Ster-Kinekor to cut costs after lockdown

Ster-Kinekor has said it will implement significant cost cuts once it reopens after South Africa’s COVID-19 lockdown.

This is a result of the negative impact of the COVID-19 pandemic and the national lockdown regulations on its business in South Africa.

“All Ster-Kinekor cinemas have been closed since 18:00 on the 24 March 2020 and to date, we have no confirmation from government as to which level cinemas will be operational from,” the company told MyBroadband.

“We continue to engage the government with our proposals around a safe and responsible reopening for movie theatres so that all South Africans can enjoy entertainment on the big screen again.”

The cinema industry’s revenue projections have also been altered by changes to the international film release schedule caused by the pandemic.

“As the world started to feel the effects of COVID-19 more and more of the major blockbuster movie release dates started moving out, which has had a knock-on effect on our revenue projections,” Ster-Kinekor said.

“However, most international cinema markets are starting to reopen now, including COVID-19 hotspots like the UK, Italy and the USA.”

The scheduled release of films such as Christopher Nolan’s Tenet, Mulan, and Wonder Woman 1984 may also help the stabilisation of the cinema industry.

Major cost reductions

Ster-Kinekor told MyBroadband that like a number of other companies in South Africa, it has been hit hard by the effects of the coronavirus.

“As with many other businesses and industries, the absence of any revenue in our company over the past two months has meant a hard look at our cost base,” Ster-Kinekor said.

From May, most of Ster-Kinekor’s staff have been placed on temporary lay-off, with a handful of essential workers earning on a reduced-hour basis.

The company said it still paid all its employees at the end of March and again at the end of April.

“We have planned to make large cost cuts when we reopen in various areas of the business as we cannot afford some things as we restart,” Ster-Kinekor said.

“This is particularly necessary as we anticipate much higher cleaning and sanitation costs in our business when we are allowed to reopen in order to keep our environment safe for our staff and our guests.”

When asked whether it would close down any of its cinemas, Ster-Kinekor it would assess the profitability of each venue at the appropriate time.

“We don’t anticipate this to be the case at this time,” the company said.

“All locations are reviewed on a location by location basis when our leases come to an end and if the location makes business sense at that time, we will look to continue trading there.”

Adapting to COVID-19

Ster-Kinekor said that if the government’s restriction that there can be no gathering of more than 50 people remains in place when cinemas reopen, this will have a significant impact on the cinema industry.

“However, there is an incredible line-up of content from July this year and we have been inundated with messages from our loyal guests that want to come and enjoy great moments with us again on the big screen,” Ster-Kinekor said.

“We believe that cinemas are uniquely positioned to adapt to COVID as our industry is geared for the management and flow of cinemagoers – we can stipulate seating, manage social distancing both in auditoria as well as in foyers, enhance the cleaning protocols that we’ve had in place for many years and via our website, mobisite, and app, we already have the technology in place to ensure that no transactions need be managed in a cinema complex.”

The company stressed the importance of all businesses being treated equally as the lockdown eases in South Africa.

“Given the great systems and protocols we already have in place, cinemas are well placed to be a safe environment for people to enjoy a little break from the hardship and negativity out there that COVID has created for so many people.”

“We support other industries like restaurants, hairdressers and salons in their efforts to reopen with good social distancing and sanitation practices in place.”

“After all, if we are happy to reopen schools and places of worship, then it stands to reason that other environments with appropriate safety measures should also be permitted to trade,” Ster-Kinekor said.

Now read: What will happen to Nu Metro after lockdown

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Ster-Kinekor to cut costs after lockdown