Joseph Blumenthal, Jack Beresin and Milton Holloway, all kind of came together to make movie concessions happen.

Dave Young:

Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom-and-pop to major brands. Stephen Semple is a marketing consultant, story collector and storyteller. I'm Stephen's sidekick and business partner, Dave Young.

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Dave Young:

Welcome back to the Empire Builders Podcast, Dave Young here alongside Stephen Semple. And Stephen just told me what we're going to talk about today, and it's not really, I mean, it's an empire sort of. It's an empire in terms of its category, right?

Stephen Semple:

Yes, yes.

Dave Young:

But it's not so much like you can't put your finger on a brand name for it.

So we're talking about movie concessions and how things got started. So I'm guessing in the early days, you didn't buy a big old thing of popcorn. You just sat down and watched a movie.

Stephen Semple:

No, that was what I found, so I found interesting about this, and I thought, and when I went down it, I was actually researching one particular business.

And then what I suddenly realized is that, no, there's a couple of things that converge together that really made the modern movie concession. And there's three players that went into this, and all three of them ended up building fortunes in the process. That's Joseph Blumenthal, Jack Beresin and Milton Holloway, all kind of came together to make movie concessions happen.

As we know today, movie concessions are like a multi-billion dollar business, and concession sales are like close to half of movie theater profits so they're a big deal.

Dave Young:

Where I am in Austin, we're, I don't know, half a mile from an Alamo Drafthouse, and I don't go to the theater as often as I did before all the things. But Alamo Drafthouse is known for pioneering like you have a menu and you sit down, you order a meal while you're, and they'll bring it to you in the theater.

Stephen Semple:

Yes.

Dave Young:

We've always known that you're going to spend more on popcorn and drinks, than you did it on the movie ticket.

Stephen Semple:

And they've taken it to a whole other level, but wasn't always that way, Dave.

In June 19th, 1905-

Dave Young:

1905?

Stephen Semple:

... was the first movie, like the first movie showing kind of in a theater sort of setup, and they were called nickelodeons. That's what they called the early movie houses because it was nickel and all that other stuff. And it was super successful, and pop-ups started happening all over the place.

And as we know, the early movies were silent. So what would happen is people would buy a ticket to go to the movie, like vendors would buy a ticket to go to the movie, and they would walk up and down the aisle going, "Popcorn, popcorn. Who wants..." and selling stuff just like they did at the ballgames and there was-

Dave Young:

Or the circus, yeah.

Stephen Semple:

But there was no connection to the theater. These were like, literally, Dave Young would buy a ticket, show up, and then basically walk up and down the aisle selling whatever food he had to sell.

Dave Young:

And they just let him.

Stephen Semple:

So concessions were not a thing at all. At all.

Dave Young:

Okay.

Stephen Semple:

So Jack Beresin is working at an opera house, and he's looking at a way to make some extra money, and he saw people buying and eating food at a nickelodeon.

So he approaches his manager with the idea of, at this opera house now, you can't go up and down the aisles in the opera house. The whole idea, let's set up a table and do concessions during the intermission.

Dave Young:

Sure.

Stephen Semple:

Now eating in the opera house was kind of considered uncouth, and his manager was a little bit resistant to the idea until Jack said to him, "Guess what? I'll split the profits with you 50-50." Suddenly, he's like, "Yeah, let's give this idea a try."

Dave Young:

Okay.

Stephen Semple:

So it turns out to be so successful that Jack sets up concession stands in nine different opera houses.

Now we enter the 1920s and the movie industry is exploding, like to the point where wealthy people didn't use to go to movies. That was like a working man's thing.

Well, now what ends up happening in the 20s is that wealthier people start going to the movies, and they start building these things called movie palaces start to open. And in the 1920s, they built like 5,000 of these get built in the 1920s, and they're really elegant. So think Grauman's Chinese Theater, like they're super elegant.

Dave Young:

The one that always pops into my head there's a theater, I forget the name of it off top of my head, but it's in Santa Barbara, California. And it's one of these just gorgeous old theaters with ornate balconies and constellations painted on the ceiling.

Stephen Semple:

Yeah, they're beautiful.

Dave Young:

Like they glitter. Yeah, yeah, amazing.

Stephen Semple:

They're absolutely beautiful. They really are. And anytime you have a chance to, there's not many around any longer, but anytime you get a chance to visit one, it's like well worth doing.

So the vendors hawking stuff in the aisles are gone, A, because now they are talking, and, B, they're now opulent. So Jack sees an opportunity in the movie theaters to do the concession idea, but he wants to do something that is easy, scalable, and he can take national. So he comes up with the idea of selling concessions, not using people, but vending machines.

Dave Young:

Oh, wow. Okay.

Stephen Semple:

So comes up with this idea of selling concessions, not using people, but vending machines. And vending machines this time are pretty popular, but they're not being used for food. You can buy stamps, as we talked about some of the early tobacco ones, cigarettes, but they haven't been used for food yet. So he plans to install these in movie theaters and dispense popcorn, crackerjacks and peanuts, okay?

Now, the theater owners, especially ones with these theater palaces, are against the idea of popcorn and peanuts because they make a mess.

Dave Young:

A mess, yeah.

Stephen Semple:

Right.

Enter Joseph Blumenthal. So now we need to go back a few years. Let's go back to the early 1920s and Blumenthal's family business makes extracts to flavor things, right?

Dave Young:

Okay.

Stephen Semple:

By the early 1900s, this has become a really crowded space. There's like over 400 companies that do this business.

But Joseph saw an opportunity in chocolate, but what he wanted to do was make chocolate powder, the ingredients for baking and things along that lines, which also means he wasn't going to be competing heavily with Hershey, who's in his area.

So they pour their savings into this venture, but the problem is they know nothing about chocolate. And so they hire this German immigrant with a chocolate background, and they have to fire him because he shows up every day drunk for work. They have all the equipment and the cocoa beans and no one to make it, and they're close to running out of money, and they end up finding somebody to extend them a line.

But they slowly get started and get the formula right, and they start making this chocolate powder.

But then they also start looking at the consumer market. And in the 1920s consumer chocolate starts getting crowded because there's a few titans that are dominating it, but combination bars start entering the marketplace. Like think Mars, where it's not just... Like Hershey's was just chocolate. And to go back Episode 175 and 176, we talked a lot about that with Mars.

But what they decided to do is do this big drum with chocolate and put other things in it like seeds and nuts and things like that, and have it being coated. And they thought, well, this would be a great idea because it's a new and different idea. It's not a bar. It's these little individual little bites.

But it doesn't really do all that well until they meet Jack Beresin, who has a problem. "I want to sell things through a machine, but the stuff I want to sell is messy. Wouldn't these little chocolate-covered raisins and peanuts and things along that lines be perfect for selling in a concession like vending machine?"

Dave Young:

Yeah, we can package them in a little cardboard box so that the vending machine doesn't have trouble with like an envelope or a packet of some kind, stacked nicely like packs of cigarettes.

Stephen Semple:

That's exactly what he does, Dave. They create these little cardboard boxes. He puts these candies in it. This would be perfect for vending machine. And they're not messy. They're each little individual pieces, right?

Dave Young:

The Raisinets and the Goobers.

Stephen Semple:

Bingo. Exactly. And they coat Raisinets and Goobers.

Dave Young:

They coat them in wax so they don't melt on your fingers.

Stephen Semple:

And that's exactly what they were called. This is the origin of Raisinets and Goobers. Bingo. Right on. So now-

Dave Young:

Oh, those are my core values when I was a kid, Raisinets and Goobers.

Stephen Semple:

So Jack goes back to the theaters because now he has these candies, rather than peanuts and popcorns, and there's still lots of pushback on the idea.

Then he remembers what he did with his manager at the opera house, right?

Dave Young:

Stay tuned. We're going to wrap up this story and tell you how to apply this lesson to your business right after this.

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Dave Young: