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TOPIC: Outsourcing the Concession Stand

Outsourcing the Concession Stand 30 Jul 2007 15:07 #27244

  • smithk0706
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We are just in the process of planning to open a drive-in. One of the items we're delivberating in the business plan is the outsourcing of the concession stand. Has anyone any experience in handing over the running, selling and management of the concession stand to an external company and say receiving a percentage of profits, etc., and indeed do these companies exist?

Any advice or experiences would be appreciated.
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Re: Outsourcing the Concession Stand 30 Jul 2007 15:41 #27245

  • Mike
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I can imagine evertyhing or anything can be outsourced but since concessions are a real profit center I'd want to see the financial model for that. Often things are outsouced ,,, like Starbucks in a Target,,, or MCD in a Wal Mart because their core business is retailing and the smaller operation is complimentary and one they do not want to enter into it. But concessions are intrinsic to the movie business model. I have not yet heard of anyone doing a outsource.

Michael Hurley
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Michael Hurley
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Re: Outsourcing the Concession Stand 30 Jul 2007 15:47 #27246

  • slapintheface
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Dont do it ......The art Greenwich had that situation in the 80s..bad news...
if the stand does well you loose monet and if it does poorly they will walk out ..cant win...
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Re: Outsourcing the Concession Stand 31 Jul 2007 00:52 #27247

  • rodeojack
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A couple of drive-ins up here tried it for awhile. They both dropped it after a year or two. A concession company can do all the work for you. However, they will naturally want to work for profits that could have been yours. You lose control over most of what makes this business fun, challenging and potentially profitable.

In the same light, you could also ask whether you'd be willing to turn over ticket sales to someone else for a percentage of what the film company doesn't take. In the end, you might be better off just leasing your place to the people who are doing the actual work....
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Re: Outsourcing the Concession Stand 02 Aug 2007 00:06 #27248

  • RoxyVaudeville
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This may surprise many of you, maybe even all of you, but outsourcing concessions at one time was the norm.

Most theatres used one of several national or large regional concession companies. Berlo Vending Co. out of Philadephia was one of, if not the, largest in the country. In addition to theatres they also operated concession stands in sports stadiums, race tracks, airports and amusement parks. Most of the theatres in the Philadelphia release district used Berlo, but others used Western Automatic Vending out of Buffalo, NY or Theatre Confections out of Rochester, NY.

All the major circuits that operated in our area such as Stanley Warner, William Goldman, Fabian, and Boyd all used Berlo. All the theatres that I attended or worked in during my youth used Berlo. Some of the independents such as my Roxy theatre used Theatre Confections. When I took over the theatre in 1970, I immediately replaced them with my own stand, a used Berlo stand. They were not happy that I wouldn't keep them, so they refused to sell me their stand and equipment. A few years later in the fall of 1972 I replaced that stand with another larger used Berlo stand. In the fall of 1987 I had a completely new stand built to my own plans more in keeping with the architecture of the theatre, but still until this day use the old Berlo pop corn and butter machines.

When Berlo was left go by a theatre management they weren't interested in taking the equipment with them if they didn't have to, so it was usually available for purchase at very low cost. I bought out Berlow equipment at several theatres that I took over for no more then $500.00 each.

As each of those circuits I mentioned were bought out by others... Stanley Warner locally by SamEric which was later bought out by United Artist who in turn were bought out by Regal, William Goldman who was acquired by Budco who in turn was purchased by AMC, Fabian by United Artist, and then Regal (Boyd went out of business), they all were converted to inhouse concession operations by the newer managements.

There is no one that I know of that outsources concession operations in this area in this day and age. I wouldn't even know of what company would be available to do it. It certainly doesn't make any sense as others here have already stated.

Running your own concession operations is not difficult, and is much more profitable when done inhouse, and certainly gives you the control that is important to your business.

What made it attractive in the past and maybe still does in other areas, is that the concession companies would finance new theatre builds for the exhibitor. Still not a good enough reason for me.
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Re: Outsourcing the Concession Stand 02 Aug 2007 11:58 #27249

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Thank you all so far for your feedback it is really appreciated. It appears the majority think it's a bad idea to outsource and I see where they are coming from.

I suppose I was looking at ways round the staffing, supply chain and maintenance issues, and outsourcing seemed an alternative.

Thanks once again.

Kevin
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Re: Outsourcing the Concession Stand 02 Aug 2007 23:57 #27250

  • rodeojack
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Roxy, that's a great outline of outsourcing's history. I had no idea it was ever that prevalent. Thanks!

Jack
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Re: Outsourcing the Concession Stand 03 Aug 2007 10:09 #27251

  • Mike
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It is still done in stadiums, sports complexes, etc. But the volume is so much more vast and intense that it makes more sense. Boston Concessions who sullpies theatres also does the concessions for Boston Garden, etc.
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Re: Outsourcing the Concession Stand 03 Aug 2007 11:05 #27252

  • rodeojack
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Sure. Our state ferry system contracts their galley services out. That makes sense, since the overall volume isn't large enough to operate efficiently under state control (is anything?). It does make their prices resemble what you'd see in a theatre, since the galleys are paying union wages to the workers, generating (hopefully) profits for the concessions company AND a percentage of gross sales goes back to the State. Still, unless you bring your Starbucks onboard, you're a captive audience... you'll be buying your coffee and doughnuts from the galley.
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Re: Outsourcing the Concession Stand 05 Aug 2007 00:14 #27253

  • jacker5
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I can't understand why an indy theatre woudl want an outside source to handle there concessions.
The possibilities are endless for you to handle yourself and that is were majority of your profits will be generated.
About how to handle that and the ticket counter most theatres have it combined so one person can sell tickets and handle the candy counter unless your really very busy(Like a weekend)than you can hire a part timer.
I am scratching my head here wondering why anyone would even ask or consider this as an option!
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