SWOT Analysis of IPIC theaters

1. Case Assignment:
IPic Theaters: A SWOT Analysis
Stacey Troup
Strategy & Planning/ MBA-643
March 12, 2019
Professor Dr. Ralph Ezelle
Touro University Worldwide

2. Abstract
IPic Theaters™ thought they had found a niche market with their indoor drive-in format
of theaters. Gearing their chain to the upper crust clientele where a meal and a movie at their
location can easily run you $100.00 without drinks, the chain has some major hurdles to
overcome after going public in February of 2018 after losing 90% of their valuation due to their
overestimates of share price as well as a market segregation that keeps them from gaining the
market share in their most prevalent locations. A SWOT analysis is key to identifying how you
plan to identify your strengths and weaknesses while setting a plan to overcome and find success
for your business. IPic could use a better strategic vision in their future if they plan on
continuing to remain a publically traded entity.
Keywords: IPO Failures, Over Valued IPO, Market Valuation Failures,
Segregation of Key Demographics in Business.

3. IPic Theaters – Good Ideas, Bad Execution
IPic Theters™ Launched in 2010 with the idea that an upscale “dinner and a movie”
experience would be an unforeseen opportunity in an upscale marketplace. The company went
public in 2018 and has continued to lose money through a failure to capture market share, a
blatant segregation of lower income clients, a “chef-inspired” menu that doesn’t fit the model of
the dine-in theater experience, and an over-inflated business model which has caused them great
valuation during their IPO tank in the last 12 months. This SWOT analysis will review what IPic
is doing, where they are making profits, and how these weaknesses can be turned into a
profitable revenue stream should they recognize and implement these strategies, rather than “hog
tying” to their “upscale only” clientele while continuing to lose money.
IPic Theaters – Brief History
IPic Theaters went public only eight years after they launched with a stock price of
$18.50 per share in February 2018. Within hours, the stock had dropped to a price of $13.74 and
has continued to lose valuation in the first full year of trading, closing out on March 14 to a price
of $5.63 per share (IPic Stock Ticker, n.d.).
Financial statements reveal that while one theater had significant damage (and
subsequent loss) from a hurricane and was closed as a result, this did not bolster the company’s
efforts to gain market share. The operation is burdened with a “chef-inspired” menu that does
not fit the needs of the moviegoers while trying to be more of a fine dining experience but often
failing due to poor attendance, high prices, and less than favorable execution of the menu
offerings including an overstuffed bar menu inclusive of $100 and $500 bottle offerings of
wine/champagne which are far from suited to a 2 hour moviegoing experience (IPic In Theater
Menu, N.D.).

4. Adding insult to injury, the company’s financials are putting them at risk for being
delisted rather than furthering their desire to expand into the Arab marketplace (by building in
the UAE). In 2019, just one year after going public, the company was put on notice under
NASDAQ Listing Rule 5550(b)(2) which imposes very strict rules relating to market value of
listed securities when the company fell short of these requirements during a 2018 and was put on
notice accordingly until they were able to come to compliance. The fear of reprisal and failure to
adhere to this requirement may happen again, causing great strife to the company as when the
financials were reviewed, we discovered a loss of $2.9M to the EBIDTA and an overall net loss
of $56.8M to the company in the same year they went public (2018) (Form 8-K, 2019). The
company can simply not continue in this fashion and expect to continue to be both publically
traded as well as profitable, as no company can continue to operate at such immense losses to
their capital valuation.
The Role of Management
When management is faced with threats against their company valuation, they need to
take appropriate steps to rectify the situation. By reviewing their situation, creating an analysis
of how they can turn things around, and committing to implement these strategic changes, they
can secure their company’s financial health. As it becomes incredibly blatant in the following
review of IPic, it seems that the CEO/Founder is more interested in opening a theater in Dubai
that he is in first turning around his US operations in order to ensure a place in the Dubai (or
other) foreign markets.
As the company is now publically traded, the Board of Directors is responsible for
ensuring the health of the companys finances and future success, while driving the decision-
making process. However, it seems that the IPic Board is made up of “pomp and circumstance”

5. rather than investment professionals or others with significant experience in the realm of
publically traded firms, as the Board consists of several members of the Tribeca Film Festival
and other smaller film schools. The infancy of the company will only survive the harsh waters of
the financial markets if they adapt to their needs, overcome their weaknesses and turn their
existing position around through targeted efforts to increase profitability (FINRA Staff, 2016)
(IPic Board of Directors, n.d.).
Comparative Analysis to AMC/Regal – A SWOT Analysis
For purposes of identifying where the shortcomings of the company’s business plan and
market share reside, this SWOT will do a comparative analysis against key factors which drive
comparable retail chains of Regal and AMC Theater chains against what IPic considers to be
their SWOT so that we may identify the true shortcomings to the company’s profitability.

6. TWOS Strategic Alternatives Matrix – IPic Theaters
External Opportunities (O)
1. Greater Market Share
2. Expansion into
foreign markets
3. Greater profitability
across offerings
(screen, food)
4. Expansions to new
technologies
External Threats (T)
1. Serious risk of
NASDAQ Delisting
of stock
2. Loss of Valuation
(insolvency)
3. Continued market
(segregation) loss to
competitors
4. Loss of Existing
Revenue Stream(s)
Internal Strength
 Only Server-Driven
movie theater on market
 Virtual “Child Free”
movie experience
 Only “Couples” seating
offering for theater chain
 Upscale design,
ambiance, and offerings
($$)
Strengths & Opportunities:
Maxi-Maxi Strategy
 Menu offering skewed to
diet trends (Keto/Atkins)
as well as “movie” foods
 Segregation against
children/seniors/families.
Offer special times for
these with pricing
 Membership expansion
to offer specials to those
paying for memberships
(vs free membership)
Strengths and Threats
Maxi-Mini Strategy
 Reduction of menu to
reduce costs associated
with carry
 Couples theater offering
keeps satisfaction up for
patrons while segregating
market share
 Offering causes high cost
and carry – hit to bottom
line
 Keep Restaurant Menu
Separate from Movie
Theater Menu – Dining
Experience
Internal Weakness
 Memberships Required
with Favortism for
higher paid memberships
 Stock Valuation (Loss)
due to operating
procedures
 Opinion of own place in
the business and refusal
to adapt to changes
needed
Weakness and Opportunity
Mini-Maxi Strategy
 High ticket prices –
revise pricing strategy
 Revise membership
offerings to favor
members
 Offer family/student
plans
 Limit high-end offerings
to sit down restaurant
and only movie fare to
in-theater dining –
reduce bar in theater.
Weakness and Threats
Mini-Mini Strategy
 More competitive movie
“freebies” for paid
members, similar to
others
 Low revenue driven by
theater views and more
by food (due to prices).
 Profitability low in
theaters, skew
membership offerings to
spike the per ticket
spending of guests.

7. Strengths
While IPic Theater is the only offering of its kind being a couples-oriented theater with a
Michelin™ chef behind the menu offering, their strengths are not appealing to the masses.
Compared to AMC, their membership is very expensive and offers little, while AMC drives butts
to the seats in the theater which, in turn, drives up the high mark-up food offerings at their
locations (including the now full meals offered at select theaters). The business model is really
only appealing (or geared toward) people making over $120k per year and who do not wish to be
around children, students, or senior citizens (due to the nondiscount structure and high prices)
(Form 8-K, 2019).
Weaknesses
Market share is a catastrophic weakness of this theater chain. By only wanting the
“upper crust” to see a movie or enjoy their theaters, they are segregating themselves into
bankruptcy. The food sales increase at a theater when ticket prices are skewed toward ages (such
as kids free under a certain age, student discount, senior discount) as many of the families will
buy over $100 of food while at a theater while the costs are usually under $10.00 for the food
purchased. Again, the segregation of client base due to their own perception that their theater is
not for everyone but only for select few, is one of the weaknesses which keep this chain out of
profit.
The other clear weakness of the chain is again due to its own perception of hierarchy.
The food offering at the hands of the “all-star” chef, is not only unbefitting a movie theater, but
actually has a lower profit margin than usual theater offerings. In addition to the high food costs,
the bar menu is expansive and outside the realm of what theatergoers are seeking (including a
$500 bottle of champagne). They have failed to recognize how partnering with the film studios

8. can bring greater revenues through “limited-run” drink offerings and by keeping the food and
beverage in the theater to a minimum (Udland, 2015) (Rushing, 2018).
Opportunities
In the opportunities column, this chain has a lot of opportunities if they recognize their
shortcomings and embrace the proposed changes to drive revenue and the company’s goal of
international theaters. By reworking the menu to reduce the overhead while allowing for specific
dietary needs of theatergoers, they will reduce their overhead in this arena. Additionally, by
making “family hour” offerings where children’s tickets are reduced and children’s food
offerings are given, they do not segregate the market who wish to watch say the latest superhero
movie without children, but they allow for families to attend these shows with their families and
spend money on food and candy options with a high mark up, while there.
By reworking the memberships to give more than free popcorn to the members, they will
find themselves in a competitive marketplace to AMC. Where AMC is known as a family-
friendly environment, IPic has a chance to become an upscale date night by offering events,
discounts, point rewards, and other spiffs to customers who frequent the movie. Currently, the
membership only allows for a slight food discount and closer seating to the screen.
Rather than worrying about the aesthetics of their theaters and renovating theaters who
are experiencing great loss, they need to focus on the innovations that have driven success for
both AMC and the Lowes theater chains. AMC holds the licensing for IMAX (regular and 3-D)
while Lowes has the 4DX Experience (unlike any other). They realize that the experience is
what drives people to purchase tickets and have made significant improvements to the
environment for viewing rather than aesthetics of the lobby.

9. Opportunities are great and beyond the scope of the small overview here. The theater
needs an influx of new ideas, a formula that brings them into the profitability side of the financial
balance, and a firm plan that helps strengthen the stock valuation of the company while removing
the threat of delisting and bankruptcy.
Threats
Threats, as indicated, are great if this chain cannot remove the delusion of grandeur they
possess and make effective changes to help drive people to their theaters. The imminent threat
of delisting and bankruptcy being at the front of these threats which require an immediate
solution for change if the theater is to exist beyond its infancy year on the exchange. Already
having been put on notice once in the first year for the capital requirement failure, this chain
needs solutions that work rather than pomp and circumstance.
In order to hold on to their existing theater chains, which average a loss of $1 million
each per year, they need to streamline the food and beverage offerings, reduce operational
bottlenecks, and drive revenue through strategic partnerships, advertising, memberships, and
other offerings designed to bring an experience as well as revenue from each customer who
chooses to experience this chain themselves.
If IPic cannot recognize their own threats and the vast threat that their own unwillingness
to change brings to the health of their profitability and bottom line, then it is only a matter of
time before NASDAQ delists the stock, they are reduced to penny stock, and valuation in the
company is all but lost.

10. Membership Comparison - AMC
AMC Theater chain, which operates over 1,000 theaters in a global marketplace while
maintaining a number 1 or number 2 spot in the top 3 locations (US), has significant profits as
their business model is welcoming to all patrons and encourages spending by all while within the
theater (AMC Fact Sheet, 2018). 2018 revenues for the theater chain stood strong at $5460.80
(in millions) while their food and beverage offering kept expenses low through a very specialized
offering to patrons; their costs for food and beverage (and film rights) for 2018 were $5195.80
(in millions). The chain also had a significant loss due to some intricate financial redemptions of
their stock over the year as well as some notes payable and other financially driven issues while
continuing to pay dividends to shareholders and raising a profit (Current Folio 10-K, 2018).
The membership for AMC, known as AMC Stubs (and Premier), bring great value to the
consumer avoiding market segregation (such as families, students, etc). The company strives for
innovation through the renovation of their theaters to include reclining seats, IMAX™ offerings,
3-D™ options for select movies, and a second-to-none rewards program which allows premier
members to view 3 movies per week as part of the included monthly service fee. In a high price
market such as NYC where an average ticket price is $17-28 (depending on type of film viewed),
these free movies drive their food sales on otherwise unused seats at a theater while providing a
points program that rewards patrons even for these “free” movies. Finally, the company has
implemented permanent $5.00 Tuesday movie offerings across all theaters and screens (US) for
AMC members, which drive a revenue stream on a day when the theaters are notoriously empty.
Their commitment to customer satisfaction, innovation, and a family welcoming experience is
what keeps their membership strong and their profits in the green (AMC Current Folio, 2018).

11. Industry Changes
While IPic (and others) struggle to maintain any semblance of market share or
profitability against streaming services, the industry as a whole is continually striving to bring
innovations which drive ticket sales. AMC, for example, innovates through IMAX™ offerings
and renovating theaters to allow for all reclining seats, $5.00 Ticket Tuesday, and in-store
specials on food and beverage for all age ranges (AMC Current Folio, 2018).
Competing with the trends of streaming video, it is imperative that the innovations these
theaters embrace continue to drive people to want to leave the house while keeping it affordable
for families, in favor of the experience offered. In markets such as NYC where a vast plethora of
restaurants exists, the IPic theater model struggles to gain any market share due to the lack of
visibility in what the consumers really want. Couped up in small spaces as is the standard of city
life, these people want to go out into the world, experience restaurants and events separate as part
of an evening out, not wanting to be trapped in one building for a date, as an example.
For years prior to the big superhero push, theaters were struggling to get butts in the seats
due to poor movie choices/selections from the studios. Economic factors were driving people
out of the theaters and into their homes where the real experience of a great movie lacks
imagination. However, since the very public DC/Marvel war at the box office, these action-
packed movies are driving ticket sales and saving the theater chains. In addition, AMC partners
with the studios to hold “fan night” or “premier night” showings the day prior to the actual
release, contests, meet and greet events, etc. in order to bring a true Hollywood premiere to
people in markets such as New York (Rodriguez, 2017). In addition to these offerings, their
revenue and profits continue to drive advertisers to infuse the business model of AMC with pre-

12. movie advertising over that of competitors (Are there enough superheroes to revive movie
theaters?, 2018)
Realizing that the experience of the theater is what drives people to the movies and that
the food is an up-sale (and highly profitable) to this experience, AMC has also geared the food
toward the moviegoers (rather than on “fine dining”) while offering specialty cocktails that are
collaborations with liquor companies and compliment the movies (Rushing, 2018)(as their
current DC inspired drinks) (Drink Specials, n.d.). Because of these innovations, AMC and
other large chains like them, have not had the hit to their business model that IPic has. Visibility
and a driving knowledge of what your customers want and are willing to pay for are what keep
them coming back to your theater (Rushing, 2018) (Udland, 2015)!
IPic Strategic Intent/Financial Objective
IPic has a strategic vision that is not resulting in profitability for the company nor the
investors. According to their Annual Report (Annual Report, 2017), the strategic vision of the
company is to drive additional revenue from its members while striving to open theaters
overseas. This vision does not take into consideration what will be needed to actually turn a
profit, gain greater revenue share, or reduce overall costs for the firm (which drive profits).
Instead, their vision is international growth over customer service, experience, or retention
(Annual Report, 2017).
Generally speaking, there needs to be a strategic intent that focuses on turning the
company around from its slump through variable offerings to consumers. It is apparent that IPic
views themselves as a “white collar” theater only and does not care if they remain profitable,
which explains the slump in their stock prices. Their lack of a strategic vision or implementation
of any sort of improvements (outside of theater renovations) have led to what will likely lead to
their demise.

13. Conclusion
It is unclear why IPic chose to go public when they had years of financial loss to their
company profits. However, going public in February of 2018 was a decision driven on the desire
to build an international presence through this fundraising effort.
A year has passed since the company went public and they have continually dropped in
value over that period. No significant changes have been brought to ensure valuation of the
company or that the stock will continue to be traded as they risk delisting due to their slumping
profits. Although the SWOT analysis presented over the course of this paper helps to identify
the shortcomings of the company which plague their success in turning a profit, it is unclear if
the current CEO or the Board of Directors will accept the vision of this resurgence due to their
lack of experience in publically traded firms.
Regardless of their intentions to expand, they face the risk of having their stock delisted
as they have already been put on notice at least once in the first year of trading while maintaining
a very low stock price (approximately 1/3 of their original offering). Remembering that the
success of a company to turn themselves around resides with their willingness to turn their
weaknesses into strengths and their threats into opportunities. This matrix provided is a starting
point to providing the experience and service the consumers are thirsty for, which will turn into
profits for the theater.

14. References
AMC Current Folio. (2018). Retrieved from AMC:
http://investor.amctheatres.com/Cache/396943088.PDF?O=PDF&T=&Y=&D=&FID=39
6943088&iid=4171292f
AMC Fact Sheet. (2018, 03 31). Retrieved from AMC: https://amc-theatres-
res.cloudinary.com/image/upload/v1526575013/amc-
cdn/general/pdf/AMC%20Fact%20Sheet_2018%20Q1.pdf
Annual Report. (2017). Retrieved from IPic: https://investors.ipictheaters.com/static-
files/f5ff971c-878c-4b51-bbd6-9cad5b6e8170
Are there enough superheroes to revive movie theaters? (2018, 10 10). Retrieved from Deloitte:
https://www2.deloitte.com/us/en/pages/technology-media-and-
telecommunications/articles/movie-theaters-vs-video-streaming.html
Current Folio 10-K. (2018). Retrieved from AMC: https://investors.ipictheaters.com/static-
files/f5ff971c-878c-4b51-bbd6-9cad5b6e8170
Drink Specials. (n.d.). Retrieved from AMC: https://www.amctheatres.com/drink-
specials?rel=marvelouslymixed_mfd_op_promo
FINRA Staff. (2016, 12 06). Get On Board: Understanding The Role of Corporate Directors.
Retrieved from FINRA: https://www.finra.org/investors/get-board-understanding-role-
corporate-directors
Form 8-K. (2019, 03 12). Retrieved from Ipic Theaters Investor Relations:
https://investors.ipictheaters.com/static-files/eaf1fc16-4670-4196-ac11-0892bc9f20d0
IPic Board of Directors. (n.d.). Retrieved from IPic: https://investors.ipictheaters.com/corporate-
governance/board-of-directors
IPic In Theater Menu. (N.D.). Retrieved from IPic Theater Menu:
https://static.ipictheaters.com/rw/imagedb/15272/043930/iPic_In_Theater_Menu.pdf
IPic Stock Ticker. (n.d.). Retrieved from Google:
https://www.google.com/search?tbm=fin&q=NASDAQ:+IPIC&stick=H4sIAAAAAAA
AAONgecRowS3w8sc9YSn9SWtOXmPU5OIKzsgvd80rySypFJLmYoOyBKX4uXj10_
UNDdOMK3KTLQ0LeBax8vg5Brs4BlopeAZ4OgMAKTp9uUwAAAA&biw=1920&bi
h=969#scso=_bRGNXMTfB-KOggfYlqywCQ2:0
Rodriguez, A. (2017, 11 06). Marvel takes Hollywood: Nine years, 17 movies, $12 billion and
counting. Retrieved from Quartz.com: https://qz.com/1116592/marvel-conquers-
hollywood-nine-years-17-movies-12-billion-so-far/
Rushing, E. (2018, 07 23). AMC, Cinemark up their game with enhanced seating, dining options.
Retrieved from Sun Sentinel: https://www.sun-sentinel.com/business/fl-reg-movie-
theaters-renovations-income-20180716-story.html

15. Udland, M. (2015, 02 18). Here's how movie theaters are still making money even though ticket
sales are down. Retrieved from Business Insider:
https://www.businessinsider.com/movie-concessions-drive-amc-earnings-2015-2