Cineplex venture moves to historic Roundhouse
Movie franchise sets sights on expansive dining and entertainment experience
The company that runs Canada’s largest movie chain is expanding its sights toward sprawling entertainment spaces with everything from axe-throwing and arcade games to live shows and upscale dining — just no movies.
Cineplex Entertainment is opening its second Rec Room location this summer in the historic John St. Roundhouse, right next to the CN Tower, Ripley’s Aquarium and the Rogers Centre. The 40,000-squarefoot space will fuse multiple types of entertainment with food and is geared toward millennials and baby boomers. The first Rec Room opened in Edmonton late last year; Toronto’s opening is set for this summer.
“We studied (the concept) closely and we felt it was a great window of opportunity here in Canada,” said David Terry, the vice-president and general manager of the Rec Room.
“I think it’s a brilliant idea and I think it will work because it’s just the way millennials live their lifestyle,” said Brian Heasman, a restaurant industry expert and professor at Ryerson’s Hospitality and Tourism Management school.
Millennials “are very active, they’re very engaged. And when they socialize they’re much more comfortable going out with a group of people and going their own way and coming back and meeting up.”
Millennials also tend to spend their disposable money on quality, dishing out more for a premium environment like the Rec Room, Heasman said. But they can be turned off an experience if it lacks quality compared to others.
“The quality has to be spread through everything, and that includes service. That would be the key to sustainability,” Heasman cautioned.
The Cineplex space will have two upscale casual restaurants that will feature traditional Canadian recipes using local ingredients where possible and will also be centred around cooking on a wood-fired grill.
“We take great raw ingredients and we make food ourselves,” Terry said, adding there will be an emphasis on customizable and shareable dishes such as gourmet poutines and madeto-order doughnuts.
This type of premium food in a unique environment is exactly what millennials are looking for, said Robert Carter, the executive director of NPD Canada, which does market research on the restaurant industry.
Though growth in the restaurant business is relatively flat, when consumers do go out to eat, they’re looking for more enhanced experiences, Carter said.
“I think this move with the Rec Room to create an experiential dining environment is definitely on trend with what we see consumers are looking for.”
Cineplex aims to open between 10 and 15 locations across the country, including in London, Calgary and a second location in Edmonton. They’re also planning on opening an additional 10 to 15 smaller locations that will be more about games than food.
A recent report by Tim Casey from BMO Capital Markets views Cineplex positively and said the Rec Room would be among its important drivers. “The shares of Cineplex are rated ‘outperform,’ and it is our top pick in the sector,” Casey wrote.
Despite lower attendance in the last quarter, which caused decreased box office and food service revenues, Cineplex’s other revenues increased, Casey noted.
In fact, “Management indicated that the Rec Room (launched in Edmonton in mid-September 2016) is performing ahead of expectations,” the report said.
Beyond movie theatres, Cineplex operates businesses in digital commerce, food service, amusement solutions and digital place-based media, among others.
“I think they’ve come to broaden the scope of their business beyond just being a movie provider to being an entertainment provider,” said Ken Wong, a marketing professor at Queen’s University’s Smith School of Business.
“Even if you think about the movie experience today, it is nowhere near what it was even 10 years ago,” he said. “Ten years ago, you lined up outside the theatre and you took your chances on getting a great seat for a movie you wanted to go to. Now, of course, you can select seats online, you can get seats that recline . . . you can get seats that vibrate and move and so on.”
The Roundhouse was the ideal place for the newest entertainment space by Cineplex, Terry said. The historic structure itself was a perfect fit because it already has elements of the planned “industrial chic” esthetic, with its high ceilings, big windows and exposed beams.
At about $220 to $240 per square foot to renovate the interior of the historic structure, construction — which began in September 2016 — will cost about $9 million, said Terry.
“I think continued use of heritage buildings is always really important, and the more meaningful the use to the city — that is to say, the more people are able to actively engage with it — the better appreciated it will be,” said Kaitlin Wainwright, the programming director for Heritage Toronto.
Wainwright lauded the structure’s new use and pointed to other historic buildings such as St. Lawrence Market and the Distillery District, which have a high level of public engagement, as similarly interactive spaces.
If the entertainment centre is successful, Wainwright said, it could also encourage other businesses to use heritage buildings.
“I think it’s a brilliant idea and I think it will work because it’s just the way millennials live their lifestyle.” BRIAN HEASMAN HOSPITALITY PROFESSOR