Greetings, welcome to the AMC Entertainment Third Quarter 2019 Earnings Conference Call . At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, John Merriwether, Vice President of Investor Relations. Please proceed, sir.
Thank you, Latonya. Good morning. I'd like to welcome everyone to AMC's third quarter 2019 earnings conference call. With me this morning is Adam Aron, our Chief Executive Officer and President, and Craig Ramsey, Executive Vice President and Chief Financial Officer. Before I turn the call over to Adam, let me remind everyone that some of the comments made by management during this conference call may contain forward-looking statements, which are based on management's current expectations. Numerous risks, uncertainties, and other factors may cause actual results to differ materially from those that might be expressed today. Many of these risks and uncertainties are discussed in our public filings, including our most recently filed 10-K and 10-Q. Several of the factors that will determine the company's future results are beyond the ability of the company to control or predict.
In light of the uncertainties inherent in any forward-looking statements, listeners are cautioned to not place undue reliance on these statements. The company undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information or future events. On this call, we may reference measures such as adjusted EBITDA, adjusted EBITDA margin, adjusted free cash flow, and constant currency, which are non-GAAP financial measures. For a full reconciliation of our non-GAAP measures to GAAP results, please see our earnings release issued earlier this morning. In conjunction with our earnings release, we encourage you to review the supplemental financials for the 2019 third quarter that we published this morning on our website in tandem with the earnings release. After our prepared remarks, there will be a question and answer session.
This morning's call is being recorded, and a webcast replay will be available in the investor relations sections of our website at amctheatres.com later today. With that, I'll turn the call over to Adam Aron.
Thank you, John. Good morning, everybody. Thank you for joining us this morning for a review of AMC's strong results for the third quarter of 2019, our enormous optimism for the coming six months ahead as we finish 2019 and start off 2020, both with a bang, and a progress update on several key initiatives in support of achieving the product, customer engagement, and financial targets that we laid out for you at our investor and analyst day in April of this year. The third quarter of 2019 was another strong quarter for AMC. In Q3, AMC continued to outperform the industry on revenue and attendance per screen. In so doing, we drove significant top-line adjusted EBITDA and free cash flow growth versus the year ago quarter.
I'll share more details on our results shortly, but first, let's start with a quick look at the industry's impressive performance in the third quarter. The domestic industry box office for the third quarter of 2019 came in, as most of you know, at $2.8 billion, 3.6% higher than last year's third quarter and 4.1% higher than the average third quarter over the past five years. Like in the second quarter of 2019, we continued to see a greater number of family-friendly films led by The Lion King, which is, as of this moment, the second-largest movie of the year. As a reminder, family-friendly films tend to drive greater attendance in our suburban U.S. theaters. In Europe, the industry box office also showed real strength in the third quarter of 2019, up 13.7% in the countries served by Odeon and Nordic on a constant currency basis.
All in all, the cadence of the industry box office in 2019 is tracking exactly as we at AMC predicted a year ago. Starting with a weak first quarter, followed by an impressive stretch in quarters two and three, ultimately culminating in what we expect to be a very strong fourth quarter, which includes the release of a whole host of superb movies, including Star Wars: The Rise of Skywalker. As always, while we are encouraged by the industry performance of the third quarter, optimistic for the fourth quarter, and note that there should be a significant spillover effect into the first quarter of 2020. It's important to remember that there are natural fluctuations in the box office at an industry level between weeks, between months, between quarters.
Therefore, our activity at AMC is geared to optimizing our performance relative to our competition, regardless of the ebbs and flows of the box office at large. To that end, we believe that AMC is extremely well-positioned and is behaving as the leader in our industry in having assembled the largest network of theaters globally, in which we have prominently invested in guest enhancement after guest enhancement after guest enhancement, combined with world-class marketing activity, and are being in the midst of nothing less than a digital transformation of our company as we increasingly and seamlessly engage with our guests before, during, and after their visits to our theaters. Let's turn back to AMC in Q3, in which we had an impressive performance, as evidenced by AMC's continuing to well outperform the industry.
In our U.S. markets, AMC set a new third quarter record in U.S. attendance of 3.8% this quarter to more than 61 million theater visits. For the sixth consecutive quarter, we noticeably outperformed the rest of the industry. The rest of the industry being defined as the approximately three-fourths of the industry that excludes AMC. On an attendance per screen basis, AMC indeed beat the rest of the U.S. industry on attendance by 270 basis points. U.S. average ticket price grew a healthy 3.3% versus the year-ago quarter, benefiting both from strategic price increases and a greater mix in IMAX and Dolby Cinema attendance. The result of our continued attendance outperformance, along with robust average ticket price growth, was that AMC outperformed the industry on admissions revenue per screen for the third consecutive quarter, this time in Q3 by 560 basis points. Let me repeat that statistic.
AMC beat the pack on admissions revenues in the U.S. per screen by 560 basis points. The story is similarly a good one in our international markets. Supported by AMC's commitment to an improved guest experience with our proven guest initiatives and theater amenities at our European theaters, along with improved marketing activity by our company in international markets, our international attendance was up 9.3% compared to last year's third quarter. Incidentally, the almost double-digit growth in European attendance, combined with the record U.S. attendance, also means that we set a global third quarter attendance record for our company this quarter in Q3 2019 of 87 million guests, up 5.4% versus the year ago quarter. In total, Q3 AMC admissions revenue globally was up 6.1%, up 7.6% in constant currency.
The AMC third quarter story is not only bright on admissions revenue, but also we continue to see strong growth in record-setting concession spending, with third quarter consolidated AMC food and beverage revenues per patron growing 3.4% to $4.82 and up 4.7% on a constant currency basis. Breaking this down by region, food and beverage revenues in the U.S. increased in Q3 some 4.7% to a third quarter record for AMC of $5.35 per patron, higher than any other major operator. Our international results in constant currency also grew by 7.4% to $3.77, which was an international third quarter record for us.
In addition to our ongoing food and beverage initiatives, this strength in F&B revenue capture was supported by a sharper focus on innovation in the menu choices we offer to our theater guests and strategic pricing actions taken in the latter half of 2018 and throughout 2019. As we've said previously, we believe that we're still in the early to middle innings of capturing increased food and beverage opportunities and expect to continue improving food and beverage spend in both the United States and in Europe in the years ahead. On a consolidated basis, AMC generated $1.317 billion of total revenue dollars, an increase of 7.8% compared to last year, up 9.3% on a constant currency basis. In addition to our going for the gold in driving revenues, we also have been watching our costs and our margins.
As a result of achieving company-wide third quarter attendance records and generating record food and beverage spend and marrying that with cost management, our margins did expand in Q3 of 2019 compared with a year ago. AMC generated third quarter total adjusted EBITDA of $156.5 million, which is up a healthy 11.4% in constant currency from the year ago quarter, and up a particularly noteworthy 33.1% on a constant currency basis after adjusting out the non-cash impacts of ASC 842 on lease accounting. Adjusted EBITDA up 33.1% year-over-year. In Q3 of 2019, AMC generated $56.6 million of cash flow from operations, a $69.2 million improvement over the year ago quarter, again, after adjusting for the impacts of ASC 842. Likewise, adjusted free cash flow grew by nearly $51 million year-over-year. It really was a very positive quarter for AMC.
I want to take a moment here to note that the third quarter tends to be a seasonally low quarter for both cash flow and ending cash balance as our working capital items are impacted by the timing of certain studio payments. We expect these working capital items to normalize in the fourth quarter. Said another way, we expect healthy cash flow generation in the fourth quarter of 2019 and a strong ending year-end cash balance. Add to it a wholly undrawn revolver, we have now and will have at year-end ample liquidity right in line with the expectations we have previously conveyed. Again, trying to encapsulate for you why AMC continues to overperform the competition. We believe that these pretty wonderful Q3 results are directly tied to what we've been calling with you this year, the AMC platform.
AMC is delivering a personalized and targeted end-to-end experience for our guests, leveraging modern technology and using data-driven insights from our popular AMC Stubs loyalty program, which literally this very week should cross 22 million U.S. member households totaling over 50 million people on whom we have significant purchase histories at our theaters, along with our loyalty programs comparable to Stubs within Europe. As part of the AMC platform, we're deploying innovative consumer engagement practices and state-of-the-art theater experiences. This all creates a positive flywheel effect that encourages incremental attendance and incremental revenue, and which holistically and synergistically drives incremental value for our guests, for our studio partners, and for AMC. Before we turn to your questions, I'd like to briefly comment on six topics.
On ASC 842 and lease accounting, as we've been telling you for many months, we continue to believe that a considerable disservice is being done to investors by the rampant confusion in the market for followers of AMC and for the many other companies with a large operating lease portfolio. The data services, Bloomberg, FactSet, Capital IQ, continue to wildly overstate our debt and are doing so inconsistently with US GAAP. As some of you have written extensively, ASC 842 caused us no change in cash, no change in interest payments, and no change in the operations of our business. We'll continue to work with the data services, pushing them to give investors more accurate information. In the meantime, we would encourage investors to take one of two approaches when looking at AMC's leverage and valuation ratios to ensure like-for-like historic comparisons.
Either debt excluding operating leases should be compared to our reported adjusted EBITDA, or debt including operating leases, should be compared to our reported adjusted EBITDA, but adding back into adjusted EBITDA our rent expense. Our finance and investor relations team is happy to discuss this further with any of you if you want more clarity one on one. Second, as we've done in past quarterly calls over the past year or so, let's talk about A-List. We are now in the enviable position of being able to give you a superb update on the rip-roaring success of AMC Stubs A-List. We are well aware that owing to the spectacular collapse of some others in this space, some investors were fearful when we initially launched what we were convinced would be our sustainable and successful AMC A-List program. They were not quite as confident.
I'm so pleased to report to one and all what a winner AMC has on its hands with A-List. We continue to have over 900,000 members, and A-List membership is now at an all-time high. This is light years ahead of our original membership goals. A-List members currently represent about 16%, one six, 16% of AMC's total U.S. admissions. Given our confidence in consumer demand for A-List, earlier this year, we had the intestinal fortitude to increase the A-List monthly price by 10%-20% across the country to most of our members. That price increase went into effect for new members as of January 2019, but hit the 600,000 members who enrolled last year in A-List only in the second half of this year, as last year when we launched A-List, we guaranteed no increases to membership pricing for 12 months from date of initial enrollment.
Remember too, that we are charging more than double for A-List what it costs to join Cinemark's Movie Club. That in the summer of this year, Regal finally launched its own subscription offering. There were some who speculated that the combination of our price increases, Cinemark continuing to dramatically undercut us on price. A new Regal program could hurt us. Not the case. Our membership base is solid, loyal to AMC, growing, and importantly, profitable. As important as are the membership numbers, given the fixed monthly price, so too is the frequency of visits to an AMC Theatre on a per-member, per-month basis. You'll recall the frequency level was 2.86 in the first quarter of 2019, and 2.848 in the second quarter. It was 2.4 in quarter three. 2.4.
We have previously indicated to you that when combined with all the other consumer behavior dynamics in A-List of incrementality, high-margin food and beverage spending, and take-along tickets at full price, the A-List program should be handsomely profitable if member visitations per month are in the sweet spot of two and a half to three visits per month. That's where we are, right in the heart of central sweet-spot ville. As a result, we can confirm to you that we are about 18 months ahead of schedule on A-List profitability. At the time of the program's launch back in 2018, midyear, we originally postulated that we would break even on A-List in 2019 and make money on A-List, but not do so until 2020. Now we can confirm that A-List was nicely profitable in the just-completed Q3.
We also now expect that A-List will contribute $15 million-$20 million to full-year AMC operating income in 2019. We can reaffirm our previous commentary about the run rate profitability for A-List looking ahead on a per-member, per-month basis by the end of this year, 2019. What's more, we are finding ways to significantly enhance the A-List program for members, but doing so without it materially increasing our costs. Just two weeks ago, for example, we launched something that we call A-List Entourage, where multiple members, including family and/or friends, can link their accounts. That way, one person can make a movie reservation and reserve specific seats for all in their entourage in just a single, quick, and easy booking transaction. Previously, each member had to book on their own.
Before Entourage, if, say, your spouse grabbed seat H5 for the 7:00 P.M. screening of Paramount's 'Rocketman,' you would separately have had to rush out and then try to grab seat H6. Our guests being able to book multiple seats at once is so popular that already, in just the first two weeks, more than 60,000 A-List members have enrolled in Entourage and linked up multiple accounts. Speaking of more to come in A-List, just a week from now, we will also introduce for the first time A-List Gifting, where someone can buy a three-month, six-month, or 12-month A-List membership for a family member, friend, or business colleague without having to disclose the credit card information of the giftor to the giftee. It's no accident that we're launching A-List Gifting just in time for all those Christmas stocking stuffer needs.
In summary, on A-List, we remain ecstatic about the continuing ahead-of-expectations, ahead-of-schedule, positive, and profitable performance of A-List and the increased loyalty to AMC it has created. It's not the only reason for the surge in our U.S. theater attendance, but it is certainly one of the major reasons. For the third topic to comment on briefly, I'd like to give you some more color on the $50 million profitability improvement program that we announced on the last quarterly call midsummer. As you might recall, at our Investor and Analyst Day back in April, we set out to you a goal to improve AMC's operating margins by up to 200 basis points.
As a part of our commitment to achieving this target, we announced a Profit Improvement Plan that we believe will contribute $50 million or more of operating income to AMC in 2020 through a combination of revenue and cost initiatives. There are literally dozens and dozens of identified line items to fund the cost savings and revenue opportunities outlined in our Profit Improvement Plan. Let me share with you a few examples to put some meat on the bone of achieving our goal. During the just-completed third quarter, we took the difficult step of implementing a reduction in force at our corporate headquarters in Kansas City to rightsize our corporate headcount by more than 10% to be more consistent with our vision of a leaner, but not meaner, AMC.
In Europe, to cut out costly duplicative above-theater overhead, we rationalized seven separate geographic territories, each with their own centralized staffs to three g eographic regions, U.K., Ireland based in Manchester, Northern Europe based in Stockholm, and Southern Europe based in Barcelona, where in each, we already had a large and effective staff presence in place. Both in the U.S. and in Europe, those steps represented significant payroll savings. Another ingenious example, our marketing programs are so pervasive, our communications efforts so constant, and our mobile technology now so much more in use, that very quietly, we have been successfully able to modestly shrink some of our theater operating hours during the most off-peak of off-peak times. This appears to be getting us considerable savings on utilities and labor costs at our theaters, but in the grand scheme of things, not depriving us of revenue.
There just may be no need to start a movie screening at 11:10 P.M. on a Wednesday night and ending at 1:30 A.M. in Oklahoma City, or for that matter, in New York City, when thanks to our improving technology and growing brand loyalty, we can now convince a guest to cheerfully attend a 10:10 P.M. or 10:40 P.M. show start for that same movie instead. In that illustrative hypothetical, a theater gets to close a half hour or a full hour earlier. That saves us money, and our staff gets more sleep, which in turn may lead to better customer service over time from more well-rested and less stressed theater teams. In the third quarter, we reduced show starts by 4.1% in the U.S.
Reduced show starts by 4.1% in the U.S., yet we achieved an all-time attendance record for that same quarter and had the biggest increase in reported market share of any chain in the country. This dynamic scheduling cuts both ways, though. Getting smarter about knowing when to cut showtimes in the off-peak means we also are getting smarter about adding showtimes in the peak. When Star Wars opens in December, you can be sure that AMC will be going around the clock without interruption for days on end at major theaters all across the country. More examples in the profit improvement plan. Just by adding an I'm-not-a-robot security feature to our gift card database, that's pretty obscure, it miraculously saves us hundreds of thousands of dollars annually.
Putting some of our vendor relationships out for competitive bid is also expected to save us millions without reducing the quality of the goods or services that we procure. I'll spare you every line item on the profit improvement plan, but I can tell you that we are on track to hit and potentially exceed the $50 million target for 2020. Fourth topic, AMC continues to be committed to innovation. By the start of the just-completed Q3, all of our U.S. theaters in the AMC and AMC Dine-In brands offered reserved seating, which is immensely popular with our guests. At the start of Q3, we also launched our new Artisan Films concept, which puts a halo and extra marketing around what we're calling contemporary curated films into which we're leaning in heavily.
Yes, we show tentpoles, but there are plenty of really intriguing movies out there that we're especially highlighting, like Universal's "Yesterday," Warner's "Joker," Disney-Fox's "Ford v Ferrari," Sony's "Once Upon a Time in Hollywood." Movie after movie after movie like "Judy," "Bombshell," "The Good Liar," and "The Current War" to name just a few of the many AMC Artisan Films that we are trumpeting. More innovation in Q3. We started showing professional football games on Sunday afternoons at about 100 of our U.S. theaters. The early returns on our blockbuster pricing test, which launched on August 2 in four major cities across the country, are going very well and our experimenting with blockbuster pricing will continue.
As we do in Europe, we are testing charging a small surcharge of $0.50, $1.00, and $1.50, depending upon the theater, on certain really big movie titles, at least for the first week or two of their run. Again, on innovation, just two weeks ago, we introduced on our website and smartphone app, AMC Theatres On Demand, the ability for our AMC Stubs members to rent or buy more than 2,000 of the latest release movies for home viewing. We're the first and only U.S. theater circuit to participate in more of the movie ecosystem by allowing us to participate in revenue streams at the home and in the theater, and we have the enthusiastic support of all the major studios in our doing so. Leaders lead. Innovation at AMC, therefore, will continue.
In Q4 or Q1, we expect that we'll start testing home delivery of our own AMC Perfectly Popcorn and other menu items via Postmates, Grubhub, or Uber Eats. What I'm suggesting with all these various concepts, many that are just in the design stage, some that are now being tested, and some that are now being widely deployed, is that there is real imagination and energy and vitality at work and on display at AMC. There are in fact reasons why our attendance and our revenues are outperforming the competition. As I said, leaders lead. Innovation along with adaptive, creative, new thinking is part of the very ethos of AMC, especially as we transform ourselves digitally and engage with our guests more and more in offering a quintessential 21st-century style movie-going experience. Topic five, just to hit quickly on our CapEx plans.
As you may recall, on the last quarterly earnings call, being very mindful of our desire to generate adjusted free cash flow and to deleverage, we introduced new guidance last quarter for 2019 CapEx of $415 million, down from $450 million, the target that was outlined earlier in the year. We also introduced 2020 CapEx guidance of only $300 million, which is reflective of the natural conclusion of the domestic CapEx cycle, and in line with the long-term targets we set out in our April investor and analyst day of $250 million-$300 million over a three-to-five-year timeframe. We are reaffirming those two numbers, $415 million and $300 million today. Indeed, the CapEx is not expected to exceed $415 million in 2019, nor to exceed $300 million in 2020.
One of the reasons why we're comfortable containing CapEx at these levels as we look ahead is that we already have recliner seats installed in 78% of our AMC-branded and AMC Dine-In theater locations in the U.S. By the very nature of the AMC CLASSIC-branded theaters, with ticket sales usually in the lower end of the range of between 200-1 ,000 tickets sold per day, visitation levels at these, our smaller theaters, are simply not high enough to get an attractive financial return from sizable investment in added theater amenities. We operate and compete differently among theaters within our CLASSIC brand.
Adding our own CapEx monies together with landlord and partner contributions, we're still able to commit significant resources to continue investing in our technology and to continue investing in our large theater network to make our theaters more attractive to consumers, especially doing so in Europe and the Middle East. As we identify growth opportunity and attractive high ROI returns, we intend to continue to capture them. Finally, topic six. I want to wrap up our prepared remarks in this call with a salute to two individuals by name, for whom I have the greatest respect. This comes in conjunction with a well-earned retirement by our CFO, Craig Ramsey, at the age of [audio distortion], he won't let me say his age, actually, who will hit his 25th anniversary with AMC on February 1 of 2020. I think the world of Craig, as do many of you.
Who has a storied history with AMC, having served as CEO of this company for some two decades. Craig, in front of the people who know you, I cannot thank you enough for your sage counsel, your competence, and your high integrity, for your longstanding service, and many contributions to AMC over the years. You have many friends. You will be missed. Craig and I have been working together on his eventual transition for some time. As a company, understandably, given the crucial nature and potential impact of the role, the CFO role, if filled well, AMC devoted great effort to identify and recruit Craig's successor as CFO, namely Sean Goodman, who joins us on December 2, just a few weeks from now. Sean is the CEO of Fortune 500 Asbury Automotive Group. Like AMC, also an NYSE-listed public company.
He's a CPA with auditing experience at Deloitte, both in South Africa and in New York, and a Harvard MBA. He worked for Morgan Stanley in London as an investment banker for many years and led several senior staff finance functions at Home Depot in Atlanta for many years as well. He's as smart as smart can be, a keen strategic thinker, and a nice person to boot. I welcome him here to partner with me in guiding AMC and especially to help us build back our share price to levels that we believe are far more commensurate with the potential earnings power and the bright future that lies ahead for our company. Sean and Craig will overlap together for about three months, making for what we all believe will be an easy, painless, and orderly transition.
Undoubtedly, they will get out and about during that time period and will be able to meet with many of you. In summary, as we conclude, AMC had a strong third quarter. We are well-positioned for the future. Operator, we are now ready for questions.
Thank you. At this time, we will conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that's star one to ask a question at this time. One moment while we poll for our first question. Our first question comes from David Miller with Imperial Capital. Please proceed with your question.
Yeah. Hey, guys. Congratulations on a great print. A few questions. I'll get to kind of the nitty-gritty first and then add just an overall philosophical question. Adam or maybe Craig, the non-cash expense entry on the National CineMedia Services Agreement looks like it cost you guys about $0.08 a share. Surprised you guys didn't call that out. If you could just kind of describe that entry for us, that would kind of help flush that out. Then it looks like rent expense was up 17.2% year-over-year. How much of that was ASC 842, and how much of that was just pure organic inflation? I have a follow-up. Thanks.
Well, we'll have to get back to you, David, on the [crosstalk].
Congratulations. You stumped us on the first one.
Yeah, on the NCM non-cash. There is some amortization. We'll have to get into it and look and get back to you on that. Your question about the ASC 842, the charge, and the comparable adjustment in 2018 for ASC 842 would've been about $23 million on a consolidated basis. Probably about 12 of that domestically and the balance on the international side.
Okay. Fair enough. Adam, do you still believe that the U.S. box office will end at a record this year versus last year? Looks like it's going to be very close. It's probably going to come down to "Star Wars." you did, I think, make that statement perhaps two quarters ago, wondering if you're willing to stand by that again. Just wondering if you could size up the Saudi Arabian opportunity. To me at least, this looks like a huge multiple expansion opportunity for your stock price and just yet another massively underserved market around the world. If you could just maybe couch some of the population statistics about the fact that it's just a younger audience and they want to go to the movies and so on and so forth, that would be helpful for us. Thank you.
Thank you. On the box office, people are trying to forecast 2020. It's hard to forecast 2020 when you still can't quite forecast 2019. It's hard to forecast the next two months of 2019 when we're all trying to figure out how next weekend will do. We're really not going to know where 2019 ends up literally until Christmas, New Year's week. The film volumes are so big in December. We know the quarter's going to be a big one. I think it's very unlikely that 2019, the domestic box office, anyway, will finish below $11.5 billion. I think it's unlikely that we'll finish above $11.8 billion, $11.9 billion. We had hoped at the beginning of the year, this might be the first year to hit $12 billion. It seems pretty unlikely it'll do that. Where in that range, $11.5 billion-$11.9 billion, $11.6 billion-$11.8 billion, it really settles in.
It really all depends on how individual movie titles gross over the next seven, eight weeks. As for the Middle East, I was just there last week. I'm going back in six weeks. The story has enormous promise for us. We have a single theater open in Riyadh. It's currently doing 11x the revenue of a traditional AMC screen in the United States or Europe, 11x . The average seat utilization per year at that theater in Riyadh is more than double the highest grossing theater in the United States, which happens to be an AMC theater, by the way, Empire 25 at Times Square. We signed a joint venture agreement with the Public Investment Fund, an affiliate of the Public Investment Fund, the sovereign wealth fund in that country to develop at least 40-50 theaters over the next four to five years.
Our second theater, a 10-screen theater, will open in mid-December. We expect to have somewhere between a dozen and 20 theaters open by the end of next year, 2020. Remember, this is an affluent country of 33 million people. It has the 20th largest economy in the world. They like going to movies. They do it now by driving to Bahrain or flying to Dubai to see movies. They see movies when they travel outside the country. They see movies at home by satellite dish. As we've proven, when we open theaters, they come to our theaters in huge numbers. We agree with you, it's a significant opportunity for us, and we've done it in a capital-light way. Most of the capital for our expansion in the Middle East is being provided by our sovereign wealth fund partner.
David, I actually now have focused on your question a second.
You're back to NCM?
I'm back to the NCM non-cash charge. Really what's going on there is when the company was formed years ago, there were some upfront payments that were collected by the forming partners, one of which was AMC, of course. That money was deferred and amortized over the term of our ongoing agreement with National CineMedia. Last year, the accountant said, "You need to break out an interest component of that amortization." Really nothing has changed. Whereas the amortization was formerly in our expense category, a piece of it is now pulled down into interest expense. There's really no substantial or change of substance there. It's just a reclassification. Most importantly, it's a non-cash item. The cash was collected long ago. This is a non-cash charge that's coming through.
Got it. Thank you very much.
Our next question comes from Meghan Durkin with Credit Suisse. Please proceed with your question.
Hi, good morning, guys. I'm wondering if you've had any very early learnings on the AMC On Demand product, and why do you think AMC can be successful in the Video on Demand space given Walmart is exiting this business? I wanted to dig into your comment about around optimizing the box office versus competition. What are the levers you can pull there, and how can we have confidence that you'll outperform the industry in 2020?
Let me do the second question first. Why should we continue to outperform the competition? Because we've been outperforming the competition. Depending upon which metric you're looking at, three quarters in a row or six quarters in a row. If you look at all of the marketing programs that we have, we're just so out in front of the pack. Stubs, it had 2.5 million member households three years ago. It's gonna hit 22 million, it wasn't growing either. We redesigned the program. Three years later, it's gonna hit 22 million households this month. We used to communicate to our guests, email and the like, 50 million-100 million times a year. When I say used to, back when Stubs had 2.5 million member households.
We're now communicating to our guests via email, text, SMS, mobile push notifications, about a billion and a half times a year. About half of our total AMC clientele now is enrolled in our loyalty program, Stubs. We're making it very easy for them to buy our product through our upgraded website and smartphone app. Under the old website that was here when I got to AMC three and a half years back, we were being visited on the web or on our smartphone app just under 100 million times annually. Depending upon the volume per month, our website or smartphone apps are being visited between a low of 50 million times a month and a high of 90 million times a month. We should be pushing in 2020 somewhere between 750 million and 1 billion visits to our website and smartphone app.
We're all reserved seating, making it much more convenient for our guests. Our theater network is in better shape. More theaters having been renovated, more theaters having been installed with recliner seats. I could just go on and on, but it really is this, what we've been calling the AMC platform. It is working. A-List is just doing phenomenally well. We're just so out and far in front of our competition. By the way, it's not easy in an industry that's mature to move market share around, and we've had the biggest reported market share gain increase in the country. That's what we've been doing. That's what we'll continue to do. We'll continue to do it well. We're constantly innovating, and I believe that all that is gonna cause us to continue to be out in front of our competition. As for AMC On Demand?
AMC Theatres On Demand?
Yeah.
We've only been out two weeks. It's a little early to give you any forecast over two weeks. We always thought that we would start out very slowly. We had very little cash invested in this thing. A few million dollars to program it. We're not spending a lot of money marketing it. We don't quite think we're gonna scare iTunes or any of the people in the space already. Here's what we do think. If somewhere between 50 million and 90 million people a month, who are interested in movies, are already coming to the AMC website and are already coming to the AMC smartphone apps, and if we can make it really easy for them to rent or buy movies on demand for home viewing, phone viewing, tablet viewing, you fish where the fish are.
Since we've got so many people interested in movies already coming to us and exploring our website, we think that just by accident, we're going to see a substantial number of transactions on each of which, we make a positive contribution overhead. That's why we think we'll be successful, and yet we think the business will be very small, at least when we start. We'll see how we build over the quarters and years ahead. Why not do it? It was easy for us to do, and we launched and we ask all of you, just you got to be a Stubs member, you got to be enrolled, but go to our website or go to our smartphone app. There used to be two buttons at the top of every page, In Theaters and Coming Soon.
There are now three buttons at the top of the page: In Theaters, Coming Soon, and On Demand. We think that what we've designed is a really attractive, slick-looking guest interface. We look every bit as professional as other major players in this space. As I said, it costs us next to nothing to do it. We'll see how much revenue and profit it winds up adding to the bottom line.
Okay.
Lastly, studios are very happy with us doing it because it's just one more player coming in and helping in the ecosystem of their home entertainment business. We already have great relationships with all of our major studio partners. To the extent that we can do more things that make their lives better, making their lives better ultimately makes our lives better in the long run.
Got it.
Our next question comes from Chad Beynon, Macquarie Group. Please proceed with your question.
Hey, guys. Good morning. This is Aaron Lee on for Chad. Thanks for taking my questions. First, you talked a little bit about Regal subscription plan. Since Regal launched their program, have you noticed any attrition in the markets where you guys compete? Can you talk a little bit about what you're seeing from a labor or a payroll standpoint in the cities? Do you think that's putting any pressure on your margin initiatives? Thanks.
On the first question, Regal Unlimited program. No, we haven't seen any impact, really. A-List is healthy, strong, resilient, profitable. How many wonderful adjectives can I come up with to describe A-List? It's driving great incrementality in moviegoing. It's driving great incrementality in food and beverage spending. A-List members are bringing people along at full price. We know we've got a very strong program on our hands. Well, let me put it differently. We also note that we launched A-List at a time when other unmentionable people were out there. We thought we designed our program in a really smart way. We know that we've been managing our program in really smart ways over the past 18 months.
There was a reason why we put in a limit of three movies per week, in the A-List program. In the Regal Unlimited program, theirs is truly unlimited, so if somebody wants to see 25 movies a month, they can. Honestly, when you're only charging $20 a month, $22 a month, $24 a month, somebody wants to see 25 movies a month, we're happy to give all those people to Regal. They can have every single one of them. To answer your question, no, there's been no competitive impact on us. We're strong and we're healthy. As for labor and payroll, Craig may have more detail, but, yes, there's no doubt we're in a multi-year trend of political decisions being made to raise minimum wage all over the country. That is costing us money.
That's one of the reasons why we're looking so hard to drive savings, real savings, through the Profit Improvement Program. I gave you several examples where we are really cutting costs, and there are dozens and dozens more examples that I didn't laboriously take you through. Net, we're ahead of the game when you look at cost reduction efforts against labor and payroll expansion efforts.
I'd say that the wage minimum, largely due to the minimum wage changes that Adam referenced, was probably somewhere between 7%-8% in the quarter. I think on a go-forward basis, we'd expect them to be around 5%. Yes, we're seeing it most notably, not to repeat Adam, but I think his example of how we really took a hard look at show starts as an example of optimizing our operating envelope without sacrificing revenue because we still outperformed on a revenue basis.
Even with some cost pressures, we managed our business smartly, and we saw margin improvement. I think that's really the answer. Yes, there was wage cost. We did the right things to manage our business under those circumstances, and we still improved our profitability.
Okay, great. Thank you very much.
Our next question comes from Mike Hickey, The Benchmark Company. Please proceed with your question.
Hey, Adam, Craig, John. Congrats on the quarter, guys. Craig, you'll definitely be missed, bud. Best of luck. I guess just two questions. It looks like your A-List sort of held through the first price increase, but I guess as you sort of think as the price increase, I guess, hit some later adopters and the impact you would expect on your total subs, if you can continue to grow that or if you expect a mild decline. Second question on one of your partners, National CineMedia changed their deal with some of their founding partners, including Cinemark, to allow ads post showtime, which I think is pretty common in international markets. It's also, I think, happening with a competitor domestically with Screenvision, you guys are pretty vocal that that's not something that you wanted to participate in.
Just sort of curious your thoughts there and why you decided not to do that?
Sure. Let's talk about A-List first. Yeah, it's all good for A-List. The membership growth is way ahead of where we expected to be at this point. I would expect that we would continue to grow our A-List membership. I don't think we've flattened out to a point where we'll decline in membership. I do think the growth going forward is going to be much slower than it was in the first six to nine months when we were in a ramp-up phase.
Pricing, yeah.
The price increase is a factor. Competition's a factor. I think the biggest factor is just how big this market size is. When we launched the program back in June of 2018, I actually speculated that if we got to 1 million members, it would take us two full years, but that we might not ever get to 1 million members because I had sized the market at about 800,000 members for AMC. We're already well ahead of that. I think we'll continue to grow. Not at the exponential pace that we saw in the first nine months. As for NCM and advertising. There were two things that were in the NCM announcement.
One is they're showing ads five minutes after the official showtime start, and the official showtime start is actually 20-25 minutes ahead of when the movie actually begins because there's a 20-minute period prior to a movie start. A second issue, which is one to two trailers before the movie actually begins. So call it 2.5 to four minutes before a movie actually begins, they were going to be inserting a 60-second ad right at the middle or the end of the trailer package right before the movie starts. We don't have any problem, really, with showing ads five minutes after the showtimes start. It's a long time before the movie begins in theater.
This thing about showing commercials right before the movie actually begins in the middle of the trailer package, that trailer package is extremely valuable real estate. I would so much rather be advertising movies. The value of what we earn, both from the paid trailers where we're receiving income from studios and from all the extra tickets that we sell for future coming attractions, that's so much more than what NCM offered us to show an ad for Tide detergent. We also think that, and know, that our customers like seeing movie trailers, and we think they're going to find it quite jarring to see an ad for an unrelated product just before showtime. It's commonly done in Europe, but consumers are used to it in Europe. It's not commonly done in the United States.
We think U.S. consumers are going to react pretty negatively to it. As the leader in the industry, we passed.
Thank you.
I just might add, I'm convinced we're going to make far more money from the sale of trailers to studios and the sale of tickets to films. By the way we deploy our trailer time, we'll make far more money from that than we would make if we accepted what NCM had offered us to show unrelated third-party advertising in that space.
Thank you. We have time for one more question, and that question comes from Eric Handler with MKM Partners. Please proceed.
Good morning, and thanks for taking my question. Adam, you haven't really talked much lately about the success of the reseats in Europe and how those have fared. I think by now a number of them have sort of anniversaried the one-year mark. I wonder if you could just give us some color on how those are performing?
Thank you, Eric. The reseats in Europe continue to be off-the-charts successful. We said on prior calls, we were seeing ROI returns of 50% or more, 70% or more. We're seeing theater revenues go up a half. We're seeing theater revenues double. There's no new news that makes us any less bullish on our investment in theater amenity programs in Europe. You'll notice that even as we've brought CapEx spending down in total for the company, we've said over and over again that we continue to see significant ROI opportunities, especially in our European and Middle Eastern theaters. I would expect we'll do at least 15 theaters in the U.K. in 2020, for example, with full-blown theater renovations, including recliner seats.
The whole investment thesis behind our buying Odeon in the first place was to take a circuit with a strong brand name and great physical locations, but a fleet of theaters that were pretty run down and invest significantly in improving the quality of those theaters, bringing AMC-style proven guest initiatives over to Europe. That's what we've done. We've got about 30 theaters done. We're going to add another 15 more next year. We're off to the races. This has been a very successful initiative for AMC. It's made us happy to have grown in Europe. It's an all-good-news story.
One that will continue in 2020 and beyond.
Great. Thank you. Just a quick follow-up with the U.K. market. It seems like Vue continues to have very irrational low pricing in a number of its markets. I am wondering how that's been impacting you lately.
Yes, one of our competitors has been pretty stupid, especially in the U.K. We, fortunately, have been renovating theaters in the U.K., so there's been no need to match their low-ball pricing, as we've insulated ourselves somewhat by improving the quality of our theaters. There's a reason why we can charge a dramatic premium. When we launched Avengers: Endgame at the Odeon Leicester Square in London, we have variable seat pricing commonly in Europe. We were charging $40 a seat to see Avengers: Endgame at the Odeon Leicester Square. If you sat in the royal box, which is what, 24 seats, I think, 18 seats? I forget how big the royal box is. We were charging $52 a seat to watch Avengers: Endgame at the Odeon Leicester Square. You can differentiate yourself via the quality of your theaters, not just on price.
In others of our theaters, we got tired of them picking our pocket. If you look, for example, at third-quarter pricing internationally, you will see that the price increase we picked up in the States, we did not pick up in Europe, but our getting down and dirty and slogging it out with them is one of the reasons why we had a 9.3% increase in attendance in Europe. The end result of it was growing attendance, growing theater admission revenues, growing EBITDA, growing margins. We think we got the formula right. Craig, you want to add?
Yeah, I might add some context with a couple of data points. I think Adam mentioned on his call, his f ormal remarks that Europe, our industry was up a little over 13%. Our recliner segment of our circuit outperformed [crosstalk] in Europe, outperformed by a factor of 3x that. They're driving a lot of the growth we're seeing, and that's clearly a portion of our circuit. I mean, it's 25, almost 30 theaters. It's a growing, more important piece. It's the fastest-growing, and we're certainly not forced or pushed to take price reductions there. In fact, we're optimizing our price because of the big demand that we're seeing on those remodeled, reseated theaters. We are matching prices in some of our other theaters where it makes sense to us strategically to take some lower price. Certainly not on the remodeled piece.
Folks, we know that this is a big earnings season day. There are a lot of companies reporting. We want to let you get off the phone. Thank you for participating and joining with us today. To sum it all up, AMC had a very strong quarter. We are extremely well-positioned looking ahead. We have every confidence in our future and hope that you do, too. Thanks much.
This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.