A charity-run cinema is set to reduce its opening hours as it looks to address “immediate financial challenges” that include potentially losing a £194,000 council grant.

Phoenix Cinema and Arts Centre, a four-screen cinema in Leicester, said it would open five days a week.

The charity said it had worked hard to grow audiences and develop new income streams but “sadly these measures are not enough”.

Phoenix Cinema recorded income of £2.5m in the year to the end of March 2024 and expenditure of £2.7m over the same period.

The charity said: “Since 2020, we’ve faced one challenge after another – the pandemic, rising operating costs, dwindling public funding and the cost-of-living crisis have all impacted our financial stability with this deepening in April due to changes to employers’ National Insurance Contributions and the loss of a significant grant.”

Phoenix Cinema said it had to reduce costs so it could rebuild its funds and improve its financial stability.

The charity completed a multimillion-pound extension in January 2023.

“After opening our award-winning extension (just over two years ago), we found ourselves covered in scaffolding due to council-led work,” the charity said.

“Despite this, our wonderful venue presents us with opportunities for future growth that should enable us to become more financially resilient in the long term.”

As reported by the BBC, the charity told staff it expected to see a “significant reduction” in its annual £194,000 grant from Leicester City Council.

Sarah Vallance, co-chief executive of Phoenix Cinema, told the BBC: “We will try everything we can to minimise the need to make any redundancies.

“Consultations with staff are absolutely vital to that and that process is underway.”

A spokesperson for Leicester City Council said it was also in an “extremely difficult” financial position.

“Phoenix Arts has been affected by a number of issues, including the longer than anticipated recovery of cinema audiences, and the impact of the works taking place there,” the spokesperson said.

“We have been talking to them for some time about our own extremely difficult funding position, and the need for us to take difficult decisions to balance our books.

“We have not yet made a final decision on this, and are considering all options, but it is prudent of the Phoenix trustees to plan on the assumption that we won’t be able to continue to support them in the future.

“Whatever final decision is made in February, we will continue to work closely with the Phoenix team to help them to maximise promotional and marketing opportunities to help to increase their business.”