The pandemic has crushed most movie theaters – but this 27-year-old’s channel has doubled in size


This story appears in the February/March 2022 issue of Forbes magazine. Subscribe

The past two years have been horrible for the movie theater business – unless you’re Mitch Roberts. While most theaters remained closed, it expanded, turning a mundane trip to the movies into a memorable mix of bowling, arcade games, comfort food and booze from Evo Entertainment.

Ochicken Texas Governor Greg Abbott allowed the state’s Covid-shuttered movie theaters to reopen at 25% capacity on May 1, 2020, most operators agreed. Never mind the possibility of hosting a super-spreader. Without new releases and few customers, the economy just didn’t make sense. Mitch Roberts disagreed. At just 25, he had built Austin-based Evo Entertainment up to six locations in Texas with 57 screens, 38 bowling alleys, full meal service, 200 arcade games and a hefty $42 million debt. dollars. When his operations had to close six weeks earlier, he says: “My first reaction was fear. My second immediate reaction was, let’s get ready for reopening. »

Roberts started showing cult classics like Fat and The Goonies to sparse and rented inactive indoor crowds auditoriums to players who wanted to play fortnite on a 65 foot screen. He improvised new sources of income: painting the exterior of two multiplexes white to serve as drive-in screens, turning nine acres of cow pasture into paintball courses, and packing gallon jugs of margaritas and home movie night snack kits for pickup and delivery. While many contestants remained closed, it generated buzz with a summer drive-in film festival and a fake pumpkin patch offering horror movies and Halloween milkshakes, both enriched and without alcohol. “[Others] took the batten-down approach,” he says. “We’ve taken the approach of reminding people there’s a place for you here.”

Nonetheless, Evo’s revenue fell 60% to just $20 million in 2020. Roberts stayed afloat only because of temporary forbearance from its bank and then $21 million from the federal government from a fund specifically for closed entertainment venues. “An absolute miracle,” he says. Between Roberts’ turmoil and Texas’ earlier easing of Covid restrictions, Evo fell back much faster than many of his film peers. In 2021, sales were barely 15% less than in 2019, and in the second quarter, the operation became profitable again. Roberts owns 60% of Evo, his two sisters the rest.

As the pandemic dragged on, a handful of chains announced permanent closures while others, like Austin-based Alamo Drafthouse (which first served booze to moviegoers a quarter of a year ago century), reorganized in bankruptcy. But Roberts has gone into expansion mode, picking up four dark Texas facilities, including Southlake Town Square in Dallas, which he is now turning into a flagship with seven dining rooms, heated recliners, laser tag, bumper cars, mini golf and an indoor ropes course. .

Funding $30 million in renovations on these four properties and funding additional expansion without adding to its bank debt of 40 million dollars, Roberts enlisted Bryan Sheffield, a 43-year-old centimillionaire. “I thought he was crazy at first,” admits Sheffield, a third generation tanker. But after months of discussions, he concluded that Roberts was onto something – the “mob business” would not only survive Covid, but also streaming and cheap 65-inch TVs. “We live in an experience economy. People crave experiences. They want to get together,’ says Roberts, this year’s member Forbes 30 Class under 30. As part of their deal, the Sheffield family office has committed up to $125 million to renovate and buy properties. Evo will receive a management fee of around 2.5% of revenue on properties financed by Sheffield and, if they overcome the hurdles to profitability, equity as well.

It’s perhaps no surprise that Sheffield and Roberts got along. Both started family businesses but branched out. Sheffield started Parsley Energy in 2008 by taking over the management of 109 of his grandfather’s old oil wells and securing the rights to drill from there. Last year Parsley was acquired by rival Pioneer Natural Resources (run by Sheffield’s father) for $4.5 billion in shares. Roberts, for his part, is a fourth-generation movie entrepreneur. Most notably, his maternal grandfather, Lee Roy Mitchell, founded Cinemark and, at 85, is still chairman with a 9% stake (currently worth $150 million) in the chain of 524 theaters and 5,897 screens. .

As a child, Roberts swept popcorn and filled pickle jars at a movie theater owned by his parents. This experience led him to hate pickles and crave a piece of the action. At 13, when grandfather Lee Roy gave him an award Big Buck Hunter Pro two-shot arcade game for Christmas, he moved it (with grandfather’s approval) to his parents’ theater and split the proceeds with them 50/50, using his share to buy movie games. additional arcade to earn money.

At 17, Roberts aimed to take entertainment resorts like Dave & Buster to the next level. While on a fishing trip, he asked Grandfather Lee Roy for financial support. The old man refused but agreed to help her polish her 50-page business plan. Grandfather’s connections and advice opened doors for Roberts. Despite this, eight banks and family offices turned him down before Capital One agreed to loan the teenager $15 million to buy 10 acres in Kyle, Texas, 22 miles south of Austin, and there build its first complex.

With funding provided, in 2014 Roberts dropped out of his freshman year at Texas State to build the 70,000-square-foot facility, featuring 11 screens, 14 bowling lanes, an arcade, and a full kitchen producing gourmet dishes – burgers, pizza, even teriyaki salmon. He quickly spent “every penny” of the $15 million and will soon be upgrading movie theater seats to $600 recliners with trays.

It’s all luxury with a purpose. Just as traditional movie theaters break even at the box office but make their money selling giant popcorn and soda, Evo uses its films as bait to sell higher-margin items to customers. Roberts redistributes more than 55% of box office revenue to studios, but retains almost all of the revenue from bowling, arcade games, popcorn, beer and margaritas, with gross profit margins of up to 90 %. To balance his own inexperience, Roberts has filled Evo’s management team with film and restaurant veterans, heeding, he says, grandfather’s admonition: “If you’re the smartest person in the room, you are in the wrong room. (In 2020, he also picked up Alamo Drafthouse’s longtime COO.)

Roberts’ timing was good. Blockbuster hits like jurassic world, Star Wars – The Last Jedi and Black Panther helped the U.S. box office gross more than $11 billion each year from 2015 to 2019. Roberts expanded and borrowed an additional $25 million from Capital One to build a 10-screen location in Schertz, 22 miles from San Antonio. It opened in 2019. That year, Avengers: Endgame became the second highest grossing film of all time and gave Evo its best earning weekend ever. In total, Evo booked $50 million from 2.5 million guests in 2019, an average of $20 per entry. Its top locations generated more than $25 per head with operating margins of 20%, above the industry average.

Then Covid-19 hit. The domestic box office plummeted to $2.1 billion in 2020, rebounding to $4.5 billion in 2021. Last December, Roberts saw his big event approach once again come to fruition when Evo sold 62,000 tickets for the opening weekend at Spider-Man: No Coming Home—even in the lead avengers in 2019. This being in Texas, despite the unleashed variant of Omicron, there were no requirements for vaccines, temperature checks or capacity limits.

On Christmas Eve, the Roberts-Sheffield partnership secured its first big deal, with Sheffield paying around $70 million for the nine-site Showbiz suburban chain, built by Roberts’ maternal uncle from 2015. boomburbs. . . . I love seeing a new high school being built,” Roberts says. The pair are looking for deals nationwide, initially only in Covid-relaxed Texas, Florida and Colorado.

“Nobody’s buying cinemas and music venues. But they’re not leaving,” Sheffield says. “When the closures are over, there will be serious pent-up demand.”

Now with 16 locations, 148 screens and 108 bowling lanes, Roberts expects more than $125 million in sales this year. And he’s still tweaking his pandemic-era model. “We are experimenting with pods,” he says. It’s a loveseat for two, with distance and privacy from other moviegoers, whether for Covid protection or other benefits.


MORE FORBESForget Meta’s sleek virtual reality. Maybe the Metaverse is fun, friendly, 8-bit – and already there
MORE FORBESDAOs aren’t a fad – they’re a platform
MORE FORBESBiden’s first year: an economic scorecard
MORE FORBESAmazon’s dedicated cloud customers must make a decision after outages: leave, stay or branch out?


Comments are closed.