CinemaCon 2024: NATO Marquee Award, Chris Johnson, Chief Executive Officer, Classic Cinemas

Courtesy of NATO

With a track record of over four decades working in the exhibition business, Chris Johnson is no stranger to overcoming challenges posed to independent cinema operators. His father, Willis, started Classic Cinemas shortly after acquiring the building that housed the historic Tivoli Theatre on the outskirts of Chicago. Diving headfirst into the business, Willis Johnson went on to acquire more downtown theaters as Chris began working his way up through the company. Chris Johnson went from ripping tickets to Star Trek: The Motion Picture (1979) to serving as assistant manager, manager, concessions manager, and operations manager, before ultimately being named vice president of Classic Cinemas in 1992 and CEO in 2014. Today, he oversees 137 screens across 16 locations in the Midwest. Boxoffice Pro caught up with Chris Johnson ahead of being honored at CinemaCon with the NATO Marquee Award to discuss the history of his family’s company, their commitment to exhibition, and resiliency in the face of adversity.

Classic Cinemas is a family company started by your father in the 1970s. Take us back to those first days in the business. What led your father to invest in exhibition?

My dad, who was originally in the commercial printing business, bought a building with his brother back in 1977 that had a movie theater in it. The theater had a lease until 1992, so they only looked at it as an income property. Well, one year later, the theater operator put up a “Closed for Remodeling” sign on the marquee and decided to skip out of town. Not only did he walk out on the lease, he also tried to take all the theater equipment with him. Fortunately, the manager for that operator went to my father and proposed, “I know how to run this theater. If you can cover the payroll, we can get it back up and running.” That’s how my father got into the movie theater by accident in August of 1978, with the Tivoli Theatre in Downers Grove, Illinois.

My dad was 41 years old then, and the Tivoli was an old downtown theater in the day of dollar theaters. Downtowns were out of favor at the time, it was all about suburban shopping malls back then. Our first big success there was with the movie The China Syndrome (1979). That’s when we realized it was going to work as a business.

How did you get your own start in the family business?

My first job there as a kid was the unenviable duty of cleaning the basement and clearing out seven dumpsters full of garbage for $3 an hour. By the time I was 13, I had already worked my way up to becoming an usher—and I’ve worked in this business since. My dad went on to acquire other downtown theaters, which were so out of favor in the 1980s that you could either acquire or pick them up on a lease for relatively cheap.

In 1984 we opened our first multiplex—a three-screen, first-run theater— just outside the Chicago suburbs. We kept growing from there, picking up locations in suburban strip malls that used to be run by General Cinema and other operators of the time. As our circuit grew, we made the leap from dollar theaters to first-run, just before the video rental boom of the ‘80s. Back then, whenever you had a slow week, you’d see Raiders of the Lost Ark (1981) pop back into circulation on a limited run.

We’ve been very fortunate to recognize changes in the industry as they happen. In those early days, it was the transition from bargain theaters to first-run houses. Later on, it would include topics like the transition to digital projection and introducing recliners with reserved seating. That being said, our big break had everything to do with luck and nothing to do with strategy. Suddenly, the shopping malls were the ones struggling, and you saw an urban revival for downtowns across the country. We were in the right place at the right time. Downtowns became vibrant and dynamic centers for the entertainment and hospitality industry, and our theaters were a great complement to that cultural life.

Today, we run 16 sites with a total of 137 screens. At our peak, in the early to mid-’90s, we operated 20 theaters. That was around the time when my dad wanted to take the company public and expand like everyone else was doing at the time.

This was right at the cusp of the stadium seating craze, which culminated with many circuits overextending themselves and filing for bankruptcy by the end of the decade.

That is precisely what happened to many of the folks that went in that direction. Instead of jumping into that expansion, I decided to return to school to get my MBA in finance from the University of Chicago to better understand the business side of our growing company. Almost immediately, I realized the industry was expanding too quickly, and some folks were in for a big surprise.

At the time, Wall Street was handing out money to movie theaters because they considered them a cash cow—but the reality was that there simply wasn’t enough room for a mature industry like ours to grow so much that quickly. We pulled the brakes on expansion and decided to stay private, pulling back when everyone was driving forward. It was perfect timing because when the market correction came in the early 2000s, we were in a really good financial position. Because we never overextended ourselves, we could pick up quite a few theaters from other players forced to consolidate. That’s how we got our first 18-screen location, entering the megaplex era. We lucked into being conservative at the right time, and instead of overpaying for new locations when the market was hot, we picked up some great sites at great prices a couple of years later.

That must have also put you in a favorable position when it came time to finance the transition to digital cinema projection.

It was cool to be a trailblazer of the digital transition. I believe we were the first circuit in the entire country to be fully integrated with 4K DLP projectors. I was the guy who kept talking about 4K before it became a household term. Christie had just come out with a model at the time, and we decided to replace all of our existing projectors with it. It was the most technologically advanced projector of its time, and we put them in each one of our screens.

We know our niche in this business, and more importantly: We know what isn’t in our wheelhouse. There are circuits out there doing a great job with in-theater dining and cinema entertainment centers, but that’s just not our thing. We’re all about delivering a best-in-class immersive experience—with the best sight and sound in the most comfortable seats and without distractions.

That’s why we took such an aggressive approach to installing recliners in our theaters. One of the most important metrics for our company is seat occupancy, a ratio of how many times a seat at our sites is filled per year. If that ratio isn’t high enough in any given auditorium, it’s a sign that you have too many seats for that screen. It wasn’t an easy decision to remove half to two-thirds of the seats in some of our auditoriums to make space for the recliners. A lot of people said it was a passing fad, but I’ve never believed that anything having to do with guest comfort is a fad. Air- conditioning is not a fad—and neither is recliner seating, by that logic. By optimizing our occupancy in each auditorium, we’re able to maximize consumer-spend across all our screens—and whenever we have sellouts, it creates a scarcity that pushes our customers to another showtime that might otherwise be underoccupied. Creating that scarcity pushes people to buy tickets in advance, which is invaluable in helping us staff accordingly. Having the right number of people working during the busiest showtimes is not only good for our bottom line, it means our auditoriums and facilities are cleaned more efficiently and [have] shorter concession lines that lead to more sales.

My dad would always question recliners, considering it’s such an inefficient use of space. He wasn’t wrong about that, but the numbers told a different story: People would drive past our locations that weren’t reseated to see the same movie in a theater with recliner seating. Some people claim that if you have a theater out in the middle of the country, it doesn’t matter if you have recliners or not. I’d say it’s even more important to offer recliners in those theaters; it helps your theater stand out as a special place in your community. Even if you’re operating in a market without any competition, you will do yourself a great service by making that conversion. Don’t try to skimp out by making the aisles extra tight; make every seat wonderful. You’ll see the results in your box office.

What industry lessons did you pick up from your time working for your father?

I remember in those early years, I asked for a raise twice, and I was turned down both times. Apart from that, he was extraordinarily generous with letting me take chances, seize opportunities, and believing in me. He would volunteer for every committee and local economic chamber—he understood the value of tapping your community and being a part of it. He took all these dilapidated theaters and brought them back to life, which would in turn bring people back to those areas and uplift the surrounding businesses. As far as lessons go, he was very detail oriented. If you had a light bulb out in your theater, boy, you were in trouble—he might come over and change it himself. I appreciate everything that he did for me.

What are your most important business initiatives as a circuit right now?

Our three biggest initiatives are recliners, premium large format (PLF), and alcohol. We’re trying to incorporate those into every one of our sites. It’s what the audience is asking for today, and it’s our job to deliver on those expectations.

Those three categories often have a premium price attached to them. Have you found any concerns in terms of price sensitivity when implementing them in your theaters?

I wouldn’t describe us as “price sensitive,” but we are certainly very sensitive to the value we provide in our moviegoing experience. For example, this year, we raised our $5 Tuesday promotion to $6, the first price increase we’ve had in that category in a decade. I’ve never sweated out a decision more than that one. Fortunately, our audience understood why we needed to make that move. As long as you’re allowing people to come to your theater at a reasonable price, I feel your audience will understand moderate price increases. We remain a very affordable circuit; most adult tickets are about $9, and our PLF concepts go for around $12.50 a ticket—they’re on the lower end of what theaters in our area charge. We understand there are additional costs related to going out to the movies: drinks, dinner, and maybe a babysitter. That all factors into someone’s decision on where to go when they leave the house. That’s why we strive to provide the best service, comfort, and projection technology, at a reasonable price, in all our theaters.

Classic Cinemas locations were closed for a long stretch of time during the pandemic. Do you feel you’re been able to reconnect with your audience over the past year?

We saw a 31 percent bump in attendance in 2023 compared to the prior year, going from just under 2.5 million people to over 3.25 million patrons. That’s positive momentum and why I’m super bullish on this industry. With the advent of digital technology, we’re also seeing the ability for theaters to program their screens with alternative content, which we saw last year with the release of Taylor Swift: The Eras Tour (2023). You’ve seen genres like anime rise up and new hits like the streaming series The Chosen finding success in theatrical runs across the country.

I know this past Christmas didn’t attract major headlines regarding any individual movie being a massive blockbuster. Still, we had a higher attendance in that period than in the preceding Christmas. Why? There were eight wide studio releases during that period. That variety helped us hit better attendance figures over the entirety of the holiday season than when we just had Avatar: The Way of Water (2022) and Puss in Boots: The Last Wish (2022).

I don’t think any individual genre is dead, we just need good movies to reignite interest in those titles. Whenever you have a good movie that catches on with an audience, the genre doesn’t matter. Just look at the success of a movie like Oppenheimer (2023). Having the flexibility to program our theaters with a consistent slate of movies helps everyone in this industry. The current downturn in theatrically released titles couldn’t have come at a worse time. We had just found all this momentum with Barbie (2023) and Oppenheimer last summer, and we couldn’t build on it. We are just now finally turning that corner, and I feel we’ll be able to recover a lot of the ground we lost in the next six months.

How has being an independent helped you navigate some of the turbulence we’ve experienced in the industry over the decades?

If you keep your eye on the ball and listen to your guests, chances are you’ll make the proper decisions. For example, we were big into digital 3D when it first came out. We noticed some fatigue around that technology, so we sent out a survey to our guests and received 700 responses in return. A third of respondents weren’t interested in 3D at all, another third were indifferent, and the last third were moderately enthusiastic about it. That’s when we decided to stop doing as many 3D screenings. Our guests told us what they wanted, and we programmed around that. Listen and execute, and if you make a mistake don’t be afraid to course correct quickly.

What does the future of the exhibition industry look like?

I’m a big believer in our business. We live in a society full of second screens and distractions; the movie theater is the only place where you can sit without having to use a pause button. You sit down, and you commit yourself to going on an adventure. I just watched Anatomy of a Fall (2023) recently, a subtitled French courtroom drama, and I was absolutely immersed and riveted by it. If that was on my TV at home, I would never have been able to sit through the whole thing. That’s why I think the theatrical experience will prevail. I know streaming is hugely popular, but we’re not really competing against all that; we’re a destination for people who want to leave their home. If you look at the frequency figures we need to achieve as an industry to really thrive again, it’s not an impossible challenge. We have the cinephiles that come every week and the folks that only stop by once a year. The success lies between those two categories. If you come to the movies six times a year, I absolutely love you. That’s one visit every other month, a very attainable frequency.

The pandemic beat up all of us. Outside of a two week period, our theaters were shut down for a total of 13 months. And it’s felt like every time we’ve had momentum at the box office, there have been outside factors that result in a dip of content available to our theaters. Once we can get back to a consistent and dependable release schedule, mark my words, we will come back bigger and stronger than we were in 2019. On our part, as cinema operators, we need to do our part and continue investing back into our theaters. We make it a point to keep in close touch with our studio partners, letting them know their movies are playing at the proper sound and light levels. This business isn’t for the faint of heart, but I embrace our future.

Courtesy of NATO

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