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.

Before we get into today’s episode, a word from our sponsor, which is, well, it’s us. But we’re highlighting ads we’ve written and produced for our clients so here’s one of those.

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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:

Let’s pick up our story where we left off. And trust me, you haven’t missed a thing.

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:

Ah, splitzies.

Stephen Semple:

Sharing the profits. He goes back with the idea sharing kind of the concession. Bingo.

So he’s now got theaters loving it. It’s easily scalable, it’s the late 1920s and profits are, literally, hitting a thousand bucks a week per theater.

Dave Young:

All right.

Stephen Semple:

That’s how much money they’re making, right?

Dave Young:

That’s a lot of Goobers.

Stephen Semple:

Yeah. Now others start copying the idea, the Blumenthals are being approached to sell candies to them, and Beresin also realizes he needs to expand his options, like he needs some additional things.

1929 happens. Of course, there’s the crash. There’s one out four people unemployed, but they have time on their hands, and movies are kind of an inexpensive escape. So people are still going to movies, and they also want a small treat, but what they would like, something that kind of lasts, right? Make that money last.

Enter Milton Holloway. Remember we said there was three people in this story. So Milton’s in Chicago, and he had bought a small defunct caramel company with a 1200 buck loan from his dad. Family didn’t really like the idea because Milton had no candy experience.

Dave Young:

He bought a defunct caramel, okay, okay.

Stephen Semple:

So the first thing he made was this thing called a Slo Poke, which is basically a caramel on a stick with a wax paper wrapper. And the whole idea is you could take the wrapper off, have a little bit, put the wrapper back on, and he started playing around with chocolate-covered caramels.

But caramels were always sold in cubes, and he wanted to stand out. So how about a marble-shaped caramel covered in chocolate? Well, it turns out round balls of caramel are hard to make, and when hot chocolate hits the round caramel, it won’t hold its shape. He plays around with this for two years trying to get it to work.

Dave Young:

It sounds like a dud.

Stephen Semple:

Exactly. They would say, “Another batch of duds, but it tasted good, though.” And suddenly what he realized is doesn’t matter what looks like, it tastes great and he decides to lean into the funny shape, and he calls them-

Dave Young:

Milk Duds.

Stephen Semple:

Milk Duds.

Dave Young:

Yeah. I mean, they also won’t, if you drop one on the floor at your feet in the theater, it won’t roll away.

Stephen Semple:

And even thought about that benefit unlike the Goobear.

Dave Young:

I don’t know why he ever reached down and picked something up off the floor of a theater.

Stephen Semple:

And again, initially sales are slow. They’re not really doing all that great, and he’s, literally, on the brink of failure. And he’s discovered by Beresin because Beresin is looking for new ideas for the vending machine.

And not only that. Once it gets in the vending machine and people get exposed to it, sales of it takes off.

By the 1940s, theaters are basically being built with concession stands built into them. So the vending machines sort of goes away, but Beresin continues to supply them, adds lots of new products. By the 1960s, they’re doing a hundred million in sales.

And today, movie concessions are a huge, huge part of the movie business. And it was really these three guys coming together that made it happen. It was Jack Beresin coming up with the idea of concessions in the opera houses because what he saw going on in the nickelodeons, then deciding to make it a vending machine, but popcorn and peanuts wouldn’t work, which ironically, popcorn is now back in theaters. And then Joseph kind of making these chocolate-covered candies and Jack going, “That would be perfect for vending machines,” and then expanding the lines with the Milk Duds from Milton Holloway.

So I thought it was a really kind of interesting story because it was these-

Dave Young:

Yeah, yeah.

Stephen Semple:

… it was a combination of these three characters that made it all work.

Dave Young:

I’m trying to think of the others, like Mike and Ike’s and Hot Tamales-

Stephen Semple:

Yeah, all those things came later.

Dave Young:

And they’re all in that little box, and they still sell them in the little box as far as I can recall.

Stephen Semple:

Yes, they do. Yeah.

Dave Young:

And so that’s sort of a legacy thing to all of those things being purchased out of vending machines.

Stephen Semple:

Yeah. So when you take a look at that packaging, yes, think back to that would be perfect in a vending machine. And that is a legacy. That is where they all started, was in these vending machines and movie theaters.

But what I loved, especially Jack, I particularly really was inspired by Jack in this, because you take a look at what Jack did. Jack saw the food in the nickelodeon and went, “Wow, we should do this in the opera house, but we’ll do it a little bit differently, a little bit more upscale. We’ll have a nice table. We’ll display the things in a different manner.”

And then movies take off and the feel of movies change and wealthy people start going to movies. In other words, Jack’s customers start going to movies. Jack goes, “I should do this in movie theaters. Well, let’s make it more scalable, vending machine.”

But then even when he got the pushback of, “Well, we’re not going to do popcorn or peanuts in it,” didn’t make him stop. He didn’t go, “Oh, this idea is no good.” “All right, I will find something different to sell.”

And then next thing was, “Well, we’re still unsure to do it,” and he remembered his conversation with his manager. “Well, let’s share in the profits.” “Okay, great. Let’s do it.” There was this big circle that all this learning to continue to go around, and I just thought it was really cool.

Dave Young:

It really is. And it’s been the backbone of the theater industry as far as profits. It’s a weird thing going on these days post-pandemic is that you get the feeling movie theaters are not going to be with us forever and-

Stephen Semple:

Which is a sad thought to me.

Dave Young:

It really is.

Stephen Semple:

I enjoy going to movie theaters, yeah.

Dave Young:

I enjoy it, but I haven’t been to one in a couple years.

Stephen Semple:

Oh, is that right? Oh, I go every few months.

Dave Young:

I have one across the street from me practically and-

Stephen Semple:

Oh, okay.

Dave Young:

… if they’d give me a pause button. Tell Milton and the guys to see if they could figure out a way to more intermissions.

Because that’s the thing, right? You’ve lost the intermission and we haven’t had those for years.

Stephen Semple:

Well, and I actually think, so if there’s anybody in the movie industry listening to this, especially where some movies have now started to get particularly long, like we are starting to get these three-hour epic movies, and it amazes me that they do not have an intermission in those movies.

Because on top of that, not only would an intermission make it more enjoyable and give people an opportunity to have a wash and break, they would go buy more concessions.

Dave Young:

That was the whole idea.

Stephen Semple:

Like I don’t get it. I don’t get why there’s not an intermission.

And I think that’s a mistake that the movie industry is making. They need to bring back, especially if it’s longer than a two-hour movie, they need to bring back that 10-minute, 15-minute intermission. And I’ll tell you, they’ll make more money. I don’t get why they don’t do it.

Dave Young:

Yeah, and that’s something I’d advertise, right? Because you’d probably pull me back in.

Stephen Semple:

My parents tell when my dad was alive, and my mom will still talk about this story, is one of the very first movies they saw in Ireland was Gone With The Wind, and Gone With The Wind was, literally, one of the first movies with an intermission because of how long it was.

Movies used to be shorter, then they start making them longer and longer. And when the intermission happened, they remember somebody saying, “Oh, it was a good movie. But boy, it was a really odd ending.”

Dave Young:

That’s a fair point.

Stephen Semple:

[inaudible 00:18:21] to explain. “No, no, no, no. It’s not over yet. It’s not over yet.”

Dave Young:

Sometime in the last six months, we watched Lawrence of Arabia just because I hadn’t seen it gazillion years. And it’s got this intermission built in. It’s got music, and got this still image, but there’s music specifically designed for the intermission.

Stephen Semple:

Oh, that’s fun.

Dave Young:

Right, with if I remember right sort of a countdown, but-

Stephen Semple:

Okay, cool. Cool.

Dave Young:

It used to be like when I was a kid, the intermission would just be clunked. It is almost like they just shut the lights off and said, “All right, intermission.”

Stephen Semple:

Yeah, go get your candy.

Dave Young:

Yeah.

Stephen Semple:

Yeah. No, I think they should bring them back. So Dave, when we go to a movie and there’s an intermission, we’re taking credit.

Dave Young:

Absolutely. In fact, we should go and insist that there be an intermission.

Stephen Semple:

There you are.

Dave Young:

Let the whole theater out and we’re like, no, because we want an intermission and I need the intermission to be when I need it, not somebody else.

All right. Well, so it’s a different kind of empire, right? Not a single brand, but it’s something that became an empire of the movie theater-

Stephen Semple:

The movie theater industry.

Dave Young:

… industry.

Stephen Semple:

Yeah. [inaudible 00:19:44] stuff.

Dave Young:

Cool. Thanks for that story.

Stephen Semple:

All right, super. Thanks, Dave.

Dave Young:

Now I got to find some Junior Mints around here somewhere.

Stephen Semple:

Again in a little box.

Dave Young:

In a little box, absolutely.

There’s always one of the Junior Mints that like leaks a little bit and it’s stuck down in the bottom of the box.

Stephen Semple:

Always.

Dave Young:

Always a little vexing, but I love those things.

Thank you, Stephen.

Stephen Semple:

All right. Thanks, David.

Thanks for listening to the podcast. Please share us, subscribe on your favorite podcast app and leave us a big, fat, juicy five-star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute empire-building session, you can do it at empirebuildingprogram.com.