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Exhibitor Cineplex considers taking its food outside movie theatres

TORONTO - Cineplex is counting on Canadian moviegoers to indulge their appetite for concession snacks outside movie theatres.

Chief executive Ellis Jacobs said Tuesday that although it may take several years, the company wants to grow its gourmet popcorn stand business, Poptopia, and its burger and fries label, Outtakes, to other places people buy fast food.

"For us it's about taking those brands and continuing to develop them ... with the total intention of going beyond," he said Tuesday in an interview after the company issued its latest financial results.

"So five years from now, maybe, when you go to a food court, or go to a specific venue, you may see (them) as part of the offering that you have."

While Jacobs says the expansion plans aren't mapped out, it's "something of significant growth" for the company, which has been focused on becoming more than just your local multiplex.

Over the past few years, Cineplex (TSX:CGX), Canada's largest theatre chain, has bulked up its website to include a library of digital downloads and a storefront that sells DVDs and Blu-rays.

It also has a media division that sells advertising on its movie screens and recently acquired digital signage company EK3 Technologies, which supplies companies such as Tim Hortons (TSX:THI) and McDonald's and has a presence in the United States.

"We want to eventually be a company (that), when you think about movies, all you think is about Cineplex wherever you are," Jacobs said.

On Tuesday, the company reported its third-quarter financial results, which included a new attendance record at its theatres, even though the crowded summer movie season generated few massive Hollywood hits this year.

Industry observers have said movie distributors bogged down the summer season with too many giant films that cannibalized each other in a fight for screens.

Jacobs said he tends to agree with that opinion.

"The summer was overloaded in a bit of a way," he said.

The Toronto-based company said it had 19 million paying guest visits in the third quarter, which is one of the busiest times of the year for movies. The results were driven by the popularity of "Despicable Me 2," "The Wolverine" and "We're the Millers," but none of those titles matched the success of "The Dark Knight" in summer of 2012.

Still, the company's profit missed analyst estimates by a wide margin.

Profits were nearly halved to $26 million, or 41 cents per share, which was nine cents below the consensus estimate of analysts compiled by Thomson Reuters. The results factored in higher expenses from recent acquisitions and the recognition of a lower value for some of the older theatre brand names such as Coliseum and Colossus.

A year ago, the company booked profits of $51.7 million or 83 cents per share.

Box office revenue per patron was flat at $8.84 while revenue from concessions rose to $4.81 per patron, an increase of 2.8 per cent.

Cineplex revenue was up from last year but slightly below analyst estimates, rising to $298.6 million from $281.1 million.

In its media business, revenue grew 23 per cent to $27.7 million with the help of better advertising sales for its digital pre-show.

Jacobs said he's optimistic about the final weeks of the year, which will see the release of the latest editions in hit franchises like "The Hunger Games," "The Hobbit" and a sequel to the Will Ferrell comedy "Anchorman," which he believes will keep audiences lining up.

Cineplex reached a deal in June to buy 26 theatres all but two of them in Atlantic Canada from Empire Co., the Nova Scotia-based parent of Sobeys Inc. for $200 million in cash.


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