The King of Intermissions

Munching, crunching and chewing away, through love scenes, naval battles and death on the barroom floor--that is the way California Entrepreneur Eugene Victor Klein likes to see his customers behave. Klein, 44, is chairman, president (salary: $156,000 a year) and chief stockholder of National General Corp., the second largest U.S theater chain.* By catering to and encouraging the moviegoers' need to nibble on popcorn, candy and anything else he can sell them in his 220 theaters, Klein in four years has brought National General from a $6,700,000 loss to a $3,030,000 profit. His secret he has managed to raise the average cinemagoer's expenditure on snackfrom 17-c- to 29-c-, or 70%--and 62% of that total is pure profit for National Expanding to the East. National is doing so well these days--it expects a $4,000,000 profit this year on sales of $65 million--that Klein plans to add 100 more theaters to the chain in the next three years. The expansion wil not only take National into the metropolitan areas of the East for the first time but will bring it much closer in size to front-running American Broadcasting-Paramount, which operates 407 movie houses. All of the new expansion will involve drive-ins or theaters in shopping centers. Says Klein: "The big thing for the family today is to do everything in a package--go shopping, have dinner, go to a movie. Nobody wants to schlepp all the way downtown to an old barn any more."

The same formula, mixed with sexier films for adult audiences, higher admission prices and special teen-age attractions, has helped other big exhibitors to bounce back financially from the inroads of TV, which has cut movie audiences almost in half (to an average 44 million persons a week) since 1947. Both the exhibitors and producers have also benefited from major hits whose yields are ten times as large as a decade ago--for example, an estimated $30 million at the box office for Goldfinger, $50 to $60 million for My Fair Lady. Besides, most of the big chains now depend on other fields for most of their income: Loew's has become essentially a hotel business, Stanley Warner concentrates on girdles (Playtex) and AB-Paramount is heavily in radio and TV. Though it has diversified into real estate, CATV and savings and loans, National more than the others still depends on the theaters as its "eating business."

Cheaper than Hamburger. Before he came to National, Bronx-born Gene Klein made his mark as a California used-car dealer by adopting an unusual pitch. He advertised that his cars were "cheaper per pound than hamburger," marked them variously at 440 or 660 per Ib. He bought 50,000 shares of National with his profits, wound up as president after the company ran into critical financial trouble. "There were so many fires to put out," says Klein, "that I had to make a list of priority fires." Klein sold off some unprofitable properties, clipped personnel, then went to work on the theater operations. Today he puts in six days a week at his Beverly Hills office, personally screens most of the films National shows, likes to relax Sunday afternoons in the swimming pool of his $500,000 Grecian-modern mansion.

At National, Klein not only noticed the big return on theater snacks but also how poorly National was displaying food in its lobbies. He changed the lobbies into fancy display centers where vending machines dispense hot dogs, hamburgers, sandwiches, coffee and soft drinks. He ordered his men to have "eat-popcorn" reminders flashed on the screens, lengthened intermissions between shows from five minutes to a taste-tempting twelve. Last year snacks accounted for 18% of National's sales. Even the nuts and popcorn in National's lobbies work overtime: they are highly salted, thus help sell more soda pop.

*A major fund-raiser among California Democrats, Klein backed Pierre Salinger in his losing race for U.S. Senator last year, then hired the former press secretary to Presidents Kennedy and Johnson as vice president in charge of advertising--at $35,000 a year.

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