Huayu started as a substitute director

Chapter 718: No Weakness
The rent increase is a bit large. 10% is equivalent to adding one thousand yuan to ten thousand yuan.

With more cinemas, it becomes a considerable burden. Generally, cinemas have a minimum rent, which is between 200 and 400 yuan per square meter per month in the core business districts of first-tier cities.

The lower limit is 200 yuan, and a cinema generally covers an area between 2500 square meters and 4500 square meters, which means that the lower limit of rental for a cinema is 50 yuan.

If the minimum increase is 10%, the rent of a cinema will increase by about 60 yuan per month, which means an additional yuan per year.

This is still very expensive for such a physical industry. After all, some have been raised to 20%. In addition, there are labor, water, electricity, property and other costs, including cinema maintenance costs.

But this is the lowest limit of the core. In reality, not every cinema is located in the core areas of Beijing, Shanghai and Guangzhou. Some are located in second-tier cities.

But there are so many theaters and the hours are long, and you can’t move your things away.

Not to mention that Fang Hong is rich and doesn't care about this. Any industry that does not aim to occupy the market and cannot be self-sufficient will not last long.

He can last for a month, and he can't be kind enough to hold on any longer.

"Is this the general environment, or is it just our cinema that has seen an increase in revenue?" Fang Hong asked.

"We are the only family that did this. No one else did this. They also said that if we didn't cooperate, they would cut off our water and electricity."

Chen Zhixi felt that these real estate developers were so hateful and thought he had them completely under control.

She added: "It was Wanda and Alibaba who did this. One of them is a real estate company, and the other has a core circle of capital, and they are very close to those in the real estate industry."

Once the other party takes action in this kind of thing, it is no longer a secret and it is easy to find out.

Jack Ma’s business circle already knows a lot of real estate developers, and he is very close to some of them.

Fang Hong nodded without any expression. What is meant to come will always come. If he didn't have such determination, there would be no point in his life.

He then asked: "In addition to rent, do we have a box office revenue sharing model?"

"If a cinema's annual net box office is 10 million, we will give them % as a share." Chen Zhixi said.

The net box office is after deducting taxes, which is 8.3% of funds and taxes. This cannot be included, otherwise we will not be able to make money.

This is also the reason why Wanda Cinemas have been able to make money and have an advantage over others. They do not have to pay rent or even commission to continue operating.

It's our own home, so it has unique advantages.

"That is to say, the profit share remained unchanged, but our rent increased," said Fang Hong.

“Yes, they also need cinemas to attract people, just like Wanda Cinema. Without content, the number of people in their plaza has dropped sharply, by more than 30%. They also have a share of the box office, and this part will not be touched.” Chen Zhixi knows this situation well.

Shopping malls also need cinemas to attract people. Many people bring their families to watch movies and then go shopping.

If you just go shopping, you will feel bored.

"I understand. If there is going to be an increase, it will start from next month. Just notify them. You can cut off the water and electricity as you like. If the rent is going to increase, the theaters under the Crystal Cinema Chain would rather close down. Everyone can bear it. It doesn't matter." Fang Hong would not indulge their bad habits.

At worst, we can just close the business, and then everyone will have a hard time. But if we close the store, we won’t get any profit either.

Without the flow of people brought by the cinema, the flow of people will gather in other competitive business districts, which will also lead to the risk of lease termination in the business district.

Cinemas are the rigid demand engine for business district traffic and are a link in the entire business chain, playing the role of stabilizing customer flow.

When a cinema opens in a business district, there is an exclusive agreement, which means that there can only be one cinema in a business district.

Because of limited customer flow, one more store may not be able to survive. Of course, the top business districts can accommodate three to five stores, but that is when the customer flow reaches more than 50 million.

It’s about the size of a city, and there are only a few of them.

"In this case, our loss will be quite large." Chen Zhixi said.

If we close the stores, not only will the movie box office decrease, but the expenses will also continue to be incurred, which will also be a chain reaction.

"Don't be afraid of losses. The more you give in, the more they will push you. Just fight them hard. You have to be strong too. Don't be afraid!
I don’t care about that little bit of money, but some things cannot be started. If other cinema chains are opened, they will have a hard time. Cinemas are the terminal channels of movies, and those who engage in real estate will not care. This kind of weakness cannot exist.”

Fang Hong is considering the overall situation. Reducing the share would have made it difficult to survive, and now that these real estate guys are doing this to him, the entire film industry will be shaken.

Not to mention that the principal has compromised, you will have to bear the consequences if the rent is raised. This will easily be transmitted to the production port, and the cinema will not be able to bear the losses due to the rent increase on its own.

Either raise ticket prices or give less share to the production side!
Don't underestimate the integrity of these people. Mr. Wang and Jack Ma only want to deal with Fang Hong, but since they are engaged in real estate, it is hard to say that they will not go further since it is profitable.

"Okay, I understand." Chen Zhixi felt that the principal was thinking far ahead.

If they increase it by 10% today, will they increase it by another 10% tomorrow, or even increase it for many cinemas? It’s hard to say.

"But there's no rush for this. Let's keep calm and not make any statement. Let's see how other theaters react first." Fang Hong wanted to see if other theaters were in a hurry.

Other theaters must have been anxious when they heard about this.

Previously, the lease of UME Cinemas in a high-end shopping mall in Shanghai's JA District expired, and the real estate developer increased the rent from three million to eight million, and also increased the profit-sharing ratio!

The negotiations between the two parties eventually broke down, and UME Cinema evacuated. The original site was converted into a high-end restaurant, which caused a serious loss of customer flow. This kind of thing happens a lot, not only in cinemas, but also in other industries. Offline companies cannot compete with online companies, and this is why they always blame e-commerce.

Later, they complained that people didn't go out, there was no one in the shopping malls, and how could they possibly make money online with the extremely high rents. These real estate developers never thought about sustainable operations, they just wanted to make as much money as they could.

"Will they stand on our side?" Chen Zhixi wondered.

"I don't know. Let's stabilize it first and see how the situation develops." Fang Hong had his own purpose.

While the two were chatting, Chen Zhixi's phone suddenly rang. She took out her phone, looked at it and smiled, "Speak of the devil, the devil will appear. It's Xu Tianfu, the CEO of Hengdian Cinema Line, calling."

"Answer it and see what he says." Fang Hong also smiled, probably about the rent increase.

It is impossible for them not to be anxious, because these people are also afraid that the rent will increase to their cinemas, which will increase expenses. They are people who own hundreds of cinemas.

Chen Zhixi pressed the answer button and said, "Mr. Xu!"

"Mr. Chen, we received news that major real estate service providers are going to raise the rent for your cinema. Is that true?" Xu Tianfu asked.

"It's true. Mr. Fang and I are discussing this matter." Chen Zhixi did not hide it.

"Then tell Mr. Fang that he must not agree to them. These bastards are all bad guys and are extremely greedy." Xu Tianfu cursed.

Obviously, they have also suffered from the real estate developers, who raise the rent at every turn and cut off water and electricity if they don't.

They were afraid that this matter would escalate to their level. Even a strong person like the principal couldn't handle it, so how could they possibly handle it?

"This is a difficult task for us! It's the summer season and we need to sell more tickets." Chen Zhixi refused to reveal the details she had discussed with the principal.

The intention must be to make them pay something.

Fang Hong looked at her with appreciation. They still had some things that they had not yet discussed with the cinema chains, namely the introduction of the Tupiaopiao settlement system and the 15-day box office settlement.

This part has not been agreed upon with the theater chains. The essence is that the theater chains do not want to pay back the money so quickly, and still want to settle according to the traditional method of several months.

The money in your hands is liquid capital after all, and no one wants to pay it out so quickly.

This incident just happened to get the job done. They are at the forefront, so these theaters will have to pay something!
"This is not just your business, but it concerns the entire industry and the entire cinema chain. As long as the principal helps us, we will definitely appreciate his kindness. He wanted us to lower the share ratio before, but we followed his lead," Xu Tianfu made a big promise.

Fang Hong laughed. In this case, lowering the ratio would also be good for them and would help create a hit product.

He gave Chen Zhixi a look, and Chen Zhixi understood and said, "We also remember your kindness, but there is something we need your help with."

"Tell us what it is. We will help if we can." Xu Tianfu said.

"It's the 15-day theater settlement issue that our President Fang talked to you about before." Chen Zhixi said.

"About this matter?" Xu Tianfu pondered.

They are not very willing to do this, as it always feels good to have the money in their own hands first.

When the principal promised the producers that they would be settled in 15 days, the cinema chains did not follow suit. The principal then said that even if the cinema chains were not that quick, they could still pay the money first.

The principal had discussed this matter with them before, but they didn't quite agree, so Fang Hong had to use financial leverage.

"This doesn't mean you lose anything, it just speeds up the settlement process. Of course, we won't make things difficult for you, but we'll settle the money as soon as possible if it's convenient." Chen Zhixi took a step back.

"I understand what Mr. Chen means, but this matter is of great importance, so we need to discuss it carefully," said Xu Tianfu.

"The rent increase is also a serious matter, and we need to think about it carefully." Chen Zhixi also echoed the other party's words.

This makes Xu Tianfu very confused, because if they don’t sign the 15-day payment repayment agreement, he will just have to bear with it.

If the crisis really affects other cinema chains, you will have to bear the consequences yourselves. Rent increases are common anyway.

"Mr. Chen, this is boring." he said.

"Boss Xu, who is the one who is not interested? This time, we at Yutu are facing huge pressure to confront those real estate service providers. You are not even willing to sign a 15-day payment agreement. If you are not united among yourselves, how can you fight against those outside forces?"

Chen Zhixi's tone was full of regret, and then he said again: "Let me tell you the truth, our President Fang said that cinemas are the core channel for movies and there must be no weakness.

Even if you don’t agree to sign the 15-day payment agreement, we will not compromise, even if we have to close all our stores.”

Xu Tianfu was shocked and ashamed by these words. He didn't expect the principal to be so courageous and consider the overall situation. He would fight those real estate service providers to the end even if all the stores had to be closed.

If we are a little weak in this matter, they will probably get further and further away. It has happened before.

This is much bigger than Mr. Wang’s plan.

"Then I'll discuss it with the old man!" Xu Tianfu still had some ideas in his mind.

Other school principals are willing to risk their lives for cinema operators, but people like them just hide behind, especially Hengdian, a leader and benchmark.

(End of this chapter)