The business of independent movie theaters, explained

I feel a tremendous amount of pressure. Being the first afro-latina. If I don't succeed, people are not going to say, oh, movie theaters, they're not working. People are closing them right? No. I feel like they're going to say, that woman had no business opening that theater. We love movies. Like that's where we always start is movies. Unfortunately, our business, it's a roller coaster. The movie theater industry has been under siege for as long as there's been a movie theater industry. Radio was going to kill the movies, television was going to kill the movies, and then the VCR was going to kill the movies, and then cable was going to kill the movies. And then the pandemic box office revenue, slightly down from what it was. And I think exhibitors are trying to understand what to make of that and how to run profitable businesses, to understand the secret behind enduring success in turbulent times. We spoke to a few theater owners and an industry expert to understand what does it take to make an independent movie theater successful? I'm Emelyn Stuart, I am the owner of Stuart Cinema and Cafe in Greenpoint, Brooklyn. Matthew Viragh, founder of Nighthawk Cinema I worked in corporate America. And somebody happened to give me a script for a short film. I had no idea what I was getting into I produced this short film that went on to win a whole bunch of awards. And I was like, wait a minute. If I could figure out how to do this, I can do this for so many filmmakers who need help. So I actually opened the theater because I couldn't get theatrical distribution, and I wanted to control what people watch. And somebody said, well, then you have to build the theater. And I was like, oh, that's all I have to do. I had no idea what I was getting into, There was an old prohibition era law that prohibited serving alcohol. In a motion picture theater in New York state. So initially we had a liquor license for our bar area in our lobby, but you couldn't take it into the theater when the law changed. We were the first in New York State to serve alcohol at a motion picture theater. When we built the theater, it took me like six months to get movies, I didn't even know how to get movies from the studios. I was showing two films that I thought I could just show. They immediately called me and said, “what are you doing?” And I said, “I'm showing movies because I'm a movie theater.” They're like, “yeah, you need licensing credit applications. You have to be approved.” And I was like, “oh, okay.” And so I started with one studio and then worked my way through all the studios. So the way it works is if you want to play a film, you have to rent a license from the studio that made it. And that's true for all theater owners, big and small. I have one screen versus an AMC that has 16 screens and shareholders. I'm a small theater with no debt, no investors and no partners, so I have more flexibility and I can control pricing. It's easier for me on the ticket sales you're paying, you know, sometimes 50 to 60%. Movie tickets alone, You wouldn't survive. We started with $11 tickets back in 2011. And now we're up to, I think it's $18, seven bucks in almost 15 years isn't too bad. So we try to remain affordable. If we price people out, they're not going to come to the movie. So we have like a senior prize and we have a price for kids and we have discounts all the time. So if you, for example, receive Snap, you can contact us and we can give you a discounted $5 ticket so that your kids can watch movies. Because what am I doing with a movie theater if my own people can't watch movies? We have a Bogo buy one, get one free promo. So if you buy a regular price ticket and come see a movie the next morning, you get a promo that's good for like 45 days. We're just thanking you for coming and come back again. Half price. The hardest part of owning an independent theater is programing. The big ones, They have 15 screens to fill Most independent theaters have single or double or maybe four screens, but they're small. In the larger venue, we have seven screens so we can fit almost everything we want to play there, but here we only have three screens. It's very difficult to make decisions because we want to play a lot of different movies, and if you make a mistake and pick the wrong movie that flops, then it's it. It really hurts you here. So I have one screen I had to choose between Meghan 2.0 and F1. Meghan had done great. The first one here, I mean we sold out the numbers clearly show that this particular community loves that movie. Um...they did not... Yeah, I didn't do well with Meghan 2.0. I would have done better with F1. It's tough on business when no one's coming to watch a movie that you bet all your money on, and that's sort of why we do a lot of our events. It's like sort of that insurance policy, right? We're not just reliant on whatever the first run is for that given week. We have birthday parties and we rent out the space for different things, but also why I have a standalone cafe. So even if no one is coming to the movies, people are still coming in to get food. There will now be a short intermission. Okay, let's take a moment to talk about the sponsor of this video, Verizon. As you can see, running a small business is no joke, which is why Verizon is bringing back Small Business days from August 11th to August 17th. You can meet with an expert, get one on one advice, free tech checks and many other special offers, so don't miss out. Now back to the video. Our income mostly comes from the concession, which is why people complain about popcorn being $12. We don't do that, but we we get it. We understand. Stuart cinema and Nitehawk Cinemas both have a dine in experience, which isn't the case with all indie’s popcorn candy, and classic concessions are still major drivers for most theaters. The more and more product you have, the more the customer is going to spend. If it's a good product and that's what's happening to theaters, they're offering more product, so people tend to spend more now when they go to the theater than they did 20 years ago. Because there's more for sale. I want coffee, I know I like potato chips, I know that I love empanadas, and I thought, what if when I build this, I can build it with stuff that I love to eat and offer that, just as an added bonus to you going to the movie, we have really talented team of chefs and, beverage folks that get inspired by movies and create specials based on movies. That was the the concept. It's a full restaurant experience. We want to play movies. That's the fun side. The heavy lift, I think, is serving, you know, hundreds of people at one time. That takes a lot of attention. What we do at Screen Dollars, we sort of support advertising. You've worked hard as an exhibitor to get that customer in the door. There's an opportunity to make money as a result of putting advertising and sponsored messages in front of that customer. That can be posters, giveaways, the pre-show program that plays before the trailers and before the feature film ads are a source of revenue, just like concessions are. I think ads are necessary because it helps small theaters to make money, but we're sensitive to the fact that people can watch commercials at home. We don't do any advertising before our movies. I think that's a differentiator. Between us and other theaters, bigger chain. So we've been pretty dogmatic about that since day one. I mean, we’d love the revenue but don't need that headache for our customers. We want them to enjoy the experience occasionally, like if something's like an event not selling as well, we'll go through like former ticket purchasers, and then we'll just email them like a promo code, which works well. That's really it. It's more about promoting individual events, and that's mostly through our social media. Very active social media makes a big difference in the success of a theater these days. And ironically, I feel that the independent theaters generally are better suited for doing that because they're doing it in the context of the local community, where their prospective customer lives. Movie theaters build community. When I got here, it was me. There was a pet store and a flower shop. There was nothing else down here. Now every store front is occupied, buildings are going up, people are moving to the neighborhood. So movie theaters are a great anchor for business. Park Slope, I mean, that is a very established neighborhood, definitely family driven. So family movies crush there, like in Williamsburg, more of an indie crowd there, just totally different venue. Also, it's not just the at large community. There's like subcommunities, you know? And so that's where our events really shine. We'll have a 35 millimeter print or a Q and A, like something special to just make it a different experience than what you could get at home. And we sweat the details. And I think that's the important part of a successful business. You know, you don't ever take anything for granted. You're always trying to improve. I am a servant first, right? And I care about the community. And I think that's important. During Covid, people needed somewhere to go and we were allowed to stay open because we became essential. We gave away our food at 4:00 every day. People said, look, my computer is at my desk and I lost my job. I can't apply for unemployment on my phone. So we provided laptops. We want to be here for the community and it matters. And I think because we are here for them, they also are there for us. People always say, oh, it's doom and gloom and like the theater business is going to go away. It's like, no, I don't think so. Actually. It's becoming more valuable. That experience is becoming more valuable than it ever has been. Some of us may fold or may have to pull back, or may have to change the way we do business. But at the end of the day, there's nothing like the moviegoing experience. We're not going anywhere.