How does a regional theater chain stay competitive when ultra-high definition 4K TVs keep getting bigger – and cheaper – and streaming services continue to pop up and give viewers a cornucopia of options? By thinking outside the (popcorn) box.
Last month, John Caparella took over as CEO of Louisiana-based Southern Theatres from founder (and still chairman) George Solomon. Southern operates 41 theaters with 476 screens in 14 (mostly) Southern states, including 24 dine-in venues under its Movie Tavern brand. The company also owns the Grand Theatre, AmStar Cinemas and The Theatres at Canal Place brands. And with the crowded nature of the theater business — and being completely at the mercy of whatever films the big studios put out — Caparella told TheWrap that to thrive in today’s market, theaters need to offer a lot more than canned nacho cheese and lecture hall chairs.
Despite a relatively flat box office last year, Southern’s flagship Movie Tavern marque, which serves decidedly not-stereotypical cinema fare including a seared ahi tuna salad to moviegoers who can order straight from their seats, plans to add three more locations this year. Caparella said Movie Tavern is influencing some of the company’s more traditional theaters, too.
“Where we can, we’ve [added] a lobby bar and a wider range of concessions,” Caparella said. “We’ve taken some of that knowledge we’ve learned from Movie Tavern.”
Caparella, who has a background in the hospitality and food and beverage industries, has plans to apply analytics to the customer data the company is currently aggregating in order to give audiences what they want – maybe before they even know they want it. He emphasized the chain’s numerous theaters with reclining seats and use of premium technologies like IMAX and RealD 3D as part of the company’s growth plan.
The new CEO also credited premium large-format screens like IMAX, which Southern has a revenue-sharing arrangement with, for providing a lift to each multiplex they’ve been a part of. While costly IMAX equipment means tickets to those showings have to come at a premium, he said the numbers still work even in markets where it’s hard to get more than $20 a ticket. To compare, an adult ticket to a Monday night showing of Disney’s “Beauty and the Beast” in IMAX 3D purchased via online ticketing portal Fandango costs $21.99 at the AMC Century City 15 in Los Angeles, but $16.55 at Southern’s The Grand 18 in Winston-Salem, North Carolina.
“We may not have that pricing power but we don’t have that rent,” Caparella said. “IMAX gives a halo effect to the whole theater.”
Caparella also said online and reserve ticketing — once a niche perk, now de rigeur — is not only user-friendly for audiences, but might motivate them to spend more time at the concession stands and bar rather than staking out prime real estate in the auditorium.
“Our guests definitely value the ability to reserve seats,” he said. “For Movie Tavern, what we hope it will do is make people feel good about the opportunity to get a good seat, have time to place an order and enjoy it while you watch the movie.”
There has been significant consolidation in the movie theater business in recent years, driven by by China’s Dalian Wanda Group-owned AMC Theatres, which has snapped up national and global chains over the past year including Carmike Cinemas and Europe’s Odeon & UCI, as the world’s largest exhibitor continues to add scale — and potentially apply pricing pressure to its peers. However, Caparella said extras like Movie Tavern’s menu and Grand Theatres’ recliners — some of the theaters even have moving D-Box seats that literally roll with the punches — gives Southern Theatres plenty of avenues to compete other than price.
“We know about what’s happening in the competitive set,” Caparella said, mentioning that only about 7 percent of total movie theaters are “cinema eateries.” “We are real keen about our product.”
Theatrical windows have been a popular panel discussion topic recently, as the film industry looks for ways to feed an increasingly impatient home market that does not want to wait months for a new release. At the Code Media conference last month, 20th Century Fox Chairman Stacey Snider said “for a business not to be able to sell what it makes for a period of time is anachronistic.”
Caparella said “it will be interesting to see what happens” with the window conversation, but he remains bullish on the theater business even if the time between a movie’s release and its availability at home does shrink, as many expect. He pointing out how Hollywood execs might have 80-inch TVs with recliners and surround sound at home — but most people hoping to catch the latest blockbuster at a Grand Theatre or Movie Tavern certainly don’t.
“People still want to escape,” he said. “People still want to go to the theaters — it’s a relatively inexpensive way of doing that. Studios have to be cognizant of that fact. I don’t think there’s a whole bunch of people who will trade in that experience. Not many of us have a button you can press and have someone take your food order at home.”