Popcorn = profit: Popcorn is profitable, but the economics of running a cinema are still pretty tough
The latest data from Box Office Mojo reveals that cinemas across the United States are taking between $10m and $15m in weekly admissions revenue in 2021. Last year in January they were averaging closer to $200m a week.
Even in "normal" times, running a large cinema chain was an extremely difficult prospect. We've visualised the latest fiscal year from AMC Entertainment, the largest cinema chain in the country, which reveals that AMC made just a 2% operating profit margin in 2019. That sliver of operating profit is then completely wiped out by the repayments that AMC has to make on its debt — meaning that in 2019 AMC actually lost $149m. And that was at least a "normal" year for cinema more generally.
So given everything that's happened to the movie-going industry it's remarkable that AMC Cinemas has managed to stay afloat. In January AMC raised almost $1bn of investment — an injection of capital that should help the company limp on for another six months. The fact that AMC shares have been caught up in the recent retail rally gave management a chance, if able to act quickly, to perhaps strengthen the company's balance sheet even further.
Popcorn = profit
Although AMC might be in poor financial health overall, its 2019 results reveal just how much cinemas are fleecing you on that popcorn + drink deal. In 2019 they scooped up more than $1.7bn in food & beverage sales, costing them just $279m to do so. That's a delicious 84% gross profit margin — and it's still not enough to keep the business sustainable.
