
Common Stock owned by GHI; (iii) FOR the amendment to the Company's       
Articles of Incorporation increasing the number of authorized shares of   
Common Stock and Class B Common Stock; and (iv) on such other shareholder 
matters which may properly come before the Meeting in accordance with the 
best judgment of the persons named as proxies.                            

   Only holders of record of shares of Common Stock ("Common
Shares") and Class B Common Stock ("Class B Shares") as of the close of   
business on August 8, 1997 ("Record Date") are entitled to vote at the    
Meeting.  As of the Record Date, the Company had outstanding and entitled 
to vote 11,240,376 Common Shares and 8,504,252 Class B Shares.  The record
holder of each outstanding Common Share on the Record Date is entitled to 
one vote per share and the record holder of each outstanding Class B Share
on the Record Date is entitled to ten votes per share on each matter      
submitted for shareholder consideration at the Meeting.  The holders of   
Common Shares and the holders of Class B Shares will vote together as a   
single class on the election of directors at the Meeting, but will vote   
both as separate classes and together as one class on approval of the     
proposed transaction between the Company and Guest House Inn, Inc. and the
associated amendment to the Company's Articles of Incorporation, as well  
as on the proposal to amend the Company's Articles of Incorporation to    
increase the number of authorized Common Shares and Class B Shares.  The  
total number of votes represented by outstanding Common Shares and Class B
Shares as of the Record Date was 96,282,896, consisting of 11,240,376     
votes represented by outstanding Common Shares and 85,042,520 votes       
represented by outstanding Class B Shares.                                

__________                                                                
*   Note to Printer:  This is Page 1 (but do not mark as such).           

DEFM14A
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 ELECTION OF DIRECTORS

     At the Meeting, the Company's shareholders will elect eight
directors of the Company, constituting the entire Board, to hold office   
until the Company's 1998 annual meeting of shareholders and until their   
successors are duly qualified and elected.  If, prior to the Meeting, any 
of the Board's nominees should for any reason become unable to serve as a 
director, the votes represented by proxies granting authority to vote for 
all of the nominees named below, or which do not contain any instructions,
will be voted for another replacement nominee selected by the Board.      
Under Wisconsin law, directors are elected by a plurality of the votes    
cast by the shares entitled to vote in the election, assuming a quorum is 
present.  For this purpose, "plurality" means that the individuals        
receiving the largest number of votes are elected as directors, up to the 
maximum number of directors to be chosen at the election.  Therefore, any 
shares which are not voted on this matter at the Meeting, whether by      
abstention, broker nonvote or otherwise, will have no effect on the       
election of directors at the Meeting.                                     

      All of the nominees are shareholder-elected directors of the
Company and have served continuously as directors since the indicated date
of their election, except for Ulice Payne, Jr. and Philip L. Milstein, who
were appointed as directors of the Company by the Board on December 18,   
1996.  The names of the nominees, together with certain information about 
each of them as of the Record Date, are set forth below.                  

        The Company's By-laws provide that a non-employee director may
not stand for re-election if he or she has then attained the age of 70.   
As a result, George R. Slater, Lee Sherman Dreyfus and John L. Murray will
not stand for re-election to, and will retire from, the Board at the      
Meeting.  The Company expresses its most sincere thanks and appreciation  
to Messrs. Slater, Dreyfus and Murray for their many years of service to  
the Company and for their valued advice and guidance.                     

                                                           [Enlarge/Download Table]
                                                                                                   
                                                                                                   

                                                                                           Director
        Name                             Current Principal Occupation                 Age    Since 
   <s?                                                                                             
   [*]  Stephen H. Marcus                Chairman of the Board, President and Chief    62    1969  
                                         Executive Officer of the Company (1)(2)(3)                

   [*]  Diane Marcus Gershowitz          Real estate management and investments        58    1985  
                                         (1)(3)                                                    

   [*]  Daniel F. McKeithan, Jr.         President and Chief Executive Officer of      61    1985  
                                         Tamarack Petroleum (operator of oil and gas               
                                         wells) and President and Chief Executive                  
                                         Officer of Active Investor Management, Inc.               
                                         (operator of oil and gas wells)(4)                        

   [*]  Allan H. Selig                   President and Chief Executive Officer of      62    1995  
                                         the Milwaukee Brewers Baseball Club                       
                                         (professional baseball team), Acting                      
                                         Commissioner of Major League Baseball and                 
                                         President and Chief Executive Officer of                  
                                         Selig Executive Leasing Co., Inc.                         
                                         (automobile leasing agency) (5)                           

   [*]  Timothy E. Hoeksema              President of Midwest Express Airlines, Inc.   50    1995  
                                         (commercial airline carrier)                              
   [*]  Bruce J. Olson                   Group Vice President of the Company (2)       47    1996  

   [*]  Ulice Payne, Jr.                 Shareholder of Reinhart, Boerner, Van         41    1996  
                                         Dueren, Norris & Rieselbach, S.C. (law                    
                                         firm)                                                     
   [*]  Philip L. Milstein               President and Chief Executive Officer of      47    1996  
                                         Emigrant Savings Bank (savings bank) and                  
                                         President and Executive Vice President of                 
                                         Milford Management Corp. (real estate                     
                                         development and management)                               
_________________                                                                                  

(1)  Stephen H. Marcus and Diane Marcus Gershowitz are brother and sister.                         

(2)  Since the Company operates as a holding company through subsidiary                            
     corporations, Stephen H. Marcus and Bruce J. Olson are also officers                          
     of certain of the Company's principal operating subsidiaries.                                 

(3)  As a result of their beneficial ownership of Common Shares and Class                          
     B Shares, Stephen H. Marcus and/or Diane Marcus Gershowitz may be                             
     deemed to control, or share in the control of, the Company.  See                              
     "Stock Ownership of Management and Others."                                                   

(4)  Daniel F. McKeithan, Jr. is a director of Firstar Corporation,                                
     Wisconsin Gas Company and WICOR, Inc. and is a trustee of The                                 
     Northwestern Mutual Life Insurance Company ("NML").  NML is also one                          
     of the Company's principal lenders.                                                           

(5)  Allan H. Selig is a director of Oil-Dri Corporation of America and                            
     Robert W. Baird & Co., Incorporated.                                                          

                                                                             
          The Board has an Audit Committee whose principal function is
to recommend annually a firm of independent certified public accountants  
to serve as the Company's auditor, to meet with and review reports of the 
Company's auditor and to recommend to the Board such actions within the   
scope of its authority as it deems appropriate.  The Audit Committee      
consists entirely of independent directors.  During fiscal 1997, the Audit
Committee consisted of Daniel F. McKeithan, Jr. (Chairman), Timothy E.    
Hoeksema and Lee Sherman Dreyfus.  The Audit Committee met one time in    
fiscal 1997.                                                              

     The Board has a Compensation and Nominating Committee whose
principal function is to recommend for approval to the Board the          
compensation, bonuses and benefits of officers and other key employees of 
the Company and its subsidiaries and to administer the Company's 1995     
Equity Incentive Plan.  See "Executive Compensation -- Stock Options."    
The Compensation and Nominating Committee is also vested with authority to
consider and nominate future directors of the Company.  Shareholders      
entitled to vote at the Meeting who wish to propose director nominees for 
consideration at the Meeting may do so under the Company's By-laws only by
giving written notice of an intent to make such a nomination to the       
Secretary of the Company not less than 15 days in advance of the Meeting. 
Such notice must specify, among other things, the nominee's name,         
biographical data and qualifications.  The Compensation and Nominating    
Committee consists of entirely independent directors.  During fiscal 1997,
the Compensation and Nominating Committee consisted of John L. Murray     
(Chairman), Daniel F. McKeithan, Jr. and Allan H. Selig.  The Compensation
and Nominating Committee met two times in fiscal 1997.  See "Executive    
Compensation -- Report on Executive Compensation."                        

     During the Company's 1997 fiscal year, four meetings of the
Board were held.  No director attended fewer than 75% of the meetings of  
the Board and committees thereof on which he or she served held during    
fiscal 1997.                                                              

STOCK OWNERSHIP OF MANAGEMENT AND OTHERS

          The following table sets forth information as of the Record Date
as to the Common Shares and Class B Shares beneficially owned by (i) each 
continuing director of the Company; (ii) each executive officer named in  
the Summary Compensation Table set forth below under "Executive           
Compensation -- Summary Compensation;" (iii) all continuing directors and 
named executive officers of the Company as a group; and (iv) all other    
persons or entities known by the Company to be the beneficial owner of    
more than 5% of either class of the Company's outstanding capital stock.  
A row for Class B Share ownership is not included for individuals or      
entities who do not beneficially own any Class B Shares.                  

                                                           [Enlarge/Download Table]
                                                                                                                              
                                                                                                                              

                                                                                   Total Share Ownership    Percentage of     
                                   Sole Voting             Shared Voting and           and Percentage of     Aggregate        
 Name of Individual or           and Investment          Investment Power(1)                Class(1)           Voting         
 Group/Class of Stock               Power(1)                                                                  Power(1)        

                                                  Continuing Directors and Named Executive Officers                           
                                                                                                                              
 Stephen H. Marcus(2)                                                                                                         
  Common Shares                        1,857(3)                     149,516                151,373(3)                         
                                                                                               (1.3%)          32.4%          

  Class B Shares                      1,770,316                   1,335,010                 3,105,326                         
                                                                                              (36.5%)                         
 Diane Marcus Gershowitz(2)                                                                                                   

  Common Shares                        3,250(4)                         100                  3,350(4)                         
                                                                                                 *             23.4%          

  Class B Shares                      1,320,612                     936,686                 2,257,298                         
                                                                                              (26.5%)                         
 Daniel F. McKeithan, Jr.                                                                                                     

  Common Shares                        4,750(4)                         -0-                  4,750(4)                         
                                                                                                 *              *             
 Allan H. Selig                                                                                                               

  Common Shares                        3,400(4)                         -0-                  3,400(4)                         
                                                                                                 *              *             

 Timothy E. Hoeksema                                                                                                          

  Common Shares                        3,250(4)                         -0-                  3,250(4)                         
                                                                                                 *              *             

 Bruce J. Olson                                                                                                               
  Common Shares                    54,161(3)(5)                      21,840              76,001(3)(5)                         
                                                                                                 *              *             

 Ulice Payne, Jr.                                                                                                             
  Common Shares                        1,500(4)                         -0-                  1,500(4)                         
                                                                                                 *              *             

 Philip L. Milstein                                                                                                           

  Common Shares                    32,077(4)(7)                         -0-              32,077(4)(7)                         
                                                                                                 *              *             
  Class B Shares                         26,401                      41,370                    67,771                         
                                                                                                 *                            

 H. Fred Delmenhorst                                                                                                          
  Common Shares                    19,444(3)(5)                       3,363              22,807(3)(5)                         
                                                                                                 *              *             

 Thomas F. Kissinger                                                                                                          

  Common Shares                  8,177(3)(5)(6)                         -0-                  8,177(6)                         
                                                                                                 *              *             
 Douglas A. Neis                                                                                                              

  Common Shares                    13,397(3)(5)                       4,278              17,675(3)(5)                         
                                                                                                 *              *             
 All continuing directors and                                                                                                 
 named executive officers as a                                                                                                
 group (11 persons)(8)                                                                                                        

  Common Shares(9)                   145,263(3)                     179,097                324,360(3)                         
                                                                                               (2.9%)          49.2%          

  Class B Shares                      3,117,329                   1,590,333                 4,707,662                         
                                                                                              (55.4%)                         

                                           Other Five Percent Shareholders                                                    

 Ben Marcus(2)                                                                                                                
  Common Shares                             910                         -0-                       910                         
                                                                                                 *             33.8%          

  Class B Shares                            -0-                   3,252,332                 3,252,332                         
                                                                                              (38.2%)                         
 Bamco, Inc.(10)                                                                                                              

   Common Shares(11)                    574,900                         -0-                   574,900              *          
                                                                                               (5.1%)                         

 Vanguard Explorer Fund,                                                                                                      
 Inc.(12)                                                                                                                     

   Common Shares(13)                    600,000                         -0-                   600,000              *          
                                                                                               (5.3%)                         
__________________                                                                                                            

   * Less than 1%.                                                                                                            

(1)  There are included in some cases shares over which a person has or shares voting power and/or investment power, as to    
     which beneficial ownership may be disclaimed. The number of Class B Shares (included in the beneficial ownership figures 
     detailed above) set forth after each of the following individuals has also been included in the beneficial ownership of  
     at least one other director:  Stephen H. Marcus (722,733), Diane Marcus Gershowitz (722,733) and Ben Marcus (299,547).   
     The outstanding Class B Shares are convertible on a share-for-share basis into Common Shares at any time at the          
     discretion of each holder.  As a result, a holder of Class B Shares is deemed to beneficially own an equal number of     
     Common Shares.  However, in order to avoid overstatement of the aggregate beneficial ownership of both classes of the    
     Company's outstanding capital stock, the Common Shares listed in the table do not include Common Shares which may be     
     acquired upon the conversion of outstanding Class B Shares.  Similarly, the percentage of outstanding Common Shares      
     beneficially owned is determined with respect to the total number of outstanding Common Shares, excluding Common Shares  
     which may be issued upon conversion of outstanding Class B Shares.  Additionally, the number of Common Shares listed does
     not include Common Shares issuable in connection with the proposed transaction between the Company and Guest House Inn,  
     Inc.  If such transaction is approved by shareholders at the Meeting, based on the closing sale price of $24.50 of the   
     Common Shares at May 29, 1997, the following number of additional Common Shares set forth after the name of each of the  
     following individuals would be issued to or for the beneficial account of Stephen H. Marcus (106,490), Diane Marcus      
     Gershowitz (53,245), and Ben Marcus (212,979).  The actual number of shares issuable will be based on the average closing
     sales price of the Common Shares on the New York Stock Exchange over the 30 trading days ending five days before the     
     closing date of the transaction and the net asset value of Guest House Inn, Inc. on the closing date.  Beneficial        
     ownership of Class B Shares will not be effected by the Guest House Inn transaction.  See "Approval of Guest House Inn   
     Transaction."                                                                                                            

(2)  The address of Stephen H. Marcus, Diane Marcus Gershowitz and Ben Marcus is c/o 250 East Wisconsin Avenue, Suite 1700,   
     Milwaukee, Wisconsin 53202-4220.                                                                                         

(3)  Includes 1,707, 1,527, 887, 210 and 572 Common Shares held for the respective accounts of Stephen H. Marcus, Bruce J.    
     Olson, H. Fred Delmenhorst, Thomas F. Kissinger and Douglas A. Neis and all continuing directors and named executive     
     officers as a group in the Company's Pension Plus Plan as of May 29, 1997, the latest practicable date for which such    
     data is available.  See "Executive Compensation -- Summary Compensation Information."                                    

(4)  Includes 3,250 Common Shares subject to acquisition by each of Diane Marcus Gershowitz, Daniel F. McKeithan, Jr., Allan  
     H. Selig and Timothy E. Hoeksema and 1,500 Common Shares subject to acquisition by each of Ulice Payne, Jr. and Philip L.
     Milstein pursuant to the exercise of vested stock options held on the Record Date pursuant to the 1994 Nonemployee       
     Director Stock Option Plan. See "Director Compensation."                                                                 

(5)  Includes 29,250, 12,825, 7,800 and 12,825 Common Shares subject to acquisition by Bruce J. Olson, H. Fred Delmenhorst,   
     Thomas F. Kissinger and Douglas A. Neis, respectively, pursuant to the exercise of vested stock options held on the      
     Record Date pursuant to the 1987 Stock Option Plan and 1995 Equity Incentive Plan.  See "Executive Compensation -- Stock 
     Options."                                                                                                                

(6)  Includes 17 Common Shares held in the Company's Dividend Reinvestment and Associate Stock Purchase Plan.                 

(7)  Total does not include 3,750 Common Shares in the AB Elbaum Trust in which Mr. Milstein is co-trustee and 5,400 Common   
     Shares held by Mr. Milstein's children, as to which Mr. Milstein disclaims beneficial ownership.                         

(8)  In determining the aggregate beneficial ownership of Common Shares and Class B Shares for all continuing directors and   
     named executive officers as a group, shares which are beneficially owned by more than one director or officer have been  
     counted only once to avoid overstatement. Additionally, such aggregate beneficial ownership does not include additional  
     Common Shares issuable in connection with the proposed transaction between the Company and Guest House Inn, Inc.  The    
     issuance of such additional shares will not materially increase the relative beneficial ownership or voting control of   
     the Company held by Stephen H. Marcus, Ben Marcus or Diane Marcus Gershowitz.  See footnote (1).                         

(9)  Includes 78,700 Common Shares subject to acquisition pursuant to the exercise of vested stock options held by named      
     executive officers and continuing nonemployee directors of the Company on the Record Date pursuant to the 1987 Stock     
     Option Plan, 1995 Equity Incentive Plan and the 1994 Nonemployee Director Stock Option Plan.  See "Executive             
     Compensation--Stock Options."                                                                                            

(10) The address of Bamco, Inc. ("Bamco") is 767 Fifth Avenue, 24th Floor, New York, New York  10153.                         

(11) Other than share ownership percentage information, the information set forth is as of February 7, 1997, as reported by   
     Bamco in its Schedule 13G filed with the SEC and the Company.  According to such Schedule 13G, Bamco owns 525,000 Common 
     Shares and Baron Capital Management, Inc. ("BCM") owns 49,000 Common Shares.  Bamco and BCM filed the Schedule 13G as a  
     group.                                                                                                                   

(12) The address of Vanguard Explorer Fund, Inc. ("Vanguard") is P.O. Box 2600, Valley Forge, Pennsylvania  19482-2600.       

(13) Other than share ownership percentage information, the information set forth is as of February 10, 1997, as reported by  
     Vanguard in its Schedule 13G filed with the SEC and the Company.                                                         

                                                                             
 EXECUTIVE COMPENSATION\

Report on Executive Compensation                                          

          The Company strives to provide fair and competitive compensation
which rewards corporate and individual performance and helps attract,     
retain and motivate highly qualified individuals who contribute to the    
Company's long-term growth and success.  One of the Company's guiding     
philosophies is to encourage its executives and other employees to take   
appropriate market responsive risk-taking actions which facilitate the    
growth and success of the Company.  The Company's compensation policies   
attempt to encourage the continuation of this entrepreneurial spirit.     

The Compensation and Nominating Committee of the Board
("Committee") is responsible for evaluating and determining the           
compensation of the Company's executive officers, including the Company's 
Chief Executive Officer Stephen H. Marcus, in accordance with the         
foregoing philosophies and policies.  The Committee is composed entirely  
of independent, nonemployee directors.  Executive officer compensation    
consists of base salary, annual bonus payments, stock option grants and   
other benefits under the Company's several employee benefit plans.        

         Each executive officer's base salary has been established based
on the level of responsibilities delegated to the executive and the       
relationship of such responsibilities to those of other Company executive 
officers.  In evaluating and adjusting base salaries of executives (other 
than Mr. Marcus) from year-to-year, the Committee acts on the             
recommendations of Mr. Marcus, who in making his recommendations takes    
into account (i) the financial performance of the Company as a whole and  
on a divisional basis, when appropriate, for the fiscal year then ended,  
compared to its respective historical and anticipated performance; (ii)   
general economic conditions (including inflationary factors) and the      
impact such conditions had on the industry segments in which the Company  
operates; (iii) each executive officer's past, and anticipated future,    
contributions to the Company's performance; (iv) each executive officer's 
existing base salary compared to the range of the base salaries of        
similarly situated executives at both the national and local level; (v)   
any new responsibilities delegated, or to be delegated, to such officer;  
and (vi) the extent of participation of the executive in any significant  
corporate achievements over the prior fiscal year.  In evaluating and     
adjusting Mr. Marcus' base salary, the Committee subjectively considers   
the same factors cited above, as well as the comparative salaries and     
total compensation packages of other chief executive officers, with       
particular reference to local market circumstances.   In determining the  
adjustment to Mr. Marcus' base salary for fiscal 1998, the Committee      
specifically took into account the Company's revenue and earnings         
performance for fiscal 1997 and the Company's long-term record of         
financial success.                                                        

          Bonus awards attributable to each fiscal year are granted by the
Committee to the named executive officers, including Mr. Marcus,          
subsequent to the fiscal year-end.  Fiscal 1997 bonus awards for the named
executive officers who have no direct operational responsibilities were   
based on the recommendations of Mr. Marcus, who made his recommendations  
based on the Company's overall financial performance for the year then    
ended and such officer's individual contributions and achievements over   
fiscal 1997, particularly as such contributions and achievements related  
to advancing the Company's entrepreneurial philosophy.  Specific corporate
performance factors considered in making fiscal 1997 bonus determinations 
for such executives were the contribution that each executive made to his 
specific functional area and overall Company performance, the Company's   
15.7% increase in revenues and 12.3% increase in comparable earnings and  
earnings per share in fiscal 1997, all compared to fiscal 1996.  The      
fiscal 1997 bonus award for Bruce J. Olson, who has direct managerial     
responsibilities for two operating divisions of the Company, was          
determined based on the financial and operating performance of those      
divisions, together with the over-all financial performance of the Company
in fiscal 1997.  Mr. Marcus received a fiscal 1997 bonus payment based on 
a pre-established formula which provides for his receipt of a performance 
bonus equal to three-fourths of one percent of the Company's pre-tax      
earnings for the fiscal year.                                             

          Stock options are granted each year by the Committee to selected
executive officers as part of such officers' compensation package.        
Options granted by the Committee have a per share exercise price equal to 
100% of the fair market value of the Common Shares on the date of grant.  
Therefore, since the economic value of each option is directly dependent  
upon future increases in the value of the Common Shares, the Committee    
believes option grants help to better align the interests of option       
recipients with the economic interests of the Company's shareholders.  The
Committee believes stock option grants provide a long-term incentive for  
option recipients to improve the Company's financial performance and, in  
turn, its stock price.  The Committee has the flexibility to grant other  
types of equity-based incentive awards (including stock appreciation      
rights, restricted stock and performance shares) in addition to stock     
options in accordance with the 1995 Equity Incentive Plan.  Mr. Marcus is 
not eligible to receive option grants or other awards under the Company's 
1987 Stock Option Plan or the 1995 Equity Incentive Plan.  Since Mr.      
Marcus and his family own approximately 39.2% of the outstanding Common   
Shares and Class B Shares, his economic interests are directly linked to  
the price performance of the Company's Common Shares.  Therefore, at the  
time the Company's 1987 Stock Option Plan and 1995 Equity Incentive Plan  
was adopted, it was determined unnecessary to provide Mr. Marcus with the 
opportunity to receive stock option grants.                               

 Consistent with the Company's philosophy of encouraging
entrepreneurism throughout the organization, the Committee grants options 
annually to a broad number of key employees.  Option grants in fiscal 1997
to key employees other than the named executive officers constituted 84.5%
of all non-Board option grants.  The size of option grants to the named   
executive officers is based on (i) each officer's length of service and   
relative responsibilities and contributions to the Company's performance  
over the past year; (ii) the officer's anticipated future contributions to
the success of the Company; (iii) historical levels of option grants to,  
and the level of existing stock ownership of, such officer and other      
executive officers; and (iv) the relative levels of option grants then    
being made to all employees and other executive officers.                 

  The Committee also attempts to provide other competitive
compensatory benefits to the Company's executive officers, including      
participation in the Company's Pension Plus Plan, nonqualified retirement 
income plan, employee stock purchase plan, nonqualified deferred          
compensation plan, health insurance, life and disability insurance and    
other benefits.                                                           

     The Company's cash compensation program for its managers is
designed to reward an entrepreneurial orientation on the part of such     
managers.  In addition to the need for such reinforcement, the Company    
also recognizes that long-term service and loyalty are of strategic value 
to the continued continuity of management which is necessary for the      
growth of the Company.  For this reason, the Company has introduced an    
incentive stock option program for unit and multi-unit managers based on  
length of service.                                                        

   As a result of current executive compensation levels, the
Committee does not intend currently to take any action to conform its     
compensation plans to comply with the regulations proposed under Internal 
Revenue Code Section 162(m) relating to the $1 million cap on executive   
compensation deductibility imposed by the Omnibus Revenue Reconciliation  
Act of 1993.                                                              

By the Compensation and Nominating Committee:         

John L. Murray, Chairman                    
Timothy E. Hoeksema                         
Allan H. Selig                              

Summary Compensation Information                                          

       The following table sets forth certain information concerning
compensation paid by the Company for the last three fiscal years to the   
Company's Chief Executive Officer and the other executive officers of the 
Company who earned over $100,000 in salary and bonuses in fiscal 1997.    
The persons named in the table below are hereinafter sometimes referred to
as the "named executive officers."                                        

                                                           [Enlarge/Download Table]
                                                                                                                

                        Summary Compensation Table                                                              
                                                                                                                

                                                        Annual Compensation                                     
                                                                                   Stock Option                 
        Name and Principal        Fiscal                                             Grants(4)      All Other   
             Positions             Year     Salary(1)     Bonus(2)       Other(3)    (shares)    Compensation(5)
                                                                                                                
 Stephen H. Marcus                1997     $378,461      $398,868        $    --        N/A         $6,912(6)   
  Chairman of the Board,          1996     $341,538      $545,568        $    --        N/A         $8,934(6)   
  President and Chief             1995     $296,154      $313,391        $   500        N/A         $4,856(6)   
  Executive Officer (3)                                                                                         

 Bruce J. Olson                   1997     $218,462      $256,046        $    --       5,000         $5,091     
   Group Vice President           1996     $205,962      $258,335        $    --       7,500         $3,732     
                                  1995     $183,269      $ 97,923        $    --       7,500         $3,260     

 H. Fred Delmenhorst              1997     $124,231      $ 18,500        $    --       2,500         $4,289     
  Vice President-Human            1996     $118,500      $ 16,000        $    --       3,000         $2,612     
  Resources                       1995     $106,192      $ 14,000        $    --       3,000         $2,608     

 Thomas F. Kissinger              1997     $123,231      $ 30,000        $    --       2,500         $1,820     
  General Counsel and             1996     $104,538      $ 25,000        $    --       3,000         $  949     
  Secretary                       1995     $ 90,346      $ 15,000        $    --       3,000         $   66     

 Douglas A. Neis                  1997     $ 99,308      $ 17,500        $    --       2,000         $2,034     
  Chief Financial Officer         1996     $ 93,808      $ 45,000        $    --       3,000         $1,480     
  and Treasurer                   1995     $ 84,420      $ 10,000        $    --       3,000         $1,115     

_________________                                                                                               

   (1)    Includes amounts deferred by the Company at the election of the                                       
          named executive officer under Section 401(k) of the Internal                                          
          Revenue Code and the Company's Deferred Compensation Plan.  The                                       
          Company's Deferred Compensation Plan is a defined contribution                                        
          program whereby an eligible employee may voluntarily make an                                          
          irrevocable election to defer receipt of up to 100% of the                                            
          employee's annual compensation on a pre-tax basis.  The                                               
          irrevocable election must be made prior to the start of any                                           
          calendar year to which it applies and must specify both a                                             
          benefit payment commencement date beyond the end of the last                                          
          such calendar year and the form of payment (i.e., lump sum,                                           
          periodic installments or monthly annuity).  During the period of                                      
          deferral, the Company quarterly applies to the deferred amount                                        
          an earnings credit equal to the average prime interest rate of a                                      
          designated Milwaukee bank.  The benefits payable under the                                            
          Deferred Compensation Plan (i.e., the employee's deferred                                             
          amounts plus his earnings credits) will be paid out of the                                            
          Company's general corporate assets as benefit payments become                                         
          due after the employee's specified commencement date.                                                 

   (2)    The bonus amounts listed for fiscal 1996 for Messrs. Olson and                                        
          Neis include a special bonus of $135,000 and $30,000,                                                 
          respectively, in each case as a result of such officer's                                              
          integral involvement in consummation of the successful sale of                                        
          the Company's Applebee's restaurants and related rights.  Bonus                                       
          amounts listed relate to the fiscal year to which such bonuses                                        
          are attributable.                                                                                     

   (3)    Includes for Mr. Marcus the amount of directors' fees he earned                                       
          in fiscal 1995.  Mr. Marcus, as an executive officer of the                                           
          Company, is no longer entitled to receive director fees.  See                                         
          "Director and Director Emeritus Compensation" below.  The value                                       
          of all perquisites and other personal benefits provided to each                                       
          named executive officer by or on behalf of the Company is                                             
          significantly less than the required Securities and Exchange                                          
          Commission reporting thresholds of the lesser of $50,000 or 10%                                       
          of the annual salary and bonus reported for each respective                                           
          named executive officer.                                                                              

   (4)    Fiscal 1995, 1996 and 1997 options were granted at 100% of fair                                       
          market value on the date of grant under the Company's 1987 Stock                                      
          Option Plan and the 1995 Equity Incentive Plan.  See footnote                                         
          (1) to the table set forth under "Stock Options -- Option Grants                                      
          in 1997 Fiscal Year" below for additional information.                                                

   (5)    Includes the Company's contributions on behalf of each named                                          
          executive officer to its defined contribution Pension Plus Plan                                       
          and the dollar value of imputed life insurance premiums paid by,                                      
          or on behalf of, the Company during the fiscal year with respect                                      
          to term life insurance for the benefit of the named executive                                         
          officer.  The Pension Plus Plan is a profit sharing plan with                                         
          Internal Revenue Code Section 401(k) features and covers all                                          
          eligible employees of the Company and its subsidiaries,                                               
          including the named executive officers, and uses a participating                                      
          employee's aggregate direct compensation as the basis for                                             
          determining the employee and employer contributions that are                                          
          allocated to the employee's account under the Pension Plus Plan.                                      
          A participating employee may elect to make pre-tax deposits of                                        
          up to 14% of the employee's annual compensation.  The Pension                                         
          Plus Plan also provides for three types of employer                                                   
          contributions: (i) a basic contribution equal to 1% of a                                              
          participating employee's annual compensation; (ii) a matching                                         
          contribution equal to one-fourth of the employee's pre-tax                                            
          deposits not exceeding 6% of such annual compensation; and (iii)                                      
          a discretionary profit performance contribution determined by                                         
          the Board each year.  For purposes of the profit performance                                          
          contribution, the Company and its subsidiaries have been divided                                      
          into eight profit sharing groups, and the profit performance                                          
          contribution for the participating employees employed by a                                            
          particular profit sharing group is dependent upon the Company's                                       
          overall operations meeting profitability targets, the Company                                         
          having achieved a positive return on shareholders' equity and                                         
          that profit sharing group's operating performance having been                                         
          profitable.  A participating employee's share of the annual                                           
          profit performance contribution, if any, for the employee's                                           
          profit sharing group is determined by multiplying the                                                 
          contribution amount by the ratio of the participating employee's                                      
          annual compensation to the aggregate annual compensation of all                                       
          participating employees in that profit sharing group.  The                                            
          employee's pre-tax savings deposits and the employer basic                                            
          contributions allocated to a participating employee's account                                         
          are fully vested upon deposit, and the employer matching and                                          
          profit performance contribution are subject to a graduated                                            
          vesting schedule resulting in full vesting after seven years of                                       
          service.  The participating employee has the right to direct the                                      
          investment of the pre-tax savings deposits and employer matching                                      
          contributions allocated to the employee's account in one or more                                      
          of several available investment funds.  The allocated employer                                        
          basic contributions are generally expected to be invested in                                          
          Common Shares but, at the direction of the Pension Plus Plan's                                        
          administrative committee, may be invested in a different manner.                                      
          The allocated employer profit performance contributions are                                           
          invested in the manner selected by the Pension Plus Plan's                                            
          administrative committee, which may also include investment in                                        
          Common Shares.  The vested portion of a participating employee's                                      
          account balance becomes distributable in a lump sum payment only                                      
          after the employee's termination of employment, although the                                          
          employee has the right while employed to borrow a portion of                                          
          such vested portion or make a withdrawal of pre-tax savings                                           
          deposits for certain hardship reasons which are prescribed by                                         
          applicable federal law.  The Company also provides all named                                          
          executive officers with long-term disability protection.                                              

   (6)    In each of fiscal 1997, 1996 and 1995, the Company paid                                               
          approximately $368,000 of premiums on three split-dollar                                              
          insurance policies on the life of Mr. Marcus.  The foregoing                                          
          data is excluded from the table above because, upon surrender of                                      
          these policies to the Company or the death of Mr. Marcus, these                                       
          premium payments will be reimbursed in full to the Company.                                           
          Based on an assumed retirement age of 65, the present value of                                        
          the excess cash surrender value of all of such policies over the                                      
          premium payments is estimated to be approximately $156,000.                                           

                                                                             
Stock Options                                                             

         The Company has a 1987 Stock Option Plan ("1987 Plan") pursuant
to which options to acquire Common Shares could have been granted by the  
Committee prior to June 1997 to officers and other key employees of the   
Company and its subsidiaries, including executive officers.  However, Ben 
Marcus, Stephen H. Marcus, Diane Marcus Gershowitz and any other person   
who owned, directly or indirectly, 5% or more of the Company's voting     
power were not eligible to receive options under the 1987 Plan.  No new   
options may be granted under the 1987 Plan, although outstanding options  
previously granted under the 1987 Plan are still outstanding and may be   
exercised pursuant to their terms.                                        

         The Company also has a 1995 Equity Incentive Plan ("1995 Plan")
pursuant to which options to acquire Common Shares may be granted by the  
Committee until June 2005 to officers and other key employees of the      
Company and its subsidiaries, including executive officers.  However, Ben 
Marcus, Stephen H. Marcus, Diane Marcus Gershowitz and any other person   
who owns, directly or indirectly, 5% or more of the Company's voting power
cannot receive options under the 1995 Plan.                               

         The following table sets forth information concerning the grant
of stock options under the 1995 Plan during fiscal 1997 to the named      
executive officers.                                                       

                                                           [Enlarge/Download Table]
                                                                                                                         
 Option Grants in 1997 Fiscal Year                                                                                       
                                                                                                                         

                           Common       Percentage of                                                                    
                           Shares       Total Options                                    Potential Realizable Value at   
                         Underlying    Granted to All       Exercise                  Assumed Annual Rates of Stock Price
                           Options    Employees in 1997     Price(2)      Expiration    Appreciation for Option Term(3)  
          Name           Granted(1)      Fiscal Year       (per share)       Date               5%                10%    

                                                                                                                         
 Stephen H. Marcus . .       N/A             N/A               N/A            N/A               N/A                N/A   

 Bruce J. Olson  . . .      5,000           6.5%             $25.125        6/25/06           $79,005            $200,214

 H. Fred Delmenhorst .      2,500           3.2%             $25.125        6/25/06           $39,502            $100,107

 Thomas F. Kissinger .      2,500           3.2%             $25.125        6/25/06           $39,502            $100,107

 Douglas A. Neis . . .      2,000           2.6%             $25.125        6/25/06           $31,602            $80,086 
__________________                                                                                                       

(1)  Options granted under the 1995 Plan may be designed to qualify as                                                   
     either "incentive stock options" within the meaning of Section 422A                                                 
     of the Internal Revenue Code or as "nonstatutory stock options." The                                                
     options reflected in the table are incentive stock options under the                                                
     Internal Revenue Code and were granted on June 26, 1996.  The                                                       
     exercise price of each option granted was equal to 100% of the fair                                                 
     market value of the Common Shares on the date of grant, as determined                                               
     by the Committee.  The foregoing options granted vest and are                                                       
     exercisable with respect to 40% of the subject shares after two years                                               
     from the grant date, 60% after three years, 80% after four years and                                                
     100% after five years, but may not be exercised after the ten-year                                                  
     option period.  Also not reflected in this table are 12,000 Common                                                  
     Shares subject to incentive stock options which were granted to the                                                 
     named executive officers after the Company's fiscal 1997 year-end                                                   
     (Olson-5,000, Delmenhorst-2,500, Kissinger-2,500 and Neis-2,000) at                                                 
     an exercise price of $24.75 per share.                                                                              

(2)  The exercise price of options may be paid in cash, by delivering                                                    
     previously issued Common Shares or any combination thereof.                                                         

(3)  The potential realizable values set forth under the columns represent                                               
     the difference between the stated option exercise price and the                                                     
     market value of the Common Shares based on certain assumed rates of                                                 
     stock price appreciation and assuming that the options are exercised                                                
     on their stated expiration date; the potential realizable values set                                                
     forth do not take into account applicable tax and expense payments                                                  
     which may be associated with such option exercises.  Actual                                                         
     realizable value, if any, will be dependent on the future stock price                                               
     of the Common Shares on the actual date of exercise, which may be                                                   
     earlier than the stated expiration date.  The 5% and 10% assumed                                                    
     rates of stock price appreciation over the ten-year exercise period                                                 
     of the options used in the table above are mandated by the rules of                                                 
     the Securities and Exchange Commission and do not represent the                                                     
     Company's estimate or projection of the future price of the Common                                                  
     Shares on any date.  There can be no assurances that the stock price                                                
     appreciation rates for the Common Shares assumed for purposes of this                                               
     table will actually be achieved.                                                                                    

                                                                             
         The following table sets forth certain information with respect
to the named executive officers concerning their unexercised stock options
held as of the end of the Company's fiscal 1997.  No options were         
exercised by any of the named executive officers during the Company's     
fiscal 1997.                                                              

                                                           [Enlarge/Download Table]
                                                                                                                              

                     Fiscal 1997 Year-End Value Table                                                                         
                                                                                                                              
                           Number of Common Shares Underlying                                                                 
                                Unexercised Options at                          Value of Unexercised                          
                                 End of Fiscal 1997(1)            In-the-Money Options at End of Fiscal 1997(3)               
        Name                 Exercisable(2)/Unexercisable(2)             Exercisable    /  Unexercisable                      

                                                                                                                              
Stephen H. Marcus .                       N/A                                          N/A                                    

Bruce J. Olson  . .             23,250     /    23,000                     $255,375     /     $115,875                        

H. Fred Delmenhorst             10,425     /     9,700                     $118,463     /     $ 46,350                        

Thomas F. Kissinger              5,250     /    10,000                     $ 43,808     /     $ 50,955                        

Douglas A. Neis . .             10,425     /     9,200                     $118,463     /     $ 46,350                        
________________                                                                                                              

(1)  See vesting schedule of stock options set forth in footnote (1) under the "Option Grants in 1997 Fiscal Year" table      
     above.                                                                                                                   

(2)  Not reflected herein are 13,050 Common Shares subject to stock options which have vested and become exercisable after the
     Company's 1997 fiscal year-end (Olson-6,000, Delmenhorst-2,400, Kissinger-2,250 and Neis-2,400).  Also not reflected in  
     this table are 12,000 Common Shares subject to stock options which were granted to the named executive officers after the
     Company's fiscal 1997 year-end (Olson-5,000, Delmenhorst-2,500, Kissinger-2,500 and Neis-2,000) at an exercise price of  
     $24.75 per share.                                                                                                        

(3)  The dollar values were calculated by determining the difference between the fair market value of the underlying Common   
     Shares and the various applicable exercise prices of the named executive officers' outstanding options at the end of     
     fiscal 1997.  The closing sale price of the Common Shares on the New York Stock Exchange on May 29, 1997 was $24.50 per  
     share.                                                                                                                   

                                                                             
Pension Plan                                                              

     The Company has a nonqualified defined benefit pension plan
("Supplemental Plan") for the eligible employees of the Company and its   
subsidiaries with annual compensation in excess of a specified level      
(e.g., $66,000 in 1996 and $80,000 in 1997), including named executive    
officers of the Company.  The Supplemental Plan is a defined benefit      
retirement income program which provides benefits based upon the          
employee's final five-year average compensation.  The amounts accrued for 
named executive officers under the Supplemental Plan cannot be readily    
ascertained and are, therefore, not included in the "Summary Compensation 
Table" above.  In calculating employee compensation for purposes of       
determining its contribution to the Supplemental Plan, the Company uses a 
participating employee's total direct compensation in determining its     
annual benefits (which, for the named executive officers, would be        
comprised of the salary and bonus amounts listed in the "Summary          
Compensation Table" above), calculated on a straight life annuity basis   
assuming benefits commence at age 65.  In addition to a reduction equal to
50% of Social Security benefits, the Supplemental Plan also reduces its   
benefits by the benefits attributable to employer contributions which the 
participating employee received under other Company-sponsored plans, such 
as the Pension Plus Plan and the Company's former qualified pension plans.
An employee participating in the Supplemental Plan will be entitled to    
receive annual benefits substantially in accordance with the table set    
forth below, except that the amounts shown in the table do not reflect the
applicable reductions for Social Security benefits and benefits funded by 
employer contributions which are payable under other Company-sponsored    
plans.  For an employee entitled to the highest level of Social Security  
benefits who retires at age 65 during calendar year 1997, the reduction in
annual Supplemental Plan benefits would be approximately $9,280.          

                                                           [Enlarge/Download Table]
                                                                                            
                                                                                            

                                       Estimated Annual Pension Plan Benefits               
                                         for Representative Years of Service                
   Final Five-Year                                                                          
Average Compensation     15         20                   25                30         35    

                                                                                            
   $  60,000          $  15,000  $  20,000            $  25,000         $  30,000  $  30,000
     120,000             30,000     40,000               50,000            60,000     60,000
     180,000             45,000     60,000               75,000            90,000     90,000
     240,000             60,000     80,000              100,000           120,000    120,000
     400,000            100,000    133,000              167,000           200,000    200,000
     600,000            150,000    200,000              250,000           300,000    300,000
     800,000            200,000    267,000              333,000           400,000    400,000

                                                                             
    A participating employee is entitled to benefits under the
Supplemental Plan upon normal retirement on or after age 65, early        
retirement after age 60 with at least five years of service, disability   
retirement after at least five years of service and other termination of  
employment after at least five years of service.  A graduated vesting     
schedule, which provides for 50% vesting after five years of service and  
an additional 10% for each year of service thereafter, applies in the case
of termination of employment before completing 10 years of service or     
qualifying for normal, early or disability retirement.  Benefits payable  
under the Supplemental Plan will be paid out of the Company's general     
corporate assets as benefit payments become due after retirement or other 
termination.  At the end of fiscal 1997, Stephen H. Marcus, Bruce J.      
Olson, H. Fred Delmenhorst, Thomas F. Kissinger and Douglas A. Neis had   
36, 23, 12, 4 and 11 years, respectively, of credited years of service    
under the Supplemental Plan.                                              

Director and Director Emeritus Compensation                               

         Under the Company's standard director compensation policy, each
nonemployee director receives an annual retainer fee of $10,000, together 
with $1,750 for each meeting of the Board and $350 for each committee     
meeting thereof (or $500 per committee meeting, if that person serves as  
the committee's chairman), which he or she attends.  In addition, under   
the Company's 1994 Nonemployee Director Stock Option Plan ("Director      
Plan"), each nonemployee director automatically is granted stock options  
to purchase 1,000 Common Shares upon his or her initial appointment or    
election to the Board and also receives an automatic annual grant of an   
option for 500 Common Shares at the end of each fiscal year of the        
Company.  Exercise prices of options granted under the Director Plan are  
equal to 100% of the fair market value of the Common Shares on the date of
grant.  Upon their initial appointment to the Board in December 1996, each
of Messrs. Payne and Milstein were automatically granted stock options to 
purchase 1,000 Common Shares at an exercise price of $21.50 per share     
under the Director Plan.  Under the Director Plan, on May 29, 1997 each   
nonemployee director received his or her annual automatic option grant to 
purchase 500 shares of Common Stock at an exercise price of $24.50 per    
share.  The options have a term of ten years and were fully vested and    
exercisable immediately after grant.                                      

          Ben Marcus, the founder of the Company in 1935, retired from his
position as the Company's Chairman of the Board in December 1991.  In     
December 1995, Ben Marcus retired from the Board and was appointed a      
director emeritus.  Mr. Marcus also continues to serve the Company as a   
nonofficer employee.  The Committee has adopted a compensation policy     
applicable to Ben Marcus that attempts to recompense him for his many     
years of service and dedication to the founding, development and growth of
the Company.  To help ensure Ben Marcus' continued availability to consult
with officers and employees of the Company, and to recognize his          
contributions to the founding and success of the Company, Mr. Marcus is   
entitled to receive for the remainder of his life (and thereafter his wife
will be entitled to receive for the remainder of her life) a consulting   
fee partially linked to a percentage of the Company's pre-tax and pre-    
corporate bonus earnings.  Mr. Marcus is also entitled to receive         
continued salary payments as an employee of the Company.  In fiscal 1997, 
Ben Marcus earned total cash compensation of $431,855 from the Company.   

 STOCK PERFORMANCE INFORMATION

         Set forth below is a line graph comparing the annual percentage
change during the Company's last five fiscal years in the Company's       
cumulative total shareholder return (stock price appreciation on a        
dividend reinvested basis) on the Common Shares, compared to the          
cumulative total return of companies included within the S&P 500 Composite
Index and to a composite peer group index selected in good faith by the   
Company.  The composite peer group index is comprised of the Standard &   
Poor's Hotel/Motel Index (weighted 64%), Standard & Poor's Restaurants    
Index (weighted 9%) and a Company-selected theatre index (weighted 27%)   
which includes Carmike Cinemas, Inc., Cineplex Odeon Corp. and AMC        
Entertainment, Inc.  The indices within the composite industry peer group 
index have been weighted to approximate the relative revenue contributions
of each of the Company's respective business segments (counting the motel 
and hotel/resort segments as one segment) to the Company's total revenues 
in fiscal 1997.  The shareholder returns of the companies included in the 
theatre index have been weighted based on each such company's relative    
market capitalization as of the beginning of the presented periods.       

                                                           [Enlarge/Download Table]
                                                                                      

             Comparison of Five-Year Total Returns                                    
               (on a dividend reinvested basis)                                       

                     SEE PERFORMANCE GRAPH                                            
                                                                                      

                               5/31/92     5/31/93  5/31/94  5/31/95  5/31/96  5/31/97
                                                                                      
The Marcus Corporation          $100        $200      $234    $250      $346     $330 
S&P 500 Composite Index         $100        $145      $183    $203      $264     $272 

Composite Peer Group Index      $100        $112      $116    $140      $180     $232 

                                                                             
 APPROVAL OF GUEST HOUSE INN TRANSACTION

General                                                                   

      The Agreement and Plan of Reorganization dated June 30, 1997
(the "Plan") between the Company and Guest House Inn, Inc. ("GHI"), a copy
of which is attached as Exhibit A hereto, provides that, subject to the   
approval of the Plan by the Company's shareholders and the satisfaction of
certain other conditions set forth in the Plan, the Company will issue to 
GHI (i) approximately 425,959 Common Shares (based on the $24.50 closing  
sale price of the Common Shares on the New York Stock Exchange on May 29, 
1997, subject to adjustment based on the average closing sale price of the
Common Shares on the New York Stock Exchange over the 30 trading days     
ending five days before the closing date of the transaction and the final 
net asset value of GHI on the closing date of the transaction) in exchange
for all of the real estate and other operating assets (net of the book    
value of GHI's stated liabilities) owned by GHI on the closing date of the
transaction ("Net Operating Assets") and (ii) 299,547 new Class B Shares  
in exchange for and cancellation of the existing 299,547 Class B Shares   
owned by GHI (the "GHI Transaction").  GHI is owned and controlled by     
Stephen H. Marcus, Diane Marcus Gershowitz and Ben Marcus, who are        
officers, directors and/or principal shareholders of the Company, Ida Lowe
(the sister of Ben Marcus), and certain trusts for the benefit of their   
families.  See "Stock Ownership of Management and Others."  The Company's 
Articles of Incorporation prohibit the issuance of additional Class B     
Shares other than in connection with stock dividends or splits and,       
therefore, the one-time issuance of the new 299,547 Class B Shares in     
exchange for and cancellation of the existing 299,547 Class B Shares owned
by GHI will require an amendment to the Company's Articles of             
Incorporation to allow such one-time issuance.  The GHI Transaction will  
not result in any additional outstanding Class B Shares.                  

Background of the GHI Transaction                                         

   The Company is involved in the lodging, movie theatre and
restaurant businesses.  GHI's principal operating assets include certain  
real estate, buildings and furniture and fixtures in the Appleton,        
Wisconsin area which are leased to operating subsidiaries of the Company  
in the Company's operation of movie theatres, a family fun center and a   
Budgetel Inn motel.  The Company also leases an Annie's restaurant from   
GHI, which it subleases to an unaffiliated third party.  GHI also         
independently owns and operates a bowling center in the Appleton area on  
property adjacent to the properties leased to the Company.  See           
"Information about GHI."   The terms and conditions of the leases between 
the Company and GHI are believed to be no less favorable to the Company   
than could have been obtained from independent third parties.  See        
"Certain Transactions."  In addition to its Net Operating Assets, GHI owns
299,547 Class B Shares.                                                   

   Over the past two years, from time to time, the executive
officers of the Company and GHI have discussed the interrelated operations
and relationships of and between each of the two companies, and the manner
in which the GHI Transaction could be accomplished for the reasons        
described below under "Reasons for the GHI Transaction."  The parties came
to a preliminary understanding that at the closing of the GHI Transaction 
the Company would issue to GHI such number of Common Shares as are equal  
to the fair market value of the Net Operating Assets.  The parties agreed 
that, given the potential conflicts of interest inherent in the GHI       
Transaction, it was in the best interests of both parties to have the fair
market value of the Net Operating Assets determined by an independent     
appraisal of the real estate related assets and leases, plus the book     
value of GHI's other assets, less the book value of all stated liabilities
of GHI on the closing date of the transaction ("Net Asset Value").  The   
parties also agreed that the Company would simply exchange 299,547 new    
Class B Shares for the exact same number of existing Class B Shares owned 
by GHI.  The existing Class B Shares owned by GHI will be cancelled in the
exchange, resulting in no net increase in the number of outstanding Class 
B Shares.                                                                 

     The terms and conditions of the Plan were negotiated by the
parties during the period from May to June 1997.  On June 26, 1997,       
Property Counselors, Inc. delivered to the Company its appraisal of the   
fair market value of the real estate related assets constituting the Net  
Operating Assets.  On June 26, 1997, the Board considered and approved the
GHI Transaction and authorized the Company's executive officers to execute
the Plan, all subject to approval of the Plan by the Company's            
shareholders at the Meeting.                                              

Reasons for the GHI Transaction                                           

          The Board and the management of the Company believe that the GHI
Transaction is in the best interests of and will benefit the Company and  
its shareholders.                                                         

      Although the Company believes that the business relationship
between the Company and GHI has always been evidenced by arms-length, fair
market rate contractual provisions, nonetheless there exist inherent      
potential conflicts of interest between the Company and GHI because of the
overlap between the officers, directors and principal shareholders of the 
Company and GHI.  Members of the Marcus family, including Stephen H.      
Marcus, Diane Marcus Gershowitz, Ben Marcus and the sister of Ben Marcus, 
own or control a controlling or significant ownership and voting interest 
in GHI, as well as in the Company.  See "Stock Ownership of Management and
Others."  The Company believes that as it continues to expand its         
operations on the properties leased from GHI, these potential conflicts of
interest are becoming more pronounced and the business relationships are  
becoming more difficult to maintain at arms-length.  The Company believes 
the GHI Transaction will eliminate such potential conflicts of interest.  

         In addition to eliminating potential conflicts of interest, the
Company believes the GHI Transaction will help create long-term savings   
for the Company by eliminating the Company's rent expenses for the        
properties leased from GHI.  The Company estimates that such pre-tax cost 
savings will amount to approximately $440,000 annually.                   

          Finally, the Company believes that the issuance of Common Shares
and Class B Shares in the GHI Transaction will not be materially dilutive 
to existing shareholders from either an ownership or voting perspective   
and will not materially increase the relative percentage of beneficial    
ownership or voting control of the Company by the Marcus family.  There   
will be no net increase in the number of issued Class B Shares because,   
after the GHI Transaction, the existing Class B Shares owned by GHI will  
be cancelled in exchange for the new Class B Shares.  Collectively,       
Stephen H. Marcus, Diane Marcus Gershowitz and Ben Marcus beneficially own
1.4% of the outstanding Common Shares of the Company.  After the GHI      
Transaction, collectively, Stephen H. Marcus, Diane Marcus Gershowitz and 
Ben Marcus will beneficially own 5.0% of the Common Shares of the Company.
This increase in the number of Common Shares beneficially owned by Stephen
H. Marcus, Diane Marcus Gershowitz and Ben Marcus will result in only a   
very slight increase in the aggregate voting power of such individuals,   
from 79.0% to 79.1%.  In addition, the combined ownership of the          
outstanding Common Shares of Class B Shares of such individuals will only 
increase from 39.2% to 40.5%.                                             

Recommendation of the Board                                               

        GHI is owned and controlled by Stephen H. Marcus, Diane Marcus
Gershowitz and Ben Marcus, who are officers, directors and/or principal   
shareholders of the Company, Ida Lowe (the sister of Ben Marcus), and     
certain trusts for the benefit of members of their families.  See "The GHI
Transaction -- Interest of the Company's Management; Potential Conflicts  
of Interest" below.  In recognition of the potential conflicts of interest
resulting from these relationships, the interests of Stephen H. Marcus and
Diane Marcus Gershowitz in the GHI Transaction were fully disclosed to the
Board and Stephen H. Marcus abstained from the Board's vote to approve the
Plan. Diane Marcus Gershowitz was absent from the meeting at which the    
Board considered the Plan.  Only the members of the Board who are not     
directors or shareholders of GHI and who do not directly or indirectly    
have any interest in GHI voted on the Plan at the Board's June 26, 1997   
meeting.  Stephen H. Marcus, Diane Marcus Gershowitz and Ben Marcus have  
advised the Company that they intend to vote their Common Shares and Class
B Shares in favor of the Plan.  The Marcus family's vote in favor of the  
Plan does not ensure that the Plan will be approved by the Company's      
shareholders at the Meeting.  See "Vote Required" below.                  

          In reviewing the GHI Transaction and approving the Plan, subject
to shareholder approval, the Board determined that the GHI Transaction and
the Plan are in the best interests of the Company and its shareholders.   
The Board therefore recommends that the Company's shareholders vote FOR   
the approval of the Plan at the Meeting.                                  

  In reaching its conclusion regarding approval of the GHI
Transaction, the Board considered, among other factors, the following: (i)
that the fair market value of the real estate related assets and leases   
comprising the Net Operating Assets was appraised by a qualified          
independent appraiser; (ii) the compatibility of the respective businesses
of the Company and GHI; (iii) the GHI Transaction would eliminate any     
future potential conflicts of interest between the Company and GHI (other 
than any potential indemnification claims by the Company against GHI under
the Plan); (iv) the expectation that the GHI Transaction would result in  
long-term cost savings for the Company; and (v) the GHI Transaction would 
not be materially dilutive to existing shareholders or materially increase
the Marcus family's relative ownership or voting control of the Company.  
The Board did not attach a relative weight to the various factors it      
considered in determining that the GHI Transaction was in the best        
interest of the Company and its shareholders.  In determining the number  
of Common Shares to be issued to GHI in the GHI Transaction, the Board    
determined that the average last sale price for the Common Shares for the 
30 trading days ending five days before the closing of the GHI Transaction
was a reasonable and fair method for calculating the fair market value of 
the Common Shares to be issued in the GHI Transaction in exchange for the 
Net Operating Assets.  This valuation was considered fair despite the fact
that the Common Shares to be issued will not be registered under the      
Securities Act of 1933 or applicable state securities laws and, therefore,
such Common Shares will not be eligible for public resale for at least one
year from the closing of the GHI Transaction.                             

Appraisal                                                                 

       To assist the Board in its review of the GHI Transaction, the
Company engaged Property Counselors, Inc. (the "Appraiser") as an         
independent appraiser on June 2, 1997 to perform an appraisal of the fair 
market value of GHI's real estate related assets and leases comprising the
Net Operating Assets.  The Appraiser delivered to the Company on June 26, 
1997 a written appraisal stating that the current fair market value of the
GHI's real estate related assets, leases, buildings and furniture and     
fixtures comprising the Net Operating Assets was $7,940,000 (the          
"Appraisal").                                                             

       Although the Appraiser acted as an appraiser, participated in
certain discussions and provided certain analyses to the Company, the     
Appraiser was not requested to and did not make any recommendation to the 
Board or the Company as to the form or amount of the consideration to be  
exchanged by the Company in the GHI Transaction, which was determined     
through negotiations between the executive officers of the Company and    
GHI.  The Appraisal is directed to the Company and does not constitute a  
recommendation to any shareholder of the Company as to how such           
shareholder should vote at the Meeting.  The Appraiser was not requested  
to opine as to, and the Appraisal did not address, the fairness of the GHI
Transaction to the Company or its shareholders or the Company's underlying
business decision to proceed with or effect the GHI Transaction.          

     The Appraisal was prepared in accordance with the appraisal
guidelines established by Title XI of the Financial Institutions, Reform, 
Recovery and Enforcement Act of 1989 (FIRREA), and conforms to the Uniform
Standards of Professional Appraisal Practice (USPAP).                     

      For purposes of the Appraisal, the Appraiser relied upon and
assumed the accuracy, completeness and fairness of the financial and other
information made available to it by GHI and the Company and did not       
attempt to independently verify such information.  The Appraiser relied   
upon the assurances of GHI management that the information provided by GHI
had a reasonable basis and, with respect to financial planning data and   
other business outlook information, reflected the best available          
estimates, and that they were not aware of any information or fact that   
would make the information provided to the Appraiser incomplete or        
misleading.  In performing the Appraisal, the Appraiser was not furnished 
any appraisal or valuation of specific assets or liabilities of GHI and   
expressed no opinion regarding the value of GHI, the fair market value of 
Class B Shares owned by GHI or the fairness of the GHI Transaction.  Other
than as described above, no limitations were imposed by the Board or the  
Company on the scope of the Appraiser's investigation or the procedures to
be followed in performing the Appraisal.  The Appraisal was based upon    
information available to the Appraiser and the facts and circumstances as 
they existed and were subject to evaluation on the date of the Appraisal. 
Events occurring after such dates could materially affect the assumptions 
used in preparing the Appraisal.                                          

         The Appraiser is headed by Jules H. Marling, Jr. MAI, CRE.  Mr.
Marling has advised the Company that he has been involved in the real     
estate industry since 1968, and has personally prepared or supervised over
3,000 appraisals and consulting reports involving properties in over 40   
states and several foreign countries.  Mr. Marling is a member of the     
National Appraisal Institute (MAI) and the American Society of Real Estate
Counselors (CRE) and the Chicago Board of Realtors.  Additionally, he     
advised the Company that he is also a qualified expert witness on real    
estate analysis.  In selecting the Appraiser, the Company's management    
first identified a number of potential appraisers.  Two appraisers were   
invited to submit bids for the project.  After reviewing the bids         
submitted, the Company selected the Appraiser.  The Appraiser was selected
by the Company's management based on the Appraiser's qualifications,      
expertise and reputation, the price of its services, its familiarity with 
the types of assets appraised, and its availability to provide a report in
the time requested by the Company.                                        

        For acting as appraiser for the Company in connection with the
GHI Transaction, the Company has paid the Appraiser fees aggregating      
$12,000.  The Company has also agreed to pay the reasonable out-of-pocket 
expenses of the Appraiser and to indemnify the Appraiser against certain  
liabilities incurred in connection with the engagement of the Appraiser by
the Company.  The fees payable to the Appraiser were not contingent upon  
consummation of the GHI Transaction.                                      

 In performing the Appraisal, the Appraiser prepared and
delivered to the Company certain written materials containing various     
analyses and other information relevant to the Appraisal.  The following  
is a summary of these materials:                                          

General                                               

       The Appraiser determined that the fair market value for GHI's
real estate assets was $7,940,000.  The procedures the Appraiser used for 
determining the fair market value of the properties varied based on the   
type of property.  The Appraiser identified three different types of      
properties owned by GHI: (i) improved properties in which GHI owns the    
leased fee interest in the property; (ii) improved properties which GHI   
owns in fee simple; and (iii) unimproved vacant land which GHI owns in fee
simple.                                                                   

Leased Fee Interest Properties                        

        The first class of properties consisted of GHI's Budgetel Inn,
Annie's restaurant, Funset Boulevard, Hollywood Cinema and Big Boy        
restaurant.  In evaluating the leased fee interest in these properties,   
the Appraiser relied exclusively on an income capitalization approach.    
All of the properties are leased to operating subsidiaries of the Company.
The Appraiser prepared a discounted cash flow ("DCF") analysis based on   
the terms of the land leases for the properties.  The Appraiser used lease
information to arrive at a projected annual cash flow over a holding      
period of 12 years (at which time three of the five land leases expire).  
The Appraiser assumed a residual sale at the end of the holding period by 
capitalizing the year 12 income and then discounted the entire cash flow  
stream to arrive at a market valuation.                                   

      To determine the discount rate used in its DCF analysis, the
Appraiser examined the creditworthiness of the Company (as the lessee),   
and compared such creditworthiness to the current applicable rates in the 
public credit markets.  The Appraiser then examined the properties        
themselves to determine the proper rate.  In arriving at its conclusion,  
the Appraiser considered that the land leases are not subordinated to any 
mortgages and are secured by the value of the existing improvements (the  
value of which is greater than the value of the leased land).  In         
addition, the Appraiser consulted an outside investment firm that         
specializes in net leases to determine an appropriate discount rate for   
the income streams produced by the properties.  Based on the foregoing    
information, the Appraiser determined that 8.75% was an appropriate       
discount rate for all of the properties, except for the Big Boy           
restaurant.  The Big Boy restaurant cash flow was discounted at 9.25% due 
to the low value of the improvements of such restaurant.                  

        In connection with its analysis, the Appraiser also determined
the terminal capitalization rate (the rate applied to the year 12 cash    
flows to determine the value of the reversion).  The Appraiser's research 
indicated that terminal capitalization rates for commercial properties    
such as the ones owned by GHI range from 7.5% to 13%.  The Appraiser      
believed that, due to the uncertainty about the state of the improvements 
at reversion, the appropriate terminal capitalization for the properties  
should be towards the upper end of such range.  The Appraiser determined  
that 12% would be an appropriate terminal capitalization rate for its     
analysis.                                                                 

       Based on the foregoing, the Appraiser estimated the aggregate
fair market value of the five leased fee properties in this class to be   
$5,990,000.                                                               

Fee Simple Properties                                 

   The second class of properties consisted of the SuperBowl
bowling center, which includes a substantial real estate component as well
as a "going concern" component.  The Appraiser relied on a sales          
comparison and an income capitalization approach to arrive at two separate
fair market value estimates.  These estimates were then reconciled to     
arrive at a final estimate of value.                                      

        In the sales comparison approach, the Appraiser used the sales
of comparable bowling centers located throughout Wisconsin and northern   
Illinois as a basis for determining a fair market value estimate.  Using  
the sales comparison approach, the Appraiser examined both square feet    
costs for sales of comparable centers, as well as costs per lane for      
comparable centers.  The review of comparable sales led to an estimate of 
$40 per square foot for the building and $38,500 per lane.  Based on this 
approach, the Appraiser estimated the fair market value of the SuperBowl  
to be $1,850,000.                                                         

       In the income capitalization approach, the Appraiser analyzed
the recent operating history of the SuperBowl business and arrived at a   
stabilized annual cash flow estimate, which was capitalized into a value  
estimate, using both a gross income multiplier and an overall             
capitalization rate.  The Appraiser first estimated stabilized operating  
results for the business by analyzing the recent historical operating     
statements, as well as 1997 year-to-date performance.  The Appraiser then 
applied two separate analyses (gross income multiplier and capitalized    
income) to the stabilized income statement.  The Appraiser's research     
indicated that gross revenue is often the primary consideration of a      
bowling operator in a decision to purchase a bowling facility.  As a "rule
of thumb," the bowling center operators interviewed by the Appraiser      
suggested the purchase price for a bowling operation would be             
approximately two times the gross income yielded by the "going concern."  
Income data was available for two of the bowling center sales used in the 
sales comparison approach and indicated gross income multipliers of 2.14  
and 2.37.  It was the Appraiser's opinion that these multipliers          
substantiated the "rule of thumb."  Applying a gross income multiplier of 
2.00 to the bowling center's stabilized gross income, the Appraiser       
arrived at a value of $1,820,000.  When using the capitalized income      
approach, the Appraiser applied an overall capitalization rate to         
stabilized operating cash flow.  In determining the rate, the Appraiser   
reviewed the location, quality and overall condition of the property, as  
well as factoring in the market rate for this type of center.  It was the 
Appraiser's opinion that a capitalization rate for this type of property  
would be within a range of 12%-13%.  The Appraiser used an overall rate of
12.5% to arrive at a value indication of $1,750,000.                      

    In reconciling the value indicated by the sales comparison
approach with the value indicated by the income capitalization approach,  
the Appraiser gave the greatest weight to the income capitalization       
approach because this would presumably be weighted most heavily by        
prospective purchasers and because, in considering the sales comparison   
approach, the Appraiser recognized that no two properties are ever exactly
alike.  All factors considered, the Appraiser estimated the market value  
of the SuperBowl bowling center to be $1,790,000.                         

Vacant Fee Simple Properties                          

      The third class of properties consisted of approximately one
acre of vacant land.  The Appraiser relied exclusively on a sales         
comparison approach, using the sales of comparable land parcels as the    
basis for arriving at a market value estimate of the vacant land.  Based  
on the analysis of similar sized parcels in the vicinity of this property,
the Appraiser determined the value of this vacant land to be $160,000.    

Interest of the Company's Management; Potential Conflicts of Interest     

         In considering the recommendations of the Board with respect to
the GHI Transaction, shareholders should be aware that certain members of 
the Board and the Marcus family have certain interests in the GHI         
Transaction that are in addition to the interests of shareholders of the  
Company generally.  Ben Marcus, Stephen H. Marcus and Diane Marcus        
Gershowitz, who are officers, directors and/or principal shareholders of  
the Company, Ida Lowe (the sister of Ben Marcus), and certain trusts for  
the benefit of members of their families, own and control GHI.  Ben Marcus
is the founder of the Company and continues to serve as a director        
emeritus and nonofficer employee.  Stephen H. Marcus is the Chairman of   
the Board, President and Chief Executive Officer of the Company.  Diane   
Marcus Gershowitz is a director of the Company.  The other members of the 
Board have no ownership or economic interest in GHI.  As a result of their
beneficial ownership of Common Shares and Class B Shares, Stephen H.      
Marcus, Diane Marcus Gershowitz and Ben Marcus may be deemed to control,  
or share in the control, of the Company.  See "Election of Directors" and 
"Stock Ownership of Management and Others."                               

        The GHI Transaction involves an inherent potential conflict of
interest between the interests of the Company and the interests of the    
members of the Marcus family described above.  Although steps were taken  
to mitigate the potential conflict, including the retention by the Company
of the Appraiser, the full disclosure to the Board (and to the Company's  
shareholders in this proxy statement) of the interests of the members of  
the Marcus family and the abstention from voting as directors on the      
approval of the Plan by Stephen H. Marcus (Diane Marcus Gershowitz was    
absent from the Board meeting at which the Board considered the Plan), the
relationship of the Marcus family with the Company and the influence which
they have by virtue of stock ownership and positions as officers and      
directors of the Company means that the GHI Transaction may present a     
potential conflict of interest.  See "Stock Ownership of Management and   
Others."                                                                  

        Stephen H. Marcus, Diane Marcus Gershowitz and Ben Marcus as a
group beneficially own 1.4% and 89.3%, respectively, of the outstanding   
Common Shares and Class B Shares.  After giving effect to the GHI         
Transaction, they will beneficially own 5.0% and 89.3%, respectively, of  
the outstanding Common Shares and Class B Shares.  Stephen H. Marcus,     
Diane Marcus Gershowitz and Ben Marcus collectively control 79.0% of the  
combined aggregate voting power of the Common Shares and Class B Shares   
and after giving effect to the GHI Transaction, they will control 79.1% of
the combined aggregate voting power of the Common Shares and Class B      
Shares.  In addition, the combined ownership of the outstanding Common    
Shares and Class B Shares of such individuals will only increase from     
39.2% to 40.5%.                                                           

Terms of the Plan                                                         

          The following description of certain terms of the Plan is only a
summary and does not purport to be a complete statement of the terms and  
conditions of the GHI Transaction.  This discussion is qualified in its   
entirety by reference to the Plan, which is set forth in Exhibit A and    
incorporated herein by reference.                                         

        The Plan provides that, subject to the approval of the Plan by
the Company's shareholders at the Meeting and the satisfaction or waiver  
of certain other conditions, the Company will issue to GHI (i) the number 
of Common Shares as have a value equal to the fair market value of the Net
Operating Assets as of the closing date of the GHI Transaction in exchange
for the Net Operating Assets owned by GHI and (ii) 299,547 new Class B    
Shares in exchange for and cancellation of the 299,547 existing Class B   
Shares owned by GHI.  In the GHI Transaction, the Common Shares and Class 
B Shares received by GHI in exchange for all of its assets (net of        
liabilities) will be distributed in a tax-free liquidation of GHI to GHI's
shareholders pro rata with their GHI share ownership.                     

        The closing of the GHI Transaction (the "Closing") is expected
to occur on or about October 1, 1997 (the "Closing Date").  Based on the  
closing sale price of $24.50 per share of the Common Shares on May 29,    
1997, the Appraisal and the net book value of the other Net Operating     
Assets as of June 5, 1997, a total of 425,959 Common Shares would be      
issued in the GHI Transaction to GHI in exchange for the Net Operating    
Assets owned by GHI.  The number of Common Shares actually issuable in the
GHI Transaction will be based on the average closing sale price of the    
Common Shares on the New York Stock Exchange over the 30 trading days     
ending five days before the Closing Date and the final Net Asset Value of 
GHI on the Closing Date.  Additionally, 299,547 new Class B Shares will be
issued in the GHI Transaction in exchange for and cancellation of the     
existing 299,547 Class B Shares owned by GHI.                             

      The obligations of the Company and GHI to consummate the GHI
Transaction are subject to the approval of the Plan and the GHI           
Transaction, including the amendment to the Company's Articles of         
Incorporation described below, by the Company's shareholders at the       
Meeting and by GHI's shareholders.  The Plan may be terminated at any time
prior to the Closing, whether before or after approval of the GHI         
Transaction by the Company's shareholders, by either the Company or GHI.  

        GHI has agreed to pay all of its fees and expenses incurred in
connection with the GHI Transaction.  The Company has agreed to pay all of
its fees and expenses incurred in connection with the GHI Transaction.    
The Company estimates that its total out-of-pocket fees and expenses      
directly attributable to the GHI Transaction will be approximately        
$58,000, including $12,000 for the Appraisal, $3,663 for Securities and   
Exchange Commission filing fees, $7,500 for the proxy solicitor and       
$35,000 for legal fees and other expenses.                                

Plans for Business Following the GHI Transaction                          

        Following the consummation of the GHI Transaction, the Company
intends to continue its present business and operations, although the     
Company may consider selling the bowling center operation.  The Company   
will likely contribute the acquired Net Operating Assets of GHI to the    
most appropriate operating subsidiaries.                                  

Accounting Treatment                                                      

        For financial reporting purposes, the assets acquired from GHI
will be recorded at the historical book value of GHI rather than fair     
value because GHI and the Company are controlled by the same shareholders.
The Common Shares issued to complete the GHI Transaction will be recorded 
at their fair value and the excess of this fair value over the historical 
book value of the assets will be recorded as a distribution.  The GHI     
Transaction and the Company's acquisition of the Net Operating Assets will
not have any material effect on the Company's consolidated financial      
condition or its results of operations.                                   

Tax Treatment                                                             

         The Company believes that (i) the transaction will qualify as a
valid tax-free reorganization under Section 368(a)(1)(C) of the Internal  
Revenue Code of 1986, as amended (the "Code"); (ii) the Company and GHI   
will each be a "party to the reorganization" within the meaning of Section
368(b) of the Code; (iii) no income, gain or loss will be recognized by   
the Company or GHI for federal and state income (and franchise) tax       
purposes; and (iv) the tax basis of the assets of GHI in the hands of the 
Company will be the same as the basis of such assets in the hands of GHI  
immediately prior to the GHI Transaction.  Shareholders of the Company who
are not shareholders of GHI are not exchanging stock in the Company.      
Therefore, such shareholders of the Company will have no direct income tax
consequences due to the GHI Transaction.                                  

Regulatory Approvals                                                      

 The Company is not aware of any federal, state or other
governmental or regulatory approval that is required to consummate the GHI
Transaction.                                                              

Restrictions on Resale of Common Shares and Class B Shares to Be Issued in
the GHI Transaction                                                       

       The Common Shares and Class B Shares to be issued pursuant to
the Plan will not be registered under the Securities Act of 1933, as      
amended (the "1933 Act"), and, accordingly, may be resold by GHI or GHI   
shareholders, as the case may be, only in a transaction that is either    
registered pursuant to the 1933 Act or is exempted from such registration.
The Plan does not grant to GHI or GHI shareholders, as the case may be,   
any right to demand, or to participate in, any future registration under  
the 1933 Act of Common Shares or Class B Shares.  Under the Company's     
Articles of Incorporation, no holder of Class B Shares may transfer Class 
B Shares without causing the Class B Shares to be converted into an equal 
number of Common Shares, except to a spouse, parent or lineal descendant  
thereof, a trust for the benefit of such holder or other entity controlled
by such holder.  Each Class B Share may be converted into one Common Share
at any time at the option of the holder of Class B Shares.                

Section 16(b) Exemption                                                   

         If the shareholders approve the GHI Transaction at the Meeting,
the issuance of the Common Shares to Stephen H. Marcus and Diane Marcus   
Gershowitz in the GHI Transaction will not subject them to potential      
"short swing" profit liability under Section 16(b) of the Securities      
Exchange Act of 1934 by reason of the application of an exemption         
therefrom under Rule 16b-3(d) under the Securities Exchange Act.  The     
Company also believes this exemption applies by reason of the Board's     
specific advance approval of the GHI Transaction, including the issuance  
of Common Shares to Stephen H. Marcus and Diane Marcus Gershowitz.        

No Dissenters' Rights                                                     

   Dissenters' rights will not be available to the Company's
shareholders under Wisconsin law with respect to the GHI Transaction.     
One-Time Stock Issuance Amendment to Articles of Incorporation            

       The Company's Articles of Incorporation only allow additional
issuances of Class B Shares as part of a stock split or stock dividend in 
conjunction with and in the same ratio as a stock split or stock dividend 
on the Common Shares and only to the holders of then outstanding Class B  
Shares.  The Board has approved, and recommends that the Company's        
shareholders adopt at the Meeting, an amendment to Article 2 of the       
Company's Articles of Incorporation which would permit the one-time       
issuance by the Company of 299,547 new Class B Shares in connection with  
the GHI Transaction in exchange for and cancellation of the existing      
299,547 Class B Shares owned by GHI ("Stock Issuance Amendment").         

The Stock Issuance Amendment also clarifies that the  
shareholders of GHI as of June 30, 1997 shall be deemed "Permitted        
Transferees" of the Class B Shares issued in the GHI Transaction so that  
any transfer or distribution of such Class B Shares by GHI to such        
shareholders upon the liquidation of GHI or otherwise shall not result in 
such shares being converted into an equal number of Common Shares.  While 
the Company does not believe that the existing language of the Company's  
Articles of Incorporation would have required such a result, nonetheless  
the Company believes adoption of the clarification is advisable.          

  The provisions of Article 2 of the Company's Articles of
Incorporation, as proposed to be amended by the Stock Issuance Amendment, 
are set forth in Exhibit B to this Proxy Statement.  The Stock Issuance   
Amendment will not result in any net increase in the number of outstanding
Class B Shares because the 299,547 existing Class B Shares owned by GHI   
will be cancelled in the GHI Transaction.                                 

Vote Required                                                             

 In order for the GHI Transaction and the Stock Issuance
Amendment to be approved by the Company's shareholders at the Meeting, the
following votes must be obtained:  (i) the affirmative vote of a majority 
of the votes entitled to be cast at the Meeting by the holders of the     
Common Shares as of the Record Date, voting separately as a class; (ii)   
the affirmative vote of a majority of the votes entitled to be cast at the
Meeting by the holders of the Class B Shares as of the Record Date, voting
separately as a class; and (iii) the affirmative vote of a majority of the
votes entitled to be cast at the Meeting by the holders of both the Common
Shares and the Class B Shares as of the Record Date, voting together as a 
single class.  Any votes represented by Common Shares and the Class B     
Shares not cast at the Meeting (whether by broker nonvotes, abstentions or
otherwise) will be treated as votes against the GHI Transaction and the   
Stock Issuance Amendment.  As of the Record Date, Ben Marcus, Stephen H.  
Marcus and Diane Marcus Gershowitz, beneficially owned approximately 1.4% 
of the voting power of the Common Shares, 89.3% of the voting power of    
Class B Shares and 79.0% of the combined voting power of the Common Shares
and Class B Shares.  See "Stock Ownership of the Management and Others."  
Since it is expected that such individuals will vote in favor of approving
the GHI Transaction and the Stock Issuance Amendment, sufficient votes for
an affirmative vote of the majority of both the Class B Shares, voting    
separately as a class, and the Common Shares and the Class B Shares,      
voting together as a single class, are assured.  However, there is no     
assurance that an affirmative vote of a majority of the votes entitled to 
be cast by the Common Shares, voting separately as a class, will be       
obtained at the Meeting for the GHI Transaction and the Stock Issuance    
Amendment.                                                                

      Common Shares and Class B Shares represented by executed but
unmarked proxies will be voted "FOR" the GHI Transaction and the Stock    
Issuance Amendment, unless a vote against the GHI Transaction and the     
Stock Issuance Amendment or to abstain from voting is specifically        
indicated on the proxy.  A vote "FOR" the GHI Transaction also constitutes
a vote to approve the issuance of Common Shares to Stephen H. Marcus and  
Diane Marcus Gershowitz pro rata with their GHI share ownership for       
purposes of Rule 16b-3(d) under the Securities Exchange Act.              

         THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE
GHI TRANSACTION AND THE STOCK ISSUANCE AMENDMENT.                         

Information about GHI                                                     

General                                                         

          GHI was incorporated under the laws of the State of Wisconsin on
August 6, 1959.  GHI's principal office is located at 250 East Wisconsin  
Avenue, Suite 1700, Milwaukee, Wisconsin 53202; telephone: (414) 272-6020.

Business                                                        

       GHI's principal operating assets include certain real estate,
buildings and furniture and fixtures in the Appleton, Wisconsin area.  GHI
leases, under long-term operating leases, real estate to operating        
subsidiaries of the Company in the operation of the movie theatre,        
Hollywood Cinema, the family entertainment center, Funset Boulevard, and a
Budgetel Inn motel.  The Company leases the property for an Annie's       
Restaurant from GHI, which it in turn leases to an unaffiliated third     
party.  The terms and conditions of the leases between the Company and GHI
are believed to be no less favorable to the Company than could have been  
obtained from independent third parties.  See "Certain Transactions."  GHI
also owns certain vacant property in the Appleton area.  In addition, GHI 
owns and operates the SuperBowl bowling center on property adjacent to the
properties leased to the Company.  As of June 5, 1997, GHI had accounts   
and notes receivable from certain of its shareholders and other related   
parties aggregating $2,218,000.  It is the intention of the shareholders  
of GHI to repay in cash all outstanding related party receivables prior to
the closing of the GHI Transaction.                                       

Financial Statements                                                      

         The financial statements of GHI for the fiscal years 1996, 1995
and 1994, and for the 36 weeks ended June 5, 1997, and the accompanying   
notes, are set forth in Exhibit D to this Proxy Statement.                

Management's Discussion and Analysis of Financial Condition and Results of
Operations                                                                

        The following table sets forth certain selected financial data
of GHI for the periods presented derived from the unaudited financial     
statements of GHI.                                                        

                                                           [Enlarge/Download Table]
                                                                                                                  

                         Selected Financial Data                                                                  
                             (In Thousands)                                                                       
                                                                                                                  

                                         Thirty-Six                                                               
                                                                          Year Ended                              
                                         Weeks Ended                                                              
                                           June 5,     September 26,  September 28,   September 29,  September 30,
                                            1997          1996            1995           1994            1993     
                                                                                                                  
Statement of Earnings Data:                                                                                       
Revenues                                     $1,112       $1,384         $1,723         $1,926        $1,794      
Costs and expenses                              649        1,091          1,410          1,525         1,508      
Operating income                                463          293            313            401           286      
Other income (expense)                          126         (213)           111             78            60      
Net earnings                                    589           78            401            478           346      

                                                                                                                  
                                            June 5,   September 26,    September 28,                              
                                             1997         1996             1995                                   
                                                                                                                  
Balance Sheet Data:                                                                                               
Total assets                                 $3,245       $2,623         $2,759                                   
Total current liabilities                       105           72            136                                   
Total shareholders' equity                    3,140        2,551          2,623                                   
                                                                             
Results of Operations                                 

General                                               

       GHI owns certain real estate, buildings and improvements, and
furniture and fixtures in the Appleton, Wisconsin area which it leases to 
subsidiaries of the Company.  In addition, GHI owns and operates a bowling
center in Appleton.  GHI previously owned and operated a second bowling   
center in Appleton until early in fiscal 1996, at which time the center   
was closed and the real estate was subsequently leased to the Company.    
GHI reports its results of operations on either a 52-or 53-week fiscal    
year.  Fiscal 1993 was a 53-week year for GHI.                            

Revenues                                              

       Revenues for the 36 weeks ended June 5, 1997 were $1,112,000,
down $23,000, or 2.0%, from the same prior year period.  This decrease was
due to the loss of $225,000 in revenues from the bowling center that was  
closed in fiscal 1996, offset by increased rental income from the Company.
Revenues for the fiscal year ended September 26, 1996 were $1,384,000,    
down $339,000, or 19.7%, from the prior year.  Reduced bowling center     
revenues of $356,000 as a result of the closure of the bowling center     
accounted for the entire decrease.                                        

       Revenues for fiscal 1995 decreased $203,000, or 10.5%, versus
the previous year.  Fiscal 1994 revenues, however, were up $132,000, or   
7.4%.  The decrease in fiscal 1995 revenues and increase in fiscal 1994   
revenues was the result of increased food and beverage sales at the two   
bowling centers in fiscal 1994 due to increased guests attending a major  
tournament held at these facilities.                                      

Operating Income                                      

  Operating income for the 36 weeks ended June 5, 1997 was
$463,000, an increase of $181,000, or 64.2%, over the same period the     
previous year.  GHI's decision to close one of its bowling centers in     
fiscal 1996 and consolidate its business into the remaining facility      
resulted in increased operating income from bowling operations of $44,000 
versus the previous year, with the remaining increase in operating income 
coming from increased rental income.                                      

          Operating income for fiscal 1996 totaled $293,000, down $20,000,
or 6.4%, from the previous year.  The entire decrease was the result of   
closing the bowling center earlier in the year prior to the commencement  
of rental income from leasing the real estate to the Company.             

        Fiscal 1995 operating income decreased $88,000, or 21.9%, from
the previous year.  Fiscal 1994 operating income, however, was up         
$115,000, or 40.2%, over fiscal 1993.  As discussed previously, fiscal    
1994 results were significantly enhanced by a major tournament held at    
GHI's bowling centers.                                                    

Other Income (Expense)                                

       Other income for GHI consists primarily of interest income on
GHI's accounts and notes receivables, along with dividend income earned on
GHI's cash equivalents and 299,547 Class B Shares.  Total interest and    
dividend income totaled $126,000 for the 36 weeks ended June 5, 1997,     
compared to $110,000, $110,000, $85,000 and $82,000 for the same items in 
fiscal years 1996, 1995, 1994 and 1993, respectively.                     

   In fiscal 1996, GHI incurred a loss on the disposition of
property and equipment totaling $323,000 as a result of closing one of its
bowling centers.                                                          

Net Earnings                                          

         Net earnings for the 36 weeks ended June 5, 1997 were $589,000,
an increase of $551,000 versus the same period prior year.  The increase  
consisted of $228,000 in operating income and interest/dividend income    
increases, combined with the fiscal 1996 loss on disposition of property  
and equipment of $323,000.  Net earnings for fiscal 1996 were $78,000,    
down $323,000, or 80.5%, due to that same loss on disposition.            

  Net earnings for fiscal 1995 were down $77,000 or 16.1%,
compared to an increase in net earnings in fiscal 1994 versus fiscal 1993 
of $132,000, or 38.2%.  As discussed earlier, a major bowling tournament  
significantly improved fiscal 1994 operating results.                     

Financial Condition                                   

         GHI has entered into various noncancellable long-term leases of
real estate and buildings with the operating subsidiaries of the Company. 
GHI believes that this provides a consistent and predictable cash source  
that should be adequate to support the ongoing operational liquidity needs
of GHI's businesses.                                                      

        Net cash provided by operating activities totaled $701,000 for
the 36 weeks ended June 5, 1997, an increase of $169,000 versus the full  
fiscal year 1996.  The $532,000 of net cash provided by operating         
activities in fiscal 1996 represented a $46,000, or 9.5%, increase from   
the $486,000 of net cash provided by operating activities in fiscal 1995. 
The increase in both years was primarily the result of increased earnings 
and increases in current assets.                                          

         Net cash used in investing activities during the 36 weeks ended
June 5, 1997 totaled $873,000.  Net cash used in investing activities     
totaled $604,000 in fiscal 1996.  Increases in related party receivables  
accounted for the majority of the net cash used in investing activities   
during these two periods.  Fiscal 1996 net cash used was partially offset 
by $147,000 of proceeds received from disposals of property and equipment 
from its closed bowling center.  Capital expenditures totaled $25,000,    
$16,000 and $66,000 in fiscal years 1996, 1995 and 1994, respectively.    
Future annual capital expenditures are not expected to exceed fiscal 1996 
expenditures and are expected to be funded by cash generated from         
operations.  GHI has not used cash in any financing activities during the 
36 weeks ended June 5, 1997.  GHI distributed $150,000, $150,000 and      
$200,000 to shareholders during fiscal years 1996, 1995 and 1994,         
respectively.  GHI paid off its remaining long-term debt in fiscal 1994   
and has no outstanding long-term debt currently.                          

Information about the Company                                             

Business                                                        

       Information about the business of the Company is contained in
the 1997 Annual Report to Shareholders of the Company which accompanies   
this Proxy Statement.  Such information, which appears on pages 4 through 
13 of the Company's 1997 Annual Report to Shareholders, is incorporated   
herein by reference.                                                      

Financial Statements                                            

       Information about the results of operations of the Company is
contained in the 1997 Annual Report to Shareholders of the Company which  
accompanies this Proxy Statement.  The consolidated financial statements  
of Company for its fiscal years 1997 and 1996, are presented at pages 20  
through 29 in the Company's 1997 Annual Report to Shareholders and are    
incorporated herein by reference.                                         

Management's Discussion and Analysis of Financial Condition and Results of
Operations                                                                

Results of Operations                                           

       Information about the results of operations of the Company is
contained in the 1997 Annual Report to Shareholders of the Company which  
accompanies this Proxy Statement.  Such information, which appears on     
pages 14 through 19 of the 1997 Company's Annual Report to Shareholders,  
is incorporated herein by reference.                                      

Financial Condition                                             

     Information about the financial condition of the Company is
contained in the 1997 Annual Report to Shareholders of the Company which  
accompanies this Proxy Statement.  Such information, which appears on page
19 of the 1997 Annual Report to Shareholders, is incorporated herein by   
reference.                                                                

AUTHORIZED STOCK AMENDMENT

General                                                                   

        The Board has unanimously approved, and unanimously recommends
that the Company's shareholders adopt at the Meeting, an amendment to     
Article 2 of the Company's Articles of Incorporation which would increase 
the number of authorized Common Shares from 30,000,000 to 50,000,000 and  
the number of authorized Class B Shares from 20,000,000 to 33,000,000     
("Authorized Stock Amendment").  The Authorized Stock Amendment will not  
increase or otherwise affect the number of authorized shares of preferred 
stock which may be issued by the Company.  The provisions of Article 2 of 
the Company's Articles of Incorporation, as proposed to be amended by the 
Authorized Stock Amendment, are set forth in Exhibit C to this Proxy      
Statement.                                                                

     As of the Record Date, in addition to the 11,240,376 Common
Shares issued and outstanding, 100,568 Common Shares were reserved for    
issuance under the 1987 Stock Option Plan, 672,900 Common Shares were     
reserved for issuance under the 1995 Plan, 49,250 Common Shares were      
reserved for issuance under the Director Plan, 8,504,252 Common Shares    
were reserved for issuance upon any potential conversions of the Class B  
Shares, 491,437 Common Shares were reserved for issuance under the        
Company's Dividend Reinvestment and Associate Stock Purchase Plan, and    
approximately 425,959 Common Shares are issuable in the GHI Transaction   
(subject to adjustment), if approved by the Company's shareholders at the 
Meeting.  As of the Record Date, 8,504,252 Class B Shares were issued and 
outstanding, with no further Class B Shares reserved for subsequent       
issuance, other than in connection with the GHI Transaction.  There will  
be no net increase in the number of issued Class B Shares as a result of  
the GHI Transaction because, after the GHI Transaction, the existing Class
B Shares owned by GHI will be cancelled in exchange for the new Class B   
Shares to be issued.  Therefore, as of the Record Date (assuming approval 
of the GHI Transaction), there were a total of 21,484,742 Common Shares   
either issued and outstanding or reserved for issuance out of a total of  
30,000,000 authorized Common Shares, leaving a total of 8,515,258 Common  
Shares remaining available for subsequent issuance or reservation.        
Similarly, as of the Record Date, a total of 11,495,748 Class B Shares    
remain available for subsequent issuance.  The Company's Articles of      
Incorporation only allow additional issuances of Class B Shares as part of
a stock split or dividend in conjunction with and in the same ratio as a  
stock split or dividend on the Common Shares and only to the holders of   
then outstanding Class B Shares.                                          

    The Board believes that the increased number of authorized
Common Shares contemplated by the proposed Authorized Stock Amendment is  
desirable to make additional unreserved Common Shares available for       
issuance or reservation without further shareholder authorization, except 
as may be required by law or by the rules of the New York Stock Exchange. 
Authorizing the Company to issue more shares than currently authorized by 
the Articles of Incorporation will not affect materially any substantive  
rights, powers or privileges of holders of Common Shares or the Class B   
Shares.  There are currently no shares of preferred stock outstanding.    
The Company does not have any current plans or intentions to issue any of 
the additionally authorized Common Shares or Class B Shares, or any       
preferred stock, other than in connection with the GHI Transaction.       
However, the Board believes that having such additional shares authorized 
and available for issuance or reservation will allow the Company to have  
greater flexibility in considering potential future actions involving the 
issuance of stock, including stock dividends or splits or acquisitions of 
businesses using stock as consideration.  The Board has no current plans  
to effect any such potential actions.  Other than with respect to the     
reservation of Common Shares in connection with (i) the 1987 Plan; (ii)   
the 1995 Plan; (iii) the Director Plan; (iv) the conversion of Class B    
Shares into Common Shares; (v) the Dividend Reinvestment and Associate    
Stock Purchase Plan; and (vi) the GHI Transaction, the Company has no     
other plans or other existing or proposed agreements or understandings to 
issue, or reserve for future issuance, any of the additional Common Shares
or Class B Shares which would be authorized by the Authorized Stock       
Amendment.                                                                

          As a result of their beneficial ownership of approximately 79.0%
of the combined voting power of the Common Shares and Class B Shares, Ben 
Marcus, Stephen H. Marcus and Diane Marcus Gershowitz may already be      
deemed to control, or share in control, of the Company.  Therefore, the   
Company does not view the Authorized Stock Amendment as part of an "anti- 
takeover" strategy.  The Authorized Stock Amendment is not being advanced 
as a result of any known effort by any part to accumulate Common Shares or
to obtain control of the Company.  See "Stock Ownership of Management and 
Others."                                                                  

Vote Required                                                             

       In order for the Authorized Stock Amendment to be approved by
the Company's shareholders at the Meeting, the following votes must be    
obtained from shareholders at the Meeting:  (i) the affirmative vote of a 
majority of the votes entitled to be cast at the Meeting by the holders of
the Common Shares as of the Record Date, voting separately as a class;    
(ii) the affirmative vote of a majority of the votes entitled to be cast  
at the Meeting by the holders of the Class B Shares as of the Record Date,
voting separately as a class; and (iii) the affirmative vote of a majority
of the votes entitled to be cast at the Meeting by the holders of both the
Common Shares and the Class B Shares as of the Record Date, voting        
together as a single class.  Any votes represented by Common Shares and   
Class B Shares not cast at the Meeting (whether by broker nonvotes,       
abstentions or otherwise) will be treated as votes against the Authorized 
Stock Amendment.  As of the Record Date, Ben Marcus, Stephen H. Marcus and
Diane Marcus Gershowitz, beneficially owned approximately 1.4% of the     
voting power of Common Shares, 89.3% of the voting power of Class B Shares
and 79.0% of the combined voting power of the Common Shares and Class B   
Shares.  See "Stock Ownership of the Management and Others."  Since it is 
expected that such individuals will vote in favor of approving the        
Authorized Stock Amendment, sufficient votes for an affirmative vote of   
the majority of both the Class B Shares, voting separately as a class, and
the Common Shares and the Class B Shares, voting together as a single     
class, are assured.  However, there is no assurance that an affirmative   
vote of a majority of the votes entitled to be cast by the Common Shares, 
voting separately as a class, will be obtained at the Meeting for the     
Authorized Stock Amendment.                                               

      Common Shares and Class B Shares represented by executed but
unmarked proxies will be voted "FOR" the Authorized Stock Amendment,      
unless a vote against the Authorized Stock Amendment or to abstain from   
voting is specifically indicated on the proxy.                            

     THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF THE AUTHORIZED STOCK AMENDMENT.                               

CERTAIN TRANSACTIONS

          The Company leases, under long-term leases, real estate occupied
by five of the Company's facilities from GHI, an entity wholly-owned by   
Ben Marcus, Stephen H. Marcus, Diane Marcus Gershowitz, Ida Lowe and      
certain trusts for the benefit of members of their families ("Affiliated  
Parties") for an aggregate annual rental of approximately $440,000 and    
from Stephen H. Marcus and Diane Marcus Gershowitz for an aggregate annual
rental of approximately $44,000.  The Company has renewal options for all 
of these leases which, if fully exercised, would result in these leases   
expiring at various times between 2005 and 2030.  Ida Lowe is the sister  
of Ben Marcus.  See "Approval of Guest House Inn Transaction."            

     During the 1997 fiscal year, the Company paid approximately
$201,000 of interest to certain entities owned by certain of the          
Affiliated Parties on nine debts of the Company owed to such entities.    
These debts are due on demand and bear interest at the prime rate (8.50%  
at May 29, 1997).  The largest aggregate amount outstanding on the above  
debts during the Company's 1997 fiscal year was $2,577,000.  As of the end
of the 1997 fiscal year, the amount outstanding on the nine debts was     
$2,001,000.  Payment of both principal and interest on these debts is     
current.                                                                  

     As has been the case in prior years, during the 1997 fiscal
year, the Company leased automobiles from Selig Executive Leasing Co.,    
Inc.  Aggregate lease payments were $351,000 in fiscal 1997.  Allan H.    
Selig, a director of the Company, is the President, Chief Executive       
Officer and sole shareholder of Selig Executive Leasing Co., Inc.         

      The Company believes that all of the above transactions were
consummated on terms at least as favorable as could have been obtained    
from non-affiliated third parties.                                        

 OTHER MATTERS

   Representatives from Ernst & Young LLP are expected to be
present at the Meeting and will have an opportunity to make a statement if
they so desire and will be available to respond to appropriate shareholder
questions.                                                                

         The Board does not intend to present at the Meeting any matters
for shareholder action other than the matters described in the Notice of  
Annual Meeting.  The Board knows of no other matters to be brought before 
the Meeting which will require the vote of shareholders.  For other       
business to be properly brought before the Meeting by a shareholder, such 
shareholder must give written notice of such proposed business complying  
with the Company's By-laws to the Secretary of the Company not less than  
15 days in advance of the Meeting.  If any other business or matters      
should properly come before the Meeting, the proxies named in the         
accompanying proxy will vote on such business or matters in accordance    
with their best judgment.                                                 

      The Company has filed an Annual Report on Form 10-K with the
Securities and Exchange Commission for its 1997 fiscal year which ended on
May 29, 1997.  The Company will provide a copy of such Form 10-K          
(excluding exhibits) without charge to each person who is a record or     
beneficial owner of Common Shares or Class B Shares on the Record Date and
who submits a written request therefor.  Exhibits to the Form 10-K will be
furnished upon payment of the fee described in the list of exhibits       
accompanying the copy of Form 10-K.  Requests for copies of the Form 10-K 
and any exhibits thereto should be addressed to Thomas F. Kissinger,      
General Counsel and Secretary, The Marcus Corporation, 250 East Wisconsin 
Avenue, Suite 1700, Milwaukee, Wisconsin 53202-4220.                      

          The cost of soliciting proxies will be paid by the Company.  The
Company expects to solicit proxies primarily by mail.  Proxies may also be
solicited personally and by telephone by certain officers and regular     
employees of the Company.  The Company will reimburse brokers and other   
holders of record for their expenses in communicating with the persons for
whom they hold Common Shares or Class B Shares.  The Company has retained 
D.F. King & Co., Inc. to aid in the solicitation at an estimated cost of  
approximately $4,000, plus $3.00 per telephone inquiry of shareholders and
certain other out-of-pocket expenses.                                     

      A shareholder wishing to include a proposal in the Company's
proxy statement for its 1998 Annual Meeting of Shareholders must forward  
the proposal to the Company by May 1, 1998.                               

                               On Behalf of the Board of Directors

               Thomas F. Kissinger
Milwaukee, Wisconsin               General Counsel and Secretary          
August 22, 1997                                                           

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                                                                 Exhibit A

AGREEMENT AND PLAN OF REORGANIZATION

        AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated
as of June 30, 1997, by and among THE MARCUS CORPORATION, a Wisconsin     
corporation ("Buyer"); GUEST HOUSE INN, INC., a Wisconsin corporation     
("Company"); and the shareholders of the Company as set forth on the      
signature page of this Agreement (individually a "Shareholder" and        
together "Shareholders").                                                 

 W I T N E S S E T H :

     A.   WHEREAS, Company is engaged in the business of owning,
operating and leasing certain real estate in the Appleton, Wisconsin area,
certain of which properties are leased by Company to Buyer (the           
"Business").                                                              

         B.   WHEREAS, in addition to its operating assets, Company owns
299,547 existing shares of Buyer's Class B Common Stock, $1 par value per 
share ("Existing Class B Common Stock").                                  

          C.   WHEREAS, Buyer desires to purchase and assume from Company,
Company desires to transfer to Buyer, and Shareholders desire to cause    
Company to transfer to Buyer, all of the assets and stated liabilities of 
Company, including particularly, but without limitation, all of the       
Existing Class B Common Stock.                                            

       D.   WHEREAS, the parties hereto intend that the transactions
contemplated by this Agreement shall qualify as a "reorganization" within 
the meaning of Section 368(a)(1)(C) of the Internal Revenue Code of 1986, 
as amended ("Code"), it being contemplated by the parties that, as an     
integral part of these transactions, after the Closing Date (as           
hereinafter defined) Company will distribute the shares of the Buyer's    
Common Stock, $1 par value per share ("Common Stock"), and the New Class B
Common Stock (as hereinafter defined), received pursuant to Section 3.2   
hereof to Shareholders in complete liquidation and dissolution of Company.

   NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and         
conditions hereinafter set forth, and intending to be legally bound       
hereby, the parties hereto agree as follows:                              

1.     PURCHASE AND SALE OF ASSETS                                        

1.1.   Assets to be Transferred.  Subject to the terms and  
conditions of this Agreement, on the Closing Date, Company shall, and     
Shareholders shall cause Company to, sell, transfer, convey, assign, and  
deliver to Buyer, and Buyer shall purchase and accept all the following   
assets or rights of Company (collectively, the "Purchased Assets"):       

          1.1.(a)   Class B Common Stock.  All of the Existing Class B
Common Stock.                                               

            1.1.(b)   Owned Real Property and Buildings.  All of the owned
 real properties of Company, including the buildings and other
improvements situated thereon (collectively, the "Owned Real
Property and Buildings").                                   

         1.1.(c)   Furniture and Fixtures.  All furniture, fixtures,
    equipment, apparatus, tools, supplies, spare parts and all other
       personal property owned, utilized or held for use by Company on the
   Closing Date wherever located (collectively, the "Furniture and
Fixtures").                                                 

     1.1.(d)   Inventory.  All inventories of Company on the
Closing Date.                                               

        1.1.(e)   Contracts.  All Company contracts, including all
       leases and subleases of Owned Real Property and Buildings for which
  Company is lessor or sublessor ("Leases"), contractual rights,
  commitments, agreements, purchase orders and sales and service
orders.                                                     

     1.1.(f)   Computer Software and Hardware.  All computer
     databases, source codes, programs and other computer software and
hardware owned or utilized by Company.                      

      1.1.(g)   Literature.  All sales literature, promotional
     literature, catalogs and similar materials of Company relating to
the Business.                                               

         1.1.(h)   Records and Files.  All records, files, invoices,
      blueprints, specifications, designs, drawings, accounting records,
  customer lists, business records, operating data, research and
    library materials, documents and files and other data of Company
relating to the Business.                                   

         1.1.(i)   Notes and Accounts Receivable.  All notes, drafts
and accounts receivable of Company.                         

           1.1.(j)   Licenses; Permits and Registrations.  All licenses,
   permits, registrations and approvals of Company relating to the
Business.                                                   

1.1.(k)   Cash and Bank Accounts.  All cash, bank 
accounts, money market funds and other cash equivalents or  
short-term securities of Company.                           

1.1.(l)   Other Assets and Goodwill.  All prepaid 
expenses and items and all of Company's causes of action,   
claims, demands and rights against third parties relating to
the Business, and other intangible rights and assets,       
including all goodwill associated with the Business and the 
Purchased Assets.                                           

1.2.   Excluded Assets.  The provisions of Section 1.1      
notwithstanding, on the Closing Date, Company will not sell, transfer,    
assign, convey or deliver to Buyer, and Buyer will not purchase or accept,
the following, and only the following, assets of Company (collectively,   
"Excluded Assets"):                                                       

      1.2.(a)   Consideration.  The consideration delivered to
Company by Buyer pursuant to this Agreement.                

         1.2.(b)   Corporate Franchise.  Company's franchise to be a
     corporation, its articles of incorporation, corporate seal, stock
      books, minute books and other corporate records having exclusively
to do with the corporate organization and capitalization of 
Company.                                                    

        1.2.(c)   Tax Records.  Company's income and franchise tax
returns and tax records.                                    

2.     ASSUMPTION OF LIABILITIES                                          

       2.1.   Assumed Liabilities.  Subject to the terms and conditions of
this Agreement, on the Closing Date, Buyer shall assume and agree to      
perform and discharge all stated liabilities of Company as set forth on   
the Closing Balance Sheet (as hereinafter defined), including all stated  
accounts payable, all taxes payable and all accrued liabilities and all   
obligations under Company contracts and Leases (collectively, "Assumed    
Liabilities").                                                            

3.     PURCHASE PRICE - PAYMENT                                           

     3.1.   Purchase Price.  The purchase price ("Purchase Price") for
the Purchased Assets shall be (i) the assumption of the Assumed           
Liabilities; (ii) subject to adjustment under Section 3.3, the issuance of
425,959 shares of Common Stock, based on the Net Asset Value (as          
hereinafter defined) as of June 5, 1997, divided by the $24.50 closing    
sale price per share of Common Stock on the New York Stock Exchange       
("NYSE") on May 29, 1997 ("Preliminary Net Asset Value Purchase Price"),  
in exchange for the Purchased Assets, other than Existing Class B Common  
Stock; and (iii) the issuance of 299,547 new shares of Buyer's Class B    
Common Stock, $1 par value per share ("New Class B Common Stock"), in     
exchange for and cancellation of Existing Class B Common Stock.  "Net     
Asset Value," as used herein, shall mean (a) the fair market value of the 
Owned Real Property and Buildings, the Furniture and Fixtures and Leases, 
as determined by Buyer's qualified independent appraiser, Property        
Counselors, Inc. (the "Appraiser"); plus (b) the book value of all other  
Purchased Assets as set forth on the balance sheet of the Company; less   
(c) the book value of all stated liabilities of Company as set forth on   
the balance sheet of the Company.                                         

  3.2.   Payment of Purchase Price.  Subject to adjustment under
Section 3.3, the Purchase Price shall be paid by or on behalf of Buyer as 
follows:                                                                  

         3.2.(a)   Assumption of Liabilities.  At the Closing, Buyer
      shall deliver to Company the Certificate of Assumed Liabilities in
the form of Exhibit 2 hereto.                               

       3.2.(b)   Common Stock to Company.  At the Closing, Buyer
    shall deliver to Company certificates representing the shares of
Common Stock issuable under Section 3.1.                    

    3.2.(c)   New Class B Common Stock to Company.  At the
Closing, Buyer shall deliver to Company certificates representing the     
shares of New Class B Common Stock issuable under Section 3.1.            

   3.3.   Adjustment of Net Asset Value Purchase Price.  Within 30
days following the Closing, Company shall prepare, or cause to be         
prepared, and deliver to Buyer a balance sheet of Company as of the       
Closing Date (the "Closing Balance Sheet").  The final Net Asset Value    
Purchase Price ("Final Net Asset Value Purchase Price") shall be the      
number of whole shares (with any fractional shares otherwise issuable     
rounded to the next closest whole number) of Common Stock, based on the   
Net Asset Value as of the Closing Date, divided by the average closing    
sale price of Common Stock on the NYSE over the 30 trading days ending    
five days before the Closing Date ("Closing Sale Price").  In the event   
the Final Net Asset Value Purchase Price is greater than the Preliminary  
Net Asset Value Purchase Price, Buyer shall issue to Company within five  
days after the delivery of the Closing Balance Sheet the number of shares 
of Common Stock that is equal to the difference between the Final Net     
Asset Value Purchase Price and the Preliminary Net Asset Value Purchase   
Price, with the value and number of shares of Common Stock to be          
determined based upon the Closing Sale Price.  In the event the           
Preliminary Net Asset Value Purchase Price is greater than the Final Net  
Asset Value Purchase Price, Company shall return to Buyer within five days
after the delivery of the Closing Balance Sheet the number of shares of   
Common Stock that is equal to the difference between the Preliminary Net  
Asset Value Purchase Price and the Final Net Asset Value Purchase Price,  
with the value and number of shares of Common Stock to be determined based
upon the Closing Sale Price.                                              

      3.4.   Allocation of Purchase Price.  The aggregate Purchase Price
(including the assumption by Buyer of the Assumed Liabilities) shall be   
allocated among the Purchased Assets for tax purposes as mutually agreed  
between Company and Buyer.  Company, Shareholders and Buyer will follow   
and use such allocation in all income, sales registration and other tax   
returns, filings or other related reports made by them to any governmental
agencies.  To the extent that disclosures of this allocation are required 
to be made by the parties to the Internal Revenue Service ("IRS") under   
the provisions of Section 1060 of the Code or any regulations thereunder, 
the parties will disclose such reports to the other parties prior to      
filing with the IRS.                                                      

4.     JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF COMPANY AND    
SHAREHOLDERS                                                

       Company and Shareholders, jointly and severally, make the following
representations and warranties to Buyer, each of which is true and correct
on the date hereof, shall remain true and correct to and including the    
Closing Date, shall be unaffected by any investigation heretofore or      
hereafter made by Buyer, or any knowledge of Buyer, and shall survive the 
Closing of the transactions provided for herein:                          

       4.1.   Corporate.  Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Wisconsin.   
Company has all requisite corporate power and authority to own, operate   
and lease its properties, to carry on the Business as and where such is   
now being conducted, and to enter into this Agreement and the other       
documents and instruments to be executed and delivered by Company pursuant
hereto (such other documents and instruments being hereinafter called the 
"Ancillary Instruments") and to carry out the transactions contemplated   
hereby and thereby.                                                       

4.2.   Authority.                                           

      4.2.(a)   Corporate.  The execution and delivery of this
       Agreement and the Ancillary Instruments and the consummation of the
   transactions contemplated hereby (including the liquidation and
   dissolution of Company as contemplated herein) and thereby have
      been duly authorized by the Board of Directors and shareholders of
    Company.  No other or further corporate act or proceeding on the
   part of Company is necessary to authorize this Agreement or the
 Ancillary Instruments or the consummation of the transactions
     contemplated hereby (including the liquidation and dissolution of
Company as contemplated herein) and thereby.  This Agreement
constitutes, and when executed and delivered, the Ancillary 
     Instruments will constitute, valid binding agreements of Company,
     enforceable against it in accordance with their respective terms,
except as such may be limited by bankruptcy, insolvency,    
       reorganization or other laws affecting creditors' rights generally,
and by general equitable principles.                        

       4.2.(b)   Shareholders.  Each Shareholder has full power,
     legal right and capacity and authority to enter into, execute and
    deliver this Agreement and the Ancillary Instruments (which term
  when used with respect to Shareholders shall include all other
documents and instruments to be executed and delivered by   
      Shareholders pursuant hereto) to be executed and delivered by each
 Shareholder pursuant hereto, and to carry out and perform the
 transactions contemplated hereby and thereby.  This Agreement
     constitutes, and when executed and delivered, the other Ancillary
     Instruments to be executed and delivered by Shareholders pursuant
     hereto will constitute, valid binding agreements of Shareholders,
enforceable against each of them in accordance with their   
  respective terms, except as such may be limited by bankruptcy,
 insolvency, reorganization or other laws affecting creditors'
rights generally, and by general equitable principles.      

    4.3.   No Violation.  Neither the execution and delivery of this
Agreement or the Ancillary Instruments, nor the consummation by Company or
Shareholders of the transactions contemplated hereby and thereby (a) will,
to the knowledge of Company and Shareholders, violate any statute or law  
or any rule, regulation, order, writ, injunction or decree of any court or
governmental authority; (b) will, to the knowledge of Company and         
Shareholders, require any authorization, consent, approval, exemption or  
other action by or notice to any court, administrative or governmental    
agency, instrumentality, commission, authority, board or body; or (c)     
subject to obtaining necessary consents, will violate or conflict with, or
constitute a default (or an event which, with notice or lapse of time, or 
both, would constitute a default) under, or will result in the termination
of, or accelerate the performance required by, or result in the creation  
of any Lien (as hereinafter defined) upon any of the Purchased Assets     
under, any term or provision of (i) the Articles of Incorporation or      
By-laws of Company or (ii) of any contract, commitment, understanding,    
arrangement, agreement or restriction of any kind or character to which   
Company or Shareholders is a party or by which Company or Shareholders or 
any of their assets or properties may be bound or affected, other than    
contracts, commitments, understandings, arrangements, agreements and the  
like which, if violated or breached, would not have a material adverse    
effect on Company.                                                        

    4.4.   Absence of Undisclosed Liabilities.  Except as and to the
extent specifically disclosed on the Final Closing Balance Sheet, to the  
knowledge of Company and Shareholders, Company does not have any          
liabilities, commitments or obligations (known or unknown, secured or     
unsecured, and whether accrued, absolute, contingent, direct, indirect or 
otherwise), other than commercial liabilities and obligations incurred in 
the ordinary course of business and consistent in amount and nature with  
past practice and none of which has or will have a material adverse effect
on the business, financial condition or results of operations of Company. 

4.5.  Compliance With Laws.                                 

     4.5.(a)  Compliance.  Company is in compliance with all
       applicable federal, state and local laws, ordinances, orders, rules
     and regulations (collectively, "Laws"), other than Laws which, if
    violated by Company, would not have a material adverse effect on
Company.                                                    

            4.5.(b)  Licenses, Permits and Registrations.  Company has all
   licenses, permits, registrations, approvals, authorizations and
   consents of all governmental and regulatory authorities and all
certification organizations required for the conduct of the 
   Business and the operation of Company's facilities ("Permits"),
     other than those Permits which, if not obtained by Company, would
    not have a material adverse effect on Company.  All such Permits
    are in full force and effect and are assignable to Buyer without
restriction in accordance with the terms hereof, subject to 
 obtaining any necessary consents.  Company is and has been in
compliance with all such Permits.                           

          4.5.(c)  Environmental Matters.  To the knowledge of Company
  and Shareholders, Company is in full compliance with all other
   limitations, restrictions, conditions, standards, prohibitions,
    requirements, obligations, schedules and timetables contained in
       the Environmental Laws or contained in any regulations, code, plan,
order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved thereunder         
("Regulations").                                            

4.6.  Title to and Condition of Properties.                 

         4.6.(a)  Marketable Title.  Company has good and marketable
       title to all the Purchased Assets, free and clear of all mortgages,
      liens (statutory or otherwise), security interests, claims, choses
in action, pledges, licenses, equities, conditional sales   
       contracts, assessments, levies, easements, covenants, reservations,
restrictions or encumbrances of any nature whatsoever       
(collectively, "Liens"), except for those Liens which do not
      materially adversely effect the Business or Purchased Assets, and,
     in the case of Owned Real Property and Buildings, Liens for taxes
not yet due or which are being contested in good faith by   
appropriate proceedings, municipal and zoning ordinances and
    easements for public utilities, none of which interfere with the
       use of the property as currently utilized ("Permitted Real Property
      Liens").  Company has complete and unrestricted power and right to
     sell, assign, convey and deliver the Purchased Assets to Buyer as
 contemplated hereby.  At Closing, Buyer will receive good and
       marketable title to all the Purchased Assets, free and clear of all
     Liens, other than Permitted Real Property Liens or those which do
 not materially adversely effect the Business or the Purchased
Assets.                                                     

        4.6.(b)  Condition.  All tangible Purchased Assets and all
      tangible property and assets of Company (real and personal) are in
      good operating condition and repair, free from any defects (except
 such minor defects as do not interfere with the continued use
     thereof in the conduct of the normal operations of Company), have
       been maintained consistent with the standards generally followed in
     Company's industry and are sufficient to carry on the Business as
conducted during the preceding 12 months.  All buildings,   
   facilities and other structures utilized by Company are in good
       condition and repair (except such minor defects as do not interfere
with the continued use thereof in the conduct of the normal 
operations of Company) and have no structural defects.      

       4.7.  Shareholders.  There are no holders of issued and outstanding
capital stock of Company on the date hereof other than the Shareholders   
listed on Schedule 4.7 hereto, with such list including the number of     
shares of Company Common Stock each holder owns and each holder's         
percentage of voting control of Company Common Stock.                     

       4.8.  Certain Securities Law Matters.  Shareholders have sufficient
knowledge and experience in financial and business matters that they are  
capable of evaluating the economic risks of an investment in the Common   
Stock and New Class B Common Stock to be received.  The financial         
condition of each Shareholder is currently adequate to bear the economic  
risks of an investment in the Common Stock and New Class B Common Stock.  
Each Shareholder acknowledges that he, she or it is an "accredited        
investor" for purposes of Regulation D promulgated under the Securities   
Act of 1933.  Each Shareholder acknowledges that the Common Stock and New 
Class B Common Stock to be received by them upon liquidation of the       
Company as contemplated by this Agreement will be acquired for investment 
purposes only for himself and not for any other person or with a view     
toward resale, disposition or distribution, that such securities have not 
been registered under the Securities Act of 1933 or any applicable state  
securities (or "blue sky") laws or regulations and, therefore, cannot be  
resold unless so registered or exempted therefrom.  Each Shareholder      
understands that certificates representing such securities will bear an   
appropriate legend reflecting the foregoing restrictions on transfer.     

5.     REPRESENTATIONS AND WARRANTIES OF BUYER                            

       Buyer makes the following representations and warranties to Company
and Shareholders, each of which is true and correct on the date hereof,   
shall remain true and correct to and including the Closing Date, shall be 
unaffected by any investigation heretofore or hereafter made by Company or
Shareholders or any notice to Company or Shareholders, and shall survive  
the Closing of the transactions provided for herein:                      

     5.1.   Corporate.  Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Wisconsin.   
Buyer has all requisite corporate power to enter into this Agreement and  
the Ancillary Instruments to be executed and delivered hereunder by Buyer 
and to carry out the transactions contemplated hereby and thereby.        

       5.2.   Authority.  The execution and delivery of this Agreement and
the Ancillary Instruments and the consummation of the transactions        
contemplated hereby and thereby shall have been duly authorized by the    
Board of Directors of Buyer.  No other further corporate act or proceeding
on the part of Buyer will be necessary to authorize this Agreement or the 
Ancillary Instruments or the consummation of the transactions contemplated
hereby and thereby (other than the approval of the shareholders of Buyer, 
which will be required to consummate the transactions contemplated hereby 
and thereby).  This Agreement constitutes, and when executed and          
delivered, the Ancillary Instruments will constitute, valid and binding   
agreements of Buyer, enforceable against it in accordance with their      
respective terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally, and by
general equitable principles.                                             

       5.3.   Buyer Stock.  At the Closing, the shares of Common Stock and
Class B Common Stock to be issued to Company on the Closing Date pursuant 
to Section 3.2 hereof will be duly authorized for issuance and, upon such 
issuance by Buyer, will be validly issued, fully paid and nonassessable   
(except for any statutory liabilities for unpaid wage claims and other    
liabilities of employees under Wisconsin Statutes Section 180.0622(2)(b)).

6.     OTHER MATTERS                                                      

       6.1.   NYSE Listing.  Buyer shall use its best efforts to cause the
shares of Common Stock issued hereunder to be approved for listing on the 
NYSE as soon as practicable after the Closing Date, subject to official   
notice of issuance.                                                       

      6.2.   Access to Information and Records.  During the period prior
to the Closing Date, Company and Shareholders shall give Buyer, its       
counsel, accountants and other representatives access during normal       
business hours to all of the properties, books, records, contracts and    
documents of Company, and Company and Shareholders shall furnish or cause 
to be furnished to Buyer and its representatives all information with     
respect to the business and affairs of Company as Buyer may request.      
During the period prior to the Closing Date, Company and Shareholders     
shall give Buyer, its counsel, accountants and other representatives      
access to Company employees, agents and representatives for the purposes  
of such meetings and communications as Buyer desires.                     

   6.3.   Liquidation and Dissolution.  From and after the Closing
Date, Company will not engage in any business or active operations (other 
than satisfying its existing debts and obligations which are not Assumed  
Liabilities and winding up its affairs), will liquidate and dissolve as a 
corporation, and will distribute the Common Stock and New Class B Common  
Stock received pursuant to Section 3.2 hereof to Shareholders in complete 
cancellation and redemption of their shares of Company Common Stock.      

       6.4.    Securities Law Matters.  Buyer shall file a Form D with the
Securities and Exchange Commission ("SEC") pursuant to the Securities Act 
of 1933 and the regulations promulgated thereunder.  Shareholders shall   
amend any Schedule 13Gs or Form 4s that have been filed with the SEC by   
such Shareholders to reflect the consummation of the transactions         
contemplated hereby.                                                      

7.     CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS                        

     Each and every obligation of Buyer to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of   
each of the following conditions:                                         

   7.1.   Representations and Warranties True on the Closing Date.
Each of the representations and warranties made by Company and            
Shareholders in this Agreement or in any instrument, list, certificate or 
writing delivered by Company or Shareholders pursuant to this Agreement,  
shall be true and correct when made and shall be true and correct at and  
as of the Closing Date as though such representations and warranties were 
made or given on and as of the Closing Date, except for any changes       
permitted by the terms of this Agreement or consented to in writing by    
Buyer.                                                                    

     7.2.   Compliance With Agreement.  Company and Shareholders shall
have performed and complied with all of their agreements and obligations  
under this Agreement which are to be performed or complied with by them   
prior to or on the Closing Date, including the delivery of the closing    
documents specified in Section 10.1.                                      

     7.3.   Absence of Suit.  No action, suit or proceeding before any
court or any governmental authority shall have been commenced or          
threatened, and no investigation by any governmental or regulating        
authority shall have been commenced, against Buyer, Shareholders, Company,
or any of their respective affiliates, officers or directors (in such     
capacity) seeking to restrain, prevent or change the transactions         
contemplated hereby, or questioning the validity or legality of any such  
transactions, or seeking damages in connection with, or imposing any      
condition on, any such transactions.                                      

  7.4.   Securities Law Matters.  All appropriate registrations,
consents or filings, if any, required with respect to the issuance        
hereunder of Common Stock and New Class B Common Stock shall have been    
obtained or made prior to the Closing Date.                               

7.5.   Shareholder Approval.  Buyer shall have received the 
approval of Buyer's shareholders at Buyer's annual meeting of shareholders
to be held on September 29, 1997 with respect to this Agreement, the      
transactions contemplated hereby and an amendment to Buyer's Articles of  
Incorporation to permit the issuance of the New Class B Common Stock.     

8.     CONDITIONS PRECEDENT TO COMPANY'S AND SHAREHOLDERS' OBLIGATIONS    

Each and every obligation of Company and Shareholders to be 
performed on the Closing Date shall be subject to the satisfaction prior  
to or at the Closing of the following conditions:                         

  8.1.  Representations and Warranties True on the Closing Date.
Each of the representations and warranties made by Buyer in this Agreement
shall be true and correct when made and shall be true and correct at and  
as of the Closing Date as though such representations and warranties were 
made or given on and as of the Closing Date.                              

    8.2.  Compliance With Agreement.  Buyer shall have performed and
complied with all of its agreements and obligations under this Agreement  
which are to be performed or complied with thereby prior to or on the     
Closing Date, including the delivery of the closing documents specified in
Section 10.2.                                                             

    8.3.  Absence of Suit.  No action, suit or proceeding before any
court or any governmental authority shall have been commenced or          
threatened, and no investigation by any governmental or regulating        
authority shall have been commenced, against Buyer, Shareholders, Company,
or any of their respective affiliates, officers or directors (in such     
capacity) seeking to restrain, prevent or change the transactions         
contemplated hereby, or questioning the validity or legality of any such  
transactions, or seeking damages in connection with, or imposing any      
condition on, any such transactions.                                      

9.     INDEMNIFICATION                                                    

  9.1.   By Company and Shareholders.   Subject to the terms and
conditions of this Article 9, Company and each Shareholder, jointly and   
severally, hereby agree to indemnify, defend and hold harmless Buyer and  
its directors, officers, employees and controlled and controlling persons 
(collectively, "Buyer's affiliates"), from and against all Claims asserted
against, resulting to, imposed upon, or incurred by Buyer, Buyer's        
affiliates or the Business, Purchased Assets or Assumed Liabilities       
transferred to Buyer pursuant to this Agreement, directly or indirectly,  
by reason of, arising out of or resulting from (a) the inaccuracy or      
breach of any representation or warranty of Company or any Shareholder    
contained in or made pursuant to this Agreement; (b) the breach of any    
covenant of Company or any Shareholder contained in this Agreement; or (c)
any Claim of or against Buyer, the Purchased Assets or the Business not   
specifically assumed as an Assumed Liability by Buyer pursuant hereto.  As
used in this Article 9, the term "Claim" shall include (i) all debts,     
liabilities and obligations; (ii) all losses, damages (including, without 
limitation, consequential damages), costs and expenses (including, without
limitation, interest (including prejudgment interest in any litigated     
matter), penalties, court costs and attorneys fees and expenses); and     
(iii) all demands, claims, actions, costs of investigation, causes of     
action, proceedings, arbitrations, judgments, settlements and assessments,
whether or not ultimately determined to be valid.                         

9.2.  By Buyer.  Subject to the terms and conditions of this
Article 9, Buyer, hereby agrees to indemnify, defend and hold harmless    
Company, its directors, officers, employees and controlling persons, and  
each Shareholder from and against all Claims asserted against, resulting  
to, imposed upon or incurred by any such person, directly or indirectly,  
by reason of or resulting from (a) the inaccuracy or breach of any        
representation or warranty of Buyer contained in or made pursuant to this 
Agreement; (b) the breach of any covenant of Buyer contained in this      
Agreement; or (c) all Claims of or against Company specifically assumed by
Buyer pursuant hereto.                                                    

     9.3.  Indemnification of Third Party Claims.  The obligations and
liabilities of any party to indemnify any other party under this Article 9
with respect to Claims relating to or arising from third parties (a "Third
Party Claim") shall be subject to the following terms and conditions:     

      9.3.(a)  Notice and Defense.  The party or parties to be
   indemnified (whether one or more, the "Indemnified Party") will
give the other party or parties (whether one or more, the   
       "Indemnifying Party") written notice of any such Third Party Claim,
   and the Indemnifying Party may undertake the defense thereof by
       representatives chosen by it upon written notice to the Indemnified
      Party.  Failure of the Indemnified Party to give such notice shall
      not affect the Indemnifying Party's duty or obligations under this
Article 9, except to the extent the Indemnifying Party is   
 prejudiced thereby.  If the Indemnifying Party undertakes the
  defense of such Third Party Claim, then the Indemnifying Party
       shall be deemed to accept that it has an indemnification obligation
      to the Indemnified Party under this Article 9 with respect to such
   Claim.  So long as the Indemnifying Party is defending any such
     Claim actively and in good faith, the Indemnified Party shall not
     settle such Claim.  The Indemnified Party shall make available to
       the Indemnifying Party or its representatives all records and other
 materials required by them and in the possession or under the
     control of the Indemnified Party, for the use of the Indemnifying
  Party and its representatives in defending any such Claim, and
shall in other respects give reasonable cooperation in such 
defense.                                                    

            9.3.(b)  Failure to Defend.  If the Indemnifying Party, within
    20 days after notice of any such Third Party Claim (or sooner if
    the nature of the Claim so requires), fails to defend such Claim
     actively and in good faith, then the Indemnified Party will (upon
       further notice) have the right to undertake the defense, compromise
      or settlement of such Claim, or consent to the entry of a judgment
      with respect thereto, on behalf of and for the account and risk of
      the Indemnifying Party and the Indemnifying Party shall thereafter
have no right to challenge the Indemnified Party's defense, 
compromise or settlement thereof.                           

            9.3.(c)  Indemnified Party's Rights.  Anything in this Article
   9 to the contrary notwithstanding, (i) if there is a reasonable
 probability that a Third Party Claim may adversely affect the
      Indemnified Party other than as a result of money damages or other
 money payments, the Indemnified Party shall have the right to
      defend, compromise or settle such Claim, and (ii) the Indemnifying
   Party shall not, without the written consent of the Indemnified
    Party, settle or compromise any Claim or consent to the entry of
any judgment which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the  
       Indemnified Party of an unconditional release from all liability in
respect of such Claim.                                      

 9.4.  Payment.  The Indemnifying Party shall promptly pay the
Indemnified Party any Claim amount due under this Article 9, which payment
may be accomplished in whole or in part, at the option of the Indemnified 
Party, by the Indemnified Party setting off any Claim amount owed to the  
Indemnifying Party by the Indemnified Party; provided, however, that      
before any such right to set-off is exercised, the Indemnified Party shall
provide the Indemnifying Party with at least 15 days advance notice of    
such intention to exercise such set-off rights.  Such notice shall include
a description of the Claim, including the amount thereof, and the method  
by which the Indemnified Party intends to exercise such set-off rights.   
If, during such 15 day period, the Indemnifying Party objects to the      
exercise of such set-off rights, the Indemnifying Party shall notify the  
Indemnified Party of such objection in writing, and shall describe the    
basis for such objection and the amount of the Claim as to which the      
Indemnifying Party does not believe should be subject to such set-off     
rights.  Upon receipt of such notice of objection, both the Indemnified   
Party and the Indemnifying Party shall use all reasonable efforts to      
cooperate and arrive at a mutually acceptable resolution of such dispute  
within the next 30 days.  If a mutually acceptable resolution cannot be   
reached between the Indemnified Party and the Indemnifying Party within   
such 30-day period, either party may submit the dispute for resolution by 
a panel of three arbitrators selected from the panels of arbitrators of   
the American Arbitration Association in Milwaukee, Wisconsin; provided,   
that (i) one arbitrator shall be selected by the Indemnified Party, the   
second arbitrator shall be selected by the Indemnifying Party, and the    
third arbitrator shall be selected by the two previously selected         
arbitrators and (ii) in all respects, such panel shall be governed by the 
American Arbitration Association's then existing Commercial Arbitration   
Rules.  During the pendency of any dispute under this Section 9.4, the    
Claim amounts owed to the Indemnifying Party by the Indemnified Party     
which are the subject of the disputed set-off shall be withheld from      
payment until the dispute is finally resolved.  If it is finally          
determined that all or a portion of such withheld amount was not owed to  
the Indemnified Party, the Indemnified Party shall promptly pay the       
Indemnifying Party such amount not owed.  The right of set-off under this 
Section 9.4 shall not be exclusive of any other rights or remedies at law 
or equity which the Indemnified Party may have against the Indemnifying   
Party.                                                                    

   9.5. Limitations on Indemnification.  Except for any willful or
knowing breach or misrepresentation, as to which Claims may be brought    
without limitation as to time or amount:                                  

            9.5.(a)          Time Limitation.  No Claim or action shall be
  brought under this Article 9 for breach of a representation or
    warranty after the lapse of two (2) years following the Closing.
   Regardless of the foregoing, however, or any other provision of
this Agreement:                                             

                 (i)    There shall be no time limitation on Claims on
       actions brought for (A) Claims of or against Buyer or the
         Purchased Assets not specifically assumed by Buyer pursuant
            hereto or (B) breach of any representation or warranty made by
           Shareholders or Company in or pursuant to Section 4.5(c), and
           Shareholders hereby waive all applicable statutory limitation
periods with respect thereto.                     

                (ii)    Any Claim made by a party hereunder prior to
            the termination of the survival period for such Claim shall be
           preserved despite the subsequent termination of such survival
period.                                           

                  (iii)   If any act, omission, disclosure or failure to
          disclose shall form the basis for a Claim for breach of more
       than one representation or warranty, and such Claims have
         different periods of survival hereunder, the termination of
         the survival period of one Claim shall not affect a party's
            right to make a Claim based on the breach of representation or
warranty still surviving.                         

10.    CLOSING                                                            

       The closing of this transaction ("Closing") shall take place at the
offices of Foley & Lardner, 777 East Wisconsin Avenue, Milwaukee,         
Wisconsin  53202, at 9:00 a.m. on October 1, 1997, or at such other time  
and place as the parties hereto shall agree upon.  Such date is referred  
to in this Agreement as the "Closing Date."                               

   10.1.  Documents to be Delivered by or on Behalf of Company and
Shareholders.  At the Closing, Company and Shareholders shall deliver, or 
cause to be delivered, to Buyer the following documents, in each case duly
executed or otherwise in proper form:                                     

            10.1.(a)  Stock Certificates.  Stock certificates representing
the Existing Class B Common Stock.                          

          10.1.(b)  Deeds, Bill of Sale.  Deeds to Owned Real Property
   and Buildings and Bill of Sale to other Purchased Assets in the
form of Exhibit 1 hereto.                                   

       10.1.(c)  Certified Resolutions.  A certified copy of the
     resolutions of the Board of Directors of Company and Shareholders
    authorizing and approving this Agreement and the consummation of
  the transactions contemplated by this Agreement (including the
subsequent liquidation and dissolution of the Company).     

           10.1.(d)   Other Documents.  All other documents, instruments
    or writings required to be delivered to Buyer at or prior to the
     Closing pursuant to this Agreement and such other certificates of
authority and documents as Buyer may reasonably request.    

     10.2.  Documents to be Delivered by Buyer.  At the Closing, Buyer
shall deliver, or cause to be delivered, to Company and Shareholders the  
following documents, in each case duly executed or otherwise in proper    
form:                                                                     

        10.2.(a)  Stock Certificates.  Stock certificates (in such
     denominations as mutually agreed upon) representing the number of
      shares of Common Stock and New Class B Common Stock required to be
issued and delivered by Section 3.2 hereof.                 

          10.2.(b)  Assumption of Liabilities.  Certificate of Assumed
Liabilities in the form of Exhibit 2 hereto.                

       10.2.(c)  Certified Resolutions.  A certified copy of the
  resolutions of the Board of Directors of Buyer authorizing and
     approving this Agreement and the consummation of the transactions
contemplated by this Agreement.                             

          10.2.(d)  Other Documents.  All other documents, instruments
      or writings required to be delivered to Company at or prior to the
     Closing pursuant to this Agreement and such other certificates of
authority and documents as Company may reasonably request.  

11.    TERMINATION                                                        

      11.1.  Right of Termination Without Breach.  This Agreement may be
terminated without further liability of any party at any time prior to the
Closing by either Buyer or Company.                                       

12.    MISCELLANEOUS                                                      

12.1.  Disclosure Schedule.   Information set forth in the  
Disclosure Schedule specifically refers to the article and section of this
Agreement to which such information is responsive and such information    
shall not be deemed to have been disclosed with respect to any other      
article or section of this Agreement or for any other purpose.  The       
Disclosure Schedule shall not vary, change or alter the language of the   
representations and warranties contained in this Agreement and, to the    
extent the language in the Disclosure Schedule does not conform in every  
substantive respect to the language of such representations and           
warranties, such language shall be disregarded and be of no force or      
effect.                                                                   

    12.2.  Further Assurance.  From time to time, at Buyer's request
and without further consideration, Company and Shareholders will execute  
and deliver to Buyer such documents and take such other action as Buyer   
may reasonably request in order to consummate more effectively the        
transactions contemplated hereby and to vest in Buyer good, valid and     
marketable title to the Purchased Assets being transferred hereunder.     

     12.3.  Public Announcements.  Public announcements concerning the
transactions provided for in this Agreement by any party hereto shall be  
subject to the approval of the other parties in all essential respects,   
except that Company's and Shareholders' approval shall not be required as 
to any statements and other information which Buyer may make pursuant to  
offers or sales of securities to employees or others, disclosures         
necessary in the ordinary course of business, disclosures by Buyer deemed 
necessary or advisable as a result of Securities and Exchange Commission  
or NYSE requirements, or as otherwise required by law.                    

12.4.  Assignment; Parties in Interest.  Except as expressly
provided herein, the rights and obligations of a party hereunder may not  
be assigned, transferred or encumbered without the prior written consent  
of the other parties; provided, however, that Buyer may assign and        
transfer its rights and obligations hereunder to any "affiliate" thereof  
(as such term is defined under the Securities Exchange Act of 1934, as    
amended), without the prior written consent of any other party.  This     
Agreement shall be binding upon, inure to the benefit of, and be          
enforceable by the respective successors and permitted assigns of the     
parties hereto.  Nothing contained herein shall be deemed to confer upon  
any other person any right or remedy under or by reason of this Agreement.

       12.5.  Law Governing Agreement.  This Agreement may not be modified
or terminated orally, and shall be construed and interpreted according to 
the internal laws of the State of Wisconsin, excluding any choice of law  
rules that may direct the application of the laws of another jurisdiction.

       12.6.  Amendment and Modification.  Buyer, Company and Shareholders
may amend, modify and supplement this Agreement in such manner as may be  
agreed upon by them in writing; provided, however, that upon liquidation  
of Company, its written agreement to any such amendment, modification or  
supplement shall no longer be required.                                   

   12.7.  Expenses.  Regardless of whether or not the transactions
contemplated hereby are consummated, Company and Shareholders, jointly and
severally, shall pay, and shall indemnify, defend and hold harmless Buyer 
from and against any sales, use, excise, transfer or other similar tax    
imposed with respect to the transactions provided for in this Agreement,  
and any interest or penalties related thereto.  Buyer shall pay all fees  
and expenses of the Appraiser with respect to the appraisal of the Owned  
Real Property and Buildings, the Furniture and Fixtures and Leases.       
Except as otherwise provided herein, each of the parties shall bear its   
own expenses and the expenses of its counsel and other agents in          
connection with the transactions contemplated hereby.  The parties agree  
that the prevailing party in any action or arbitration brought with       
respect to or to enforce any right or remedy under this Agreement shall be
entitled to recover from the other party or parties all reasonable costs  
and expenses of any nature whatsoever incurred by the prevailing party in 
connection with such action or arbitration, including without limitation  
attorneys' fees and prejudgment interest.                                 

      12.8.  Entire Agreement.  This Agreement, along with the Ancillary
Instruments, embody the entire agreement between the parties hereto with  
respect to the transactions contemplated herein, and there have been and  
are no agreements, representations or warranties between the parties other
than those set forth or provided for herein.                              

       12.9.  Counterparts.  This Agreement may be executed in one or more
written counterparts, each of which shall be deemed an original, but all  
of which together shall constitute one and the same instrument and which  
shall be effective as of the date and year written above.                 

    12.10.  Further Documents.  Buyer, Company and Shareholders each
agree to execute all other documents and to take such other action or     
corporate proceedings as may be necessary or desirable to carry out the   
terms hereof.                                                             

      12.11.  Tax Covenant.  Buyer will not take any action, prior to or
following the Closing, that will cause the transactions contemplated by   
this Agreement to fail to qualify as a "reorganization" within the meaning
of Section 368(a)(1)(C) of the Code.  This covenant shall survive the     
Closing.                                                                  

  12.12.      IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date and year first above written.                    

THE MARCUS CORPORATION             GUEST HOUSE INN, INC.    

By:                                By:                      
   Stephen H. Marcus,                 Stephen H. Marcus,
                             President
President and Chief                               
Executive Officer                             

SHAREHOLDERS:                                                             

Stephen H. Marcus, personally      Ida Lowe, personally     

                                   Ben and Celia Marcus 1992
                         Revocable Trust
Diane Marcus Gershowitz,                                    
personally                                                  
             By:
  Ida Lowe S Corporation Trust            Ben Marcus, as Trustee
(Charles and David)                                         
                                      Ida Lowe S Corporation Trust
                             (Charles and Susan)
By:                                                         
Stephen H. Marcus, as                               
Trustee                                             
             By:
                                       Stephen H. Marcus, as
Exemption Trust under the Will         Trustee              
of Charles Lowe                                           

By:                                                         
Ida Lowe, as Trustee                                

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                                                                 Exhibit B

 PROPOSED AMENDMENT TO THE
 ARTICLES OF INCORPORATION

          The proposed amendment to Section (B)(5) of Article 2 of the
Company's Articles of Incorporation that would be effected if the Stock   
Issuance Amendment is approved by shareholders at the Meeting is          
underlined.                                                               

(5)    Issuance of the Class B Common Stock.      

   (a)    Initial Issuance.  One share of Class B Common
Stock shall be initially issued for each outstanding share  
of Class B Common Stock, par value one dollar ($1) per      
share, of The Marcus Corporation, a Delaware corporation,   
pursuant to the Agreement and Plan of Merger, dated August  
13, 1992, by and between the Corporation and The Marcus     
Corporation.                                                

(b)    Subsequent Issuance.  Following the initial
issuance, the Board of Directors may only issue shares of   
the Class B Common Stock in the form of a distribution or   
distributions pursuant to a stock dividend on or split-up of
the shares of the Class B Common Stock and only to the then 
holders of the outstanding shares of the Class B Common     
Stock in conjunction with and in the same ratio as a stock  
dividend on or split-up of the shares of the Common Stock.  
Except as provided in this subparagraph (b), the Corporation
shall not issue additional shares of Class B Common Stock   
after the initial issuance of Class B Common Stock, as      
described in Paragraph (B)(5)(a) of this Article, and all   
shares of Class B Common Stock surrendered for conversion   
shall be retired, unless otherwise approved by the          
affirmative vote of the holders of a majority of the        
outstanding shares of the Common Stock and Class B Common   
Stock entitled to vote, voting together as a single class,  
as provided in Paragraph (B)(1) of this Article.            
NOTWITHSTANDING THE FOREGOING, THE BOARD OF DIRECTORS AND   
THE CORPORATION SHALL BE PERMITTED TO MAKE A ONE-TIME       
ISSUANCE OF 299,547 SHARES OF CLASS B COMMON STOCK TO GUEST 
HOUSE INN, INC. ("GHI") IN CONNECTION WITH THE AGREEMENT AND
PLAN OF REORGANIZATION DATED JUNE 30, 1997, BY AND AMONG THE
CORPORATION, GHI AND THE SHAREHOLDERS OF GHI, IN EXCHANGE   
FOR AND CANCELLATION OF 299,547 SHARES OF CLASS B COMMON    
STOCK OWNED BY GHI AND, NOTWITHSTANDING ANY OTHER PROVISION 
OF THESE ARTICLES OF INCORPORATION (INCLUDING PARTICULARLY  
SECTION (B)(3) OF THIS ARTICLE 2), THE SHAREHOLDERS OF GHI  
ON JUNE 30, 1997 SHALL BE "PERMITTED TRANSFEREES" OF THE    
SHARES OF CLASS B COMMON STOCK ISSUED TO GHI.               

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                                                                 Exhibit C

 PROPOSED AMENDMENT TO THE
 ARTICLES OF INCORPORATION

           The proposed amendments to the first sentence of Article 2 of
the Company's Articles of Incorporation that would be effected if the     
Authorized Stock Amendment is approved by shareholders at the Meeting are 
underlined and the proposed deletions have been indicated by overstriking.

 ARTICLE 2

 Authorized Shares

        The total number of shares of all classes of capital stock
which the Corporation shall be authorized to issue is <#> fifty-one</#>   
EIGHTY-FOUR million <#> (51,000,000) </#>(84,000,000) shares, consisting  
of (i) <#> thirty </#> FIFTY million <#> (30,000,000) </#> (50,000,000)   
shares of a class designated "Common Stock", with a par value of one      
dollar ($1) per share; <#> twenty </#> THIRTY-THREE million  <#>          
(20,000,000) </#> (33,000,000) shares of a class designated "Class B      
Common Stock", with a par value of one dollar ($1) per share; and one     
million (1,000,000) shares of a class designated "Preferred Stock", with a
par value of one dollar ($1) per share.                                   

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                                                                 Exhibit D
   
                                                        [Enlarge/Download Table]
                                                                                         

                           GUEST HOUSE INN, INC.                                         
                        BALANCE SHEETS - UNAUDITED                                       
                              (In Thousands)                                             

                                                                                         
                                                    June 5,  September 26,  September 28,
                                                      1997       1996            1995    
                                                                                         
 ASSETS                                                                                  

 CURRENT ASSETS                                                                          
  Cash and cash equivalents                         $  309       $  481          $  703  
  Accounts and notes receivable                      2,241        1,370             670  
  Inventories                                           13           15              23  
  Prepaid assets                                        38           55             148  
                                                    ------        _____          ______  
 Total current assets                                2,601        1,921           1,544  

 PROPERTY AND EQUIPMENT                                                                  
  Land                                                 270          270             270  
  Buildings and improvements                         1,972        1,972           2,377  
  Furniture, fixtures and equipment                    758          758           1,242  
                                                    ______        _____           _____  
 Total property and equipment                        3,000        3,000           3,889  
  Less accumulated depreciation                      2,364        2,306           2,682  
                                                    ______        _____           _____  
 Net property and equipment                            636          694           1,207  

 OTHER ASSETS                                            8            8               8  
                                                    ------       ------          ------  
Total assets                                        $3,245       $2,623          $2,759  
                                                    ======       ======          ======  
 LIABILITIES AND SHAREHOLDERS' EQUITY                                                    
 CURRENT LIABILITIES                                                                     
  Accounts payable                                  $   56      $     6         $    44  
  Taxes other than income taxes                         46           63              87  
  Accrued liabilities                                    3            3               5  
                                                    ------       ------         -------  
 Total current liabilities                             105           72             136  

 SHAREHOLDERS' EQUITY                                                                    
  Common stock, no par value, authorized                 5            5               5  
  1,000 shares, issued and                                                               
  outstanding 50.0 shares                                                                
  Retained earnings                                  3,135        2,546           2,618  
                                                    ------       ------         -------  

 Total shareholders' equity                          3,140        2,551           2,623  
                                                    ------       ------         -------  
 Total liabilities and shareholders' equity         $3,245       $2,623          $2,759  
                                                    ======       ======         =======  

See accompanying notes.                                                                  

                                                                             
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                                                           [Enlarge/Download Table]
                                                                                                                      

                           GUEST HOUSE INN, INC.                                                                      
                    STATEMENTS OF EARNINGS - UNAUDITED                                                                
                              (In Thousands)                                                                          

                                                                                                                      
                                                      For the                                                         
                                                    Thirty-Six Weeks                                                  
                                                       Ended                         For the Year Ended               
                                                       June 5,        September 26,     September 28,    September 29,

                                                       1997               1996               1995             1994    
                                                                                                                      
 REVENUES                                                                                                             
  Food and beverage                                 $  310               $  451              $  625         $  792    
  Bowling                                              483                  650                 832            883    
  Rental income                                        319                  283                 266            251    
                                                   -------               ------              ------         ------    
 Total revenues                                      1,112                1,384               1,723          1,926    

 COSTS AND EXPENSES                                                                                                   
  Food and beverage                                     90                  141                 203            242    
  Advertising and marketing                             33                   46                  84             62    
  Administrative                                         6                    8                   8             18    
  Other operating expenses                             431                  714                 875            950    
  Depreciation                                          58                  121                 135            155    
  Property taxes                                        31                   61                 105             98    
                                                   -------               ------              ------         ------    
 Total costs and expenses                              649                1,091               1,410          1,525    
                                                   -------               ------              ------         ------    

 OPERATING INCOME                                      463                  293                 313            401    

 OTHER INCOME (EXPENSE):                                                                                              
  Interest income                                       55                   53                  27             23    
  Dividend income                                       71                   57                  83             62    
  Interest expense                                      --                   --                  --            (7)    
  Gain (loss) on disposition of property                --                (323)                   1             --    
  and equipment                                                                                                       
                                                    ------               ------              ------         -------   
                                                       126                (213)                 111             78    
                                                    ------               ------              ------         -------   
 EARNINGS BEFORE INCOME TAXES                          589                   80                 424            479    
  State income tax                                      --                    2                  23              1    
                                                    ------               ------              ------         -------   
 NET EARNINGS                                       $  589               $   78              $  401         $  478    
                                                    ======               ======              ======         =======   

See accompanying notes.                                                                                               

                                                                             
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                                                           [Enlarge/Download Table]
                                                                                                                   
                           GUEST HOUSE INN, INC.                                                                   
                   STATEMENTS OF CASH FLOWS - UNAUDITED                                                            
                              (In Thousands)                                                                       
                                                                                                                   
                                                          For the                                                  
                                                         Thirty-Six                                                
                                                        Weeks Ended                 For the Year Ended             
                                                                     September 26,  September 28,     September 29,
                                                          June 5,                                                  
                                                                          1996           1995             1994     
                                                            1997                                                   
                                                                                                                   
 OPERATING ACTIVITIES                                                                                              
 Net earnings                                             $  589        $   78          $  401           $  478    
 Adjustments to reconcile net earnings to net cash                                                                 
 provided by operating activities:                                                                                 
  (Gain) loss on disposition of property                      --           323             (1)               --    
   and equipment and other assets                                                                                  
  Depreciation                                                58           121             135              155    
  Changes in assets and liabilities:                                                                               
   Accounts and notes receivable                               2            26            (18)               18    
   Inventories                                                 2             8              --              (3)    
   Prepaid expenses                                           17            40               7             (11)    
   Accounts payable                                           50          (38)            (42)               21    
   Taxes other than income taxes                             (17)         (24)               3             (18)    
   Other accrued liabilities                                  --           (2)               1                1    
                                                          ------       -------          ------          -------    
 Total adjustments                                           112           454              85              163    
                                                          ------       -------          ------          -------    
 Net cash provided by operating activities                   701           532             486              641    

 INVESTING ACTIVITIES                                                                                              
 Capital expenditures                                         --          (25)            (16)             (66)    
 Net proceeds from disposals of property and                  --           147              --               --    
 equipment                                                                                                         
 Change in related party receivables                      (1,283)        (535)            (30)               28    
 Change in due from First American Finance Corp.             410         (191)           (221)               --    
                                                          ------      -------          ------          -------     
 Net cash used in investing activities                      (873)        (604)           (267)             (38)    

 FINANCING ACTIVITIES                                                                                              
 Debt transactions:                                                                                                
  Principal payments on long-term debt                        --            --              --            (209)    
 Equity transactions:                                                                                              
  Distributions to shareholders                               --         (150)           (150)            (200)    
                                                          ------       ------          -------         -------     
 Net cash used in financing activities                        --         (150)           (150)            (409)    
                                                          ------       ------          -------         -------     

 Net increase (decrease) in cash and cash equivalents       (172)        (222)              69              194    
 Cash and cash equivalents at beginning of year              481          703              634              440    
                                                          -------      ------           ------         --------    

 Cash and cash equivalents at end of year                $   309       $  481           $  703           $  634    
                                                          ======       ======           ======         ========    
See accompanying notes.                                                                                            

                                                                             
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 GUEST HOUSE INN, INC.

 NOTES TO FINANCIAL STATEMENTS - UNAUDITED

June 5, 1997

1.   Description of Business and Summary of Significant Accounting        
Policies                                                        

Description of Business                                                   

  The principal operating assets of GHI include certain real estate,
buildings and furniture and fixtures in the Appleton, Wisconsin area.  GHI
leases, under long-term operating leases, real estate to subsidiaries of  
the Company.  GHI also owns certain vacant properties and owns and        
operates a bowling center in the Appleton area.                           

Fiscal Year                                                               

GHI reports on a 52/53-week year ending the last Thursday of    
September.  All annual periods presented consist of 52 weeks.             

Cash Equivalents                                                          

    GHI considers all highly liquid investments with maturities of three
months or less when purchased to be cash equivalents.  Cash equivalents   
are carried at cost, which approximates market.                           

Inventories                                                               

     Inventories, consisting principally of food and beverages, are stated
at average cost.                                                          

Depreciation                                                              

Depreciation of property and equipment is provided using the    
straight-line method over the following estimated useful lives:           

                     Years

Building and improvements               7 - 31                  
Furniture, fixtures and equipment       5 - 10                  

Advertising and Marketing Costs                                           

GHI expenses all advertising and marketing costs as incurred.   

Use of Estimates                                                          

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and  
assumptions that affect the amounts reported in the financial statements  
and accompanying notes.  Actual results could differ from those estimates.

Unaudited Financial Data                                                  

    These financial statements are unaudited, however, in the opinion of
management, all adjustments (consisting only of adjustments of a normal   
and recurring nature) considered necessary for a fair presentation of the 
financial position and results of operations have been included.          
Operating results for the thirty-six weeks ended June 5, 1997, are not    
necessarily indicative of the results that might be expected for the year 
ending September 25, 1997.                                                

Other Assets                                                              

Other noncurrent assets consist of 299,547 Class B Shares of The
Marcus Corporation, recorded at historical cost.  Holders of Class B      
Shares are substantially restricted in their ability to transfer their    
Class B Shares.  Holders of Class B Shares are entitled to ten votes per  
share while holders of Common Shares are entitled to one vote per share on
any matters brought before the shareholders of the Company.  The          
shareholders of GHI also have voting control of the Company.              

Income Tax Status                                                         

    GHI has elected to be taxed as an S Corporation under the applicable
provisions of the Internal Revenue Code and the tax laws of Wisconsin.    
The liability for federal and state income taxes under S Corporation      
provisions is the responsibility of the shareholders individually.        
Accordingly, GHI's financial statements do not reflect any provision or   
liability for current or deferred federal or state income taxes except for
minor surcharge or recycling taxes.  Assuming the acquisition by the      
Company is approved, income taxes would generally be provided at the      
Company's effective tax rate of 40%.                                      

2.   Accounts and Notes Receivable                                        

  The composition of accounts and notes receivable is as follows (in
thousands):                                                               

                               June 5,    September 26,  September 28,
                            1997          1996            1995

Related party receivables         $2,216         $933            $398   

Due from First American                                                 
Finance Corporation                  2          412             221 

Interest and other                    23           25              51   
receivables                                                         
                               ------       ------          ------
                               $2,241       $1,370            $670
                               ======       ======          ======

3.   Leases                                                               

The GHI's leasing operations consist of leasing property and    
equipment under operating leases expiring in various years through 2016.  
Income for such leases from related parties amounted to $319,000 for the  
thirty-six weeks ended June 5, 1997, and $283,000, $266,000 and $251,000  
in 1996, 1995 and 1994, respectively.                                     

  Following is a summary of property on or held for lease at June 5,
1997 (in thousands):                                                      

Land                               $  241             
Buildings and improvements          1,112             
Furniture, fixtures and                               
equipment                        193        
                       -------
                       1,546
Less:  Accumulated depreciation     1,304             
                       -------
                      $  242
                       =======

     Minimum future rentals to be received on non-cancelable related party
operating leases as of June 5, 1997 for each of the next 5 fiscal years   
and in the aggregate are (in thousands):                                  

1998                           $ 449        
1999                             449        
2000                             449        
2001                             456        
2002                             482        
Subsequent to 2002             5,038        
                       -------
Total minimum future                        
rentals                       $7,323        
                      ========

4.   Related-Party Transactions                                           

In addition to the leasing activities disclosed above, GHI also 
transfers excess cash to and obtains operating advances from First        
American Finance Corporation ("First American"), a subsidiary of the      
Company.  Interest is paid to First American based on the prime rate, or  
interest is paid to GHI based on 90-day certificate of deposit rates.     
Operating advances are available to GHI on an as needed basis.            
Interest income earned by GHI on advances to First American was $9,000 for
the thirty-six weeks ended June 5, 1997, and $25,000 and $11,000 in 1996  
and 1995, respectively.  No interest income was earned on advances to     
First American in 1994.                                                   

   GHI has various accounts and notes receivable from shareholders and
other related parties (see Note 2).  Interest income earned by GHI on     
these related party receivables was $46,000 for the thirty-six weeks ended
June 5, 1997, and $28,000, $13,000 and $23,000 in 1996, 1995 and 1994,    
respectively.  It is the intention of the shareholders of GHI to pay all  
outstanding related party receivables prior to closing on the proposed    
transaction between GHI and the Company.                                  

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                                                                   [WHITE]
THE MARCUS CORPORATION
 PROXY FOR HOLDERS OF COMMON STOCK
 SOLICITED BY THE BOARD OF DIRECTORS
FOR THE 1997 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
 ON SEPTEMBER 29, 1997

The undersigned hereby constitutes and appoints STEPHEN H. MARCUS and     
THOMAS F. KISSINGER, and each of them, with the power of substitution, as 
proxies of the undersigned, to vote any and all shares of Common Stock of 
THE MARCUS CORPORATION which the undersigned is entitled to vote at the   
1997 Annual Meeting of Shareholders to be held at 10:00 A.M., local time, 
September 29, 1997, at the Pfister Hotel, Milwaukee, Wisconsin, and at any
adjournment thereof, upon such business as may properly come before the   
meeting, including the items set forth below as more completely described 
in the Proxy Statement for the meeting.                                   

The undersigned acknowledges receipt of the Notice of the Annual Meeting, 
the Proxy Statement and the 1997 Annual Report to Shareholders and hereby 
revokes any other proxy heretofore executed by the undersigned for such   
meeting.                                                                  

This proxy, when properly executed, will be voted in the manner directed  
herein by the undersigned shareholder.  If no direction is made, this     
proxy will be voted FOR all nominees for director, FOR approval of the    
Guest House Inn, Inc. transaction and the associated amendment to the     
Articles of Incorporation to permit the one-time issuance of shares of    
Class B Common Stock in exchange for and cancellation of an equal number  
of existing shares of Class B Common Stock, FOR approval of the amendment 
to the Articles of Incorporation to increase the number of authorized     
shares of Common Stock and Class B Common Stock, and on such other matters
as may properly come before the meeting or any adjournment thereof in     
accordance with the best judgment of the proxies named herein.            

 DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
__________________________________________________________________________

THE MARCUS CORPORATION 1997 ANNUAL MEETING

1.          1 - Diane Marcus Gershowitz   [_]  FOR all    [_]  WITHHOLD 
ELECTION       2 - Timothy E. Hoeksema         nominees        AUTHORITY
OF            3 - Stephen H. Marcus 4 -        listed to       to vote  
DIRECTORS:    Daniel F. McKeithan, Jr.         the left        for all  
              5 - Bruce J. Olson  6 -         (except         nominees
              Allan H. Selig  7 - Ulice        as              listed to
                     Payne, Jr.                specified       the left.
8 - Philip L. Milstein          below).   

(Instructions:  To withhold authority to      ------                    
vote for any indicated nominee, write the     ------                    
number(s) of the nominee(s) in the box                                  
provided to the right.)                                                 

2.   Approval of the Guest House Inn, Inc.          [_]    [_]      [_] 
        transaction and associated amendment to the    FOR    AGAINST  ABSTAIN
Articles of Incorporation to permit the one-                  
time issuance of shares of Class B Common Stock               
in exchange for and cancellation of an equal                  
number of existing shares of Class B Common                   
Stock.                                                        

3.   Approval of an amendment to the Articles of     [_]   [_]      [_] 
        Incorporation to increase the number of         FOR   AGAINST  ABSTAIN
authorized shares of Common Stock and Class B                 
Common Stock.                                                 

    4.   Upon such other business as may properly come before the annual meeting
         or any adjournment thereof in accordance with the best judgment of such
proxies.                                                      

Address Change?               Date:______________________   N0. OF SHARES 
Mark Box  [_]                                                             
Indicate changes below:                                                   

                                             Signature(s) in Box

                                                Please sign exactly as
                                              your name appears on
                                                 your stock certificate.
                                                  Joint owners should each
                                             sign personally.  A
                                                 corporation should sign
                                                in full corporate name
                                              by a duly authorized
                                                officer.  When signing
                                                as attorney, executor,
                                                administrator, trustee
                                                or guardian, give full
                                        title as such.

DEFM14A
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                                                                    [BLUE]
THE MARCUS CORPORATION
 PROXY FOR HOLDERS OF CLASS B COMMON STOCK
 SOLICITED BY THE BOARD OF DIRECTORS
FOR THE 1997 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON             
SEPTEMBER 29, 1997

The undersigned hereby constitutes and appoints STEPHEN H. MARCUS and     
THOMAS F. KISSINGER, and each of them, with the power of substitution, as 
proxies of the undersigned, to vote any and all shares of Class B Common  
Stock of THE MARCUS CORPORATION which the undersigned is entitled to vote 
at the 1997 Annual Meeting of Shareholders to be held at 10:00 A.M., local
time, September 29, 1997, at the Pfister Hotel, Milwaukee, Wisconsin, and 
at any adjournment thereof, upon such business as may properly come before
the meeting, including the items set forth below as more completely       
described in the Proxy Statement for the meeting.                         

The undersigned acknowledges receipt of the Notice of the Annual Meeting, 
the Proxy Statement and the 1997 Annual Report to Shareholders and hereby 
revokes any other proxy heretofore executed by the undersigned for such   
meeting.                                                                  

This proxy, when properly executed, will be voted in the manner directed  
herein by the undersigned shareholder.  If no direction is made, this     
proxy will be voted FOR all nominees for director, FOR approval of the    
Guest House Inn, Inc. transaction and the associated amendment to the     
Articles of Incorporation to permit the one-time issuance of shares of    
Class B Common Stock in exchange for and cancellation of an equal number  
of existing shares of Class B Common Stock, FOR approval of the amendment 
to the Articles of Incorporation to increase the number of authorized     
shares of Common Stock and Class B Common Stock, and on such other matters
as may properly come before the meeting or any adjournment thereof in     
accordance with the best judgment of the proxies named herein.            

 DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
__________________________________________________________________________

THE MARCUS CORPORATION 1997 ANNUAL MEETING

1.               1 - Diane Marcus       [_]  FOR all      [_]  WITHHOLD 
ELECTION      Gershowitz  2 - Timothy        nominees          AUTHORITY
OF                  E. Hoeksema              listed to         to vote  
DIRECTORS:   3 - Stephen H. Marcus 4 -       the left          for all  
            Daniel F. McKeithan, Jr.        (except as        nominees
              5 - Bruce J. Olson  6 -        specified         listed to
             Allan H. Selig  7 - Ulice       below).           the left.
Payne, Jr.                      
8 - Philip L. Milstein                      

(Instructions:  To withhold authority to      ------                    
vote for any indicated nominee, write the     ------                    
number(s) of the nominee(s) in the box                                  
provided to the right.)                                                 

2.   Approval of the Guest House Inn, Inc.         [_]     [_]      [_] 
        transaction and associated amendment to the   FOR     AGAINST  ABSTAIN
Articles of Incorporation to permit the one-                  
time issuance of shares of Class B Common Stock               
in exchange for and cancellation of an equal                  
number of existing shares of Class B Common                   
Stock.                                                        

3.   Approval of an amendment to the Articles of   [_]     [_]      [_] 
        Incorporation to increase the number of       FOR     AGAINST  ABSTAIN
authorized shares of Common Stock and Class B                 
Common Stock.                                                 

    4.   Upon such other business as may properly come before the annual meeting
         or any adjournment thereof in accordance with the best judgment of such
proxies.                                                      

Address Change?               Date:______________________   N0. OF SHARES 
Mark Box  [_]                                                             
Indicate changes below:                                                   

                                             Signature(s) in Box

                                                Please sign exactly as
                                              your name appears on
                                                 your stock certificate.
                                                  Joint owners should each
                                             sign personally.  A
                                                 corporation should sign
                                                in full corporate name
                                              by a duly authorized
                                                officer.  When signing
                                                as attorney, executor,
                                                administrator, trustee
                                                or guardian, give full
                                        title as such.

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘DEFM14A’ Filing		Date		First		Last			Other Filings
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		10/1/97		4		5
		9/29/97		2		13
		9/25/97		11
Filed on:		8/22/97		2		4
		8/8/97		2		3
		6/30/97		2		6
		6/26/97		4
		6/5/97		4		11
		6/2/97		4
		5/29/97		2		5			10-K
		2/10/97		4					SC 13G/A
		2/7/97		4					SC 13G
		12/18/96		4
		9/26/96		4					DEF 14A
		6/26/96		4
		8/13/92		6
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