Ster-Kinekor, the prominent cinema chain, is poised to undertake significant downsizing by dismissing nearly a third of its staff, which translates to 236 employees out of its current workforce of 728. In tandem with the layoffs, the company also plans to shutter up to nine of its movie theatres across Gauteng, KwaZulu-Natal, and the Western Cape regions.
The development emerges a mere two years subsequent to the company’s emergence from business rescue proceedings. Ster-Kinekor attributes the necessity for this restructuring to a confluence of adverse conditions including economic downturns, persistent load-shedding issues, stringent financial pressures, and delays in movie releases precipitated by Hollywood strikes that have pushed many premieres to the year 2025.
These challenges have precipitated a marked decline in cinema patronage, subsequently eroding the chain’s revenue streams. Ster-Kinekor has acknowledged that these externalities, largely beyond their direct influence, are expected to persist, thereby compelling the company to reassess its expenses in pursuit of enduring operation and financial viability—”As these are forces largely out of the business’s control and the financial impact is likely to endure for some time, Ster-Kinekor Theatres has had to review its cost structure to ensure the continued survival and sustainability of its business,” the company stated.
The nine cinema locations earmarked for closure:
- Bayside (WC)
- Boardwalk (KZN)
- Mimosa (KZN)
- Shelly Beach (KZN)
- Cedar Square (GP)
- Maponya (GP)
- Matlosana (GP)
- Southgate (GP)
- Sterland (GP)
In February 2024, Ster-Kinekor initiated the process of retrenching 236 employees from its 728-strong workforce, invoking Section 189(3) of the Labour Relations Act, which set in motion the formal consultation phase for restructuring the company’s operations.
The notice issued by Ster-Kinekor Theatres informed all team members of the management’s intention to undergo a comprehensive reorganisation, as articulated in the company’s official communication: “Ster-Kinekor Theatres issued a notice to all staff informing them of the company’s intention to proceed with a restructure under Section 189 of the Labour Relations Act, and to begin the consultation process.”
Roles affected span an array of departments including the CEO’s office, marketing, sales, human resources, business operations, content procurement, finance, administrative headquarters, regional management, and information technology.
The company disclosed that cinema closures were slated to occur incrementally, aligned with lease renegotiation outcomes. Additionally, Ster-Kinekor is evaluating the fate of eight more cinema locations—Secunda, Wonderpark, Bedfordview, Cradlestone, Mooi River, N1 City, Rosebank Nouveau, and Rustenburg—with a consideration for closure that might affect another 69 employees. However, at the Gateway cinema in KwaZulu-Natal, only one position is expected to be impacted.
The backdrop to these measures was Ster-Kinekor’s entry into business rescue in January 2021, prompted by the debilitating impact of the Covid-19 pandemic and subsequent restrictions on business operations. Prior to the pandemic’s advent, the cinema operator was turning a profit, notwithstanding the rising popularity of streaming services. The enforced cinema shutdowns, seating capacity limits, and curfews significantly dented the company’s financial health, compounded by the postponement of numerous film premieres.
To navigate through this tumultuous period and leverage legal protection mechanisms, the board made a pivotal decision to enter into business rescue. The path to recovery culminated in November 2022 when Ster-Kinekor emerged from business rescue, buoyed by an acquisition deal that introduced an investment of R250 million from UK-based Blantyre Capital and South African Greenpoint Capital.
