Choices and challenges: More food options equals more management

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I often write about finding new products to introduce at the concession stand, and I recently discussed milkshakes and their potential contribution. But a big operational issue that this particular item brings with it is equipment. When new products are brought to the concession stand that are not candy items, most of them require some type of equipment, to cook, heat, cool or serve. Think pizza, hot dogs, ice cream and beverages.

With the large amount of equipment that is now in use, every theatre operation must manage equipment as much as managing sales. The two are in fact tied together. We could explore many aspects of concession equipment, but there are four critical areas of this management that I will review now: space, serving time, energy, and return on investment (ROI).

Space allocation in a theatre concession operation is a direct driver of sales potential. Finding the right product mix today is tied to the amount of counter space that can be allocated to equipment. If a product yields a per cap of $.01 out of a total per cap of $3.50, for example, and takes up one-quarter of your counter space, it is not performing well enough to merit the space. In this regard, the theatre concession stand is exactly like a retail establishment: Shelf space is a mathematical formula that must always be considered when trying new items.

Space is closely related to serving time. How long does a piece of equipment take to deliver one serving, in order to merit the space it occupies?

Pizza and hot dogs provide the answer. Ten years ago, pizza was a desired, but much tougher, item to serve. The ovens were bigger and more cumbersome, and it took longer to cook an individual serving if prepared in smaller ovens. Today, pizza ovens have improved dramatically and their output is much greater. This yields faster serving time and higher per-caps for the space allocated and it’s a big reason why you are seeing pizza in higher numbers today.

With hot dogs, do you grill or steam? The cost of the equipment is comparable, and there are those who prefer the taste of one over the other. The big difference is the number of servings that can be delivered in a small window of time. The same size steamer can produce triple the amount a grill can and is the only option in a theatre with high-volume sales of hot dogs. In my travels I have heard this statement as a real badge of honor: “We can’t use grills, we sell way too many dogs on a Saturday night for the grill to keep up.” Serving time matters, but so does the energy required to deliver.

In addition to heating the cheese, the hot dogs and the pizza, we are also cooling and freezing the water, the soda and the ice cream. This is all in addition to the cold storage that is required long before serving. Energy consumption and ratings have gained priority in operational discussions, as the concession stand now must be equipped to handle a much greater electrical load as efficiently as possible. This aspect of concession stand management must be a part of the original construction discussion for a new build and is often one of the significant reasons for remodeling the concession operation.

The electrical requirements, both in load and outlet spacing, are going to help determine if you can or should add a pizza oven in a concession operation. More important, the Energy Star rating system is gaining ground not only as a guideline for good practice but as a standard. What was just a rating system five to eight years ago is now being used in many states as a requirement, with penalties for non-compliance. “Green” energy rating for equipment, as well as entire buildings, is a growing area of operational concern and this topic merits further review as a standalone subject.

The ROI consideration of equipment-laden concession programs combines all of the above issues and layers them onto the cost of the equipment, either in purchase, lease or contract commitments, to determine the contribution of the program. In addition to the price of the equipment, which is incurred somewhere, the time and funding required to test and deploy a new program must also factor into the investment that must be returned. Once the investment is returned, the program will follow set guidelines for minimum annual contribution to total per-capita income as a concession item. These guidelines vary by company and are primarily determined by item category, type of theatre operation, geographic and demographic realities, and theatre attendance. The costs associated with item selection, substitution or change are much greater than base product costs, for all items. For items that require equipment, this cost increases significantly and must be analyzed thoroughly for efficient concession management.

These four topics are not exclusive when considering new concession/equipment programs, but they are areas that must be addressed. Finding new items to increase per-capita revenue, gain new customers, and keep the concession stand fresh and exciting is critical to the growth and success of the theatre. Equipment considerations cannot be allowed to be inhibiting factors to new item growth, they just need to be properly managed. With the right criteria and attention, food equipment programs elevate the theatre concession operation to the varied offering and experience that the consumer has come to expect from a night of entertainment.

Please send any comments to Anita Watts at anitaw@reactornet.com.