A co-director of an independent cinema chain gives a first-hand account of a few short weeks that saw the exhibition world close doors, shed employees and face a very uncertain future.
March 2020 is a month that will never be forgotten in the exhibition world.
In just a few shorts weeks as the coronavirus pandemic continued its global rampage, cinemas across the planet went from worrying about the lack of blockbuster releases as studios began pulling their biggest titles, to physically shutting their doors to customers for an indefinite period of time. Some, possibly forever.
In the U.K., now under a government-enforced lockdown, one dark Tuesday saw all the biggest theater chains declare that they were closing until further notice. This news was promptly followed by reports of mass layoffs, with Cineworld, the second-biggest exhibitor worldwide, coming under fire for its treatment of staff, terminating the employment of many with "immediate effect."
But while much focus has been on the impact of the outbreak on these major cinema chains, the independent sphere has, in many cases, been hit hardest, with smaller operators often without any large war chests to fall back on and not able to rely on membership programs to bring in much-needed income.
Parkway Cinemas, a British family-run business with four sites in the counties of Yorkshire and Lincolnshire, is one such company that has been grappling with the biggest crisis in the industry’s history. This first-hand account told to The Hollywood Reporter by Richard Parkes – one of the founder Gerald Parkes' two sons and a co-director – describes how the month unfolded, making the heartbreaking decision to close the cinemas for the first time in 15 years, doing everything in the firm's power to ensure staff could be kept on and why a financial lifeline from the government may just be able to see the company through.
We were fully aware. There was a major health crisis happening around the world and we knew it was going to come to the U.K. And we knew we needed to prepare for it. So in a sort of theoretical way, we were thinking about it already.
But as soon as they announced that Bond (film No Time to Die) was being pushed back, effectively from that point on we started speaking every day, and we approached it more like an immediate crisis coming our way. That film is so British. So big, and it's so important to exhibition and the film industry, that once Bond was the first casualty, it sort of sharpened everyone's minds about how big this was going to be.
We found that out on Thursday (March 5) and started speaking on Friday about what we were going to do about it. And over the course of that weekend, we were going through a really challenging and emotional process of trying to work out, effectively, how long our business could survive if we lose 20 percent of the audience, 25 percent, 50 percent, if we lose everything. How long can we live if we've got no income?
We got to the point that by the end of the Sunday we realized that had rent to pay in advance, a full quarter. We've got four sites, of which one's a joint venture. So just looking at the others, if you take the rent, and then the VAT [value-added tax] bill that was all due within the next 10-15 days, it's £250,000 ($293,000). And then from the first week of April, business rates hit, and that would have been another £15,000-20,000 ($17,600-$23,500) a month. So when you start trying to work out how quickly we’re going to burn through our cash reserves, knowing that in the first two weeks you’re going to lose a quarter of a million pounds, that focuses the mind.
We had a lot of conversations. With our staff, we don't have any zero hour contracts. We don't agree with them. So that means that from the moment we started talking about this, we knew that we couldn't just reduce staff costs by not giving anyone any hours nor would we want to. It wasn’t an option. We were adamant that we didn’t want to lose any of our people because we're close to them, we know their individual circumstances. The start point for this is that it’s a family business and the staff are part of that family. It sounds like a cliche, but it's true. They're the ones that meet our senior audience every week in the different cinemas. They're the ones that do the parent and child screenings. They are the face of the company. We've got about 100 people across everything. We wanted to keep everyone and we just didn't know how we were going to manage it. So that was a really bad weekend.
But then we were waiting for budget day (March 11) to see what happens. As it turns out, what happened was that sick pay was going to start earlier. So that was good. And then [the government] announced they were going to reduce business [tax] rates, give them a holiday, but only if they were less than £51,000 ($60.000). As a medium-sized business, we’re above that. So at that stage, we still had no help.
So that was that budget. And then, very rapidly, Peter Rabbit was postponed and it suddenly felt like Easter has been cancelled. There wouldn't have been a more perfect time for that film. That was a serious loss, and then very, very quickly, the same happened with A Quiet Place Part II, F9 and Mulan. And at that moment, I don't think we'd ever felt quite so alone in exhibition. Everything was just going. So by Friday 13th, just a week since Bond, we’d lost all the key films coming up, we didn’t have any confirmation of what we're going to actually be able to show in the screens, and we still currently had to pay all our business rates, all of our VAT, and all of our rent at some point in the next couple of weeks. So we were under pressure!
That weekend we did the now classic post, "Yes, we’re open," which everyone was doing around then. And we were doing extra cleaning to sanitize our sites and looking at the way people sat in screenings, all things that are expected. And we were surprised that a fair few people came. I mean, it was quiet, but it wasn’t too bad. We felt like the regulars came out to support us. We were expecting it to have completely dropped off a cliff, and it was close, but it wasn't that.
On the Monday, tensions are beginning to rise everywhere, and we tell all the staff that we are staying open in line with government advice. My belief was that the industry would put on a united front and all agree to close their doors at some point. We were expecting that to be announced on Thursday, and we’d be closed Friday.
So on Monday, we told all the staff we were staying open, and were going to wait to see what happens later. But we already knew that we couldn't sustain this business with this level of outgoing across the board.
And then, just after five o'clock, the Prime Minister [Boris Johnson] told the public to stop going to pubs, clubs and theaters. So in that one speech, he effectively killed our entire cash flow. I know it's a relatively minor thing in the grand scale of everything else that's going on. But our staff heard that. My family heard that. Our loyal customers heard that.
We have a senior screening that happens every single Tuesday. We normally get 250 people, on a good week up to 400. It's an incredibly popular event. We have people that have been coming for years, people come without knowing what the films are because it's a social occasion for them. It's an important part of the week. And at 5 p.m. the Prime Minister tells everyone not to go, so it is fair to say I think that could have been handled a little better.
Again, there are much bigger things happening in the world, but that moment was a fairly significant one for us. And then, when at that point we're kind of thinking there's not a lot worse that can happen, we hear that Universal is breaking the release window and putting Trolls World Tour out early on digital. So it's just the final kick in the teeth that we need at the end of a horrible day.
The next morning – Tuesday – we’re having management calls and know that we’re likely to make a decision this week about closing down. And we’re waiting to have conversations with the Cinema U.K. association, which has been working so hard to keep everyone up to date. What then happens is that Cineworld and Odeon [two of the biggest cinema chains in the U.K.] announced they were closing at 10 a.m. All our staff see that, and we’ve got people starting work in an hour.
So we did what we were going to do, but now to do it slightly quicker. The first thing was to tell the entire team that we would be closing the cinemas at the end of the day, and that if they’ve got shifts booked in for the rest of the week, they’re not to come in but they’d still be paid. We effectively had to announce that we were closing at the end of the day with staff and customers in the building. It was a very difficult day. Apart from Christmas Day, that’s the first time our cinemas have been closed since we opened 16 years ago.
I think in the end it's a personal choice for each business about when they were going to take this decision, but I think the industry standing united as a body and saying that we are deciding to close our doors would have been better. It would have been a better communicated message for the public, with hindsight.
But if we'd said we're going to stay open and close on Thursday, it could have generated crowds of people visiting because it was their last chance, and that could have maybe posed a health risk. So perhaps telling them that we've closed rather than telling them that we we're going to was the right thing to do.
As I say, it’s the first time we’ve been closed outside of Christmas Day. It was genuinely heartbreaking.
But then – finally – a little bit of good news. On Tuesday evening, they changed the rules on the business [tax] rates, so it was no longer those below £51,000 ($60,000), it was for everybody in our sector. That, for us, is an amount of money we we’re not going to have to pay every single month from April, so that was a positive thing on a very bad day.
On Wednesday, on the first day of a shut cinema, we actually opened the doors for the senior screenings in one site. We often get 250 a week coming to this, and we weren’t sure that putting something out through social media would necessarily reach these customers. So we have the doors open and the kettle on, and were ready to welcome them in. And we got about 50 people. There were lots of conversations, lots of cups of tea and lots of biscuits. And a lot of tears. Some of the senior people were obviously worried that we weren’t going to be there anymore for them, so that was quite emotional.
On Thursday, we pulled together all the jobs we’ve put off in the past we could think of that everyone could spend their time doing. It sounds really silly, but things like putting all the ice-cream in one freezer to save the electric bill. And again, we confirmed to the team that yes, we are closed and yes they are going to be paid for this week. But we also said that we would honor all of the hours that they’d been shifted to work next week as well. But at that point, we were saying to them, there may be difficult times ahead.
And what we were doing in the background was contacting all the local recruiters we could think of where we operate. There's a lot of food production, and there's a lot of light industrial pre-production packaging – there’s bakeries, chicken and fish factories. There were roles there. So we made contact with them, and on Friday morning shared with all our staff that we had found immediate jobs with immediate shifts available that week in food prep in various places and the details of how they could apply to them. And we confirmed again that they'd be paid for last week, and for this coming week. And also said that if any member of staff wanted to request a sabbatical, so they could go and work somewhere else in the short term, but then come back to us when we're open again, that would be great.
Then, and this is almost a happy ending, on Friday the chancellor delivered one of the most extraordinary things I've ever seen any government do. The VAT return – gone, we can delay that. That was going to be about £60,000 ($70,500). And then they announced that they were going cover 80 percent of our staff costs. In all honesty, that was the best news we've had in months. It meant that nobody needed to leave. How long it lasts is another question. They’ve said three months, because it means we can plan ahead. We’ve got clarity for three months. We know we can support everyone.
I'm choosing to be optimistic about the positive impact of this crisis. I think more people are going to want to spend more time in the world. And I think shared experiences and social closeness is going to be a very big part of what we need to do to get back on track. And cinemas have always been probably the most affordable night out.
I also think that people being at home, effectively watching everything Netflix or Disney or the rest of them has to offer, are going to be desperate to see big films properly. And I think that's going to be a really good period for us when we reopen.
I feel like we could be, as an industry, incredibly well placed to be the opening night party when we finally get back to normal.
