Strong movie ticket sales and sliding real estate prices are turning cinema-eating venues into a business with blockbuster potential, say operators in the burgeoning segment.
Among the operations looking to star in cinema eating are Gold Class Cinemas of Los Angeles, with its exclusive, private-screening room atmosphere, and Cobb Theatres/CineBistro of Birmingham, Ala., with a bistro experience. Most recently, Alamo Drafthouse Cinema of Austin, Texas, announced a franchise development agreement with a group that includes a long-time restaurant executive.
“When executed properly, these are very profitable venues,” said Neil Billingsley-Michaelsen, president of Triple Tap Ventures LLC of Austin, which recently announced a franchise agreement with eight-unit Alamo Drafthouse to expand in Texas. “There can be a very good return on investment.”
His partner in Triple Tap is Norman Abdallah, chief executive and president of Restaurants Unlimited Inc. and co-founder of Fired Up Inc., parent of Carino’s Italian. Abdallah said Alamo Drafthouse is one of the “strongest emerging brands in the unique ‘cinema eatery’ segment.”
The recession has fueled movie-going this year. Year-to-date statistics compiled by Holly wood.com’s Box Office tracker show ticket sales are up 7.94 percent from last year, as of Oct. 18, to nearly $8.3 billion. The number of people going to movies in the same period is up 4.02 percent, to 1.1 billion, even though the average ticket price has risen from $7.18 to $7.45.
Rob Goldberg, chief operating officer of Gold Class Cinemas, said more traffic to movies and cinema eateries “is a testament of people’s yearning for community.”
Gold Class, which offers specialized service in small, 40-seat theaters, has eight screens in Chicago and seven in Seattle, and will have six more in Pasadena, Calif., by the holiday season. The company plans further expansion next year.
CineBistro also is growing, with five sites under development, said Jeremy P. Welman, chief operating officer for Cobb Theatres and CineBistro, which offers foodservice at three of its 14 locations, or at 17 out of 193 screens.
Lynne McQuaker, director of creative affairs for Studio Movie Grill, said the Dallas-based cinema eatery company recently opened its seventh Texas location in Houston’s City Center development and plans to expand to Atlanta and Kansas City, Mo., next year.
Movie Tavern, also of Dallas, currently has 13 locations from Colorado to Georgia.
Cinema eating offers value to recession-weary consumers, said Billingsley-Michaelsen of Triple Tap Ventures, which bought two initial stores in Houston and plans to develop others in the West Texas cities of Amarillo, Lubbock and Midland-Odessa as well as San Marcos and Corpus Christi.
Triple Tap is converting theaters, remodeling big-box retail stores and undertaking some new construction for its venues.
“This is a good time, as the real estate market will be favorable to us,” Billingsley-Michaelsen said, especially for 25,000- to 35,000-square-foot spaces.
Landlords also look kindly on the increased traffic a theater can bring to their properties, he said.
Startup costs for an Alamo unit range from about $1.3 million to $2 million, and includes a $75,000 franchise fee. Royalties are 5 percent of sales with a 0.5 percent contribution to a marketing fund.
“We’re looking for restaurateurs to be partners with us in franchising these theaters because they know how to run these high-volume restaurants and multiple units,” said John Martin, president and chief executive of Alamo Drafthouse Cinemas.
Alamo’s first location outside Texas, a unit in Winchester, Va., opened in mid-October. The company’s ninth location will open in San Antonio in November. Best-selling menu items are the nine pizzas, with names such as “Raging Bull,” “The Godfather” and “The Italian Job,” as well as a burger with blue cheese. Alamo sometimes coordinates menus with films, such as the wine menu offered during “Sideways.”
Movie ticket prices vary by market, and movie-going diners spend on average $14.50 to $15 each on top of the price for food, Martin said. Alamo has a corporate concept chef and each location has its own chef.
While Alamo Drafthouse’s screens range in size from 75 seats to 300, Gold Class Cinemas units are targeted at a more exclusive audience willing to pay about $22 a ticket for 40 plush reclining seats and more personalized service, Goldberg said.
“People now are stretched for time, and time is probably the most valuable thing that they have,” he said. “When they get away and go to the movies, they say, ‘Wow, I want a true escape.’ We offer them convenience. They can come through our door and have dinner and movie under one roof.”
Goldberg says Gold Class theaters are small with state-of-the-art sound systems and amenities.
“There’s a call button you can press if you want another glass of wine or a glass of water or a pillow or whatever it is you want,” he said.
The check average is between $20 and $22 per person, he said.
“We have a chef on site and a fully staffed commercial kitchen,” he said. “Everything we cook is from scratch. We have an 80-bottle wine list and 30 wines by the glass.”
Special menus are created to complement movies, like one featuring Julia Child’s recipes for “Julie & Julia” or Cosmopolitan drinks for “Sex and the City.”
Best-selling items are the wagyu beef sliders, blue-cheese potato chips and duck tacos.
“It’s all finger food,” Goldberg said. “We like food that you can eat with your hands and that doesn’t require a lot of attention or make a lot of noise.”
Even the salad is served as a Vietnamese rice-paper wrap so there is no clattering of utensils in a china bowl to distract others.
Waiters are trained to be especially unobtrusive, Goldberg said.
“The servers have to be trained in sneaking in and out,” he said. “It’s a bit counter-intuitive for a great server. They want to engage the guest and talk to them. Our servers are taught be very quiet.”
While most cinema eateries appeal to a broad demographic, Gold Class is geared at those 30 and older, Goldberg said. “We don’t get the teenage crowd,” he said.— [email protected]