It is hot, scorching hot. I am sitting on a boat in the middle of the Caribbean. On a large 45 foot screen perched above a courtyard filled with pools, Danny Kaye and Bing Crosby are tap dancing their way into your hearts in the holiday classic “White Christmas”. About six hundred people, all slathered with suntan lotion are watching with deep intent, only stopping to take a sip of an over sugared pina colada or a mai tai. This is Christmas day on a cruise line, kind of a bizarre scene in many ways but for me a movie fanatic, a re-assuring one.
It does raise the question, what will movie theaters in the future look like?
As I bob around in a crystal blue sea, I keep asking myself that question. About two weeks earlier I created a bit of controversy when I made mention of a theater I have just built in the middle of a water park. One self righteous member of this group took great offense at my labeling this effort as a drive-in or actually we used the term “dive-in”. While I respect the viewpoint of those who attempt to remain purists, I would make the statement that this ship had sailed as soon as the multiplex came into the being.
The latest trend now is to have movie theaters twinned with bowling alleys, arcade and virtual reality centers. In fact, I would make the assertion that these buildings have ceased being movie theaters and are now defacto family entertainment centers where theaters are just one of many attractions. Executives like Cineplex’s Ellis Jacob are leading this transformation by integrating arcades and virtual reality into their business model. I am waiting for the day when the innovation that is being forced on movie theaters to slowly devolve away from its core business will lead to its demise or becoming unrecognizable from its original form.
In the past I had rallied against overstuffed seats and chicken tenders, because I was firmly aware that this was a slippery slope that would lead to the diminishing of the movie going experience. I know many would argue this point. Frankly if I wanted to sit in an overstuffed chair and have food of my choosing, I would have stayed at home. When AMC stripped away a layer of theater managers only to be replaced by experienced food service professionals the writing was on the wall. From a practical matter, I have enough problems keeping a level of decorum while eating with a normal level of light, remove that light and while I may walk into the theater with a white shirt, there is a decent chance that with the addition of goopy food items I will walk out sporting a Hawaiian shirt.
The percentage of theaters’ revenue attributable to concession sales has climbed steadily over the past few years give the much higher prices of meal based menu items, even as ticket sales have fallen. In 2016, AMC’s concessions sales hit the $1 billion mark, up 12 percent from 2015 and 28 percent from 2014. At the same time the revenue derived from box office was diminishing. Popcorn no longer rules supreme when it comes to snacks at the movies . The way we watch movies on the big screen is evolving, as well the way we eat at the movies is changing too.
In the 1930s, the movie theater business was crippled by the Depression. People didn’t have money even for the relatively cheap form of entertainment they were peddling. Theaters started to close. But one type of theater survived: the kind that sold concessions. Some owners of fancier, higher-class movie theaters banned food, considering it to be beneath their business. It turned out that theaters that peddled things like popcorn and candy were the ones that survived the Depression. It seemed that those who could afford a ticket apparently liked the cheap snack, and the relatively low cost of the reigning king of the concession stand popcorn meant that theaters made a huge profit, which kept them afloat. By 1945, half of all popcorn in America was consumed in movie theaters. The movie theater business has had its highs and lows since then. Of course I am also concerned when I am told that Dave and Busters, Chuck e Cheese, and Buffalo Wild Wings are strongly looking at implementing a movie exhibition model. This dilution of a movie going experience by placing the focus on the food further erodes the community aspect of movie going to a negligible level, and right now, it’s in one of its slower periods. Movie theater attendance in the US hit a 25-year low in 2017, a drop likely attributable to a few factors: the soaring price of movie tickets, poor turnout during the blockbuster summer season, and the ever-present threat of streaming entertainment services like Netflix, which provide an inexpensive alternative to the theater. In short if theaters want to become Applebees, why can’t Applebees become theaters.
So it’s probably no surprise that movie theaters have been reinventing the ways they sell concessions too especially since they pocket about 85 cents on the dollar, at least for conventional concessions. Not every food item can be sold at the sort of markup that cheap-to-make popcorn brings in, but the profit margin is still enticing (particularly for theaters that add alcohol to their menus.). In fact at best the markup will produce only a 7% profit.
And that’s why, around the country, you can find independent theaters selling specialty cocktails and fancy snacks in the lobby; franchise chains like the Alamo Drafthouse cinemas, which serve up a full menu including alcohol during the meal; and even fancier fare at multiplex megachains like AMC and Regal, which in some locations are supplementing their standard popcorn and nachos routines with chicken and waffles, sliders, and paninis.
A real concern is that there is a headlong rush to enter the full service menu business. The cost of implementing a full kitchen is close to $300,000 with at least $40,000 being dedicated to a hood and a fire suppression system. There is also the fact that almost 60% of hospitality facilities close within three years of opening. In any restaurant facility operating costs such as salaries, marketing, inventory and maintenance are often underestimated, especially with new restaurants. These costs typically make up around 80% to 90% of total revenue at profitable establishments. My concern is that very soon having a meal with your movie will cease of be a novelty, then we will see theaters facing pressures they did not expect. They will discover that running a restaurant comes with a huge amount of risk and as well slim margins.
While evolution is completely natural and the movie going experience has always been in flux, it is an industry that is under intense pressures from competing mediums. This week Netflix crowed that since its premiere on Dec. 21, the original drama/thriller Bird Box starring Sandra Bullock has been viewed by over 45 million accounts. Again Netflix is laying claim to nomenclature defined by motion picture exhibition, in a thinly veiled attempt to become the primary platform for the release of the art form known as motion pictures. These machinations by Netflix, I feel, for the most part are ego fueled because as a rule Netflix is evolving into a platform for short form binge watchable donuts of entertainment. Basically Netflix is throwing down the gauntlet and letting people know that their movie has had the same amount of views that would equate to a $400 million box office.
I go back to the beginning of this essay, where I was witness to six hundred people watching “White Christmas”. Here you have a cruise ship, offering 24 hour access to an avalanche of food and drink. The cruise line served small bags of popcorn, but at the end of the day with a thousand distractions these people chose to watch a movie made in 1954. There is a truth there and there certainly is an audience there. And I would also make the firm statement that there was a movie theater there….in many ways truer than most multiplex experiences. It is simple and that as an industry should be our simple should be our collective goal.
Happy New Year
