Operating Drive-In Theaters in Retail Parking Lots

July 22, 2020
The once-popular drive-in movie theater is back in vogue as many U.S. movie theater chains remain closed due to the COVID-19 pandemic fallout. In those markets where theaters have reopened, the coronavirus fears may scare moviegoers away.

Now new pop-up drive-ins are taking advantage of the void by opening up in underused parking lots at shopping centers and regional malls. They’re giving entertainment-starved moviegoers the opportunity to get out of the house, catch a movie or virtual concert while still maintaining social distancing, and retail landlords the opportunity to make some money. For mall operators that boast vast parking lots, the hope is that these pop-up drive-ins will boost traffic and revenue at a time when many retailers are struggling to stay in business and pay rent.

For example, Kilburn Live, a division of entertainment company Kilburn Media, is leasing parking lot space from mall owner Brookfield Properties to open pop-up drive-ins at some of its centers. In the arrangement, Kilburn is a tenant of Brookfield’s, says Michelle Snyder, senior vice president and chief marketing officer for Brookfield Properties’ retail group. The company is paying rent to occupy the parking lot space.

“We’re a real estate company, so Kilburn is one of our tenants and they do all of the turnkey business,” Snyder says. “They handle the technology, the movies, and the ability to stream via Bluetooth in your car. They really arranged everything,”

Brookfield—like other mall operators—has been looking at ideas to utilize its malls’ parking lots during the pandemic.

“At the start of COVID, one of the things we talked about when we were shutting our centers [was that] we’re a real estate company and how do we leverage the rest of our real estate, which would include our parking lots,” Snyder notes.

That has included adding drive-thru farmer’s markets and COVID-19 testing sites at some locations. In addition, Chick-fil-A has opened drive-throughs in some of Brookfield’s centers’ parking lots.

Unusual times call for unusual measures

Kilburn’s Cinema Pop-Ups is a business unit that didn’t even exist a few months ago, says the company’s CEO and partner Mark Manuel. COVID-19 changed everything. Before the pandemic, the company specialized in live entertainment for brands like Dr. Seuss and Peanuts.

“As early as February, we kind of sensed we might be in trouble,” Manuel says. “There might be a pause in our normal business. We pivoted and looked around and said what are we good at?”

For a touring company, doing pop-ups and drive-in movie theaters was the “obvious answer.” Kilburn targeted mall parking lots.

“We knew we wanted to work with the malls because you need large parking areas,” Manuel notes. “We liked the fact that malls had restaurants and shopping, so there were other things to do besides watch a movie.”

So far, three Cinema Pop-Ups have opened at Brookfield centers in Denver, Dallas and Minneapolis, with negotiations underway for pop-ups in Houston and Woodbridge, N.J.

Kilburn also recently opened a pop-up drive-in at The Star in Frisco retail center at the Dallas Cowboys headquarters complex, as well as a handful of other locations.

Kilburn has relationships with three or four other large mall owners in addition to Brookfield, according to Manuel, and more locations will be announced soon. Ninety percent of Kilburn’s partners are mall operators.

“We’re at eight locations now. I think we’ll be at 20 by early August and hope to get to 32 sooner or later,” Manuel notes.

Each Cinema Pop-Up offers ample and safe car spacing, state-of-the-art audio streams, and an app-based platform to allow for reduced human interaction. Cost is $25 per carload.

The number of parking spaces at the locations that are open varies from 140 to 280, according to Manuel. “That’s about 100,000 sq. ft.. Sometimes we need 125,000 sq. ft.,” he says.

In general, the terms of the contracts are 60 days to 120 days. Kilburn brings the expertise of the drive-in and contacts to licensed films, while the mall owners provide the real estate and restroom access.

Mall owners know that if things change quickly with COVID-19, they can always go to Kilburn because the company is flexible, Manuel says. “This was designed to be short term,” he notes. The pop-ups can be shut down in 30 days.

Kilburn staffs the drive-ins either with people who the malls laid off or hires new local people.

Pandemic calls for creativity

Manuel gives mall operators credit for their initiatives during the health crisis. “They really are trying to do all they can to help their tenants,” he notes. “They’re trying to find ways to drive traffic to help their current tenants and [pop-up drive-ins] are doing a great job of that.”

The drive-ins are helping malls’ food-and-beverage tenants, in particular. Brookfield is encouraging moviegoers to go to the mall early, get a choice spot for the movie, and then head into the mall and grab dinner before the movie begins.

“If consumers aren’t comfortable entering the center, they can order food and have it curbside delivered,” Snyder says.

In addition, Brookfield set up outdoor, centralized walk-up counters for people to order from the mall’s food court while still maintaining social distancing. Brookfield has also had discussions with Kilburn about restaurant tenants setting up tents in the parking lot.

“We’re working as much as we can with our tenants to really help them drive their sales and their success,” Snyder notes.

Kilburn developed a smartphone app that would allow moviegoers to order food from on-site concession stands in the parking lot or from the mall’s restaurants and have the food delivered to the car’s stall number. “We’re slowly integrating that, so you can have a cheeseburger delivered from the Cheesecake Factory,” Manuel says.

How long will pop-up theaters be around? “That’s the million-dollar question,” Manuel says. “Unfortunately, I think this persists through the rest of 2020. I think a lot of people are going to be hesitant to go into confined, indoor spaces any time soon.”

Many consumers may remain cautious about returning to malls, movie theaters, restaurants and other entertainment venues when they reopen due to the risk of coronavirus. Outdoor venues like drive-in theaters make going out appear safer.

Walmart partners with Tribeca to open drive-ins

In another drive-in movie strategy, Walmart will transform 160 of its U.S. store parking lots into contact-free, drive-in movie theaters starting in August. The giant retailer is partnering with Tribeca Enterprises, the New York-based media company co-founded by Robert De Niro.

Locations and movie titles haven’t yet been announced, but will be revealed later on a new specially dedicated website. The movies will run through October and include 320 showings. Admission will be free. Customers will be able to pick up picnic items and snacks curbside at Walmart stores.

Reaction to pop-up drive-ins

Overall, it’s a good idea, says Ricardo Rubi, retail marketing specialist and partner at New York consulting firm Simon-Kucher & Partners. “I am frankly surprised that AMC and others have not jumped onto this bandwagon more aggressively,” he notes.

However, Rubi points out several factors to make the most out of the initiative, including really emphasizing the safety component.

“Moviegoers that do care about safety may be feeling alienated by some of the stances that some theater chains have taken around masks,” Rubi says. “It should be fairly easy to capture this group of consumers. The ‘get the experience, not the virus’ is highly likely to resonate here.”

Following backlash, AMC Entertainment recently changed its position about not requiring masks inside its theaters and will now require moviegoers to wear masks.

Rubi also says “doing drive-ins like it’s 2020 rather than 1960” will be important.

“Creating an omni-channel experience in the drive-in could be a big driver of success,” he says. If drive-ins will boost incremental trips to the mall, the mall owners should make sure that as much as possible is extracted from that trip, he advises.

Mall owners should provide incentives for people to not only consume food and beverage but also buy merchandise. That could include having people pick up merchandise that they bought online at the mall during this trip. Our encouraging consumers to go in the mall and not just to the parking lot, Rubi adds. Think movie discount with a purchase, he suggests.

And “there’s no need to give this away,” Rubi adds. “Consumers will compare this to tickets at a movie theater, because it is the closest experience they may be able to relate this to.”

Of course, consumers with a bleak financial outlook are not likely to buy drive-in movie tickets, even at low prices, he notes. “But consumers with a more secure financial outlook that have been saving on their family entertainment budgets these last months will be willing to pay for the experience.”

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