The Tribune

• Move ‘critical to keeping the lights on’

• Attendance numbers 33% off forecast

• Eyes Xmas bounce, 2023 profitability

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Fusion Superplex yesterday said its workforce has been reduced by 25 percent compared to pre-COVID levels as part of a $3m cost savings package “critical to our survival and keeping on the lights”.

Carlos Foulkes, the cinema and entertainment complex’s chief executive, told Tribune Business via written responses to this newspaper’s questions that it had been forced to restructure its operations due to changed consumer habits in the pandemic’s aftermath. 

With fewer late movie nights, and earlier restaurant closings, he explained that Fusion Superplex’s labour needs have decreased as a result. The Gladstone Road-based business is also down 33 percent on its adjusted attendance forecasts for 2022, although close to four months remain for the year, with those numbers also representing 75 percent of what it achieved pre-COVID in 2019.

Mr Foulkes nevertheless voiced optimism that Fusion Superplex will return to profitability in 2023, with revenue generated by its restaurants and other amenities returning to pre-COVID levels by year-end 2022. Cinema attendance was also likely impacted by a weak late summer movie line-up that “had major holes with no good content”, as the major movie producing studios pushed back their best releases to late 2022 and next year.

Asserting that Fusion Superplex’s situation was no different to the global cinema industry’ struggle to rebound from COVID-related lockdowns and subsequent restrictions, he added that the upcoming release of movies such as Black Panther: Wakanda Forever and Avatar 2 should provide a year-end boost to viewing figures even though global inflationary pressures have raised costs and cut profit margins. 

The Fusion Superplex chief told Tribune Business: “Fusion’s revenue is directly proportional to the attendance.... Our restaurant and other revenue outlets are on a strong rebound. By the end of the year, we should be back to pre-pandemic levels in all the outlets with the support of the public.

“But financial performance is not just revenue. It is best described by operational margins. As you know, the rising cost of supplies and inventory has reduced profit margins. Not just here but globally.” Noting the devastating blow that COVID has inflicted on the global cinema industry, Mr Foulkes pointed to Cineworld, parent company of Regal - the second largest chain in the US - having to file for Chapter 11 bankruptcy protection yesterday.

However, there are glimmers of improvement. Cineplex, Canada’s largest cinema chain, has posted quarterly profits of $1.3m. While massively down on pre-COVID earnings, Mr Foulkes said this was a major improvement when compared to the prior year’s $103m loss, and he voiced optimism that Fusion Superplex will soon achieve a similar positive swing thanks to the major cost-cutting initiatives it has implemented.

“The way Fusion has survived this period of higher costs and lower revenue is by a comprehensive restructure of its operating methodologies,” he told this newspaper. “More efficient ways of production, better maintenance programmes and, yes, reduced staffing. This has led us to a cost reduction of $3m when compared to pre-pandemic operations. This $3m cost reduction was critical to our survival and keeping on the lights.

“We have actually reduced staff out of necessity by 25 percent. However, we are now at maximum staff level for our newly-restructured services. These adjustments were systemic after COVID-19 forced a restructure. For example, the late night movies are now only on Fridays, Saturdays and Sundays. This means labour needs on Mondays through Thursdays in cinema services are less.

“Another example is the roof-top restaurant, Edge, that once operated on the weekend until 2am. This now closes at midnight. In COVID-19 lockdown and subsequent curfews, eating out habits did change and this became the new business cycle. We have found additional ways to improve services with technology, such as using our automatic chemical mixing machines instead of hand pouring or eyeballing measures.”

Given that Fusion Superplex’s pre-COVID workforce was around 350-strong, a 25 percent reduction implies that around 87 positions have been axed to bring it to around 263. “As attendance continues to rise, it is our expectation that 2023 should be a profitable year for Fusion Superplex,” Mr Foulkes told Tribune Business. “Occupancy is picking up steadily.

“We estimate we are at 75 percent of pre-pandemic numbers, and 33 percent short of 2022 adjusted attendance projections thus far. This is a cumulative total to this point in the year, and is a comparison between this year and 2019. But the year is not yet over.”

The Fusion Superplex chief added that a relatively weak late summer movie line-up may have contributed to lower cinema attendance numbers than forecast. “Occupancy largely depends on Hollywood offerings. To maximise profits when full attendance returns, and to be certain they have cleared COVID-19 restrictions, most studios pushed their better movies to the bottom of the year and, in some cases, well into 2023,” he explained. 

“We had only a few good movies such as Top Gun Maverick, Dr Strange 2, and Sonic The Hedgehog 2 early in the summer. You would have noticed the schedule for the late summer had major holes with no good content. So much so that studios ran a re-release programme for old movies such as 1975’s Jaws, 1982’s E.T and 2016’s Star Wars Rogue One.

“Even last December’s Spider Man - No Way Home has returned to screens this week with 11 minutes of new footage. This one was for the fans. Later in the year we expect movies like The Woman King, coming to screen next week, or Black Panther 2 in November, or the long-awaited Avatar 2 to really raise boost attendance this December.”

Yohancy Kemp, Fusion Superplex’s sales and marketing director, told Tribune Business that it was still missing many of its previous 40 year-old and older customers who are venturing out less often post-COVID. “We’re still struggling in terms of demographics and Baby Boomers coming back out. We’re getting a lot of Generation X’s, and it’s the millennials and Generation X’s that are keeping us afloat,” he explained.

“We’re missing two major demographics. Once they start coming back out, and it’s not only here but it’s a worldwide trend that many 40 and older persons, they go out less after COVID. Once we can capture that audience back that will go a long way towards our recovery. We’re working really hard to get them back out.”

Mr Kemp estimated that Fusion Superplex has “another 30 percent company-wide in all our entities” to recover before it regains pre-COVID business levels. He added that the entertainment destination was “very encouraged” by Saturday’s National Cinema Day audience, as it showed movie goers that it was still adhering to all the pandemic-related health and safety protocols.

“It was by far the best day we’ve had for the year,” Mr Kemp said of Saturday. “We discounted tickets to $3 plus fees and taxes. That was by far the best day we have had for the year. People are coming back slowly but steadily. Summer was marginally better than expected. The bounce back in the business, I would say it’s consistent but we would still like to see it increase.”

Echoing Mr Foulkes, the sales and marketing director said anticipated summer movie “blockbusters” such as Bullet Train, Minions and Notes “didn’t pan out” as expected in terms of driving attendance figures. “Notes we anticipated would be a huge blockbuster hit for us, and it was very marginal for us in sales,” Mr Kemp said.

“We are still in a position where everything is in recovery mode. Our restaurants are doing well, but not as well as we’d like... People are coming out more regularly, and what we’re gearing up for is hopefully this coming season everyone joins the new normal and starts using the facilities again. We have a lot of great movies coming out between October and December, so are really looking forward to that period.”