Earlier this week, Cinema In Flux continued is webinar series focused on the reopening of cinemas as attention turns toward the recovery for dine-in venues. View the full presentation here.
The session was moderated by Matt Mader, Founder and President of Venue Valet. Panelists included Matthew Baizer (COO, Flix Brewhouse), Larry Etter (Sr. VP, Malco Theatres), Robbie Sosna (President & CEO, Envision Cinemas), and special guest Jason Ostrow (VP-Development, Star Cinema Grill).
Star Cinema Grill’s First Week Back In Play
Kicking things off, Ostrow discussed what their experience has been like in Baybrook, Texas, where easing regulations recently allowed them to reopen. “We didn’t think the opening was going to come as quickly as it did. We expected the Governor’s announcement to include restaurants in that phase, but not movie theaters … We had to change the way we operate our business. We want to talk to every guest and have it be a hands-on experience and we had to flip that upside down.”
When asked how their first days of business had gone, Ostrow reported the results were largely on par with expectations– even trending higher after Mother’s Day. “People said we were nervous and didn’t know what to expect, but they felt comfortable and are going to bring their kids back.” He further cited an expectation of achieving 10 percent of last year’s business on the same weekend, a target which they hit on Friday and Saturday. “Weekdays have been a very pleasant surprise. We’re doing about 40 percent more than we thought we would do Monday and Tuesday. Not massive numbers, but good enough for us to not be losing money.”
Will Kitchens Open Concurrently with Cinema Operations?
The question for a venues serving as a hybrid of cinemas and eateries is whether or not kitchens will reopen at the same time. In some cases, venues who lean more heavily on the dine-in experience than others see it as an all-or-nothing approach. “No one comes to stare at an empty screen, and very few come to use Flix as simply a cinema without a meal associated with it. We have no intention of any kind of a reboot without ensuring that we have a menu and a dine-in experience to couple with it, but that menu will be pared down and the labor designed to correlate to that menu and those lower admits associated with it,” said Baizer.
Envision Cinemas will echo that approach since they are a full dine-in operation. Sosna said they “won’t open until a version of that experience can be achieved.” He added, “Our goals are to streamline our menu and make it as efficient as possible. The supply chain is becoming a big issue, at least around here, and our governor has announced restaurant reopen plans but nothing with movie theaters. We’re in a holding pattern.”
In other examples, some theaters have already adapted in the interim by remaining open and serving food via delivery and pick-up services, but with a goal towards a focus selection items upon fully reopening. “We’ll offer burgers, chicken tenders, pizzas, and six core items on the concession side to start with,” says Etter.
The Math Behind Reopening
Logistics are the ultimate deciding concern, though. From the new release schedule, dictated by studios, to capacity restraints and other factors, the math behind reopening isn’t a simple equation.
“It’s a complicated question,” said Baizer. One of the things we’re waiting on is to find out what the first-run film is going to be. I know what’s being said, I just don’t know what’s going to happen. I suspect there could be a delay in first-run beyond July, and we don’t want to reopen until repertory content is a lead-in for a first-run experience. In that case, we’re willing to accept it as a loss-leader — a training period, if you will. The maximum I can possibly see us running that kind of program without it turning stale is about eight weeks, and we’re willing to tolerate some red ink during that time period. Other than that, it’s not in the cards, so we’re going to wait for a clear indication that we’re going to reopen and then we’ll put the math in play.”
Speaking to the possible advantages allowed by recliner seating and larger gaps between rows, Sosna thinks Envision locations could be in a position to adapt fairly smoothly. “We’re taking the same approach since we don’t even know, in my state, when the government is going to let us open. If Tenet holds [its release date], then we can start looking at Fourth of July weekend for that soft opening and then grow into a full launch. What’s interesting in Ohio is that they’re not doing capacity restraints. They’re just saying that, in restaurants, you can have as many people as you can fit as long as you honor six-foot social distancing.”
Business Evolution During the Pause
The hiatus since March’s closures has also provided an opportunity for these chains to reassess the futures of their business models, as outlined by Baizer. “How we truly re-imagine the business isn’t something I can execute today or tomorrow, but I imagine a world where tech is much greater deployed in our cinemas. One of the real difficult things about dine-in cinema that most who operate conventional cinemas go in and don’t realize until they get into it is the heavy reliance on labor. We need to refine and redo the labor model. We need more automation, procedures, and processes where remote delivery is an actual thing, greater robotics deployment… If studios are going to re-imagine how they are going to release film, then we need to start re-imagining, as a group of operators, how we show film and do it to our advantage related to attracting the most audience at the most opportune times.”
Supply Chains and Distribution Channels
Distribution chains may also be provide a massive challenge well into reopening phases, as well, since needs will vary by geographic location — as will access to those products and the speed at which they can be attained.
“We have very specific relationships with our distributors,” says Etter. “We have worked very closely with distributors on product levels, but I’m fortunate in that I only have one primary distributor for concession supplies and one big-box distributor for other needs. It’s going to be a challenge for larger circuits versus those more centrally located.”
Sosna also noted the increasing examples of shortages and lack of certainty on how long products can be held, forcing his business to reach out to other vendors. “We’re dealing with Inflation and increase in pricing. On the accounting side, we’re now going to have hundreds of new item numbers of random products we’re going to get in to satisfy whatever limited menus we’re working on. My theaters are primarily scratch kitchens and we don’t use a lot of boxed, frozen stuff, so we’re already going to have make things from scratch and utilize whatever ingredients are available to us.”
On the subject of how the guest experience will be impacted by these hurdles, Sosna added, “We’re going to single-use menus because it’s more sanitary and also allows us to print new menus based on what’s available. Our guests will have to become accustomed to [the idea of] whatever their favorite was last week, it might not be there next week, then hopefully we can bring it back the following week as the supply chain ebbs and flows.”
Lower Prices and Promotions
Consumer expectations may ultimately evolve in this rapidly changing world where personal finances have been impacted and the needs of one location may not fit the needs of others. “We’re looking at seven states,” said Bazier, “so there are different pricing tiers in different states since it’s, to some degree, indexed to minimum wage and there are different wage structures everywhere. We are lowering our pricing, generally speaking, to our lowest tier. There’s a single-page menu being drawn up and it’s specifically designed to reduce prep intensity and labor in the kitchen so we can at least have some shot of breaking even with a reduced number of seats in auditoriums.”
Etter noted, “Our menus aren’t going to change, but we will scale down on the reopening. We’re trying to take the philosophy of mirroring the films we’re showing. So if we’re showing classic films, we may have classic concession prices. I think we’ll limit the number of items we roll out when we reopen, but as we go week to week and get closer to first-run films, we’ll transition back into full menus at full prices. We will run price sensitive promotions. Again, we want people to get back in the theaters and feel good about the experience. We understand people’s discretionary income is going to be limited after this kind of financial crisis, so we’re trying to be sensitive to all those pieces as we rebuild the business back for mid-July.”
Technology’s Role in the Current Situation
Closing out the discussions, everyone largely agreed that now is the time to become hyper-focused on embracing technological advancement and innovation to meet current needs and be better prepared for the needs of the future — whether that’s pre-ordering food from lobbies, ordering food and tickets via online apps, or other solutions.
“This is the opportunity to push us into technology faster,” says Etter. “Use the technologies available and push us over the edge.”
Baizer further noted the need to implement touchless payments, handheld ordering, and subscription models. “We have a system of management tablets that allow managers to address things like call lights, missed greets, reminder systems on when to check restrooms, sanitation, and all sorts of things. It’s all about the ability to “deliver a better, safer, and more efficient guest experience.”