VSS platform Southern Theatres adds movie dining chain

Starting with a modest investment and revenue of about $10 million with VSS’s initial investment in 2005, Southern Theatres will ring up about $200 million in revenue with the addition of Movie Tavern.

The combined company now ranks among the 10 largest cinema eatery chains in the United States, with 36 locations and 433 screens in 13 states. Terms of the deal weren’t disclosed, but the transaction includes a loan syndication deal with GE Capital, Webster Bank, CapitalOne and CIT Group.

The investment in Movie Tavern comes from VSS Communications Partners IV LP, the firm’s $1.7 billion buyout fund. VSS declined to comment on any possible plans for a Fund V.

Trent Hickman, a partner at New York-based VSS, said the trend of movie theaters offering casual dining remains “very much on the upswing.”

VSS built a premium cinema eatery, called the Grand Theatre, in downtown New Orleans that has been “very, very successful” and led it to expand the concept by purchasing Movie Tavern.

“By buying Movie Tavern we’re creating a platform within the platform to continue to expand that business,” Hickman said in a phone interview with Buyouts. “And it gives us a greater ability to develop sites that are attractive but may not be appropriate for a traditional movie theater.”

While a typical theater takes up about 60,000 square feet, cinema eateries occupy about 40,000 square feet.

Southern Theatres plans to add a new theater in the New Orleans market in November, plus two new locations in development are expected to open in 2014. Movie Tavern will add a location in the Atlanta area in November of this year, and two more sites are planned for 2014

While VSS has no current plans to exit Southern Theatres, the current landscape for theater deals appears to be at least somewhat favorable.

AMC Entertainment filed an initial public offering on Aug. 30, about one year after its current parent, Chinese property developer Dalian Wanda Group, purchased the movie chain from affiliates of  J.P. Morgan Partners, Apollo Global Management, Bain Capital, Carlyle Group and Spectrum Equity Investors. Regal Entertainment Group, Cinemark Theatres and Carmike Cinemas are all publicly-traded.