Matthew and Jean Spenser receive a letter from Matt's great-uncle Simon, making him sole heir to his Sloughborough cinema. On arrival in Sloughborough, they are assailed by the smell of the local glue factory, but are hugely impressed by the Grand, which the taxi driver claims is the only cinema in town.

But solicitor Robin Carter breaks the news that the Spensers' cinema is in fact the Bijou, an ironically-named fleapit, adversely affected by passing trains. However, the Grand's owner, Mr Hardcastle, made Simon an offer of five thousand pounds to buy up the Bijou, as he wants the land for a car park.

Matt and Jean meet Hardcastle, but find that the offer was made several years earlier, before television hit cinema profits. Hardcastle offers five hundred pounds instead, raising his offer to seven hundred and fifty after haggling. Afterwards, Carter suggests that Matt and Jean fool Hardcastle into thinking that they're going to reopen the Bijou.

Matt and Jean meet the Bijou's staff: cashier Mrs Fazackalee, projectionist Percy Quill and usher-cum-janitor 'Old Tom'. Matt is puzzled to see references to groceries and farm produce in the accounts, and Mrs Fazackalee explains that Simon's customers often paid in kind, as a tax dodge. She warns Matt about Quill's drinking.

The cinema is restored, and Hardcastle ups his offer to £2,000. It is refused again, but Old Tom overhears that Matt and Jean never intended to open the cinema, and leaks this news to the Grand's commissionaire, which finds its way to Hardcastle just when he's about to agree the full £5,000. The offer promptly falls to £750.

Matt and Jean are forced to open the Bijou. Tom confesses that he leaked the news, but Matt consoles him, and buys him a much-cherished uniform. While the Grand has the pick of the latest Danny Kaye releases, the Bijou can only show B-feature Westerns like Killer Riders of Wyoming. No-one turns up for the first show, but they run it anyway.

Gradually, an audience appears, starting with a small boy. A train on screen synchronises with a train passing the cinema, causing Sensurround-style juddering and audience applause. When the film ends, the audience stampedes out of the cinema to avoid the National Anthem.

By the end of the week, the Bijou is making a small profit. Matt and Jean visit the Grand, and decide that they should have an ice-cream girl. Jean gets the job, but gives it to Mrs Fazackalee when she's mobbed by an over-enthusiastic crowd. When Matt breaks up a fight over blonde sexpot Marlene Hogg, he offers her the job.

Sales of drinks and ices shoot up when they screen Mystery of Hell Valley ("A Scorching Drama of the Pitiless, Thirsty Desert") with extra heating. One night, Matt and Jean return to the cinema to hear music: Mrs Fazackalee is accompanying the old silent film Comin' Thro' the Rye, part of Quill's private collection.

Hardcastle's partners are worried by the Bijou's success, but Hardcastle has an idea. A newsreel arrives, and when Quill opens the can, he finds a bottle of whisky inside. He locks it in the first aid cabinet - but when the film turns out to be another parched desert extravaganza, he can resist no longer.

The film breaks, and Matt takes over projection. The show is a disaster, with sound out of sync, an upside-down picture and speeded-up chases. The audience thoroughly enjoys the latter, but when the film burns in the projector, Matt has to offer them full refunds.

Jean discovers that she's pregnant, along with Marlene and the cinema cat. But when the news sinks in, Matt realises that the Bijou can't go on, and that they should accept Hardcastle's offer, realising that the only thing that would make a difference would be if the Grand caught fire.

The next morning, Matt discovers that the Grand has indeed burned to the ground. Because Hardcastle needs to remain in business, he stumps up ten thousand pounds for the Bijou. Bidding the Spensers farewell, Tom gives a strong hint that he was responsible for the fire. Matt and Jean agonise over whether they should do anything about this, but decide to go travelling instead.