60 Seconds on cinemas: A tough year in prospect?

The current situation:

• US cinema attendances are down 52% y-t-d (per Box Office Mojo).
• BOM unhelpfully adds ‘summer 2017 is closing out with the worst Labor Day weekend in 17yrs’.
• Such trends have a habit of crossing the pond.

How did we get here?    

• TV did the damage 50yrs ago.    
• Cinema subsequently rallied (modestly).
• But now it faces the on-demand revolution.    
• Services such as Netflix, Amazon Prime & Facebook Watch compete for eyeballs with cinema – and they arguably offer better value for money.

Collateral damage?

• Multiplexes tend to be co-located with casual diners.
• The symbiotic relationship has benefited both in the good times – but this year may be more challenging.
• Restaurant Group (many of whose Frankie & Benny and Chiquito’s outlets are located alongside cinemas) acknowledged softer attendances hurt the latter in 2016.
• Beauty & the Beast anchored a good Q1 this year but the outlook is less good.
• This, alongside other headwinds faced by the casual diners (NLW, rates, consumer confidence/spending drop, input price rises etc.), is distinctly unhelpful.

Where are the winners?

• Working harder & adding value remain critical.
• Experiential leisure operators continue to trade strongly.
• Casual diners add little to cinema outliers such as Everyman Media, which focuses on enhancing viewer experience by serving food and drink to seat.