Despite an economic crisis that has cut B.O. dollar revenues 40% and jacked up the cost of credit, top Mexican exhibitor Ramirez Cinemas is soldiering on with an ambitious expansion scheme.
Having unveiled 31 screens since Jan. 1, Ramirez now operates 387 venues, more than three times the count of closest rival Cotsa. With at least another 90 set to debut by Christmas, Ramirez will almost double its 1994 record of 51 screen openings.
Amid a recession likely to last until mid-1996, this is not the behavior one might expect of a company that’s often labelled conservative by competitors and distributors.
But the country’s 90 million people and the ambitious business plans at Cinemark, UA, Hoyts and Mexico-based Cinemex – new entrants planning to operate several hundred screens each within a few years – testify to Mexico’s long-term potential.
Executive VP Enrique Ramirez Villalon says he hopes to have 1,000 screens under his belt by the year 2000.
The company’s conservatism is part of its success, Ramirez Villalon makes clear. “We use credit only with great prudence. Usually we finance construction with the company’s own cash flow,” he says.
So at a time when interest rates are up around the 60%-70% mark, causing other exhibs to slow or suspend expansion plans, Ramirez (which owns 75% of the screens it operates) continues building with relative ease.
It helps a great deal that Ramirez Cinemas is part of a larger corporation, Organization Ramirez, whose assets include a video retail chain, a construction and real estate division, auto dealerships and shares in two of Mexico’s biggest financial groups.
Cash generated by the org as a whole has thus flowed into the annual expansion budget, which at the current exchange rate amounts to about $15 million.
Founded in 1972, Ramirez Cinemas has always been in growth mode. But things started to accelerate in the early ’90s when a decline in attendance prompted a need for smaller theaters.
At first, Ramirez divided up old theaters into three-or four-plexes, or added screens onto twin venues. But with the imminent arrival of Cinemark and other foreign giants, the Mexicans turned toward bona fide multiplexes.
Opening Mexico’s first multiplex in Tijuana in January 1994, Ramirez began its “Cinepolis” project, bringing plexes of 10-plus screens to the biggest cities. Monterrey and Chihuahua venues followed, and next up is a 10-plex in Mexicali (opening June 29) followed by sites including Mexico City.
“U.S. entry has forced us to improve service to the public,” says Ramirez Villalon. “That means better training, better installations, better sound. We have Dolby in all our screens now, and we’re installing DTS in 80.”