Adam Aron’s tenure as chief executive officer of AMC Theatres has been eventful from the start. Stepping into the role in 2016, Aron helped transform the circuit into the world’s largest cinema chain while spearheading AMC’s investments in digital ticketing, premium large format (PLF), and expanded food and beverage offerings. The last four years on the job have been fully devoted to, in Aron’s words, a “survive then thrive” philosophy, as the chain navigated the impact of the Covid-19 pandemic on the global cinema industry.

As the world’s leading cinema chain, the company’s results are directly tied to the box office. Nevertheless, AMC has put a special focus on diversifying its revenue stream since the pandemic. In the last year alone, the circuit introduced innovations like a retail popcorn line, company branded candy, and a foray into theatrical distribution that already delivered two world-class concerts (“Taylor Swift: The Eras Tour” and “Renaissance: A Film by Beyoncé”) to movie theaters around the world.

AMC has also focused on achieving increased efficiencies across its fleet of cinemas. The circuit has closed 169 underperforming locations while adding 60 new sites to its circuit since 2020. The contraction represents a 10% decline in its location count, with the 60 new sites already outperforming the 169 shuttered theaters.

Among its latest innovations in the European market is the introduction of XL-branded auditoriums. These screens are situated between a regular auditorium and a premium large format (PLF) screen and are offered to moviegoers at a modest price increase. There are currently more than 60 XL auditoriums across AMC’s European circuit, with expansion possible once it’s determined how moviegoers respond to the concept.

Those efforts have begun making an impact on the bottom line. According to the latest quarterly earnings report, total revenue per patron at AMC Theatres was up 36 percent when compared against Q1 2019. Celluloid Junkie’s J. Sperling Reich and Boxoffice Pro’s Daniel Loria spoke with Adam Aron at CinemaCon 2024 to get an update on AMC’s fleet of theaters, future investments, and potential plans for expansion.

How has the launch of your popcorn line at supermarkets been going?

Sales have been great, and Walmart has made it available at more stores. We expect more sales throughout the year, and we like how it extends our brand. The popcorn helps promote what we do, but we’ll make a lot more money from it in our theaters than in supermarkets — so we’re not taking our eyes off the main business.

The two big trends in exhibition today are premium large format (PLF) and family entertainment centers. AMC has taken a leading position in investing in PLF auditoriums throughout its global circuit. Have you considered investing in an entertainment center like many of your competitors?

There are a lot of competing uses for our capital, and we see a tremendous amount of opportunity in how we can deploy money going forward. We’re the largest PLF player in the world. We have over 550 PLFs in our theaters. We’re the largest IMAX player outside of China. We’re the largest player of Dolby Cinema in the world. We’ve also been developing our house brand, AMC Prime. We had 150 PLF auditoriums when I joined AMC eight years ago; today, we have 550. I can easily see us adding another 150 PLF screens to our circuit. They cost a lot of money; we’ve spent a quarter of a billion, and adding another 150 would cost another quarter of a billion.

There’s also the opportunity to add more theater chains to our system or reinvest money into what we call our “Battleship Theaters.” Do you know how a navy is sustained by their battleships? We have around 50 of our 1,000-plus theaters, among the most significant in our system, that have not yet been renovated—for example, big, successful theaters like AMC Empire and Lincoln Square in New York. We could easily put $20 million into those two theaters, and that’s just two out of 50.

Family entertainment centers are another place where we could deploy money. But at the moment, where we are today, one has to be very careful about spending because the industry has yet to recover from the pandemic fully. I believe 2025 and 2026 will finally bring us to the promised land. I think our industry will be strong, healthy, and robust again in 2025 and 2026. We’ve made progress from the depths of where we were in 2020 to what we achieved in 2023, but we’re not where we need to be. That is why we need to be very smart about having robust cash reserves, which have been the key to success in this industry since March 2020.

We will be very careful about deploying money in the coming months because the best thing to do with our reserves right now is to have it in the bank. We ended 2023 with $885 million in the bank at AMC. That’s a lot of cash. Chains that ran out of cash failed. There are movie theater companies that went bankrupt and entire circuits that disappeared. AMC has stayed strong and healthy through all of this. We’ve also focused on innovating and blazing new trails, like we did with “Taylor Swift: The Eras Tour”. The key to pulling all that off was having ample cash reserves. Investing in a family entertainment center takes up a lot of capital; it could take $25 million in real estate alone. A single location could require $125 million of capital—a large bet. Right now, I think the smartest thing for us is to keep our money, ensure our bank balance is high, and then direct some capital to where we know we have surefire, guaranteed returns.

Another big trend in the industry is dine-in theaters. In the last few years, AMC has invested in stand-alone dine-in sites and expanded menus across its circuit. What are the results so far?

We have 50 dine-in theaters in the United States, representing around 10 percent of our fleet, and they do very well. We’ve transitioned to a delivery to-seat model, where customers can order from our app or website when buying tickets. What we’ve found to be a failed concept is a full-blown restaurant in a theater lobby. We started experimenting with that concept many years ago but increasingly saw it as a suboptimal product.

There were two problems with that model. One, it was disturbing to other guests in the same auditorium to have waitstaff constantly coming in and out of the theater. Second, not only are wages in the United States going up, but the availability of labor has become tight, with unemployment at its lowest level in decades. It became distracting for our customers to enjoy a movie under that model while also being difficult for us to afford and retain the required labor. That is why we’ve shifted to a model where a runner brings you your order rather than a waitstaff taking your order. Economically, it’s much better for us, which means we can keep costs lower for the consumer, which is beneficial. We’ve heard from fellow patrons that this model doesn’t distract them from the screen. That’s what dine-in is at AMC today: a broad menu with a delivery-to-seat model.

One of the most challenging aspects of this recovery has been dealing with a significantly reduced number of titles reaching theaters—a situation that was exacerbated by the actors’ and writers’ strike last year. AMC was able to weather the storm by releasing a pair of concert films from Taylor Swift and Beyoncé, respectively. Are there plans to continue this venture into theatrical distribution?

Yes, yes, and yes. In just six weeks, Taylor Swift and Beyoncé brought in $310 million in box office revenue for movie theaters around the world. The domestic number was around $200 million. Neither of those movies existed in April 2023—it all came together very quickly. It was five months from the first phone call to Taylor Swift’s camp to the world premiere. From the first phone call with Beyoncé’s camp to the world premiere in 100 countries, it was two and a half months. That’s unheard of, going from a first call to a world premiere in that period. Both movies got an A+ CinemaScore and have scores of 98 and 99 percent on Rotten Tomatoes. It was a situation where everyone was happy: our theaters, customers, and even our competitors in exhibition.

We’re certainly thinking about bringing more movies to theaters. We started with two big hits, so the next step is to crawl before we walk and walk before we run. Given what we just pulled off, the obvious thing to first consider is whether there are other concert movies that would be right in our wheelhouse. We’re talking toother world-class artists to see if we can get more concert films into theaters worldwide. We have nothing to announce today, but hopefully, we’ll be able to announce something relatively soon.

This interview is coming out on the eve of CineEurope, where you’re the region’s leading player. What is your current assessment of those markets?

AMC is the largest exhibitor in Europe, resulting from two major acquisitions we made in 2016 and 2017. We bought Odeon in the U.K. and Nordic Cinema Group based in Stockholm. We expanded and invested in theaters there, opening new ones as well. Europe comprises about a quarter of our company’s revenues, a significant percentage of who we are today. We operate it from Europe rather than from Kansas City. It’s a big part of who we are; we believe we’re pretty good at it. Eight years later, we’re still the largest exhibitor in Europe.

There is a morbid obsession among the financial and trade press about AMC filing for bankruptcy or getting acquired. Do you ever get annoyed by that speculation?

We are the biggest movie theater chain in the world, and people focus on what we do in the sector. I’m very proud of the fact that we kept AMC strong through it all. We’ve always been confident about our performance, even when the so-called experts were equally confident that we wouldn’t make it past the pandemic. The good news is we were right; they were wrong.

I’m very relaxed when I look ahead at the future of our industry, even more so when it comes to our company. For the last two years, I’ve reiterated that our strategy is to “survive and then thrive.” Through a lot of deliberate actions and decisions on our part, we’ve done very well in the survival phase. When you look at our earnings going up almost tenfold, it’s significant. We went from $46 million in 2020 through 2022 to $425 million in 2023, a tenfold increase. If we continue to see our earnings come roaring back as part of this recovery, we’ll be in a great position to move from “survive” to “thrive.” By 2025 or 2026, I will be very proud of what we did and feel good about proving wrong those who were convinced we wouldn’t make it.

Are there any acquisition targets that look interesting for AMC?

I’ve been running AMC for over eight and a half years, and in that time, we’ve made three significant acquisitions. Even more recently, we’ve quietly done some strategic pickups. We bought Cinetopia, a small chain out of Portland, Oregon, in 2019. We picked up around a third of Arclight’s locations, half of Bow Tie, and several sites from Reading since the pandemic. Our eyes are always open. We never want to overpay, so we must be cautious about where we direct our cash.

Looking ahead to the next two and a half years, we’ll likely add more locations via acquisition. There will be failing circuits in that span because much of this industry was propped up by government assistance two years ago when Congress approved money for all the small theaters in the United States. If you were a public company or had locations in more than 10 states, you were ineligible to receive government support. Some chains that survived only did so because Congress bailed them out. Congress is not going to be around to bail them out this time. That’s why I expect to see more acquisition opportunities for us in the coming years; several circuits are already for sale.

As you can imagine, we get a call whenever there’s a circuit up for sale. There are several things we have to assess. Number one, what’s the condition of the theaters? To what extent do they compete with us? If they don’t compete with us, it’s an easy pickup from an antitrust point of view. If they’re right across the street from one of our locations, that will be a problem. Third, what’s the price? Is it a good buy or not? And finally, fourth, in the grand scheme of things, where are we in terms of keeping our cash reserves ample and flush? I think it’s far more important that we keep our bank balances strong than adding 14 more movie theaters. It’s not like we need 14 more theaters to be the largest player in the United States. Our market share is about two-thirds bigger than the second-largest player in the U.S. right now. While acquisitions are possible, it’s not our company’s most immediate strategic objective at the moment.