Can a family name take on Cineplex?

How Quebec-based Guzzo Cinemas plans to expand in the west with its large scale entertainment complexes.

Vince Guzzo

Pictured: Vincenzo Guzzo, CEO of Guzzo Cinemas.

Cinémas Guzzo, a Montreal-based chain of movie theatres, may be little-known outside of its home province of Quebec. But over the course of its 40-plus-year history, the Guzzo-family owned company has helped shaped the Canadian movie business in unexpected ways.

Today, Guzzo Cinemas is comprised of 10 theatres across the Greater Montreal Area, making it the third-largest chain in Canada, with two more on the way next year. But it remains a fraction of the size of competitor Cineplex, which counted 165 theatres at the end of 2018 and which has expanded into adjacent businesses over the years – food service, esports, video gaming, digital media – to offset declining ticket sales. (Last week, Cineplex began seeking a strategic equity partner for World Gaming Network, its online e-sports platform, though it intends to keep a minority interest).

Yet CEO Vincenzo Guzzo, who was handed the company’s reins from his father, founder Angelo Guzzo, believes there’s room in Canada for both David and Goliath, as the company looks to expand outside of Quebec for the first time since its founding more than 40 years ago.

This time last year, the company announced plans to enter into Vancouver, Calgary and Red Deer, Alberta, markets that Guzzo says are not as “oversaturated” as those of its native Montreal. If the chain can make money in the more competitive Montreal area, Guzzo says he doesn’t see any reason it shouldn’t be able to steal share in Alberta and elsewhere.

Tape-cutting on new western locations was initially planned for December next year. But those plans have since been postponed, with a new timeline of December 2021, as it focuses more exclusively on Alberta and examines “other opportunities,” on which the CEO is currently unable to elaborate.

“We’ve always had the philosophy that we want to always build. We didn’t want to buy old existing theatres, have to renovate them or shut them down,” he says. “But now, we actually have some opportunities that make so much sense, that it may actually be worth picking up screens here and there, then consolidating everything.”

Whether the company builds new or not, its westward expansion comes at a difficult time for the industry, as movie attendance slips across North America. According to Statista, in 2018, ticket purchases totalled US$1.3 billion across the continent, up from $1.23 billion the year before. But sales have not exceeded $1.4 billion since 2009.

In spite of industry headwinds, Tom Cooper, an associate business professor at Memorial University in Newfoundland and a former consultant at PwC, says the expansion into western Canada makes sense, given what the company has been able to build in Quebec.

“Guzzo’s choice to enter the Alberta and western Canada has previously been driven by a strategy to target underserviced markets as well as broader exposure beyond the chain’s Quebec market. These strategies of targeting niche, underserviced markets as well as broaden exposure beyond a specific geographic segment make sense,” Cooper told strategy via email. “The question is whether the premiumization and experience that Guzzo is selling, in comparison to a consumer sitting on their couch and watching a movie on a streaming service, such as Netflix or via their cable provider, is enough to establish a viable business model.”

Another factor, says Kenneth Wong, a professor of marketing at Queen’s University’s Smith School of Business, is that given current “Wexit” sentiments, coming from Quebec may prove to be a disadvantage, unless it can find a way to cater to the region’s Francophones.

During a period when the industry standard is huge screens and spacious seats – and when media companies invest heavily in promoting their own titles – Guzzo says customers are most likely to attend the closest theatre that has the movie they most want to see, no matter who owns the venue.

Differentiating, for him, means offering more options, which means having more screens. With an average 14 screens per theatre, Guzzo Cinemas has the largest number of screens per location after AMC.

Guzzo has contributed to the “era of recreation centres featuring not only movie theatres but also a Café-Hollywood restaurant and virtual-reality games,” ever since its acquisition and renovation of Cinema des Sources 10, a modern, 10-screen movie theatre in 1998.

Its strategy of offering more movies and entertainment options to customers became ever more clear later that year, with the opening of its Mega-Plex Taschereau 18, an 18-screen, 4,500-seat complex in the area of Greenfield Park. Housing a carousel, bumper cars and an arcade, the venue became one of Canada’s largest at 100,000 square feet, according to the company.

“Our focus is on entertainment,” Guzzo says. “We integrate VR, full motion arcade experiences. New locations will have 20,000 square feet arcade areas along with separate company-owned Giulietta Restaurants, so patrons can choose between the two or go to both.”

Guzzo believes branding will play a large role in the company’s success, but it will rely largely on his family name. In addition to Guzzo Cinemas, the family owns a chain of restaurants and a construction business in Quebec, and it pursues philanthropic endeavours through a foundation. It’s also the reason Guzzo joined CBC’s Dragons’ Den as an investor for its 13th season, as it offers valuable exposure that can serve as a stepping stone for expansion.