In Q1 of 2024, when Boxoffice Pro publishes its annual Giants of Exhibition ranking of the top 50 chains in North America by screen count, the top 10 will look a little different. Following two years in which the 10 largest cinema chains remained the same (in ranking, if not in exact screen counts), next year will see San Antonio, Texas–based Santikos Theaters leapfrog its way from no. 38 on the list into the top 20 percent. (Exact rankings for all chains will depend on theater and screen counts as of December 31, 2023.)
This change to the North American exhibition landscape comes courtesy of an acquisition: Santikos will acquire a total of 17 locations under the AmStar Cinemas and the Grand Theatre brands from New Orleans, Louisiana–based VSS-Southern Theatres. The acquisition more than doubles Santikos’s footprint, taking the company from 121 screens in 10 locations to 377 screens in 27 locations. That’s enough to make it—as of press time—the eighth-largest circuit in North America and the seventh-largest in the United States. Jim Wood, CEO of VSS-Southern Theatres, called it “an exciting time for our Grand and AmStar colleagues and guests as they become part of the Santikos family and continue to elevate the guest experience throughout the Southeast.”
The expanded footprint is only part of Santikos’s evolution. In 2016, the chain opened its first cinema entertainment center, making it an early adopter of a concept that’s since grown in popularity; others in the industry have begun eyeing a similar shift from cinemas with double-digit screen counts to multipurpose spaces combining cinema, dining, and various entertainment amenities. In 2021, Santikos signed a three-year deal with Cinionic to convert the entire chain (then 9 locations) to laser-based projection. In 2021 and 2022, it acquired two Texas cinemas—both former Alamo Drafthouse locations—renovating one to add a bar and arcade. And in 2022, Santikos announced an extensive remodel for its Silverado location in San Antonio, set to include new bowling and arcade facilities and technology and seating upgrades.
“After clearing the Covid hurdle, we are now in a great position for future growth and expansion,” said CEO Tim Handren in a statement. “Our partnership with the Bank of San Antonio has helped us emerge from the Covid era financially strong and ready to expand. We believe the future of our industry is bright, and we are thrilled with the incredible movies the studios are producing.” Handren spoke to Boxoffice Pro to discuss Santikos’s growth and its plans for bringing the Grand and AmStar locations into the fold.
You’ve been working on plans to expand since 2018. Can you give me a rundown on how this acquisition came to be and why these theaters were a good fit for the Santikos roster?
I joined Santikos in September 2018. I would say I had zero experience in the theater world. I was actually on the Santikos board, and as we made a change [in leadership]; I stepped in for what I thought was going to be a short duration. [Handren had joined the board only a few months earlier, in April 2017.] I thought I was just going to be an interim guy. But look, I’ve been an entrepreneur. I’ve worked at a Fortune 100 company, and growth is in my blood. That’s what you do when you’re the CEO. You get the company to grow. And we started laying out strategies for growth not long after I walked in the door.
We had started acquiring some properties here in the San Antonio area. We were going to build a couple of new theaters. That was all in 2019. And then, obviously, 2020 comes along and changes everything for everybody.
But as soon as we got to where we felt, over the last year, that the future was bright again—and it is, in our opinion—we laid out our strategy. We were financially in pretty good shape going into the pandemic. And we stayed in pretty good financial shape throughout and coming out of the pandemic. That’s primarily because we own most of our own theaters right now.
So we laid out a strategy that we wanted to double in size, perhaps, over some time horizon. We had looked at several opportunities for acquiring companies. I think [the acquisition of theaters from] VSS-Southern was not something where we set out and said, “We’re going to go target those guys.” What happened is, in January, we started conversations. I’ve known Jim Wood, the CEO there, and Ron Krueger, the COO, for a few years. I know they do a good job. As we started having deeper conversations, we thought, “Let’s look at this a little further.”
By the time we got to April, I visited seven of their theaters. Our COO [Rob Lehman] visited seven other theaters, so we saw 14 of their 17. And we said, “This looks like a match.” This is a cultural match. This is a quality match. They had reseated most of their theaters, which is great. So they were focused on a supreme customer experience. Around May 1, we came to terms. From May through, really, the end of June, we ironed out all those details that happen on every one of these kinds of deals.
That’s the journey we’ve been on. But the biggest thing I would just say to you is [that] it’s a cultural match, and it’s a match in terms of how we view the guest experience. What it should be like—a really good experience and not just a 1990s experience.
That cultural match is so important. A big part of the Santikos culture is that you’ve always been very active in community participation—both through donating to nonprofits and hosting charitable initiatives like coat drives and food drives at your theaters. Those theaters are almost like community centers.
We actually have a phrase in our corporate office: “It’s more than a mission.” It’s not just a movie theater. What you’re saying is true. We care deeply about the communities where we are, and we’re going to continue to do that with the Southern acquisition and get involved in their communities in very similar ways, I’m certain.
What are the markets that you’re entering for the first time with this acquisition?
We are new in every one of the markets that we’re going to be in with the Grand/AmStar acquisition. It’s a simple answer! North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana, and two new places in Texas. That’s Conroe and Fort Bliss, over in El Paso. Every one of those is brand new to us. So we have, with the exception of Tennessee, the entire SEC covered with our movie theater circuit now [Laughs].
How do you introduce yourself to these new markets, both to people who went to their local Grand/AmStar before and those who aren’t regular moviegoers?
Our emphasis right now is going to be focusing on the almost 750 new employees that are becoming part of the Santikos family and imparting to those employees our philosophical viewpoint. It’s not an about-face at all. It’s a slight adjustment in terms of how we view the future and how we advance toward that future state. Once we get our employees engaged in that messaging, then we can think about some of the messaging we’ll do in those respective communities.
In the meantime, those Grand theaters and those AmStar theaters are very well known in their respective communities. To go in and say, “Let’s change the name and rebrand [everything]” … I don’t think that makes a lot of sense right now. I would rather focus on our messaging and our treatment of the employees first, and then let the outcome of that turn into a superior experience at the theaters that are in those new areas for us.
You’re keeping the branding, at least in this initial period. You’re not having to do a ton of renovations or bring things up to standards, because they’re already there. It sounds like a natural fit.
There’ll be a few things that we’ll introduce. I got to meet with all the general managers here in the last couple of weeks. I believe they’re pretty excited about what they have learned about Santikos. They did their homework, and they’re anxious to implement a lot of the things that we’ve done at Santikos in some of their theaters. I almost had to say, “Well, hang on there, guys. We’re not going to go quite as fast as you want to go. We’ve got to figure this out first.”
What I really love about the attitude of those general managers is, I think they appreciate the fact that we are a theater company also. And we understand all the things they want to do and all the ways to implement [them]. We know how to do that. We’re going to teach them the things that we’ve done differently. We’re going to learn from them, the things that they do well. My belief is that we’re bigger and better and stronger together than we were as two different companies. It’s pretty cool [that], all of a sudden, we’re the no. 8 largest circuit in North America, no. 7 in the U.S.
One of the areas where Santikos was an early adopter was with the cinema entertainment center concept; your first one opened back in 2016, and you’ve opened another since. Do your ideas for expansion include further investment in that type of theater?
I have to give credit to [late former owner] John Santikos. He was the forward thinker on that. That all predates me, for sure. He was implementing those kinds of ideas from 2010 to 2014.
We are implementing more family entertainment concepts within our theater circuit right now, here in the San Antonio area. In fact, in one of our theaters, we’re knocking out seven of the auditoriums. We’re adding bowling, an arcade, and all the fun stuff that people want to do to make it a true family entertainment center. We’re doing the same thing in our New Braunfels [Texas] location. We know how to do that, but we also know how much it costs, so economics will be a big driver for what we do and when. We’ll do the right things, when it makes sense.
Candidly, there’s a lot of things that we do at Santikos that I believe are unique. I want to implement those in all of those other theaters, because it will free up the general managers to really focus on the employees and customers as their primary job, not all the other things that they have to worry about today. That’s what I get excited about.
Can you give me an example?
I’ll give you some generic examples. If you’ve talked to many general managers across the country, and you look at all the things that they have to deal with on a day-to-day basis, they are a chief cook, bottle washer, painter, they mow the yard, they stripe the parking lot, they shovel the snow. They do everything under the sun. My perspective is, I’d rather they be focused on taking care of the employees and the guests. [We can] find alternate ways to handle all that other stuff—which is important, but not value-add from a customer-experience standpoint.
We’ve spent the last five years at Santikos retooling how we operate, taking some of those burdens off of our general managers. Even simple things, like how inventory is managed inside those theaters. We’ve gone cashless at Santikos. The fact that they don’t have to count cash at a theater is a big time saver. And it also de-risks the environment.
We’ve done some things that I think are innovative. And our new general managers have already said, “When do we get to implement all that stuff?” Because they know what it means to them and their quality of life, as an employee in our new combined family.
That’s got to really help during the transition period. You’re not going to see as much turnover, and customers will still see those same familiar faces when they go to the movies.
This is the truth: We kept, easily, 99.5 percent of the employees that were already at Grand and AmStar. So all the familiar faces that people have become familiar with, they’re still going to be there. And I believe we treated the employees really, really, really well during this transition.
So, short term, you’re making sure that everything goes smoothly on the labor side, building a firm foundation. Once that’s set, what are some of your longer-term ambitions for the chain as a whole? Acquiring more theaters, upgrades to existing theaters to add more premium experiences—?
In the short term, the majority of our focus will be on the employees, because that’s how I tend to run my businesses. Always focus on the employees and the culture first, and then let all the other stuff be outcomes of that. And that will also be a long-term focus.
As it relates to the theaters that we’re acquiring, over the last four years Southern has done a pretty good job of reclining all of their theaters. They were not quite as aggressive on the projection and sound front as Santikos is. With the number of screens we’re acquiring, there’s quite an opportunity to really improve that overall audiovisual experience for our customers that are gonna be coming in those areas. We’re definitely laying out that game plan. Even as we speak, we’re already working on that.
[Regarding] the way we do some of our expanded food and beverage offerings, Ron Krueger, the COO [at Southern], is anxious to implement some of those changes as quickly as possible and to provide some broader and deeper food offerings. Even the way we deliver food and that whole customer experience. We’re not a dine-in theater; Grand/AmStar are not dine-in theaters. But there are some innovative things that I believe we’ll do in terms of what the food delivery experience can be like. The customers in San Antonio have really appreciated those changes that we’ve made. I think the customers in our new markets are actually going to really appreciate the things we’re going to implement as well.
You use pickup lockers, right? The customer can order online, then come in and punch in a code to get their food.
We partnered with Apex [Order Pickup Solutions] on that. We do two things: If the guest wants food delivered to their chair, we offer that as an option. And for those that are a little bit more self-service oriented, we use that locker system that came from Asia and Europe. Frankly, they’ve been doing that there for a while. Something Rob Lehman, our COO, had the idea of implementing, first-of-a-kind in the theater business. It’s worked out really well for us.
At the moment we’re about halfway through the summer. How do you feel about the film slate performance so far this year? There have been some high-profile films that haven’t done as well as expected, which has led to some negative headlines, but on the whole audiences have definitely come back to the movies.
I agree with you. Has it lived up to all of our expectations? With the exception of February—I think we had much higher expectations of February, as did everybody—I would say the films have been delivering right on what we thought they would do. Do we wish they could be better? Of course. Who doesn’t want better, right? Who doesn’t want more? But we’ve been pretty pleased. With the slate that continues to come up, I’m super enthusiastic about the future.
That plays into the fact that were going to continue expanding our Santikos footprint, as it economically makes sense for us, whether it’s in the San Antonio area or other markets. That’s how bullish we are on this industry.