AMC Empire 25 near Times Square opens as New York City theaters on March 5, 2021 for the first time in over a year after the coronavirus shutdown.
Angela Weiss | AFP | Getty Images
movie theaters have struggled to fill seats during covid pandemicBut some are facing another problem—what to do with their menu.
In many movie theaters, popcorn and soda appear alongside flatbreads, lobster grilled cheese, and elaborate cocktails. But due to a load of debt and a lack of box-office winners, theater chains of all sizes have been forced to change menus and launch creative dining initiatives to boost revenue.
“American consumers are now really demanding more than just a popcorn and a drink or nachos or candy,” said Rolando Rodriguez, president and senior advisor for the National Association of Theater Owners. Marcus Theater, “They’re really looking for the experience they’re having for food associated with watching a movie. The expansion … is absolutely necessary on the food and beverages.”
Since 2019, before the pandemic, the number of North American screens has fallen by more than 3,000, according to comScore. Market research firm Mintel said only 54% people Went to a theater between April and October 2022.
Mintel senior travel and leisure analyst Mike Gallinari said people are willing to wait to see a movie, helping streaming services gain a foothold in cinemas. This has forced some theaters to improve their food game.
Gallinari said, “It’s things like the concession and how it fits into a broader movie theater experience that are really the things that movie theaters need to focus on and hammer down.” “Not only is that part of the experience they can control, but they can control a greater share of the revenue since the movie theater is the box office.” [performances] Varies depending on the film.”
not enough movies
Theaters were struggling to keep their doors open during the pandemic. cineworldwhich operates Regal Cinemas, filed for Chapter 11 bankruptcy Protection in September, reporting $8.9 billion in net debt. Regal Cinemas will cancel the lease for 39 theaters from February 15.
amc entertainmentThe world’s largest movie theater chain exits its third quarter Together over $5.3 billion In debt. The AMC stock has fallen nearly 50% in the last 12 months. On Monday, the company announced that it would change ticket price Based on seat location.
AMC, which operates dozens of AMC dine-in theaters, is unlikely to turn free cash flow positive until 2024, B. said Eric Wald, an analyst with Relay Securities.
He said that lack of content is the biggest problem for cinema halls. Wald said that compared to 2019, 50% fewer films were released in theaters last year. box office sales down over 30%, He predicted that the industry would not return to pre-pandemic film release numbers until 2025 due to delays and production backlogs.
To be sure, though, studios are more specific about which movies are shown in theaters, favoring blockbuster-style releases. ,Avatar: The Way of Water,” which came out in December, and “Spider-Man: No Way Home,” released in late 2021, are among the 10 highest-grossing films of all time.
Tom Holland as Spider-Man in Sony-Marvel’s “Spider-Man: No Way Home”.
Sony
“A restaurant can open if it can get its hands on food and cooks. A theme park can open if it has electricity and people to run the rides. But if there’s no movie coming, a movie theater can open.” Can’t show.” whatever they want,” Vold said.
Competing with low attendance, Marcus Theaters reduced menus at its Zafiro, Reel Sizzle and Take Five lounge concepts, as well as its Movie Tavern locations. Now, menus are mostly back to pre-pandemic forms as consumer spending rises.
“Everyone has a kitchen at home, but people still go out to eat,” said Greg Marcus, CEO of Marcus.
“At the end of the day, humans want to be among each other,” he said. “They want to get out. They don’t want to stay home and they don’t want to sit on their couch.”
economics of concessions
According to Wold, the revenue from ticket sales is about a third larger than from concession sales. But theaters make much more profit from concessions than from ticket sales.
Wold said that about half the money from ticket sales goes to the studio, while theaters keep all the discount margin, which is usually more than 80%. Marcus Theaters derives 44% of its total revenue from concessions, while 39% at Cinemark Theater and 36% in AMC.
Wold said, “It doesn’t matter how great a flatbread is or how wonderful a cocktail a theater can make, if the movie is crummy, no one is going to come to the theater.” “If you can make a better meal while someone is already there and give them an extra reason why they want to go to the theater to see the movie…it’s definitely a draw and can be an additional revenue source.” could.”
According to data from research firm Entelligence, the average medium popcorn at home movie theaters costs $8.14, while a medium drink runs $6.20. Wald said these items typically have margins in the mid-90s.
For more advanced items, the margins are significantly lower, meaning theaters may not shy away from the classics, but instead seek incremental revenue from sandwiches or entrees.
“During the pandemic, you’ve seen the average concessions per patron increase dramatically,” Wald said. “It’s a combination of getting more out of each patron by increasing the size of the basket they order at the counter, but also getting more people at the counter who would otherwise skip it.”
Ahead of the fourth-quarter earnings call, Wald said theaters haven’t seen spending pressure from consumer concessions despite rate hikes. The concessions have been a “very recession-resilient segment”, he said.
A Cinemark employee serves popcorn to a customer at a concession stand at Cinemark’s Century 16 at the South Point Hotel & Casino on August 14, 2020 in Las Vegas, Nevada.
Ethan Miller | Getty Images News | Getty Images
Theaters with larger menus, however, face the same issues as restaurants, according to Mintel’s Gallinari, with some raising prices in response to rising prices for eggs and meat. Some are adopting healthier food and bakery items, as well as partnering with local businesses.
Gallinari said, “With movie theaters and concessions already having a reputation for being overpriced, being subject to the whims of the market can actually work in a movie theater’s favor.”
Wald said theaters have used the pandemic to make concession sales more streamlined amid labor shortages. Pre-pandemic, some theaters adopted a dine-in model, in which servers would bring food from a central kitchen into the auditorium, though many have shifted toward pick-up apps and reserved seating.
Marcus Theaters recently launched an online ordering app that handles large volume orders more efficiently. He said the app has been more effective for consumers to increase sales and reduce lines.
“If you take a minute or two, a minute and a half [ordering] process and multiply that by 15 million transactions in that time, it’s a meaningful number if you can figure out how to structure yourself from a labor perspective to go from taking orders to just fulfilling orders,” Marcus said. Said.
Hungry for long term success
Wald said that while some menus have more than 50 items, theaters are more methodical about staff and food preparation for slow and heavy nights.
Some theaters, such as the Dallas-based Studio Movie Grill, predict attendance weeks.
CEO Ted Croft said, “We’ve got enough history with enough analysis to say that we know, whether it’s a horror movie or a romantic comedy, how they’re going to perform based on national predictions and our particular locations.” “
Studio Movie Grill, which takes orders at customers’ seats, recently shortened the menu to focus on burgers, pizza and alcoholic beverages, which the team quickly executed to accommodate the more than 1,000 seats. Can Croft said about 25% of the total field team is back-of-house kitchen staff.
After bringing operating hours back to pre-pandemic levels — and introducing drinks themed to movies like “Black Panther: Wakanda Forever” — Croft said the per-capita concessions average continues to rise.
“The fact that we’re outperforming pre-pandemic key performance indicators gives us a lot of confidence that if we get more movies, we’ll continue to grow,” Croft said.
Angela Bassett stars as Queen Ramonda in Marvel’s “Black Panther: Wakanda Forever”.
disney
Rich Dottridge, president and CEO of Maryland-based Warehouse Cinemas, sees a similar trend. About two-thirds of the staff at theater venues are in the kitchen or behind concessions, preparing gourmet grilled cheese, hot dogs with house-made beer cheese, and classics like nachos and seasonal popcorn mix, he said.
Dotridge said the menu veers away from more perishable and low-margin items, such as steak or seafood.
Its self-serve beer wall has craft cocktails on tap and a selection of 32 craft beers and ciders. This month, the theater will offer a themed cocktail for the movie “Winnie the Pooh: Blood and Honey.”
“Hollywood makes great stories, and it’s our job to make sure that our product, sound, picture, seat, all those things together are something they want as a big screen event,” Dotridge said. who is also the chairman of the Independent Cinema Alliance.
Cinepolis, a Mexican theater chain with 25 U.S. locations, updates its menu twice annually and serves lobster tacos and truffle mushroom pizza, among other non-traditional theater munchies.
For an advanced screening of the bloody culinary satire “The Menu”, Cinepolis launched its “Movie and a Meal” initiative to curate seasonal specials to accompany the film. The company will be rolling out another iteration for “Cocaine Beer,” which will include two drinks, two appetizers, a main course, and a dessert.
CEO Luis Oloqui said, “As our founders used to say in Mexico, we build theaters to sell food.”
, of cnbc Sarah Whitten Contributed reporting.
Disclosure: “Cocaine Bears” is being distributed by Universal Pictures, which is part of CNBC’s parent company, NBCUniversal.
Clarification: This story has been updated to clarify that AMC Entertainment exited its third quarter with more than $5.3 billion in debt.