Dinner and a movie

DVDs please? If you’ve ever even considered offering movies with your pizza, then this is the article for you.

While researching this article, I found that movie rentals require a large initial investment. If that’s not what you want to hear, then take a further look into the article—there are more economical options that might appeal to you.

Offering Video Rentals

Scott Thomas, owner of two Pizzas by Marchelloni in New Castle, Pennsylvania has offered videos with his pizza stores for the past two years. Since there are two Scotts in this article, to avoid confusion they will be referred to them by their last name. “I thought it would be a good addition to my sales,” Thomas said. “People usually like pizza and a movie, so I thought, why not give them both?”

Thomas gained his initial movie collection by buying used copies of movies from a video store. From there, he contacted VPD (Video Products Distribution) to buy new releases as they came out. “New releases have to be ordered six to eight weeks ahead of time from our distributor,” Thomas told me. “VPD sends out color catalogs each month with the upcoming new releases and you order what you want.”

New Movie Costs

The prices for buying and selling VHS can range in price from $70-$75 for the first one with additional copies of the movie being cheaper. When a movie is newly released to VHS, it goes first to the rental store and later hits the shelves to be sold. You pay the extra money to be able to offer the video before it is widely available to the public. Occasionally, the distributors decide to sell a movie on VHS at a “buy-through” price. A buy-through price is around $20 and is only used for very popular movies. All DVDs are sold at a buy-through price of $15 to $20. DVDs hit the shelves at the same time you get them because, according to Thomas, the distributors are trying to phase out VHS.

Rental Rates

Thomas rents out his movies for two days at $2.50 for a new release and $1 for an old release. He cautions that you only have about three weeks to earn your money back before a new release is “done” and becomes “stale.” For late fees, he charges the same amount as the original rental. If someone just doesn’t ever return the movie, he takes legal action. “I can’t not go after them,” Thomas said. “If I let one person have a movie, then others will think it’s no big deal to keep the movies as well.”

Delivering Movies     

Thomas offers to deliver movies along with his pizzas. “If (the customer) has an account, we mark the rental at the store. If they don’t have an account, then we take the necessary paperwork and fill it out at the door. All the pizza deliverers need is a picture ID.” Part of the problem with offering the movie rentals via phone is the time someone has to spend checking for a particular movie and discussing what movies are in stock. “If I were renting out enough movies to hire someone just for that job, then this wouldn’t be such a problem,” Thomas said. “I tried sending out lists with the names of the thousand or so rentals that we offer to our customers. It didn’t work—they promptly lost it.”

His paperwork for setting up an account is based on what you might see at a large video chain. “Just pay attention to the form that you sign at the video store,” Thomas said. “You don’t want to reinvent the wheel. See what they say about legal actions being taken on late fees and unreturned movies. See what their policies are on credit and payments.” He also doesn’t have a POS system to run the video side of production. “We just use a filing system and haven’t had any problems with it.”

Think Before You Leap

Above everything else, Thomas recommends that you seriously think about the effort that goes into offering videos. “Offering movies is a lot of work,” Thomas said. “Before you do this, think about how much time you’re going to have to put into it to make it work—actually renting the movie, phone calls, chasing customers that don’t return movies, dealing with late fees and setting up and cleaning racks are all just a small part of maintaining the movies. You have to figure out your rental fee, your break even point and then decide how much money you consider a nice profit and worth your time.”

Thomas will soon stop offering movies in his pizzeria. “I haven’t lost any money by offering movies, but I haven’t really made enough to make the time I’ve spent on this project worthwhile,” Thomas said. “I can offer Take-and-Bake for more money and it’s making pizza, which is what we’re set up to do in the first place.” He also said that there are several problems with offering videos. “First is a size issue—actual video stores have the square footage to display their movies—a pizza store might not. In fact, if you do, I’d recommend making it a sit-down area in your restaurant. You’d get more return from it. Second is the time issue—you’ll spend a lot of time out and around the videos—there’s always something to be done, be it straightening, cleaning or organizing. Third, DVDs are so easily damaged that you may not get all of your money back from it before it’s ruined.”

Another Case Study

Laurie Averill, a small town owner of a store named Me Too Pizza and Videos in Culbertson, Montana, both sells pizza and rents out videos. “We started out as a video store and decided to offer pizza,” Laurie laughs. “Now, we sell more pizza than rent DVDs.” Me Too Pizza has a small sit down area but also specializes in Take and Bake—Laurie does no deliveries.

“I try to offer all of the new releases,” Laurie said. “Our town is small enough that I only have to get one copy of each movie.” Since the town is so small (Culbertson’s population is around 800), Laurie buys all of her movies from places like Best Buy or Wal-Mart.

Laurie said that DVDs are definitely the way to go as opposed to renting out VHS. “We still do both, but even in the last six months or so, we’ve seen drastic increases in the numbers of people renting DVDs while the number of people renting VHS are decreasing.”

Even though initially cheaper than VHS, one thing that eats into her profits is disc replacement. “People just don’t take care of DVD.” She says that she’s looking into buying a disc-repair machine that would enable her to repair some of the damaged discs at the store rather than buying new ones.

She said that they used to rent out VCR’s and DVD players too, but have stopped because the cost of repairing the machines was too great. “If they’re going to watch a movie, they’ll find something to play it in on.”

Disposable DVDs!?

One option soon to be available to pizzeria owners is disposable DVDs—yup—disposable. Buena Vista Home Video will shortly roll out with disposable DVDs, called EZ-Ds. The DVDs are compatible with most DVD players and allow the viewer to watch the movie as many times as they want within a 48-hour time span. The discs come vacuum-sealed to you and you sell it to your customer. Once opened, the viewer has 48 hours in which to watch the movie before it “self-destructs.”

The self-destruction is a result of an oxidation process that starts the second the disc is opened. It changes the color of the surface of the disc (from clear to black), rendering the disc unplayable after the 48 hours is up. This makes the trip to return the video unnecessary and ensures that you, the owner, don’t lose money on unreturned rentals.

“The real benefit to EZ-D is that without the costly expense of a rental infrastructure, pizza store owners can immediately participate in the movie rental business,” said Dan Silverberg, director of new business development at BVHE. “Offering EZ-Ds to a call-in customer is a natural extension of enjoying a pizza at home, and a nice way for pizza retailers to add value to the consumer experience.”

You pay under $5 for the initial disk and then set your own retail price. The disposable disc is as inexpensive as it is because it only contains the movie—no previews, theatrical trailers or special features on the DVDs. The movies that are available on EZ-D include titles from Disney, Mirimax, Touchstone and Buena Vista Home Entertainment, which accounts for some 60 percent of the movie industry.

For the environmentally conscious, the used DVDs can be recycled. The discs can be sent to Green Disk Services for recycling by you or your customer. As part of a recycling incentive, EZ-D and Green Disk Services offer to give you or your customer one new EZ-D for every six used ones that are sent for recycling. To encourage the idea of a disposable DVD with your customers, you could offer to take a small amount of money (like $1) off the next order if the customer returns a used disc with the delivery person to be recycled.

What if you feel that actually renting out movies isn’t for you? Don’t worry—the following ideas are an alternative to the hassle of renting.

Have a Cross-Promotion with a Local Video Store

At least that’s what Scott Anthony, owner of Fox’s Pizza Den in Punxsutawney, Pennsylvania has found successful. “We trade coupons with a local video store called Movie Castle, Inc. about every other month,” Anthony said.

To get the deal started, Anthony warns that large movie franchises probably won’t want to do anything cross-promotional, but the local stores will be more open to the idea. “Movie Castle was just about to open up,” Anthony said. “The owner liked the idea a lot—it got his name out to the community right before he opened and let both of us take advantage of each other’s customers.”

Anthony has done all sorts of promotions with Movie Castle. He sends movie coupons out as box toppers with all of his pizzas. He’s got an upcoming four-month promotion where he offers a large pepperoni pizza, two-liter drink and free rental from Movie Castle for $14.99.

“The bundle packages are best for me,” Budd Siders, the owner of Movie Castle, Inc., said. “Especially around any holidays. The bundles might include popcorn, drinks, a few movie rentals and a coupon for a pizza. No one wants to be out on the road during a holiday, so they rent several movies and might buy one of the bundle deals.” Budd also offers to call in a customer's pizza order from the video store.

With all of these cross-promotions, Anthony ends up with lots of coupons for free movie rentals. “I have more free movie rentals than I could ever hope to use,” Anthony laughs. “So, I use them as employee incentives or as extra prizes if I’m having some kind of drawing or promotion.”

Give Away Movies in a Deal

A Canadian-based regional chain, Pizza 73, goes one step further than offering rentals. Once a year, for eight to ten weeks, they give away a movie and a bag of popcorn with the purchase of two 12-inch pizzas. “We tried working out a deal with some of the local chain video stores to offer a free movie rental, but no one wanted to give anything away,” said Dale Moran, vice president of Pizza 73. “They were more interested in offers such as a two-for-one deal with us. Then we changed our focus from renting to giving away movies.”

They contacted several studios and finally worked out a deal with two of them. They purchase, up front, a certain number of movies on VHS for a total of five titles. Dale says that this worked for them because they were able to purchase a lot of movies. An independent operator may not be able or willing to purchase enough movies to make it worthwhile for the studio. Over the seven years that Pizza 73 has offered this promotion, they give away an average of 50,000 movies per promotion. “We’ve given away as few as 44,000 movies and as much as 62,000—the outcome just varies,” Dale said.

Papa John's has also dabbled in the "free movie" business. Karen Sherman, vice president of corporate communications at Papa John's, discussed their offer. Papa John's is offering a special of one free movie with the purchase of a large regularly priced pizza. They wanted to offer the videos as a way to add value to their pizzas by providing their customers with something they really wanted. "We looked at some movies that were family and kid-friendly, were well received by audiences and that we felt customers would be interested in," Karen said.

Papa John's is offering the videos both to phone-in customers and online. "Our online ordering business has been increasing or staying steady for quite some time and we have seen a respectable number of orders come through for the DVD promotion through online ordering."

Sell DVDs online

Movie affiliate programs allow you to make a little bit of extra money while not having the physical mess that goes with rentals. One PMQ reader, Wanda Romano, owner of Romano’s Italian Restaurant in Steeleville, Illinois, recently signed up with a service called dvdMonster. The marketing concept behind affiliate programs is to pay the individual a commission for every DVD that a customer buys. This is tracked through an online site (in Wanda’s case, the site is www.dvdmonster.com/moviemart) that requires customers to enter the “name” and code of the person who referred them.

Wanda advertises the online site in her store and sends information out with all of her take-out orders and deliveries. “I print out two ads on a page and cut it in half to hand out to my customers,” Wanda said. The service offers 30,000 movie titles and will soon be able to offer video games. The initial price of $189.95 bought a year’s membership with a yearly renewal price of $149.95 at dvdMonster. These prices are different from program to program.

Conclusion

Depending on the time, money and effort you’re willing to invest, there are lots of options available to you. Actually offering rentals may be the road you want to take; however, a good alternative to doing that is a cross promotion with a local video store. Want more involvement without the hassle of rental? Give EZ-D, the disposable DVD, a try. Once ordered and on your shelf, they’re guaranteed to last at least two years and you don’t have to worry about late, damaged or unreturned movies. And if you’re interested in increasing your disposable income without giving space in your shop to movie displays, then movie affiliate programs may be right for you.