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TRC Blog

October 01 , 2006

Dinner and a Movie

October 1st, 2006 - Studio Movie Grill readies its cinema-eatery concept for expansion By Rodger Brown Those who have visited a cinema draft house recall a place running faded prints of a grade-B movie with a crackling soundtrack barely audible above the beery din of the local softball team on its night out. But it might surprise them to learn that the concept has risen a level or two over the past few years. Salads and pasta are now on the menu. And a customer is as likely to order a Starbucks Mochatini as a pitcher of Pabst Blue Ribbon. And no more B flicks, either — the on-screen action at a movie-and-a-meal place is now as compelling as anything at the neighborhood multiplex. The theater industry calls this new kind of establishment a “first-run cinema-eatery,” but Brian Schultz prefers a tastier handle. “We’re calling our category ‘movie grill,’ ” said Schultz, owner of Dallas-based Studio Movie Grill, which he launched in 1999. “We are trying to brand that, because our concept is bringing great, high-quality food that’s made from scratch, delivered hot and fresh to you in your chair while you watch your movie.” From the leather recliners to the black-clad wait staff, Schultz’s place is definitely not your fraternity brother’s movie draft house, where a viewer is unsure whether to blame the out-of-focus screen image on a faulty projector or on too much beer. “We differentiate ourselves very clearly because of the quality of our sound, the cleanliness of our facility, the quality of the presentation and the quality of the food and service,” Schultz said. Another differentiation is the audience itself. “We intentionally do not cater to teen-agers and don’t allow anyone under 18 in without a parent.” Currently, there are three Studio Movie Grill units, two in the Dallas-Fort Worth area and one in Houston. A fourth is slated to open sometime in the fall, with a fifth in line for next year. The success of the high-end dinner-and-a-movie concept is generating competitors, but Studio Movie Grill gets the credit for pioneering the format and for helping break down the resistance of Hollywood distributors to booking first-run movies in alcohol-serving venues, according to the National Association of Theatre Owners. The idea of combining food and movies is nothing new, of course — popcorn and nachos are as much a part of the movie experience as sticky floors. It was the introduction of alcohol that created the 1970s cinema draft house. But though the beer brought in customers, it also kept the distributors for major studios away. The distributors “want to make sure that their film product coming out is shown in the best environment possible,” said Terrell Braly, CEO of Austin-based Alamo Drafthouse, in a report the association published last year. “They don’t care if the beer is cold, all they care about is that the product is shown properly.” There were a handful of theaters in small markets showing first-run movies and serving alcohol, but the association cites the persistence of Schultz and an early partner as instrumental in pioneering the concept in major metropolitan areas and in delivering the quality experience — and the gross receipts — that made the distributors happy. But his success didn’t come easy. Schultz got his idea in the late 1980s after visiting a Cinema Grill (a popular chain of second-run cinema-eatery), in Bethesda, Md. He tried to establish one in Los Angeles but ran into an immovable object in the form of the California Department of Alcoholic Beverage Control, which had a rigid policy against issuing liquor licenses to cinemas. The reason was the difficulty of policing alcohol consumption in a dark auditorium full of minors. So Schultz and a partner took the idea to Dallas and opened a cinema-eatery for showing second-run movies in 1992 in a historic movie palace, the Granada Theatre. For five years they worked to persuade distributors to let them show first-run movies. It never happened, and they gave up that facility to take over a multiplex in Addison, north of Dallas, which became the first Studio Movie Grill. Here the hard work paid off. In 1999 Buena Vista became the first distributor to let Schultz have a first-run print: Adam Sandler’s The Waterboy. Those first weekend box-office receipts convinced distributors that their precious first-run flicks need not suffer in these newly dressed-up draft houses. Schultz’s concept was a hit, and soon first-run cinema-eateries were springing up all over Texas — and beyond. In 1997 there were only 14 cinemas in the U.S. showing first-run movies and serving alcohol. Last year the association counted nearly 300, about half of them in the Lone Star State. Today Studio Movie Grill and others are becoming desirable tenants for malls and shopping centers seeking high-end entertainment anchors. It will be an inspired addition to a lifestyle center that is part of Arlington Highlands, an 80-acre development in Dallas-Fort Worth, says John Mathes, senior vice president of The Retail Connection, the project’s broker. Studio Movie Grill is slated to open in December at the lifestyle center, which is the main feature of the development’s 900,000 square feet of parks, offices, and shopping, restaurant and entertainment space. “It was important to have the theater component,” Mathes said. “Although we’re right next to a very successful mall that has a very successful theater, this was a great alternative to get a theater anchor to come in that also has a food component. Because of the dining component, they serve a different customer and don’t really compete with the traditional theater.” The high-end clientele that frequents Studio Movie Grill is exactly the group Mathes wants for the project. “We focus on families and adults.” Mathes says that limiting the access of teens contributes significantly to attracting a desirable demographic. “What sets them apart is that it’s an older clientele,” he said. “The traditional mega-theaters in the malls attract a lot of kids. These guys [Studio Movie Grill] focus on 18 and up, young adults, couples, so you don’t have a lot of the loitering and the negative stuff that you might have with some of the theaters, and you have all the positives. So it is a win-win for us.” Limiting the age of the customer is a key part of Studio Movie Grill’s appeal to developers and customers alike. “It doesn’t have to do with the liquor and doesn’t have to do with the rating of the movie,” Schultz said. “It has to do with the fact that we’re a niche concept, and we think it’s important that when you pay to watch a movie, you should actually see it.” What they see, Schultz says, is state-of-the-art. “We’re a moviegoer’s movie palace,” he said. “The highest-end audiophile is what we cater to.” Some might be attracted by the Dolby Digital EX sound systems and the wall-to-wall screens, but a large part of the appeal is the cuisine, which Schultz compares to that of a Chili’s or a Cheesecake Factory. “Our customer really isn’t the same customer that goes to a regular theater,” said Schultz. “Our customer is the one who says, ‘Hey, should we go out to dinner, or go see a movie?’ And here they have both in one. It’s a hybrid that allows them to have dinner, drinks, see a first-run movie in a few hours and get back to the kids.” This emphasis on the experience meshes with the priority that lifestyle and town center developers place on the aesthetics of shopping rather than the function, he says. The unit at Arlington Highlands will be Studio Movie Grill’s first one built from the ground up. Another ground-up, freestanding cinema is scheduled to open next year at Frisco Square, a 4.4 million-square-foot, mixed-use development in Frisco, north of Dallas-Fort Worth. Frisco Square will consist of office and retail space as well as multifamily residences and municipal facilities, including the city hall. Both cinemas will measure about 37,000 square feet and contain 1,350 seats. The company is looking at locations outside Texas, though it has not announced any. But Schultz says a careful, selective process for opening cinemas will serve his concept best. Other first-run cinema-eateries have turned to franchising as the quickest way to get their concept to market, but Studio Movie Grill doesn’t want to go that route. “Franchises tend to do best when it’s a very simple concept with few variables,” Schultz said. “That’s not this. We can be selective. … We only want to work with the highest-quality developers and the highest-quality lifestyle and town centers. That’s our strategic growth model.” For now, even the customers are willing to wait. With customer frequency averaging 20 visits per year, Schultz’s Dallas units are sold out every evening, Thursday through Sunday. “The best compliment we get all the time,” he said, “is that ‘You’ve spoiled us — I never want to go to a regular theater again!’ ”
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