Regal plans to raise $250 million in capital to modernize its theaters

Regal Cinemas, the second-largest movie theater chain in the U.S., has announced a major financial move to upgrade its theaters. The company has secured $250 million to upgrade its 425 locations nationwide. The upgrades will include luxury reclining seats and other amenities designed to enhance the moviegoing experience. Regal is owned by Cineworld, the movie theater giant that filed for Chapter 11 bankruptcy in September 2022 and emerged from a financial restructuring last year.

Regal CFO Thomas Song expressed optimism about the company’s future. “Regal is executing on its business plan and our first-quarter results exceeded our expectations, delivering one of the strongest balance sheets in the industry,” Song said. “As we continue to invest in delivering the best moviegoing experience, our customers will enjoy enhanced theater experiences combined with a strong slate of films through the end of the year.”

Song, who joined Regal in March as part of a series of executive appointments at Cineworld after its bankruptcy, also encouraged property owners to reach out if they’re interested in upgrading their locations. The move is part of a broader industry trend in which exhibitors like AMC Theatres, Cinemark and Marcus Theatres are focusing on upgrades to attract homebound viewers. Boutique chains like Alamo Drafthouse have also made a name for themselves by offering more amenities, like in-theater dining, than standard movie theater locations.

Regal’s decision to invest in the upgrades comes after a difficult period in which the company had to shed multiple locations and screens due to its parent company’s Chapter 11 filing. The moviegoing experience has been revived with recent releases like “Inside Out 2,” “Despicable Me 4” and “Bad Boys: Ride or Die,” which helped the domestic box office reach $156 million over the July 5-7 weekend. But the year remains tough for the moviegoing circuit with fewer major attractions due to strike- and pandemic-related production delays.

Year-to-date domestic box office receipts are $3.9 billion, down about 17% from 2023, according to Comscore. There could be more slow days in the short term. “Overall, we expect box office receipts to decline a relatively modest 6% year-over-year this quarter,” theater chain analyst Eric Handler of Roth MKM wrote in a July 8 report. “Our forecast calls for declines in July and August before turning positive in September.”

Raising $250 million in upgrades is part of a broader strategy to improve the moviegoing experience and attract more customers. This strategy isn’t unique to Regal; other major exhibitors have been taking similar steps for years. AMC Theatres, for example, has invested heavily in reclining seats, improved food and beverage options and premium large-format screens. Cinemark has also focused on luxury seating and expanded concession offerings, while Marcus Theatres has introduced amenities like in-theater dining and premium large-format screens.

Boutique chains like Alamo Drafthouse have taken a different approach, offering unique moviegoing experiences that include in-theater dining, themed screenings and a focus on independent and cult films. This approach has resonated with a segment of moviegoers looking for a more personalized and immersive experience.

Regal’s decision to invest in upgrades is a clear signal that the company wants to catch up with its competitors and offer its customers a more upscale experience. The move is also a sign of confidence in the future of the movie theater industry, despite the challenges it has faced in recent years.

Raising $250 million in capital will allow Regal to make significant upgrades to its theaters, which will likely include new seating, upgraded sound and projection systems, and improved concession offerings. These upgrades are expected to attract more customers and increase revenue, helping the company emerge from the financial challenges it has faced in recent years.

In addition to the physical upgrades, Regal is also focused on offering a compelling film schedule through the end of the year. This includes a mix of blockbusters and smaller, independent films that appeal to a wide range of viewers. By offering a diverse selection of films and a great moviegoing experience, Regal hopes to appeal to a wide audience and increase its market share.

Raising $250 million in modernization is a positive step for Regal and a sign that the company is committed to providing its customers with the best possible moviegoing experience. With the right investments and focus on customer satisfaction, Regal is well-positioned to compete with other major exhibitors and maintain its leadership position in the movie theater industry.

As the movie theater industry evolves, it will be interesting to see how Regal and other exhibitors adapt to changing consumer preferences and new technologies. With the right investments and focus on delivering premium experiences, the future looks bright for Regal and the movie theater industry.

Source: The Hollywood Reporter, Comscore, Roth MKM