Reel Cinemas has said the evolution of its business model is “critical for its long-term survival” after its profit was slashed during its latest financial year.
The Leicestershire-headquartered independent chain added that it is optimistic for the despite rising costs and the industry remaining “challenging”.
The admission comes in newly-filed accounts with Companies House which shows the firm’s pre-tax profit was slashed from £2.4m to £424,007 in the year from 30 December, 2022, to 28 December, 2023.
Its turnover edged up from £13.3m to £13.9m over the same period.
Reel Cinemas, which was founded in 2001, has 15 venues and 74 screens and is owned by Kailash Chander Suri.
Ticket revenue increased from £6.7m to £7.4m while concession sales dipped slightly from £4.7m to £4.5m. Advertising revenue grew from £743,047 to £795,011.
National living wage increases impacts Reel Cinemas
A statement signed off by the board said: “The directors believe it is time to move beyond referencing pre-Covid box office figures.
“However, it is noteworthy that the group achieved 18 per cent more admissions in this period compared to 2019 and the average revenue per admission is also higher than it was in 2019.”
It added: Similar to other operators, the group continued to face significant cost challenges, primarily due to persistently high energy expenses and increased staff costs.
“The April 2023 increase in the national living wage raised the base pay and exerted upward pressure on wages at higher levels to maintain appropriate differentials across various roles.
“To mitigate energy costs, the group actively renegotiated its contracts to unlock savings.
“Initial investments have been made to transition part of the estate from digital to laser projectors, which are substantially more energy efficient and will have a positive impact on operational costs in future years.”
Read more
Amazon Prime Video buys British film studio where The Lord of the Rings: The Rings of Power is made
Chain eyes further UK expansion
On its current trading and future, Reel Cinemas added: “The group has opened one new site in FY 2024, with two other new schemes in the pipeline beyond 2024.
“Other opportunities are being actively ought, reflecting the group’s confidence in the resilience of the exhibition industry – albeit a confidence that it rooted in the belief that evolution of the model is critical for long-term survival.
“Investments continue to be made to enhance and broaden the customer experience, improve staff retention and reduce utility costs while increasing sustainability.
“The operating environment for the exhibition industry remains challenging.
“Another national living wage increase in April 2024 has contributed to increase staff costs, while the impacts of the 2023 SAG-AFTRA strike has been felt in early 2024 through gaps in the film slate.
“However, the positive audience reaction to key releases and the strength of the slate from Q4 2024 onwards gives cause for optimism.”