26 Dec Looking Forward…
Matt Silvers, Senior Vice President of Real Estate and Brand Development and Allan Reagan, CEO
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“You want to know what I see in your future? Possibility.”
- The Ancient One, Dr. Strange
The last quarterly newsletter of the year typically recounts the Company’s accomplishments in the past 12 months, brags a bit about how well we are doing and extols the virtues of our growing team. No question 2016 was a year of huge progress on many fronts. Tangible results included our successful new store opening in Albuquerque and impressive progress in growing total sales volume and EBITDA profitability, all while increasing the talent level and bench depth of our unit teams. We achieved critical mass with 33 screens operating by year-end, and hit a positive inflection point on the curve of continued growth and scale. Great stuff indeed, and strong testaments to both the drive and determination of our team and the extent to which our brand of dine-in cinema resonates with guests.
Flix Brewhouse Albuquerque
While subjective in some aspects, our positive inflection point is evidenced by how capable we’ve become in preparing ourselves for the future. Aggressive growth goals were set, with fast moving time lines. A long pipeline of new real estate opportunities now exists, our seasoned corporate support team is leveraging their collective experience to drive results in all kinds of areas, and at the unit level we’ve made big strides in attracting and nurturing talented and dedicated operators. Simply put, possibility abounds – thus the quote from November’s biggest blockbuster as the theme for this article.
The cornerstone of transforming possibility to reality above and beyond same store EBITDA growth is the addition of new units. Quietly executing our real estate growth strategy, we’re developing an intelligent portfolio of prospective Flix Brewhouse openings through 2019. Markets throughout the Southwest, Midwest and Southeast regions of the United States are well represented and projections for specifically identified locations are into double digits. Near term, we continue to work toward an early autumn 2017 opening for our suburban DFW location and are pushing hard to open a new store in the Phoenix metro market before the 2017 holiday season. Our previously announced Madison, WI location is slotted for a spring 2018 projected opening.
In hospitality portfolio management, it’s unwise to take for granted big cash flow generators, and our biggest is the unit that put Flix Brewhouse on the dine-in cinema map — Round Rock, Texas. We expanded Round Rock from six to nine screens in late 2015 and in early 2017 will execute a thorough refresh of the original footprint, which should be ready to roll before what looks to be another robust summer season.
As we stretch toward the possible in 2017, having the “right” capital partners is critical. At the moment both landlord-provided real estate financing and bank debt is reasonably plentiful, provided we are supported by appropriate equity levels. A rough rule of thumb is about $3.0 million of equity per new Flix unit, some of which is internally generated. We’ve been working on identifying institutional quality equity partners, and with solid 2016 financial results and above-average unit economics to report in a few weeks, we’re guardedly optimistic. As we close the books on a 2016 of increased learning and earning, know that the entire Flix team is inspired to continue creating and realizing realms of innovative future possibilities for our guests, fellow team members and business partners.
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