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How movies are boosting experiential retail for shopping centers

Nov 30, 2016

AMC dine in-988468-edited.jpgCinemas often take a backseat to other tenants in shopping centers, but a recent deal in this retail-entertainment sector has pushed it into the spotlight.

AMC Theatres is now the nation’s largest movie theater chain after its acquisition of Carmike Cinemas for $1.2 billion. The deal gives AMC about 3,000 more screens, bringing its total to just over 8,200 with 659 theaters in total.

Given the magnitude of the transaction, it’s a good time to take a look at the role of movie theaters in experiential retail, which can help combat the effects of online shopping.

AMC and other large chains offering more

The major chains, such as AMC and Regal Cinemas (formerly the country’s largest chain), have made significant efforts to provide a customized movie-going experience for consumers.

At certain AMC theaters, you can buy alcohol before and during a film by patronizing the MacGuffins Bar & Lounge. The company also offers a variety of dining options beyond popcorn, candy and soda. Certain venues have food that can be brought to your seat, while others now have different types of in-theater eating available.

For its part, Regal has a handful of Cinnebarre locations in its theaters that also serve alcohol and food beyond the standard fare. In addition, the company is trying to attract new customers and create alternative revenue streams by inviting religious groups and businesses to have services and large meetings in Regal theaters.

Whether it’s offering new dining options or experimenting with space use, a theater in a shopping center can be good for landlords because it attracts more business to other tenants at a venue, and the surrounding area as well.

Regionals, independents led the way on creative use for space and experience

The large chains likely got the idea for fancy dining, booze and multi-use spaces from independent and regional outfits. Most of the time, these theaters are found in more urban areas with street retail.

Alamo Drafthouse, founded in 1997, started selling brews and casual-dining food right out of the gate. Now, with nearly 25 locations mainly in the Southwest and Midwest, the chain is still going strong in area entertainment districts and some malls. Alamo is currently growing nationally through a franchise system.

Why not swing by and browse some antiques before catching a film? For decades, Pacific Theatres, with locations in Southern California, has used its drive-in area for swap meets when movies aren’t playing. One of the locations even has two restaurants, as well as food carts, to attract more visitors.

An Arizona-based company called Ultrastar Multi-Tainment Center operates facilities that are theater-entertainment complexes on steroids. Besides large theaters, these monsters feature laser tag, bowling, restaurants, stores and other attractions.

Some cinematic drawbacks

One potential problem in a multi-tenant facility: these mega-theaters could draw away business from surrounding restaurants. Why go to dinner before the movie at another location if the theater has serviceable, and in some cases very good, food?

There are also several questions about the fate of the cinema sector at large. How many of these mega-theaters can the country support? With increased consolidation, are we going to see locations closing? Will the continued ease of streaming movies eventually push these places out of business? What if Hollywood goes on one of its creative droughts or has a labor strike that destroys an important theater-going season?

It’s worth keeping an eye on these trends, but for now, theaters remain solid tenants. And it’s encouraging that these companies are being proactive and adapting to a changing retail environment.

Next: 4 emerging trends in real estate, according to ULI

Ian Ritter

Written by Ian Ritter

Ian Ritter is a veteran commercial real estate writer. He worked several years as retail editor at GlobeSt.com and currently writes about the industry for several corporate clients and news organizations. He holds a Master's Degree from Columbia University's School of Journalism.

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