Martek - Concessions

Counter balances CONCESSIONS

Whilst munching at the movies has always been a part the American filmgoing experience, other international markets have taken longer to realise the impact of concessions on the bottom line Derek Galloway, Martek

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ntil the arrival of the first ‘Multiplex’ theatres in the UK during the mid to late 1980s, film food rarely, if ever, got past the humble hot dog, pre-bagged popcorn and a limited selection of confectionery. Ice cream, when available, was often sold from trays at intermission or before the “main feature” and the connection between concession sales and bottom line profits had definitely not been made. Notably, fast and convenience foods had, in the early 1980s, only just started to gain a significant foothold in the eating habits of many Europeans who were still very much conditioned to the separation of eating and entertainment. Meals tended to be taken at regular times in the home and an evening at the ‘pictures’ was generally an after-dinner activity.

CONCESSIONS

[Prev/This page] Popcorn, hotdogs and sodas still provide the main concession income at cinemas and theatres but the market, and appetites, are changing. The future of cinema and theatre concessions is likely to include more themed, stylish and pre- and post-show bars - perhaps even nightclubs and other attractions that can keep patrons in the venues for longer.

CONCESSIONS

As the market matures, so does the expectation of the customer - product evolution must match their growing sophistication and independence

But society has changed. The old conventions of what you do where and when are changing.

The customer seeks fulfilment regardless of the time or place and with it we are seeing the review of licensing restrictions, substantial changes to eating habits and patterns, and the proliferation of food outlets from traditional fast food to increasingly sophisticated international offerings.

Bear in mind that at a cinema or theatre the customer is on the move - no longer prepared to tolerate queues, limited choice, indifferent service and prices that cannot be justified by the quality of the item on offer. As the market matures, so does the expectation of the customer - increasingly discerning, product evolution must match their growing sophistication and independence. We live in a time when last year’s hot ticket is yesterday’s news and the customer is no longer constrained by limited supply. In many areas the customer can actually be challenged by over supply.

Walk down any high street or through any mall the choice is staggering, with a multiplicity of offerings competing with each other to tease away the disposable cash. The customer knows that he is king and is unabashed at exerting the influence that he has.

If the generated level of expectation fails to be met he will either withhold a proportion of his cash or take it somewhere else. For the cinema operator the key elements that can most influence that all-important decision to spend are: waiting and service times; product

choice; the quality and design of the concession areas; and the perceived value of the products on sale.

Waiting and Service Times

By far the most important of the key criteria for a successful concession operation is the time that it takes for the customer to be served. Lines at a concession can form for a variety of reasons: •

Insufficient staff

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Sufficient staff but insufficiently trained

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Confusing or misleading signage

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Inefficient servery layout

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Inefficient service points.

Any one or a combination of these will begin to impact the service times and queues will form. In general terms, the majority of concession operations have the potential to function adequately until they are put under pressure. There is a big difference between a slow Wednesday afternoon and wet Saturday evening when you have three major movies running. It is at these times, when the lines are forming at concession that the customer can rationalise themselves out of what is an otherwise impulse purchase. Spontaneous business is generated in that brief period between initial sensory stimulus and gratification through quick and efficient service. At either end of that process can lie confusing or unattractive displays, which fail to provide the initial stimulus and service delays which can take the purchaser beyond the point at which they are acting upon impulse.

CONCESSIONS

Bold colours and themed interiors from the backdrop of an entertainment experience for film fans. Concessions must keep pace with increased service and quality demands

Just 15 seconds added to each transaction on a busy evening will have the potential to shave enormous sums off the total retail take

Adequate staffing at times of peak demand is essential and those staff should be motivated and trained to operate the facility efficiently and be prepared to ‘step up the pace’ to meet the demand. Signage must be evocative whilst clearly describing the products on offer, enabling the customer to make a clear choice in advance of reaching the server. Products, portions and pricing should be unambiguous - signage that raises more questions than it answers will result in extended service times. Servers will loose pace and the customer may be subject to a range of emotions, none of which will be conducive to repeat business.

Serveries that demand excessive travel through inefficient layout will result in staff fatigue, customer impatience and extended service times. Just 15 seconds added to each transaction on a busy evening will have the potential to shave enormous sums off the total retail take, as will concession operations that are undersized. Being too small, they are effectively designed to fail. In the numbers game of high volume catering, any money saved at the outset through cutting back on service points or equipment is a one off gain. The effects in terms of reduced customer numbers and hit rate will be a financial drag upon the cinema for the rest of its operational life.

Product Choice Amongst operators the world over, product choice is the area most likely to invoke the strongest opinions. There seems to be as many views as products available and without a doubt, different operators in a wide variety of international markets appear to have both

preferences for and substantial success with a host of supplementary products. However, carbonated beverages and popcorn are the products that are way out in front of everything else regardless of the market. I never cease to be amazed by just how consistent these two products are in terms of contribution to overall concession revenues throughout the world.

Always somewhere between 60% and 70% of total sales and consistently up there with the winners in terms of raw food cost and contribution to profit.

With candy, bottled waters and a variety of other food products, the key consideration is to provide the customer with a choice that is consistent with their expectations for both variety and quality whilst ensuring that the additional product is purchased as well as and not instead of. Some care should thus be given to their prominence in terms of display, such that their visual emphasis does not skew the product mix towards the increased sale of products with a considerably lower margin.

Quality Concession Areas Key motivators in the decision to purchase are a well designed, aesthetically appealing, well lit and inviting concessions operation. The customer will subconsciously identify with an operation that appears to be clean and shares common attributes with other forms of fast food operation that they favour. At its simplest, a concession that appears to be drab or dull, which doesn’t complement the products or gives the impression of being inferior to the accepted “norm” for fast food purchase will achieve below average sales.

Spontaneous business is generated in that brief period between initial sensory stimulus and gratification through quick efficient service

From an operational and staff motivation perspective, the concession must be easy to operate, provide a good working environment, be of robust construction and, most importantly, is easy to clean and keep hygienic.

Perceived value

A common complaint expressed in cinema patron surveys is the cost of concession products compared with similar products available from alternative retailers outside of the theatre. The customer must perceive value in relation to their overall perception of the quality and service level of the theatre.

Premium prices can only be justified when considered in the context of the overall purchasing experience. However, if the customer is going to be expected to pay more, the overall efficiency and appeal of the operation has to be as good as it can be or they may decide that the concession experience is sufficient to justify the choice of an alternative venue in the future.

Cinema’s competitive future While international standards of service,

CONCESSIONS

product quality and design have risen substantially in the last decade, there is concern that the key principals detailed still are not fully appreciated. The multiplex operator is in hot competition not only with other cinema venues, but also a host of other leisure destinations that can tease away the profitable margin of customers.

Despite the fact that a major proportion of multiplex bottom line can be generated by concessions, concession planning and development can sometimes play a very poor relation to a host of other development considerations in a new complex. Sometimes left to the very last moment and occasionally to the skills of a willing, but in terms of concession operation, hopelessly inexperienced general contractor, what emerges in the foyer lacks in most of the key elements relating to efficient layout, robust construction and appealing design. Any marginal savings, mostly perceived, will be more than offset during the early weeks of the operation and will continue as a financial drag upon the profit performance for the life of the complex.