A pioneer of the dine-in cinema concept since its launch in 1993, Studio Movie Grill (SMG) has grown into one of the most influential cinema circuits in the United States. Placing 13th on Boxoffice Pro’s annual Giants of Exhibition list of North America’s largest cinema circuits by screen count, SMG currently operates more than 30 locations in the United States. In April, the circuit announced an ambitious expansion plan with a $100 million investment from TowerBrook Capital Partners. The announcement came on the heels of two new initiatives from the dine-in chain: a new loyalty program, SMG Access, with an approach tied to outreach, and plans for the launch of its own in-house subscription service.
Boxoffice Pro caught up with Brian Schultz, founder
How does your mission statement, opening hearts and minds, resonate beyond a motto and seep into your company culture?
Our philosophy is based on Win Five, our five stakeholders: our team, our guests, our community, our vendors, and our investors. In every decision we make, we balance all five stakeholders. If one of those stakeholders is losing at the expense of another, it creates a problem in the long term. We keep this in mind in every decision, including our living wage initiative, to make sure everyone on our team is fairly compensated.
Too often, our industry is affected by this extraction mode: How can we get more money out of somebody? How can we take more and pay less? I really wish it was more about increasing the pot. How can we actually create a great experience for more moviegoers?
Now that the dine-in concept is more familiar to consumers, is it easier to enter new markets?
We spent a lot of time selling the concept. Now, unless we’re going to a new city, there’s already a built-in familiarity with in-theater dining. One of the fun things about our new location, SMG Sunset Walk in Orlando, is that it’s doing a good job of seeding the market; as people come from vacation, they return with an exposure to what we do.
How did you decide to pursue such an ambitious expansion?
We hit a tipping point for growth, of understanding exactly who we are and how we could lean into our mission of opening hearts and minds, one story at a time. I believe in the evolution of any concept, and as leaders and innovators of in-theater dining, we always go back to asking ourselves: What does the guest really need? Going back to 1993, when I started with warm beer and frozen chicken tenders, it’s great to see how far you can take the concept by fine-tuning and developing it. There’s always the danger of going too far—serving sushi or other hand-crafted meals, for example—so it’s really about figuring out a sweet spot where you can deliver a unique service.
I started asking myself, what does Studio Movie Grill do that is important and different? Why should we even exist? In 2018, I was hitting a point where it was my 25th year doing this. Half my life has been invested in this concept, and it was a good time to reflect on the future. We stepped back and asked ourselves if it was a good time to sell and start a new chapter. We also considered if this was a good time to look at what we were doing and explore what the next evolution could be.
Some dine-in circuits did sell during that time. What convinced you to stay and go all-in on an expansion?
I love this business. I think what we’re doing is really important. As I looked at other opportunities, I realized we can create a positive wake in the world by being in this space. That’s why we went out and got funded. We’re too big to be considered a small independent, but we’re too small to be a major. So we made the decision to go big. We’re going to bring our concept to a lot of different cities and reinforce our presence in some of the cities that we’re in. We’re going to build a product that spoils our guests so much that they’ll never want to go anywhere else. More importantly, they’ll come more often because we’re going to be smart enough to roll it out at a price that makes sense so they can come every week. We’re appealing to moviegoers and keeping the theatrical experience healthy. I think we’re doing it by innovating in ways that sends a signal to other segments of the industry about ways they can keep things vibrant.
The building blocks are there. Last year, SMG launched a loyalty program and started experimenting with subscription. As an early partner of Moviepass, you knew what you wanted and what you didn’t want in a subscription program.
When I first started, we’d do a lot of special events around community-based content. When we did that, it was to advocate a position that I had, or to support a cause that I deeply cared about. That’s no longer the case, and it hasn’t been for a long time. Today we’re a platform for an interaction of ideas and discussion. Now we ask ourselves, what does the community want? With the amount of data and the amount of experience we have, it became obvious. They don’t want caviar, they don’t want sushi. They want good, fresh made-to-order food at a price they can afford. That’s how we get them to come back; that’s how we become a local place for them to gather.
How does that translate in terms of content and programming?
We distinguish content by community. What we show in South Chicago is very different than what we might show in Plano, Texas. I like being able to actually identify and communicate directly with our audience as we begin to see the results from our loyalty program.
Dine-in is not a one-size-fits-all solution, whether that’s in menu or alcohol service. How important is it to distinguish yourself as a circuit, and is that something you need to achieve in the kitchen or through operations?
I’ve always been blessed to have amazing mentors. One of the mentors who helped me in this area was Norman Brinker, who started Brinker international. He used to tell me, “There are lots of different restaurants. Don’t try to differentiate yourself with a piece of tile or some random menu item. Differentiate yourself by offering hospitality.” I can’t point to just one strategy that differentiates Studio Movie Grill from any other dine-in theater; strategies can be imitated. The feeling you get when you walk into a Studio Movie Grill has to be one that drives an incredible desire to return. We want to deliver a great experience. That begins with our website and how we market and communicate our food and our programming. This idea of hospitality and servant leadership, maybe it hasn’t been fully baked into the moviegoing experience across the board. That’s why it’s something we continually focus on getting right.
You mentioned starting out with warm beer and frozen chicken fingers. How has the SMG concept evolved in recent years?
We’re driven by a simple philosophy: plan, do, check, adjust. We’re constantly innovating. Our focus is to be seamless, whether it’s buying your ticket, finding your show time, getting to your seat, ordering food—how can we do this in a seamless way so you can enjoy the experience?
We’re seeing a lot of private-label PLF. Are you planning anything in that space?
Moviegoing should be for everybody. I like the idea of democratizing moviegoing, so it’s tricky for us at SMG to get into the premium conversation. With that being said, I would actually put presentation—screen size, laser projection, seating—up against any of our competitors. We do offer an upgrade in our circuit, usually two auditoriums in our locations that are branded SX, “Studio Extreme.” We have a psychographic that loves seeing movies in these big PLF auditoriums, and we have another that loves the more intimate, smaller theaters. There is a little bit of customization required, and we make sure to articulate that so guests can select the experience they want.
You’re building an experience. People can watch a movie anywhere, but what SMG is offering are unique experiences tied to watching movies. That being said, it seems like every circuit is currently caught up in trying to develop its own customized offerings. It makes me question if we might be looking at a bubble when it comes to premium amenities. At what point does an experience turn into a gimmick?
You need to be creative and continually innovating. One of my favorite innovations is called Black Box Theater. Years ago, I got really into auditorium design and started investigating fancy lighting designs that hearkened back to the grandeur of cinemas. I have a musical theater background, and I began to ask myself, what if we apply that black box concept to a cinema? What if the entire auditorium were black? How could we make the connection to the screen as immersive as possible, without any distractions? And this would apply to the entire experience, from a change in staff uniforms to making sure we have all the food orders out by the time the movie starts. The idea would be to move away from anything that distracts from the experience.
We have some locations that are right across the street from traditional multiplexes. At the start, I was secretly hoping that those theaters would see business improve. And it looks like it has. Part of the reason is that dine-ins have less seating capacity, so there’s a spillover. Another reason is because most dine-ins attract a 20-something demographic, which is the one that traditional cinemas are having trouble retaining and engaging. All of a sudden, when these audiences start going to the movies again, there’s a halo effect: When there’s a good movie out, even some of the bad movies see a bump at the box office. What we’re trying to do is get people to go to the movies more often.
Are you concerned about saturation among dine-in cinemas?
I think it’s a mistake when copycats open right next to each other. Just as there are different restaurants for different tastes, there are different cinemas for different tastes. That might be a bit of a provocative thing to say, because for most of our industry—exhibition and distribution—the old thinking used to be that the main driver was the movies. For dine-in, while there’s no question that the movie is still very important, it’s not as dominant a factor. We have a lot of folks for whom Tuesday night is date night, or maybe it’s Sunday afternoon. They’ll pick a film that seems reasonably appealing, but they come back to SMG because they like the experience and the way they’re treated when they come to one of our theaters. A percentage of your audience will return simply because we offer them great hospitality.
Have you considered any international markets for expansion?
We’re doing research on that. There are some countries that are better suited than others in terms of openness and willingness to entertain this kind of concept. We’re very open to royalty deals, and that might be one of the ways we explore international expansion.
I’m going to end the interview by asking for a short answer to a big question. What is the future of cinema?
It doesn’t have to be dine-in, but you have to create an experience. If you’re just building a theater, you might not have great prospects in this environment. And you need to have great service and hospitality; I just don’t see anything being successful without it.