For the first few years I operated this theatre, I stayed with the standard wisdom of old-time Drive In owners (the ‘If-it-ain’t-broke-don’t-fix-it’ crowd): charge less for admission than indoor theatres and allow people to bring in their own food, drink, and alcohol.  And soon I was filling the theatre with cars, but being an experienced businessman I began to notice a few interesting things.  First, I was getting a lot of problems from people who had been drinking; by this I mean vandalism of theatre property, obnoxious behavior towards families and other reasonable people, fights breaking out, and the like.  Of course, when this occurred I confronted these people, kicked them out, and got the sheriff’s deputies to help out in the more hard cases.  But by the time I accomplished that, the damage had already been done; customers who didn’t care to be subjected to the boorish behavior of the drunken and inconsiderate said they would never come back to my theatre because of the experience they had.  I clearly remember a young woman I tried to calm down (unsuccessfully), who had been verbally abused and threatened by a drunken fool in the parking space next to her who objected when she complained to him for loudly ranting and carrying on.  I kicked this guy and his family out (he subsequently trashed me and my theatre on the internet), but I knew I had forever lost this woman as a customer.

The next thing I noticed was that there was a large amount of trash being left on the field and almost all of it were items that were brought in from outside the theatre (e.g McDonalds bags, watermelon rinds, and the like).  Spending over an hour picking up trash on a hot, humid summer’s day can get to be real irritating.

Finally, although I was getting a lot of cars on the field, I wasn’t making any money.  In fact, I was starting to lose money (note: my business model calls for adequate staffing, paying a good wage, properly reporting and paying all licensing fees and taxes, and putting money into maintenance and theatre upgrades).  I could have made money if I had just milked this place and let it fall apart (unfortunately, like some Drive In theatres I have visited), but I don’t choose to run a business that way.

The answer was simple, to me at least: I had to stop letting people bring alcohol on the lot and, given the economics of the movie theatre business (markup on concession sales being greater than markup on ticket sales) I had to insist that customers buy their food and drink items at our concession stand.  Indoor theatres figured this out long ago and have these policies in place, Drive In theatres have been slower to change.  When I reopened this place in 2000, some Drive Ins had started to institute restrictive carryin policies, but not many.

So prior to the 2004 season, I announced my new No Carryin food/drink/alcohol policy in my newsletter, on my web site, on my phone recordings, and in my newspaper ads.  The reaction was quite vehement and I received quite a few sarcastic, rude, and threatening emails.  The first year, we tried being nice about it.  When we saw someone bringing in their own food, drink, and even alcohol, we politely reminded them of our new policy and asked them to honor that policy in the future.  These gentle reminders became very time consuming because just about everybody continued to bring in their own food and drink.  As the season wore on, we were still dealing with alcohol-fueled problems and our field still looked like a trash dump on the weekends.  I also started recognizing people we had reminded of this policy coming back in, still bringing their carryins.  When I asked them why, they either denied I had ever said anything to them, or (the more honest ones) made statements along the lines of: if I wasn’t going to enforce the policy, then they were going to keep bringing in whatever they wanted; why should they honor the policy if others weren’t?

Good point.  OK, so I learned that moral suasion wasn’t working.  The next season, we confiscated coolers and alcohol, put them in the projection booth and let people pick them up at the end of the evening.  People didn’t like this and my rampmen and I went through a considerable amount of verbal abuse.  We were finding so many carryins, that the booth was becoming dangerously overfilled, so we shifted coolers out to the box office area, where people then insisted that we guarantee the safety of the items they brought in violation of our business policies (we refused to do so).  And even then we were still catching repeat offenders and I was losing rampmen to burnout from the nasty treatment they were receiving.

Enough.  I finally realized that the only way this was going to work was to strictly enforce the policies and institute some penalties for non-compliance.  Anyone we caught with alcohol on the field, no matter how little, was ejected from the theatre grounds without a refund.  Anyone caught with carryin food and/or drink was given an option to donate their items to the Jefferson Food Pantry or be ejected from the theatre without a refund.  In either case we would accept no excuses and make no exceptions (because everyone we caught had an excuse and thought that we should make an exception for them).  We further publicized these policies through very blunt signage near the box office and very specific language on our web site.  For the next two seasons, we even verbally reminded every vehicle that entered theatre grounds of our policies and asked the driver point blank if they had any carry in food, drink or alcohol in their vehicle.

One of the most discouraging things I encountered in running a small business is the number of people who will shamelessly lie to you, often in front of their own children.  I even had a woman we caught with a cooler rage at me because (in her viewpoint) I had forced her to lie in front of her children at the box office.  I’m not really surprised by this, but it’s hard when you have to deal with these types of people on an almost nightly basis.  Eventually I realized that verbally reminding people of our policies and directly asking them if they had carry-ins was a waste of time.  The vast majority of people who were going to ignore our business policies were going to lie to us anyway.  Now we only verbally remind people of our No Carryin policy if it’s obvious they are coming here for the first time (as an added courtesy; our signage is quite clear and blunt).

When we first announced our No Carryin policies, some predicted we would soon be out of business because, of course, no one would come to my theatre if they couldn’t bring in their own food/drink/alcohol.  My response to these naysayers was:  the current situation was unsustainable; if this theatre was going to be put on firm ground, these changes had to be made and; if customers weren’t going to support this theatre, I wanted to find that out now rather than after investing significant monies in digital cinema and other capital upgrades.  So I bit the bullet and went ahead with the policy changes and what happened?  Ticket sales decreased by only 3 percent that year (and continued growing in subsequent years), while our concession sales doubled (and have also continued to increase).  Trash on the field went down to almost nothing, while vandalism and other drunken behavior almost completely disappeared.  More importantly, the theatre was again profitable.  This enabled me to convert to digital projection (an expensive proposition; see my essay on Crossing the Digital Rubicon) last year, as well as continue to invest in other important upgrades.  Instituting and enforcing those policies kept this theatre open.

I mentioned earlier that other Drive Ins have begun to enact restrictive carryin rules, but from my experience with many of them, they don’t enforce their policies.  This doesn’t surprise me because most restaurant and entertainment businesses, particularly chain and corporate owned operations, also don’t enforce their policies.  They’re afraid of offending anyone because they know these opprobrious individuals will create a scene in front of other customers and trash their business on the internet.  Giving in to these people is the path of least resistance.  And believe me, if these abusive people don’t get their way, they often become extremely nasty and vindictive.  Dealing with these types can wear on you; it’s easy to see why most business owners might elect to avoid confrontation.

But avoiding confrontation only further encourages abusive behavior.  I still get people coming onto my lot who completely ignore my business policies and are then shocked that I actually enforce them: that I won’t accept their excuses or make an exception for them, like other places they’ve been to.

So why do I enforce my policies instead of ignoring violators as most businesses do?  I certainly don’t enjoy getting yelled at and otherwise being treated like a jerk by these people.  I strictly enforce my business polices for two reasons: (1). Most of my customers respect my policies, understand the rationale behind them, and honor them.  These are my best customers; these are the people who are supporting my business.  Unfortunately, they are also subsidizing those who sneak in their own food and drink.  I don’t think this is right or fair.  I don’t think that people who have no respect for my business and property should get a better deal than those who do.  So I enforce my policies out of respect for my good customers.  (2)  This Drive In isn’t just another business to me.  I’ve spent a considerable amount of money, time and effort to make this a special place.  I take a lot of pride in what I’ve done with this theatre and when I see someone violating my business policies and verbally abusing my staff, I take it personally.  Unlike chain and corporate owned operations, I don’t want to serve all customers.  If someone doesn’t have any respect for my business and property, then I don’t want them as a customer; I don’t want them on the lot.

Isocrates once famously observed that “Democracy destroys itself because….it teaches its citizens to consider audacity as a right, lawlessness as a freedom, abrasive speech as equality, and anarchy as progress.”  Unfortunately, I see this truism played out almost every night on the field.  But whereas this ancient Athenian orator’s comments might well apply to modern day Greece, I think it only applies to the minority of our society.  And on that note, I want to close this essay by thanking all of the nice, honest, appreciative, and sane customers who come to my theatre every year.  You are the ones I enjoy serving and I’m only sorry that I can’t spend more time talking with you.  You know who you are.

Another factor to my early closing decision was that there was a considerable amount of deferred maintenance work that I wanted to get accomplished before the snows fly.  During the season, just running this theatre and taking care of emergencies is a full time, 7-day-a-week, 10-hour-a-day job.  Maintenance and upgrade work must be performed in the off-season.  So, for example, I’m currently in the process of refurbishing the deck on the back of the bar, repairing and/or replacing damaged/nonworking speaker poles and ramp signs, getting on top of my landscaping, brewing beers to lager over the winter in preparation for the 2012 season, cleaning and repairing my speakers, upgrading my security camera system, experimenting and working on my digital projection system (note; I’m looking to experiment with some alternate programming next year), repairing broken sections of my fence, and other items to keep making this the Drive In Theatre I want it to be.

And finally, this has been an unusually trying year and I just wanted it to end and start up anew next Spring.  The conversion to digital was not without its problems, especially in the first half of the season.  I lost an entire weekend in the Spring due to equipment failure, had problems with the hard drives in my server (causing weird freezes on the screen), and suffered a premature lamphouse failure one weekend night.  Most customers were nice and understanding about this, but I did receive some verbal and written abuse from a not-so-silent minority.  And whereas I understand this is just part of running any business that deals with the public, sometimes my patience just starts to run out.  Adding to that was the added financial burden of converting to digital being paired with one of the worst business years I’ve ever had here (not just me, many other Drive In owners I know also had a bad year).  Weather in 2011 was the perfect storm for Drive Ins: cold and rainy every weekend in the Spring through June followed by one of the hottest, most humid Julys on record.  A freak hailstorm that caused $1,700 worth of damage to my road and marquee signs was just icing on the cake.  I also think that the weak economy greatly affected attendance this season: people didn’t stop going out to the movies, but I don’t think they went out as often as before (just my anecdotal impression).

But we’re not dead yet.  I’m optimistic about the future of the Highway 18 Outdoor Theatre and am looking forward to next Spring.  My startup expenses of converting to digital are largely behind me; as I’ve gained more experience in operating and maintaining this new digital/black magic technology (I’ll also be attending the factory, advanced service technician’s course this winter which should help), equipment failures (and associated lost shows and revenue) should greatly decline; I’m an experienced businessman so I know how to size my business expenses to meet lower ticket sales from possible continued bad weather, weak economy, and/or lousy product out of Hollywood; as more Drive Ins go out of business because they can’t afford the switch to digital, the remaining, surviving outdoor venues will become even more of a premier market niche; alternate programming may offer additional sources of revenue, especially in the movie-dead months of August and September (I’m working with Wisconsin Public TV on something for 2013, stay tuned); and I’m contemplating turning the greatest irritant in running a small business (dealing with those who have no respect for your business and property) into a positive by filming people caught violating our business policies and pitching the most entertaining confrontations as a reality TV show.  I say this last only half-jokingly and you may laugh, but I got the idea for this by watching a cable TV station that had a reality show about some enterprising Kentucky backwoodsmen who were charging 20-something city yuppies big bucks to lead them into a lake where they could experience the thrill of having their feet and lower legs gummed and partially swallowed by giant catfish.  Having seen this, I don’t think my Drive In reality show is so outlandish.

So in summary, despite some setbacks and difficult times this year, we’re still solvent, we’re still a going operation, I’ve got the support of my wife and many good customers, and I’m still having fun running this place.  As Arnold Swartzennegger famously said in “The Terminator”: I’ll be back.

 Were it only that simple.  My most controversial business policy, implemented eight years ago and still causing me aggravation (although each year is getting better), was the decision not to allow customers to bring in their own food and drink (and peripherally the zero-tolerance policy of bringing in alcohol).

 First a little background.  Fifty years ago, in the heyday of the outdoor theatre, there were over 4,000 Drive Ins throughout the country.  Drive Ins then were widely popular as a place for families to enjoy cheap entertainment: ticket prices were generally lower than indoor theatres and you could bring in a picnic basket full of goodies (indoor theatres also commonly had double and triple features in those days).  But Drive Ins did not get first run films.  Oh, there were some very large-scale urban theatres, 1,200 to 1,800 car and larger, that got first run, but generally Drive Ins would get mainstream movies months after release.  There was a time when most Drive Ins couldn’t get mainstream movies at all, and a group of film studios arose (American International Pictures for example) that cranked out cheap films just for the Drive Ins.  These were generally cheesy horror films, ridiculous westerns, biker/prison flicks, soft-core porn and the like.  Movies with titles like ‘Attack of the Crab Monsters’, ‘Death Race 2000’, ‘Biker Chicks from Hell’, ‘I Spit on your Grave’, and let’s not forget that all-time Drive In classic: ‘The Cheerleaders’.  These movies were cheap to make and cheap to license.  Drive In owners could often get these films for a low flat rate (e.g. $50 a week) instead of the normal percentage of box office receipts that is the standard to this day.  In those circumstances, owners could make money on the box office; the more cars they could get on the lot, the better.  Concessions were an afterthought.

 Today it’s a different story.  People don’t want to come out to see ‘Biker Chicks from Hell’.  They want to see first run movies when they are first released.  American International Pictures and all of those other studios that catered to Drive Ins are long gone, as are about 90 percent of the Drive Ins.  The few Drive Ins still left have to show first run movies if they want to attract customers and to get those movies they have to pay very stiff licensing fees to the studios.  So, Drive In theatre owners don’t make much margin off of their ticket sales anymore; not enough to stay in business.  Concessions now are the primary means of paying the bills.

Most Drive Ins are gone, reduced from over 4,000 in the 1950′s to less than 400 today and the numbers continue to decline.  This Drive In closed in the mid-1990s and languished as a deteriorating graveyard site for several years.  No one stepped forward to operate it until I bought it in 1999.  It then took me a full year and hundreds of thousands of dollars to get it capable of showing movies in 2000.

 This discussion will continue with Part 2.

 In the past few years, the business model for Drive Ins has been changing in two important ways.  First, the studios have been shifting forward windows for releasing their summer blockbuster/popular movies.  Instead of good product available through August, high grossing films are being released from May through July (actually, now it’s April through early July).  Second, theatres, with the urging (pushing?) of the film studios, are rapidly shifting over to digital projection systems as the primary means of showing movies.

 To the first point, Wisconsin Drive Ins can’t take full advantage of releases in April and May.  We can’t really open much before May 1^st without risking snowstorms and other forms of nasty weather that deters patrons from coming out.  Even in May, school is still in session and the crowds don’t really pick up until Memorial Day weekend.  But now there are no good movies being release in the late July and August time frames.  This means that instead of 14 weeks of solid business, we now only get about 6-8 weeks of solid business followed by 6-8 weeks of slow business.  Of course, film studios don’t consult me on the rational for their release schedule decisions, although I’ve heard theories that the studios want their popular movies to be available in DVD during the Christmas season (which now starts in early November).  To accomplish this and still maintain a 4 to 6 month window (time from theatrical release to DVD release) that the theatres insist upon, they have to release their more profitable films earlier in the season.  This all makes sense for the film studios, but it hurts the Drive Ins.

 The first point is further exacerbated by the second point.  Before digital cinema, movies could only be shown in theatres using 35MM film (there were some 16MM and 70MM venues many years ago, now all gone).  Because of economies of scale, 35MM prints of movies used to cost anywhere from $800 to $1,500 per copy (cost borne by the studios) depending on who you believe.  35MM film is also bulky and heavy, so there is considerable cost to store and transport these prints (also mostly borne by the studios).  Digital movies, on the other hand, can be put onto a small hard drive (in the future even be downloaded from satellite) at very little cost and there are no storage costs and minimal transportation costs.  You can see why the film studios would like to get rid of 35MM and get all theatres on digital; they stand to save a huge amount of money.

 But digital projectors (basically large computers with flamethrowers strapped on the front end) are expensive and theatres have been reluctant to upgrade.  But through a combination of incentives and other factors, the movie theatre industry is switching over.  Roughly half of the screens in the U.S. are now digital and conversions are taking place at the rate of about 1,000 a month.  By the end of 2012, most screens will be running digital.  Overseas markets are also rapidly converting.

 But not all screens.  Roughly 95 percent of the screens in this country are owned by major theatre corporations who have access to capital markets and therefore the means to finance the conversion to digital (roughly $75,000 to $100,000 per screen depending on circumstances).  The other 5 % are made up of small independents, like myself, who do not have the same financial resources or clout as the big boys.

 So with more and more screens going digital, the studios don’t have to make up as many prints.  With fewer prints being made, economies of scale go away and the cost per print rises.  In a couple of years, I’ve heard that the cost per print could be a high as $5,000.  This creates a situation whereby the studios are going to enact stiffer terms as conditions for making up a 35MM print for someone.  Aside from percentage of box office receipt licensing fees, which are already quite high, the studios have begun requiring longer hold periods for films.  This is no problem for a multiplex that can hold a film 2 months and keep shifting it to smaller auditoriums as the crowd diminishes.  It’s a big problem for a single screen Drive In with a short season.  In the past I could turn over first run films every two weeks.  Now I’m increasingly getting three week minimum run demands; can 4 week minimum runs be far behind?  Getting second features is more difficult too.

 Finally, studios are increasingly cutting back on print counts for movies released in the second half of the summer.  They are not as confident that these movies will earn them a return on their money and they want to save on costs (my presumption).  But whatever the cause, when I go to book a movie during this period, more and more I’m being told: “Sorry, no prints available.”

 Now, there are some old-time independent theatre owners who insist that this digital is all BS and that film will always be around.  Maybe they’re right, but I don’t think so.  I think that in two years, film will be pretty much gone and either a theatre pays to switch to digital or go out of business.  Many small independent operators can’t afford digital equipment or their theatres don’t generate enough profit to justify the investment.  I think, and am afraid, that half of the Drive Ins will be out of business in five years.

 So it was gut check time for me: do I invest almost $100,000 more in my Drive In or do I just milk the business for the next few years and shut down?  I could have probably waited another year or two before being forced to make a decision, but I’m being slowly strangled to death.  If I decide to convert to digital, why wait?  Will I get more business with digital?  Doubtful, but my business shouldn’t decline over time as it would if I stuck with 35MM.  Will I save on expenses?  No, in fact maintenance costs will be higher than with 35M.  Is this a good business decision?  Only time will tell.  Bottom line: I’ve already invested too much time, energy, and money in this theatre to just let it die.  My attitude is: ‘in for dime, in for a dollar’.

 So I crossed the Rubicon; I went to the bank and dug further into my meager savings, spent a week in California undergoing Installation and Basic Maintenance training, and signed the purchase order last week.  Equipment delivery is set for April 15^th and hopefully I’ll get this whole thing up, running, and figured out by our opening date of April 29^th.

 As the late, great Jackie Gleason would say: “And away we go.”