A Landmark Move: Eddy Duquenne discusses Kinepolis expansion to Canada and beyond

Cinemas Features

“Well, so far, so good.” Eddy Duquenne, chief executive of Kinepolis Group, is talking about how the integration of Landmark Cinemas across Canada is moving along. “The feeling that I have today is the same as the feeling I got the moment we signed the deal. So far, so good. We are very excited about the opportunity.”

Film Journal International caught up with Duquenne between a board meeting and release of first-quarter 2018 results and his heading across Brussels to get ready for le Festival de Cannes. On behalf of our readers, we thank Duquenne and his team for providing exclusive insight into the pan-European exhibition powerhouse spreading its reach across the Atlantic.

With the acquisition of 44 Landmark locations and 303 screens throughout Western Canada, Ontario and the Yukon Territory completed and approved by the beginning of December, followed by the acquisition of two Dutch NH Bioscopen sites in January, Kinepolis welcomed 9.4 million guests during the first quarter of 2018, 42.1% more than in the same period of the previous year. Turnover per visitor increased in all seven countries of operation, Kinepolis noted (94 cinemas total worldwide, with 822 screens and more than 180,000 seats). Whereas revenue from tickets, beverages and snacks increased faster than the number of guests, “total revenue increased more slowly than visitor numbers due to the addition of Canada.” With a lower average box office per person than expected, and Landmark Cinemas Canada accounting for 28.4% of total attendance during the period, Kinepolis Group in its entirety experienced “a significantly changed country mix.”

“We are very excited about the team and the market,” Duquenne says, noting that films like Black Panther performed better in the Canadian market than across Europe. “So, from a risk-leveling perspective, it just makes sense to be present in more markets. We are continuing to expand in microeconomic stable markets. That is the reason why we were interested in going to Canada. The combination of a growing population that is on average younger and thereby more moviegoing-minded with a stable economy are all part of what attracted us.”

Was culture part of the attraction also? While every country across Europe is different, they represent an overall cultural unity. Duquenne agrees that Canada matches more of a European profile than the United States or Latin markets, for example. “Absolutely. I always tell family and friends when coming back from Canada, ‘It looks like the United States, but if you talk to the people, it is much more like Europe. Most of the people I meet there are second or third-generation from Ireland, Germany and from France, of course. There are some roots still, and the mindset is very European. On top of that, as a European-based business, Kinepolis is used to very different cultures. If you drive 300 miles here, you arrive in a completely different culture; if you travel 5,000 km across Canada, the similarities remain very strong.” (That’s 480 km and 3,000 miles, respectively.)

For him, “Canada is still a little bit of the old world. The new world, that is China, South America, India… I think Canada is the youngest of the old worlds. Let’s put it that way.”

The decision to expand to North America was not about needing “to go to a new world because we no longer have any further opportunities in Europe,” he explains. As evidenced by their acquisition of NH Bioscopen and the opening of new multiplexes (Kinepolis Jaarbeurs in The Netherlands) and taking over existing operations (Palace in Metz, France, closed immediately for complete renovation), Kinepolis does not believe “that we do not have any future in Europe. This move is more about putting your eggs into several baskets.”

How about some eggs from the newest of the new worlds? About entering China, India and the United Arab Emirates, he responds, “We did not show any interest in that part of the world, so far.” As for the reason, Duquenne names the very nature of the company culture. “Kinepolis is an organization that relies on the involvement of the employees, down to the base level in the structure. Combined with the fact that going to the movies is a cultural activity that is very different in every country, we are cautious. We might not be successful in countries where we do not fully understand the beat of the local culture and the beat of work ethics.” That said, he does not rule out those markets entirely. “I am not saying that we will never do anything over there. We are growing. Our insights our growing. We have more and more talented people onboard. There is more and more involvement that has to do with the expansion. But let me just stay that this is not our first priority, and it will probably not be a priority in the immediate future.”

The guiding principle for Kinepolis, he continues, is “that our expansion strategy is based on improvement potential. What can we do to improve customer satisfaction? What can we do to improve the customer experience? What can we do to improve efficient field operations? With that, we ask a lot of our teams to be on the forefront in the industry, in terms of revenue and efficiency per visitor. And we always try to incorporate that benchmarking approach in acquisitions that we make.”

As the second-largest cinema operator in the country, Landmark uses its own benchmarks and policies for customer service and ways of conducting business. How does one choose one over the other? Duquenne immediately credits the “great team” tasked with streamlining and integration. “We try to set up an organizational structure that is close to what we have in different European countries. Essentially, this has to do with an attempt to empower the people in the theatres who are interacting with the customers. We call this a self-learning organization where we are always benchmarking the achievements at different theatres. Someone is always doing something better,” he says, praising his teams. “With that approach, Kinepolis acquired important know-how and experience as a company. And, essentially, what we are doing in Canada is setting up that same structure, so that we can benchmark between continents and countries.”

Using the same management tools and reporting is necessary to compare and then test different “concepts that have proven successful in Europe, and some of the concepts that are successful across Canada.” Duquenne calls this an “objective way to evaluate the performance of those concepts and innovative ideas in different markets. That is the invitation we sent to the Landmark team as well. It is not an integration where we come in with company manuals and procedures. Telling everyone, ‘That’s the way you need to do it’ is more of the McDonald’s style. Instead, we rely on the know-how of the local team. At the end of the day, we use customer satisfaction as our biggest benchmark… There is nothing better than being in front of a customer and talking to him or her. And that is the reason why at Kinepolis we empower the maximum we can those employees that are, on a daily basis, in contact with the customer.”

Duquenne adds that with self-learning comes innovation as well. “We empower people that come with ideas to us and have them execute their ideas. We feel that the one who has the idea is always the most involved and motivated to make it successful.” This initiative has been in effect for about three years now, he says. “A couple of things that are successful today in our company came out of that innovation lab. We are putting much effort into this, because we think that the future of the company is about adding more and better guest experiences and trying to be smarter in many aspects of our operations. We can generate more revenue that way and improve the bottom-line results.”

Results, whether bottom-line or highest customer satisfaction, remain the key objective for Kinepolis Group going forward. “There is only one goal for us: profitable growth. We will not grow at any price,” Duquenne cautions. “We believe that market share alone does not pay the bills. While we think that a certain size and reach are needed for the future, profitable growth is a bigger goal than growing to five or ten-percent market share on the world level, for instance, or to becoming the number one in each of our markets. We always try to manage our risk profile as well. Even after the very aggressive growth from 23 to 94 theatres in less than four years’ time, the financial leverage of the company is still very low. If you compare us to our peers, we are at less than 2.5 ratio.”

He reminds us that across Europe, “we own almost all the real estate,” 43 of those 94 theatres to be exact. “We want to provide a higher-than-average return with a lower-than-average risk. That is our essential objective at Kinepolis. We are looking for smart and profitable growth. Expansion is always a little bit opportunity-driven as well,” he says, extending an invitation. “It takes two to tango. We are in the middle of the dance floor. If someone wants to tango and it is an interesting counter-party, we will be ready to dance.”