Cineplex Inc. (TSX:CGX) Is Delivering Munchies Just in Time for Legal Marijuana

Cineplex Inc. (TSX:CGX) is delivering popcorn now… What next?

| More on:

Cineplex Inc. (TSX:CGX) is a stock that can’t seem to catch a break. Through no fault of management, the company has fallen from glory thanks to the continued secular decline of the movie theatre industry.

Believe or not, Cineplex’s management team has stayed on top of their game relative to most other movie theatre companies. With a virtual monopoly in the Canadian theatre space, the company has been able to drive average revenues per users (ARPU) up in the past with innovative new ways to enjoy films. Think VIP movies, arcades, and D-BOX experiences.

Despite a history of unlocking creativity in the traditional movie-and-popcorn business, the company had hit a growth ceiling, which limited its ability to continue delivering growth to investors. At one point, Cineplex was loved by income and growth investors alike, but those days are over, and as video streamers continue to pick up momentum, Cineplex is going to need a new game plan.

Management has been creative with its abilities to grow in the past. I’ll give them that, but is delivery of overpriced concession snacks going to do anything at all to alleviate pressures that the company has suffered to its top line?

It’s clear that the “stay at home” economy is here to stay as consumers opt to stay in to watch a movie on their streaming platform of choice. Cineplex has identified this trend, and they’ve partnered with Uber Eats to offer concession snack deliveries to Canadians.

I don’t know about you, but I think the nationwide legalization of marijuana had something to do with Cineplex’s odd decision to deliver popcorn and candy to customers’ homes.

A problem that marijiuana smokers may face is a lack of “the munchies” when they smoke up before sitting down to enjoy a movie within the confines of their homes. Resistance to this side effect is futile, and if there are no Alimentation Couche-Tard Inc. (TSX:ATD.B) convenience stores nearby, you’ll be out of luck as a marijuana smoker.

That’s where Cineplex is coming in with its new concession delivery service.

Cineplex is slated to deliver a ride array of concession snacks to Canadians, and it’s not just popcorn. Hotdogs, candy, nachos and soft drinks will be available to customers across Ontario, Quebec, Alberta and B.C. If you reside in one of these provinces, odds are the service will probably be available in your area by the time you’re reading this.

Only time will tell how the service fairs, but I have a feeling that the fourth quarter of this year will see the service skyrocket. Legal marijuana kicks in October 17, 2018, and Cineplex is going to be ready with a bag of popcorn in hand.

Foolish takeaway

Although concession snack deliveries sound ridiculous on the surface, I think it may show some promise once legal weed takes effect. The new service will probably relieve a minimal amount of pressure though, so I’d encourage investors to continue avoiding the stock.

With less of an incentive to go out and see a movie, the concession snack delivery may be just another means of offloading excess scene points that Canadians may have accumulated over the past year.

Stay hungry. Stay Foolish.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette owns shares of ALIMENTATION COUCHE-TARD INC. Alimentation Couche-Tard is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

bulb idea thinking
Dividend Stocks

The Smartest Dividend Stocks to Buy With $3,000 Right Now

Do you have $3,000 and are wondering how to generate some extra income? These three dividend stocks present attractive value…

Read more »

Lights glow in a cityscape at night.
Dividend Stocks

The Best Stocks to Invest $1,000 in Right Now

Looking for some stocks that could be set for a big rebound in 2025? Here are two contrarians can buy…

Read more »

Canadian dollars in a magnifying glass
Dividend Stocks

Passive-Income Seekers: 2 BMO ETFs to Buy Aggressively for 2025

ETF investors should consider BMO Low Volatility Canadian Equity ETF (TSX:ZLB) and another income-oriented option.

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

Invest $7,000 in This Dividend Stock for $441 in Passive Income

Generate a tax-free quarterly income of $110.33, totaling $441.32 annually with this top Canadian dividend stock.

Read more »

A worker drinks out of a mug in an office.
Dividend Stocks

A Dividend Giant I’d Buy Over BCE Stock Right Now

The largest telecom company in Canada is brutally discounted, and the dividend yield is naturally up, but it's too risky…

Read more »

a man celebrates his good fortune with a disco ball and confetti
Dividend Stocks

Get Ready to Invest $7,000 in This Dividend Stock for New Year Passive Income

This is the year you get ahead, and maxing out your TFSA contribution is the best way to start.

Read more »

ways to boost income
Dividend Stocks

Buy 2,653 Shares of This Top Dividend Stock for $10K in Annual Passive Income

Enbridge is a blue-chip TSX dividend stock that offers shareholders a forward yield of 6%. Is it still a good…

Read more »

Blocks conceptualizing the Registered Retirement Savings Plan
Dividend Stocks

CPP at 70: Is it Enough if Invested in an RRSP?

Even if you wait to take out CPP at 70, it's simply not going to cut it during retirement. Which…

Read more »