To Upgrade From Dirty Carpets and Tubs of Popcorn, Theater Chains Try Full Menus, Seat-Side Service
|The AMC Menlo Park 12 Cineplex in Edison, N.J., is trying to woo viewers with meals and more spacious seating. (Bryan Derballa)|
As Hollywood churns out ever more attractive big-budget films, laden with 3D and other special effects, little has changed at theaters, where audiences can find worn seats, stale popcorn, and overpriced candy.
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Under pressure from viewers as well as movie-industry executives, the country's theater chains are trying to win back moviegoers—with food. Audiences at a growing number of theaters can order such dishes as chinois chicken salad rolls or limoncello-tossed shrimp. More middle-of-the-road fare is also available, like cheeseburgers and chicken caesar salads. Seats in these so-called "in-theater dining" cinemas are big and plush. Lobbies are luxurious, with art on the walls and mood lighting. Popcorn is often complimentary and a full bar is de rigueur.
Theater chains hope the new style of film-watching—which has previously been the realm chiefly of small independent theaters—will help boost the number of moviegoers after years of flat attendance. Other recent efforts to get more people in the doors include offering reserve seating online and more movies in 3D. But in-theater dining represents one of the movie-theater industry's biggest bets to expand its static audience size.
"I am one hundred percent sure that these theaters are the future of movie-going," says Jeffrey Katzenberg, an industry veteran who once served as studio chairman at Walt Disney Co. (NYSE: DIS - News) and is now chief executive of DreamWorks Animation SKG Inc. (NasdaqGS: DWA - News) "These new theaters really up the quality of experience because they require a high degree of service that movie theaters have lost."
A few years ago, a handful of such theaters existed in the country. Now, the National Association of Theatre Owners estimates that the U.S. plays home to roughly 300 to 400 cinemas with restaurant service out of roughly 5,750 total theaters. Industry analysts predict that number could double over the next few years.
Regal Entertainment Group (NYSE: RGC - News), the largest U.S. theater chain, has opened five premium locations as part of its new Cinebarre line, a combined movie theater and restaurant concept the company began in 2007. IPic Entertainment, which acquired Gold Class Cinemas last year, recently opened its eighth dine-in cinema in Scottsdale, Ariz., and plans to open another five to six theaters a year. Gerry Lopez, AMC Entertainment Inc.'s chief executive, says he can envision converting 10% of the company's total theaters, which now number about 375, into ones that offer in-theater dining.
Horror movies don't play quite as well in the format because consumers apparently don't enjoy eating while watching blood and gore, theater executives say. Listening to others chewing, and smelling their food, might also be a turn-off for some moviegoers, although the wide seat spacing may help to minimize any annoyance. And the premium prices may seem high, but movie-chain executives say in-theater dining is a more time-efficient way for some people to spend an evening out.
Keeping the multiplex clean is harder than it looks, theater executives say. Tight time slots between showings, and large auditoriums, sometimes confound efforts to keep floors and seats clean.
At dine-in cinemas, seats typically come in pairs of two, with wide aisles between couples to allow waiters to navigate in and out the theater during screenings without blocking views of the movie. Many guests order during the film by pressing a small button near their chairs. Some theaters have small tables in front of the seats; others feature folding trays that extend across the seat for easy eating. Many dine-in theaters have some age restrictions; some don't allow anyone under 21 years old.
Ticket prices vary. Some chains, such as AMC, charge a flat fee of $10 or $15 above the usual price of a ticket but include that amount as a credit toward food purchases. Others, like Gold Class Cinemas, price tickets between $17 and $29 just for a ticket and then charge for food separately.
Some theaters offer alcohol, luxury seats with armrests and footrests, blankets, pillows, or moist towels before the film begins—as well as chocolate mints afterward. The actual auditoriums are often significantly smaller than those of the vast multiplexes, featuring fewer than 30 chairs, along with assigned seating, digital sound and super-wide screens.
Casey Mead, a 21-year-old student at University of California, Los Angeles, drove with his girlfriend last month to Gold Class's location in Pasadena—a small theater with six screens and a dimly lit lounge decorated with modern art—to view the latest installment of the "Harry Potter" series. Mr. Mead says they were willing to pay extra for the higher-end experience. "We never go to the movies normally because for the same price you could buy a DVD and not have to sit in a dirty theater to watch it," he says.
AMC's Mr. Lopez says the company's research shows that most customers don't mind the higher cost of dine-in theaters. And he says it's not simple or cheap to turn theaters into full-service restaurants. It requires kitchens, on-site food preparation, chefs and trained waiters who can navigate in the dark during a screening.
"We had to play with the menu to figure out what worked best for eating in the dark—you can't have a dollop of ketchup fall on your skirt. And china plates are too noisy, although composite works great," he says.
Arlene Evangelista, 69, was upset when she visited AMC's renovated dine-in theater in nearby Edison, N.J. The retired legal secretary wanted to catch "The Fighter"—the new Mark Wahlberg movie about boxing—during the Christmas holidays but was surprised to find a $10 surcharge for the dine-in experience. Instead, she turned around and went home.
"I think it stinks!" she said while walking out of the Menlo Park Mall that houses the theater. "This place used to be a date place. It was so nice. I think it's terrible to charge 20 dollars for a movie, especially in this kind of economic climate. What about families?"
Movie attendance has remained sluggish over the last decade. Last year, North American movie theaters sold 1.35 billion tickets, down about 5% from a year earlier and down about 6% from 1.44 billion in 2000, according to the box-office division of Hollywood.com. But higher ticket prices helped boost box-office sales to $10.57 billion last year, down slightly from a year earlier but up about 36% from 2000.
It's too soon to know whether dine-in theaters will be profitable. Theater chains note that profit margins on concessions, such as popcorn and candy, are far higher than on ticket sales. Half of a ticket sale represents profit for a theater, compared with 85% from the sale of concessions. Executives hope the dine-in theaters will also benefit from higher food margins, although not as high as for snacks.
Movie-industry executives say theaters have done little to innovate even as studios continue to spend lavishly on movie budgets. To make matters worse, consumer spending on DVDs, which for years propped up the studios' bottom lines, has plummeted more than 40% since its peak in 2006, according to media-tracking firm IHS Screen Digest, making the studios more reliant on profits from the theatrical window.
Hamid Hashemi, iPic Entertainment's chief executive and founder, says dine-in theaters, although still a niche market now, could become mainstream especially as audiences clamor for a higher-end experience. "The movie-going business has always been one size fits all, but now we are realizing that if you give people amenities, they are more than willing to pay for them," he says.
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