Moviegoers are seeing a 15 per cent to 20 per cent increase in the cost of the past- time, with Palace Amusement blaming the hike on supply shortages and high electricity costs.
Steven Cooke, executive director and concessions manager at Palace Amusement, told the Jamaica Observer that because the cinemas were closed for the past two years due to COVID, all the price changes hit the company at once. Cooke describes this phenomena as a "compounded effect" for the company because it was not aware of the increases.
"So when I come back in two years, we open our cinemas and we're in a pile of debt and I look at the cost of my hot dogs and I order some supplies from the States and when I get it, I can't sell it. I'd be selling it at a break-even point," said Cooke, who further explained that in order to play catch-up in the quickest possible time, he had no other choice but to increase the price of food.
Within those two years, several price increases occurred from inflation to shipping costs which went through the roof.
"A container moved from a few thousand [US] dollars for a container to six to eight times the cost," explained Cooke, who also shared that the movie theatre suffered a lot of shortages as raw materials from its suppliers in the United States come from China, which remained in a lockdown until a few months ago while the rest of the world was opening up.
"We are just now starting to get back our supplies on a regular flow from the United States."
He mentioned one of the most demanded products, nachos, has been the most difficult to get, let alone in consistent supply, mainly due to suppliers prioritising theatres in the United States and then passing on what's left to other cinemas.
"Because of the lockdown and the work-from-home rules, the chip manufacturers are operating on a 30 per cent capacity, so obviously we're going to be the last set of people to get it because when there are other orders from big cinema companies in the States, it naturally goes to them," Cooke explained before adding that a struggle to get portion-controlled cheese is behind the reason moviegoers are seeing a change in the quality of the cheese they get for the nachos.
He pointed out that whenever Palace Amusement manages to get nacho cheese, "the cost of getting that boat [with the cheese] from China to the US is astronomical and they simply pass that cost right on to us… even if the container from the US to Jamaica is cheaper, the cost from China to the US is a lot more expensive," Cooke said.
He also mentioned that the backlog of container ships, though clearing up, is still an issue which is slowing the supply of materials. This has resulted in the cinema company finding alternatives for even its popcorn bags with the paper products being in short supply in the United States. The cinema company also faced difficulty getting hydrogenated oil, popcorn and butter, resulting in a 15-20 per cent increase in food at concessions from December last year.
While doing the interview for this article, the concession manager was notified of a five per cent increase in the cost of the nacho cheese.
In previous years, Palace Amusement removed the discretion of customers to use jalapeños peppers in order to cut costs due to wastage.
"Patrons not being able to control themselves and putting jalapeño pepper on popcorn…it's just waste and if I were to price it in, it's just ridiculous," Cooke said. He points out it's the same reason the cinema does not allow ketchup and relish to be placed on hot dogs by pumps.
Despite the challenges, Cooke said he will keep nachos on the menu.
"Nachos are one of our biggest sellers, and I will price it in order that we can make a modest profit without robbing anybody."
The cinema also lost 90 per cent of its staff during the closure and is still struggling with re-hiring; however, with the recent announcement of an increase in the minimum wage for security guards, labour costs at the company might also be impacted.
"We are in the process of looking at all our options right now," Melanie Graham, marketing manager at Palace Amusement, told the Caribbean Business Report.
Effective March 3, the cost of ticket prices increase by 15 per cent.
"What you need to understand, too, is 50 per cent of it goes to the distributor abroad, they share in the box office, so the little that we charge, the 50 per cent of that, is what we have to use to pay all our bills," Graham explained.
She added that many times the company has had to hold prices but now the economy and the cost of inputs are making it difficult to do so.
"The cost of running the air conditioning, the cost of water, the cost of overall electricity, everything has increased and our margins are very narrow. We don't have anything to cushion the effect."
Even with all the challenges, Palace Amusement managers are well aware that if the cost to attend movies is too high, it will affect turnout, which has seen an increase in recent months.
"As soon as we see prices come down, if they come down, we'll adjust to it as well," Cooke asserted. He, however, said the primary focus is keeping the prices at a point where the cinema can afford to purchase another container from the States.
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