As more people head back to the movie theaters for blockbuster movies, they could be facing a shortage of an item that pairs well with movies: popcorn. One movie theater executive is brushing off the potential shortage.
What Happened: A recent report from The Wall Street Journal cites a shortage of popcorn coming due to increased fertilizer costs, lack of transportation and supply issues for popcorn bags that could impact movie theaters.
“Popcorn supply will be tight,” Preferred Popcorn CEO Norm Krug told The Wall Street Journal.
Several regional movie theater operators and concession suppliers were cited in the report saying that popcorn and supplies both could become an increasing issue for movie theater operators and patrons.
Rising fertilizer costs and a need for crops that generate more income for farmers than corn could be a longer-term issue hurting the movie theater industry.
One movie theater executive spoke out about the potential issue.
“It amazes me the totally false info about AMC on the internet and in the press. Is it intentionally designed to scare retail shareholders,” AMC Entertainment Holdings Inc (NYSE:AMC) CEO Adam Aron said.
Aron added that AMC has “high-quality popcorn” under contract for the next three years.
Related Link: AMC Entertainment CEO Adam Aron On What's Next After Record-Breaking 'Top Gun: Maverick' Opening
Why It’s Important: AMC reported revenue of $785.7 million in the first quarter, beating a Street estimate of $736.2 million and coming in significantly higher than the $148.3 million the company reported in the first quarter of the previous year.
AMC saw attendance rise from 6.8 million one year ago to 39.08 million in this year’s first quarter. Attendance-related revenue was $443.8 million for the first quarter. The company also reported a food and beverage revenue of $252.5 million in the first quarter, versus $50.1 million in the previous first quarter.
Concession revenue continues to be a high revenue business for movie theaters and disruption to popcorn could impact movie theaters’ food and beverage revenue during this pivotal time of attendance picking up to levels not seen since the pandemic.
AMC is also working on its own popcorn business to expand beyond movie theaters into retail locations.
With supply secured for three years, AMC could be ahead of rivals who could see disruptions to this high-margin item.
Price Action: AMC shares are down 3.53% to $12.01 on Monday morning.
Photo: Colleen Michaels via Shutterstock
