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Commuters arrive at the Oculus station and mall in Manhattan on November 17, 2022 in New York City.

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Sales are returning to pre-pandemic levels at many downtown restaurants and hotels — but only on Tuesdays, Wednesdays and Thursdays.

In cities like New York, Los Angeles, and Atlanta, the three-day in-person work week has presented challenges to the hospitality industry. With fewer employees in offices on Mondays and Fridays — the busiest days for some businesses — many businesses have been forced to stagger their hours or launch initiatives to attract customers at the beginning and end of the week.

Amali, a restaurant on the outskirts of Midtown Manhattan, pulls in just a quarter of its weekday business on Mondays and Fridays, said managing partner James Mallios.

Hotels are also seeing slower week starts and ends for business travelers. However, hotels across California have seen more instances of combined business and leisure travel, according to Pete Hillan, a partner at PR firm Singer Associates, which has clients in the hospitality industry.

WFH Research, which conducts surveys and research projects on work arrangements and hiring, released results last week showing remote work costs cities billions annually. According to data collected from June through November, the reduction in spending per person in New York City was $4,661, followed by $4,200 in Los Angeles and $4,051 in Washington, DC. The study outlined a dozen cities with annual spend reductions of over $2,000 per person.

Personal workdays fell the most in Washington, down 37% from pre-pandemic levels, followed by Atlanta at 34.9% and Phoenix at 34.1%. The information, financial, and professional and business services sectors are leading the way in working from home.

According to WFH Research co-founder Jose Maria Barrero, 28.2% of employees are hybrid—working some days in the office and some days remotely—compared to 12.7% who work entirely remotely. Though 59.1% of workers are on-site full-time, hospitality businesses that cater to office workers are still struggling to make ends meet, Barrero said. WFH Research found that before the pandemic, only 5% of paid work hours were done remotely.

Andrew Rigie, executive director of the New York City Hospitality Alliance, said people in business districts are more likely to spend more on breakfast or lunch or go out for after-work happy hour than at restaurants and bars in their own neighborhoods when working remotely.

However, the demand for corporate dinners and catered meals has not disappeared in many cases.

“We’ve found that there is significant demand from the business community, both for lunch and for the really fun happy hour later, in many ways at higher levels than before the pandemic,” said Steve Simon, Partners with Atlanta-based Fifth Group restaurants.

From the inner cities to the suburbs

This month, Manhattan’s only Ruth’s Chris Steakhouse announced it would be closing in April, and numerous midtown Manhattan restaurants, including the upscale Thai-inspired Random Access, have closed.

“Even if you’re busy on Wednesdays and Thursdays, your Mondays and Fridays can be really slow,” Rigie said. “If someone walks by a restaurant on a Thursday around lunch or dinner, they might say, ‘Wow, the restaurant is full, they’re so busy,’ but that’s not every day.”

The Bureau of Labor Statistics found in a study that an increase in remote work leads to a reduction in foot traffic in urban centers. A 10% drop in foot traffic in a census tract results in a 1.7% drop in employment in catering and accommodation, and a 1.6% drop in employment in wholesale and retail.

Areas with positive traffic growth saw employment gains in the same sectors.

“Particularly because the census areas where foot traffic has increased are more in the suburbs and moving away from the dense urban parts, it means that restaurant, bar and retail employment appears to be better in those areas suburban, less dense census areas,” said Michael Dalton, a bureau research economist who led the study published in August.

WFH Research’s Barrero said significant spending has been shifted to locations outside of inner cities, hurting city centers.

“To the extent that this shifts from New York City to adjacent counties within the metropolitan area, it means a lost sales tax for the city,” he said. “That goes hand in hand with a loss of passenger revenue and so on.”

Over the past six months, Barrero said, data has shown a stable number of days worked from home for the overall economy at just under 30%. There was a drop in remote work in January from 29% to about 27%, though he predicts the level of remote work will not fall below 25% in the near future.

“The bad news for these restaurant owners and whatnot is that I don’t think we’re going back to normal, and we’re probably pretty close to the new normal,” Barrero said.

resilience of the restaurant

Rigie of the New York City Hospitality Alliance said full-service restaurants could have more consistent business over the long term than fast-casual, limited-service restaurants that are more office-focused because of tourists and people going to shows crowds. However, full-service restaurants, which have higher overheads, will continue to struggle with staffing shortages, he said.

“Once the staff can see why I’m at this restaurant, when many nights aren’t as busy and I don’t make as much money, they might go to a restaurant in another neighborhood that’s busier earlier in the week” , he said .

Emily Williams Knight, CEO of the Texas Restaurant Association, said downtown Texas restaurants are seeing two different types of worker winbacks. She said Houston reported office space was 60% occupied, with a 30% vacancy rate, while Austin led the nation in returning to in-person work.

On a recent trip to downtown Houston, Williams Knight said she had “never seen empty streets like I’ve seen in the middle of the week, in the middle of the day.” She added that the return of conventions and business trips is particularly slow.

Houston and Dallas, which have an average commute time of nearly half an hour, have experienced small weekday crowds for lunch and happy hour in recent months. Combined with four decades of high inflation and labor costs that have risen more than 20% in the last two years, some restaurants have had to close or relocate, she said.

“If you had five, six, seven restaurants within blocks of each other and you could choose, you would try to go into town and eat at your favorite restaurant,” Williams Knight said. “Now that lack of choice is also keeping people at home, and all that dovetailing with that spending isn’t happening.”

Nick Livanos, owner of Livanos Restaurant Group, has two restaurants in Manhattan and two in Westchester. While Westchester restaurants offer more consistent lunch and dinner menus, Midtown’s Oceana is “extremely busy” on Tuesdays, Wednesdays, and Thursdays, but is much weaker on Mondays and Fridays.

Molyvos, the group’s upscale Greek restaurant, moved from Midtown to a smaller space in more residential Hell’s Kitchen in November. He said the new location has attracted longtime residents who are more loyal, like the Westchester crowd.

Rigie said inner cities need to focus on targeting not only office workers but also tourists and residents of nearby neighborhoods, while also having to change working hours, cut costs and build relationships with local businesses while remote work continues.

And despite discussions about converting many low-occupancy office buildings into residential units, restaurants may not benefit for years.

A handful of independent, single-unit restaurants in Houston and Dallas are moving to the suburbs.

Tracy Vaught, who owns five Houston-area restaurants, said business from downtown office workers isn’t picking up again until later in the week. Four of their restaurants are now closed on Mondays, and another is closed for lunch on Tuesdays and Wednesdays. She expects business to pick up at all locations as spring approaches.

“Suburb restaurants suffer from the same problems as downtown restaurants or in office parks, and that means not everyone is going back to work,” Vaught said.

Girl is watching a comedy movie in the cinema with her friend.

Rgstudio | E+ | Getty Images

LOS ANGELES – Movies are still big. It’s the multiplexes that are getting smaller.

Since 2019, the number of total screens in the US has fallen by around 3,000 to just under 40,000.

This consolidation was a direct result of the Covid pandemic, which temporarily closed cinemas and sparked a surge in streaming subscriptions. A number of regional chains have closed for good, while others have had to reassess their financial footing. For many, that meant closing sites or selling leases.

“Think of the retail industry out there in general, it’s repositioning, you don’t have that many stores of the same brand in the market,” said Rolando Rodriguez, chairman of the National Association of Theater Owners. “Consumers are a lot more selective and I think you’re going to stop seeing those 30 plexes for economic reasons.”

Rodriguez said most newly built locations will have between 12 and 16 screens, and those with larger, pre-existing floor plans will seek to reallocate some space for additional moviegoer activities such as arcades, bowling alleys or bars.

Theaters have been forced to innovate even as Hollywood production returns to normal and studios have more films available for release than they could in the earlier stages of the pandemic.

As space contracts are finalized, cinema operators are investing in the basics, improving sound, picture quality and seating, as well as strengthening food and beverage offerings, events and alternative programming. The aim is to improve the basic experience for cinema-goers regardless of the type of ticket purchased.

“We’ll do better as people get used to seeing it,” said Larry Etter, senior vice president of family-owned regional chain Malco Theaters. “And I think that will happen. I think we’re going to recreate the usual effect of going to the movies on Friday night or Saturday night or whatever.”

The premium push

The industry is already seeing improvements in ticket sales. According to data from Comscore, the box office topped $958.5 million in ticket sales in 2023 through Monday, up nearly 50% year over year and down just 25% from 2019.

This is a significant improvement from a meager $98.7 million at the box office over the same period in 2021.

Foot traffic has also improved but remains below pre-pandemic levels. In the two decades leading up to the pandemic, the industry sold an average of 1.1 billion tickets a year, according to data from EntTelligence. Even when Covid restrictions were lifted in 2022, just over half that number of tickets were sold for the year. And ticket sales should increase in 2023 as studios release more films.

While cinema operators are happy about the increase in studio production, they no longer take the audience for granted.

To this end, operators have started upgrading projectors. In recent years, cinema operators have removed traditional digital projectors and installed laser units, citing cost savings and better image quality for moviegoers over time.

“It’s a bit pricey, but it will produce a better product on screen,” said Malco’s Etter. “The more light you have, the clearer everything is and the better it is to see. And it will be much more economical. It’s sustainable because you use about 60% of what you used to use.”

Etter explained that traditional digital lightbulbs need to be replaced after around 2,000 hours and produce so much heat that theaters have to pay more to air-condition the projector rooms. And laser components have a lifespan of 20,000 hours, so they can work for years without replacement.

Many theater operators told CNBC they are planning similar sound system upgrades and said they have partnered with companies like Dolby to bring quality speakers to their auditoriums.

“We’ve invested in Dolby Atmos, we’ve invested in new screens, we’ve invested in laser projection,” said Rich Daughtridge, President and CEO of Warehouse Cinemas. “For me, that’s the baseline. I think you have to create the best audio and visual experience you can create to motivate people to spend money to go to the cinema.”

General atmosphere during the private IMAX screening of the film: ‘First Man’ at IMAX AMC Theater on October 10, 2018 in New York City.

Lars Niki | Getty Images Entertainment | Getty Images

Across the industry, theater chains large and small are replacing outdated stadium seats with lounge chairs to improve the overall cinema experience.

“[We are] We really look at our theaters and make sure they’re all amazing,” said Shelli Taylor, CEO of Alamo Drafthouse. “So if they don’t have loungers, we go in and stock up. We’re doing a face lift where needed and just really freshening up and making sure we continue to provide the premium experience that people love and have come to expect from the Alamo.”

These improvements are part of a broader trend that began before the pandemic. Consumers are increasingly opting for premium cinema experiences for blockbuster feature films, choosing to spend more money to see films on larger screens or in specialized cinemas.

In 2022, 15% of all domestic tickets sold went to premium shows, with the average ticket costing $15.92, according to EntTelligence data. A standard ticket averages $11.29.

So far in 2023, that premium ticket average is higher – $17.33 each – because so many moviegoers have seen it Disney’s Avatar: The Way of Water in premium formats and 3D.

Event cinema, niche programming

Big blockbusters have always been a driving force in cinema ticket sales. Before the pandemic, movie theater owners relied heavily on studio advertising—trailers, TV spots, and posters—to promote content and attract moviegoers to theaters. Now they’re putting more into that mix.

Loyalty programs, direct marketing, and special events are some of the recent tactics operators are using to attract viewers. AMC launched its first-ever advertising campaign in 2021, starring Nicole Kidman and the slogan “We Make Movies Better.” The company invested around 25 million US dollars in the campaign.

Budget-conscious smaller chains need to be a little more creative.

“I’ve had many discussions with distributors about better and more efficient ways to market their films,” said Warehouse’s Daughtridge. “Often that’s data marketing and paid social, better trailer placements and [putting] Tickets on sale at the right time.”

“I think there’s a lot of low-hanging fruit,” he said of email lists, loyalty programs, and social media for personalized marketing.

The Warehouse, which will soon be opening its third location, has also run promotions ranging from offering margaritas with movie tickets to special “father-daughter” date night screenings. In the midst of the pandemic, Warehouse Cinemas capitalized on the release of Solstice Studio’s Unhinged by hosting a car crash event during the film’s fifth week in cinemas.

More recently, the chain ran Pajamas and Popcorn, a promotion where customers who went to the movies in their pajamas received free popcorn. During this promotion, the company screened an Indiana Jones film and the classic animated dinosaur film The Land Before Time. Tickets were $5 each.

“The Land Before Time” screenings sold 1,400 tickets, Daughtridge said.

“It was one of those events that just happened,” he said. “We didn’t expect it to do so much business.”

For big chains like AMCshelf and Cinemamarkthere are alternative programming in the form of live events, with cinemas setting up streams for concerts, sports and even Dungeons & Dragons campaigns.

Mid-size chains like Alamo Drafthouse even delve into the quirky. When the Oscar-winning Everything Everywhere All at Once hit theaters, the theater chain gave out hot dogs to ticket buyers who went to their “Feast” event to celebrate the film’s famous hot dog finger scene.

Still from A24’s Everything Everywhere All at Once.

A24

The company also worked with the Lincoln Zoo prior to the opening of its new location in Chicago’s Wrigleyville neighborhood to host an outdoor screening of The Lion King in the zoo’s lion den.

Alamo isn’t the only chain innovating when it comes to food and drink. Concessions have long been a staple at cinema, but in recent years theater owners have expanded on the traditional popcorn and soda fare.

Cinepolis, which operates more than two dozen movie theaters in eight states, is a luxury dine-in theater chain that offers a wide variety of food and drink options, from chicken wings to lobster tacos. Cinepolis is hosting “Movie and a Meal,” a special dinner themed around a specific new movie release.

“For us, food is critical to the local experience,” said Luis Olloqui, CEO of Cinepolis, noting that more and more people have big HD TVs in their homes coupled with the ability to order from world-class restaurants.

That trend is unlikely to slow, and industry insiders are optimistic about the future of the cinema business.

“I think unfortunately we’ve had some very bad PR aspects as Covid has progressed,” said Rodriguez of the National Association of Theater Owners. “And now we need to rebuild that muscle in consumers and remind them, ‘Hey, you know, that’s behind us. Theaters are fine.’”