The First Class Experience: Interview with iPic CEO Hamid Hashemi
There are few specialty circuits that have as much of a brand presence as iPic Entertainment, the high-end cinema chain founded by Hamid Hashemi in 2006. Following his tenure as President and CEO of Muvico, Hashemi became a pioneer of the luxury cinema niche in the United States–helping establish the building blocks to one of the hottest trends in American exhibition today. Launched a mere couple of years before the financial crisis, iPic endured through growing pains and has since grown to 15 locations across 9 states. BOXOFFICE caught up with Hashemi, who has served as iPic’s Chief Executive since inception, to speak about the premium cinema market and what the future holds for the innovative company.
How did you settle on adopting a premium model across the circuit, branding iPic as a luxury experience?
Everyone in this business gets the same movie. Imagine if you own a steakhouse, and if all the steakhouses in this country got the same kind of meat–identical, same texture, everything. What’s going to make you different? What’s going to make people drive past one to come to you? For us, it was all about finding a niche, doing something that encourages people to not only leave their home, but pass other theaters and come to ours. There is a trend for declining attendance, and I believe a lot of it can be attributed to the experience, frankly. It’s not that people of all a sudden stopped liking movies. People have been going to the movies all along, for years and years. I always go back to that popular analogy: people have kitchens in their house, but they still go out to restaurants. Movies are the same thing.
iPic has been an important player in introducing the luxury and VIP cinema concept in the United States. How did that come about?
The concept has been evolving, it’s not something that started yesterday. We first started with the whole concept of a dining and luxury experience when we built the first of this generation of theaters in 1999. I built it in Boca Raton, Florida, a 20 screen theater, and six auditoriums had balconies. It was on the cover of your magazine, actually!
We wanted to bring the two most common forms of entertainment under one roof: dining and going to the movies. That theater had six auditoriums with balconies and a separate entrance going up. As for the restaurant aspect, the first we were building, nobody wanted to do it. I talked to everyone from Wolfgang Puck, to Let Us Entertain You to the Levy Group, all the big operators. Everyone said it would never work. So we ended up doing it ourselves, and from the third month on, it was in the black. It was one of the best things we ever did. From that point on, we built a number of theaters. We always added the restaurant as an adjunct to an existing theater–the way Cinemex or Cinepolis do in Mexico. It was in 2005, after having done it a number of times, that we recognized there was definitely a market if you did it right.
It’s a big gamble, tackling both concepts, a restaurant and a movie theater. Operations need to be managed on both front.
It’s totally different when you do it standalone. If you’re part of a megaplex, you’re sharing a lot of the expenses. There are a lot of efficiencies that come with it, but some of the concept becomes diluted as a result. If you’re going to do it as a standalone, you’ve got put a lot more emphasis on the food and beverage side of it, especially when it comes to the service. At that point, you’re like a hotel or a restaurant. That’s the way you have to look at it, that’s the way you have to run the company.
Traditionally, when you built megaplexes, it was all about getting customers in and out as fast as possible. Get people up to buy a popcorn and soda, then get everyone out as fast as possible so you can schedule more shows and more people through the doors. Our model is about keeping guests in the theater longer. The average stay in our theater is four and a half hours. People are going there ahead of time and staying after the movie finishes. In order to do that, you have to design these theaters as the kind of place you’d want to go to. If you’re out on a date on a Friday night, you want to go to dinner and the movies, and after that you might want to go to a bar. So you have to bring all those three elements, give them all an individuality and personality that’s authentic, so it’s not something that feels slapped-on. It has to have its own personality.
That was something that we learned very early on. The first of this generation of theaters was built in 2007. Then we hit the bad economy. When 2010 came around, that was when we really put it on high gear: acquired six locations, started building, and today we have 15 sites. In that period, our first focus was on dining in the auditorium. We perfected that to the point of being completely seamless, no disruption of the moviegoing experience.
How has the concept evolved over time?
Our focus has always been to do enough so people going think of going to the destination first, the movie second. Traditionally, the thinking used to be, “Oh, Star Wars is coming out. I want to go see Star Wars. What’s the closest theater?” Our goal was to change that mentality, for people to say “I want to go to iPic” first, and then decide what movie to see. We have the data to back it up: people will come to the theater, and if the top movie is sold out they’ll go to the next one. Our theaters fill up in the fourth or fifth week of a picture, whereas most theaters don’t.
High prices are often cited by consumers as one of the main reasons they don’t go to the movies more often. Your admissions come with a premium, so how have you been able to fight that reticence from a segment of price-conscious audiences?
That is always the biggest challenge. Today it’s a little bit easier, because more people are familiar with the luxury concept. When we started, however, nobody was doing it in this country. Today, most people have heard of it even if they haven’t been to one–at least they’ve heard about theaters with the big seats. When we first opened, we were charging $20 in suburbia and $25 to $29 in major markets. The first reaction was, “Wow, why should I pay that?” The challenge is getting them to come try it for the first time; once they’re there, you have go give them $50 worth of an experience in order to get them to return.
Looking back to that first experience opening a theater in 1999, are there any lessons you wish you had learned sooner about this business?
We’ve made a lot of mistakes! [Laughs.] We learn more from our mistakes than we do from our successes. I will tell you, the first year we opened up in 1999, it was such a huge success, we thought the concept could never fail. That’s what led us to start making big mistakes, costly ones. When your first theater is a big success, you think you’re invincible, you think it’s all going to work out.
Things that we’ve learned? If you go to a restaurant and have a bad meal, you’re not going to go back. In a traditional theater, if you watch a terrible you can walk out unhappy but still come back the next night to watch a different movie. People don’t blame the operator for the quality of the movie. Audiences can be very forgiving to a movie theater if the only reason they’re there is to watch a movie. In the restaurant business, they’re not. So if you’re running a theater of this type, where you’re charging double the normal ticket price, you better be consistent. I mean, literally, every single time. You have to make sure to stay focused on it.
The food business is very different than the theater business. I learned that the hard way, frankly. I used to think, you have a recipe–what’s so hard about making the food? You have a kitchen staff, what’s so hard about running it? People get used to doing the same thing over and over; sometimes they stop using the measuring cup, or they deviate from the menu because it’s faster. That’s how you lose quality. After you miss your mark once and nobody complains, you can do it again and again. All of a sudden, within two months, your recipe completely changes. I can tell you from experience, that’s what happens. Staying consistent is really difficult.
We had about 450 or 500 seats in our first theater. They were always sold out, so we put more seats in our next theater. Bad idea. Maintaining that level of service when you have up to 650 seats, it’s amazing how hard it is. The kitchen can only handle so much, the staff can only handle so much. At a traditional theater you can scale your staff very easily. You can have 20 people behind a concession stand on the weekend and put two people on it mid-week. The same employee can work the box office, pour a soda, or rip a ticket in the same night. You can’t do that with a kitchen. In the kitchen, the person who’s flipping the burger, that’s all they do–there are stations–if they stop paying attention, it’s going to overcook. Whether you serve one hamburger or 500, that kitchen is going to need the same number of staff.
How much of a challenge is employee training and retention?
When you look at it, good restaurants are busy seven days a week. The ones that are slow in the middle of the week, they don’t make it, because of two factors. One, the kitchen is tough to get right. Good kitchens are like a machine, they’re orchestrated, the people who work there have to love working at that pace. Second, you need to have great servers–and great servers want to make money seven nights a week. You need to make sure you get people mid-week, otherwise it won’t work.
Would you say you’re closer to the restaurant business than the movie theater business?
We are in the restaurant business. From a revenue standpoint, only 30 percent of our revenue comes from the box office. Our revenue is all about food and beverage.
2010 was a turning point for the company, and it’s also when we see start to see mobile apps and digital ticketing coming into the picture. iPic implemented a lot of this fairly early on, how has your investment in digital impacted the company?
Going back to my former company, when I started that theater in 1999, I think we were the only company here doing reserved seating. In those days, everybody was either on Fandango on MovieTickets, this industry has a tendency of turning to third parties when it comes to innovation. We couldn’t find anyone to accommodate our reserved seating system, so we started writing software ourselves–and that kind of mentality really grew into the company. We’ve never relied on third parties. What we always wanted to do didn’t exist, and the big companies that were around didn’t want to do it, so we just did it ourselves.
With our smartphone app, it only takes three touches to buy your ticket. We’re beta testing mobile ordering for your food, so your meal can be at your seat when you get to the theater.
How has technology shifted consumers’ perception of customer service?
15 years ago or 10 years ago, when we talked about good service, you thought about the Ritz-Carlton or the Four Seasons. They were the gold standard. 10 years ago, service was all about interaction with the customer; that’s why the Ritz-Carlton was so important, they knew your name and catered to you individually.
Today, if I asked young professionals about great service, most people of that younger generation will bring up Amazon or Uber. Every business that they’re engaging with is one where there is no personal interaction. Their perception of good service today is a company that gives them the autonomy to do it themselves, without having to go through anyone else. What they want, when they want it.
I love getting in an Uber, because the car meets me wherever I am. I don’t even have to tell the driver where I’m going, he already has directions on how to get there. When I arrive, I don’t have to fumble for my wallet, I just get out and leave. That’s what we call great service today. We are aiming to do the same thing; being there when the customer need us.
What’s next for iPic?
We want to continue to improve and enhance the experience. There is a lot of competition coming and a lot of competition that is already here. How do we differentiate ourselves from the pack? Part of it is the experience, the other part is content. When you talk about alternative content, people always talk about event cinema, but that’s still a broadcasted product. If we’re going to do alternative content, we’re going to do it differently. So we put on live shows in our auditoriums. We did 30 events in our theaters in November and December of last year. Every one sold out at a $100 ticket price.
This year, we’ve found success with what we’re doing. We’ve done close to 100 events just from the beginning of the year. We’ll probably do 300 events by the end of the year, to the point that we’re going back and retrofitting our auditoriums for live performances.
In New York you can go to a different live performance each day of the week. But when you get out of the city, your choices start getting limited. There is a ceiling to the ticket price for a movie, a limit to what people are willing to pay. But for a live show, charging $100 is not an issue. That’s how we’re improving our topline and bottom line.