Based in Columbus, Ga., Carmike Cinemas has grown considerably since it started operations more than 30 years ago. Founded in 1982 with the acquisition of a small theater chain from Fuqua Industries, the company is now one of the top motion picture exhibitors in the country.
“Today, we are the fourth-largest circuit in America and publicly traded on the NASDAQ,” President and CEO David Passman says.
With 275 theaters across 41 states, Carmike works to set itself apart as a motion picture exhibitor and ensure that managers and staff maintain high-quality customer service. One element that differentiates the company is its locations, as its facilities are largely located in rural or suburban markets with populations of less than 200,000.
“We think of ourselves as America’s hometown theater,” Passman says. “Although our footprint includes megaplexes, we focus on the secondary and small to mid-size markets.”
Because of its market focus, Carmike feels that it must treat guests a little differently. “All guests matter to us, and our managers have to focus on the individual experience instead of the box office numbers,” Passman says. “We want our guests to know they are appreciated.”
Trends and Amenities
Operationally, Carmike is focused on making the guest experience the best it can be. When the company looks at opportunities to reinvest in the business, it sees amenities and conveniences as critically important components.
“It isn’t just about providing the highest level of audio and video quality, as the industry has already dealt with that for the most part,” Passman says. “While there are evolving technologies that are being installed into larger auditoriums, our overall focus is on what will compel consumers to come to theaters. That is why there has been a big trend toward more concession offerings and dine-in theaters.”
The dining options are designed to help consumers maximize the efficiency of their time. Providing options for meals along with a great entertainment experience is a great way to get people into the theaters.
“Expanded concession offerings with more hot foods can drive incremental growth, and all you really need is enough counter and freezer space for inventory,” Passman says. “Full dine-in theaters require larger investments, and we have closed and renovated some properties in order to offer full dine-in service. Adult beverages options with beer, wine and spirits is another aspect of the strategy, but it is an ongoing process as it can take a while to become licensed to serve.”
Beyond dining, other amenities that are modernizing the movie theater experience at Carmike locations include luxurious, wide-body, deep-cushioned reclining seats and premium-format auditoriums with 80-foot wide, four-story-high screens that can seat 400 to 700 people.
“Those amenities are all the rage,” Passman says. “Everything is about the consumer having a better experience than in a traditional movie house.”
Staying on top of entertainment trends is another important aspect of Carmike’s long-term plan. It is no surprise that there has been an evolution in the industry for more excitement on the screen full of CGI magic and larger-budget movies.
“Those action hero and adventure movies are tending to drive a lot of the large studio activity,” Passman says. “What that indicates to us is that the blockbuster type of movie is alive and well, and that they will be coming out consistently into the foreseeable future. Major studios are announcing release dates two to four years in advance, with some movies announced as far out as 2021.”
What that also means is that major studios are passing on smaller movies, which are now going to smaller studios in order to fill that gap. Carmike believes it will continue to see a strong supply of those types of movies, even though suppliers may change.
“Technology changes like digital and satellite transmission means there are other options beyond films for entertainment complexes,” Passman says. “We have seen that movie complexes can be used for alternative programming and content, including operas, documentaries and gaming.”
Outside of investing in current properties, Carmike is also looking at making investments in expanding its footprint. When the company considers organic growth, it looks at population shifts to determine locations where it should put new theaters.
The company is also heavily involved in industry consolidation. There are hundreds of theater operators in the country, and many are small and suffer from operational inefficiencies. “Consolidation can help eliminate efficiency issues such as a lack of purchasing power and excess management costs,” Passman says. “We’ve been averaging an acquisition of a few hundred screens per year, and we want to acquire another 500 screens in the next few years.”
No matter how big Carmike gets, it will always remember the responsibility it has to best serve its shareholders, partners, employees and guests. As the company grows, Carmike wants its people, partners and investors to grow with it, and it wants its customers to walk away feeling thrilled with their experience and ready to return for more.
“We are always trying to figure out how to best allocate capital,” Passman says. “With dining, seating and audio/video amenities, there are many choices. We spend a lot of time training our managers to think like owners and getting all of our staff involved in providing a great experience. We provide incentive programs and advancement opportunities, and we validate performance through guest feedback and mystery shopping. Our focus has been to utilize best practices from the top customer service models to make sure we take care of guests and empower our people.”