Santikos in Growth Mode: Interview with Rob Lehman, COO of Santikos Entertainment – Boxoffice

Rob Lehman, a three-decade veteran of the exhibition industry, will be honored with this year’s Frank Liberto Award at CineShow, the annual convention of the Theatre Owners of Mid-America, held in Dallas, Texas, from August 26-28. The award, bestowed by industry partner Ricos—one of the nation’s leading nacho suppliers to cinemas—celebrates the achievements of Lehman’s storied career in the exhibition sector. “Rob has championed innovative ways to service the customer, and we’ve all benefited from his vision to improve restaurant efficiency within movie theaters,” stated Tony Liberto, Ricos’s president and chief executive officer, in a press release announcing the honor.

Boxoffice Pro caught up with Lehman, the COO of a circuit that has grown from its roots as a local player in San Antonio to the eighth-largest cinema chain in the country.

How did you first come to work in exhibition?

I graduated from Illinois State University in 1992 with a political science degree but didn’t feel a pull towards a political career. My love of movies, especially childhood favorites like Star Wars and Indiana Jones, inspired me to explore the theater industry. I started as a manager trainee at Kerasotes Theaters and have stayed connected to the exhibition industry for 32 years. This journey has been fueled by my passion for the cinematic experience and the joy it brings to audiences.

Who were the mentors that helped you along the way?

I had some great mentors throughout my time in the industry. Tim Johnson took a chance on me and hired me at Kerasotes Theaters, and Fred Walravran, who ran sound and projection for Kerasotes, taught me a lot when I took over the food and beverage position in 1999.

Though I only worked for three years at Carmike Cinemas, Fred Van Noy taught me leadership and how to treat people and encouraged me to apply for the COO position at Santikos Entertainment.

Being on the food and beverage side of exhibition for many years, I had some great mentors who taught me the industry, and the best one is my good friend Jill King. While working at CCSI distribution, she taught me how to put the customer first while working with the buyers, drivers, and support office to make sure theaters got deliveries for their customers. I wish everyone could see and understand the craziness of the distribution industry.

I have many more people who have been mentors and good friends in the industry and have learned from them to become a better leader.

What have been some of the biggest lessons and principles about this business that have guided you throughout your career?

I have always stressed to everyone I work with that if the 16-year-old kid at the concession stand doesn’t understand what we are trying to accomplish, we will fail. We must keep it simple because those are the employees who have the most interaction with the customers, and if we aren’t clear with our plan, then we have failed the employee and customer.

My passion for the industry has allowed me to work with some great people over the years, and I have always been willing to listen to other areas of the industry. I never considered myself just a food and beverage guy but an operations guy. Learning and asking questions about loss prevention, sound and projection, gaming, the booking process, and accounting during my first 24 years allowed me to become COO at Santikos Entertainment in 2017.

At Santikos, we live by a mantra: If you’re not growing, you’re dying. This belief has driven our strategic approach and fueled our transformation from a local circuit in San Antonio to one of the ten largest theater chains in the domestic market. Under our now-retired CEO, Tim Handren, we embarked on a comprehensive strategy centered around three key pillars: process optimization, system automation, and leadership development.

Process Optimization: We scrutinized every aspect of our operations to identify areas for improvement. By streamlining workflows and eliminating inefficiencies, we enhanced our operational agility. This involved adopting best practices from across the industry and tailoring them to fit our unique needs.
System Automation: Embracing technology was crucial to our growth strategy. We invested in cutting-edge systems to automate various functions, from ticketing and concessions, to inventory management and customer service. Automation improved efficiency and provided valuable data insights, enabling us to make informed decisions quickly.

Leadership Development: Building a strong leadership team was essential for driving our expansion. We focused on nurturing talent within the organization and attracting top industry professionals who shared our vision. Through continuous training and development programs, we equipped our leaders with the skills and knowledge to steer Santikos through its growth phase.

Despite the unprecedented challenges posed by the pandemic, we remained steadfast in our commitment to growth. Our efforts to solidify our financial footing paid off, putting us in a strong position to seize opportunities. The acquisition of the VSS-Southern chain was a pivotal moment in our expansion journey. This strategic move added 17 theaters to our existing 10 in San Antonio, significantly broadening our footprint across the Southeast.

Santikos has experience some of the fastest-growing trends in exhibition, like cinema entertainment centers and PLF auditoriums. What has your experience been with both concepts, and why do you think you’ve succeeded in using them in your circuit?

Our cinema entertainment center strategy has become very successful. We are all in on only building cinema entertainment centers, where our customers can enjoy movies, bowling, an arcade, bars, restaurant-quality food, and fun under one roof.

We just finished two remodels of our Silverado theater, a typical 16-screen theater, and we tore down seven auditoriums to add 14 lanes of bowling, 50 arcade games, party rooms, and a whole new lobby and bar. We also just finished an expansion in New Braunfels, Texas, where we took three storefronts—13,000 square feet next to our 11-screen theater—and added eight lanes of bowling, 50 arcade games, a new lobby, concession, and bar. Our customers love both entertainment centers, and the numbers are outstanding.

Concerning PLF auditoriums, when I came to Santikos Entertainment in 2017, our two flagship theaters—Casa Blanca and Palladium 19—both had four PLF auditoriums, and I was blown away by what the Santikos family had created: large auditoriums, huge screen sizes, and the best sound and projection technology available. We continued this trend at our Silverado theater when it reopened; we now have three PLF screens at a nine-screen theater.

How has the moviegoer of 2024 changed from the moviegoer of 2019? How do you reach that moviegoer today to convince them of their next cinema visit?

The 2024 moviegoer is more cautious than the 2019 moviegoer, not from a Covid perspective but from a financial perspective. Over the past six months, we at Santikos have noticed that our walk-in business (30 minutes or less before the start time) has seen a huge surge in ticket purchases. Customers in 2024 wait until the last minute to see a movie instead of buying advance tickets. This impact could be the convenience fees charged or the Gen Z population making last-minute decisions.

Getting customers to come back is always the most significant challenge, and that has changed since 2019; we, as operators, must continue to provide the best customer service possible, but with a slight change. Today, a whole generation might want to avoid interacting with employees; they want to purchase their tickets online or at a kiosk, order their food at the kiosk, and just pick it up and go to their seats. We, as operators, must adapt to that new concept while allowing our customers to purchase tickets and get their popcorn and soda from the box office and concession stands.

As mentioned above, our cinema entertainment centers are another way to get the customers to come back and allow them to stay for four hours rather than just two hours. Families love these concepts because they can see a movie and go bowling, and the kids can play arcade games while the adults can go to the bar.

If Hollywood continues producing movies that people want to see on the big screen, customers will continue to come as they have for over 100 years.