FROM THE TOP

By:  Allan Reagan, CEO

You’ll read in this newsletter reports of progress on many fronts, as our energized leaders strive to make Flix Brewhouse the gold standard cinema experience in each community we serve.  You already know the physical formula of great movies, food and beverages in first class surroundings, but our emotional purpose is even more important. This purpose is centered on creating and sharing happiness, within our guest community, among our team members, and for our financial partners.  It’s what this organization was designed to do and embedding that in our culture is a particular focus right now.
 
At this point in time, our portfolio is radically different from a year ago. Gone are the two legacy restaurants and added are two new Flix locations, with more to come, as well as a fall 2015 expansion of Round Rock to nine screens plus an internal educational facility (which could be converted into a 10^th screen if future demand warrants).  We’ve inked a letter of intent for a fourth Flix Brewhouse, in a thriving Houston suburb, and additional exciting opportunities are in the pipeline.
 
We have lots of business challenges and problems to solve this year. The good news from my perspective is that none of these challenges and problems is insoluble. We have a strong concept, solid capitalization, and are gaining a critical mass in people and systems infrastructure. The triple economic tailwinds of low gas prices, low interest rates, and (relatively) low unemployment are as good as it gets in the hospitality and entertainment business.  Time to make some hay! 

ROLL OUT ROUND UP

By:  Matt Silvers, Senior Vice President Real Estate and Brand Development

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With the opening of Flix Brewhouse Des Moines on Dec. 17, 2014 we can all definitively state that the Flix “roll out” is officially under way.  We have big plans over the next several years but it all starts with opening the doors of Unit No. 1.  Technically, we did that in the summer of 2011 with our original location in Round Rock, Texas.  That unit, however, is fairly different from our new Flix Brewhouse prototype and was opened without regard for its platform potential.  It was only after Flix Round Rock performed so well that the folks who backed it decided it would be a great concept to expand nationwide.

Now with the opening of our second store we are officially on the board with a new prototype look and feel.  Yes, the Flix Brewhouse expansion train has finally left the station.  Flix Des Moines is doing phenomenally well and is exceeding our projections and expectations in almost every way imaginable.  It has been hugely popular with Des Moinesians, so much so that our eight screen movie theater is now routinely performing at or near the top of the market. This is a significant achievement for a modestly sized, new-concept movie theater that has been in existence for only 90 days. 

As we fine tune operations in Des Moines, collectively, we look toward our third store which is presently scheduled to open to the public in Carmel, Indiana on April 30, 2015.  We also expect Flix Carmel to perform quite well, but you won’t read me projecting how it will do.  I’ll leave that to our operations team.  We have put everything we have into this location and the entire management and development team believes that what we are building in Carmel truly represents the future Flix prototype.  It is a fantastic looking building, inside and out, and is emblematic of the Flix Brewhouse brand.  Although I am not prognosticating, I will state on the record that Carmelites will like their Flix Brewhouse at least as much as Des Moinesians like theirs.

As we look ahead, through the end of 2015 and into 2016, we have a lot on tap. This summer we’ll add three screens to our first location in Round Rock, expand and augment the kitchen and begin the process of adding aesthetic enhancements to bring it more into line with our new prototype look.  As you will read below, we have also announced a new deal in a large and very fast growing suburb of Houston, Texas called Sugar Land. We are hoping and expecting that it will be the land of milk and honey from a revenue generation standpoint!  We are in the midst of lease negotiations with the landlord but expect that we will be able to move ahead with this deal sometime later this year, with an expected opening sometime in mid-2016.  There are numerous other deals brewing presently, but I won’t divulge too much relative to geography except to say that they are predominantly in the Midwest, West and Southeast. 

Looking ahead, we expect to expand by about three units per year.  Within a reasonably short period of time, we will have grown from a one unit concept anchoring a community shopping center in suburban Austin, Texas to a national, well regarded innovator in the dine-in segment of the cinema industry.  The growth here is palpable and with rapid growth comes growing pains.  Yes, we’ve had a few of those.  But we have already built a business that we are proud of and as we push toward our goal of 15 total units across the country, we believe strongly that we can achieve scale for our investors while bringing our guests a truly memorable, if not unique, experience.  Stay tuned for more in the months ahead as we roll onward.

FLIX INTENDS TO EXPAND TO SUGARLAND

Upscale cinema and on-site craft brewer Flix Brewhouse™ will open in 2016 at The Crossing at Telfair.

Flix Brewhouse™, the world’s only combination first-run cinema and dine-in microbrewery, will become lead entertainment anchor at the Crossing at Telfair in Sugar Land, Scott Weaver of developer Rubicon Realty Group announced today. “We set out to bring a novel entertainment concept to the area and are thrilled to have Flix Brewhouse bring their unique brand of cinema dining to the Crossing at Telfair.  Flix is both cutting-edge and family-friendly and will be a landmark destination at Telfair, whether patrons are going to the movies or not,” Weaver added.

BRAND EVOLUTION

By:  Greg Johnson, Director of Marketing

As Flix has made the transition from a single unit-operation to a multi-unit national brand, we have found a need to update some of the creative assets used in order to best communicate the brand benefits to new markets. The process has been both exciting and formidable, but the marketing team has risen to the occasion.

We'd like to share some of the projects we have been working on that, if you're in one of our new or existing markets, you may have seen. We'd also like to tease a few of the upcoming pieces that will be added to our brand going forward over the next twelve months. 

On New Year's Day this year, a crew of three traveled to our newest location in Iowa to produce a new :30 second and :60 second commercial for use in all current and existing markets. The goal of this commercial was to highlight the guest experience, showing the four major tenets of the Flix brand: movies, food, beer, and hospitality. One of the benefits of an e-newsletter is that you get to see it too:

The commercial was created in 1080p, pro-res HD and we expect it to have a shelf-life of at least 24 months. The best part about using our own people for the creation of our new commercial rather than hiring an outside agency, is that we have access to all of the footage that we created during the shooting period. From this footage, we have started the process of generating additional creative video assets for use in other areas of Flix.

The first completed asset is our Flix Promotional Reel that we send to prospective landlords to explain the Flix Brewhouse concept and the benefits of having Flix as an anchor tenant. 

Finally, I will share one of our recruiting ads. As Flix exists to create and share happiness, we want to ensure that viewers see people who are happy when they experience the Flix brand. This ad represents a shift we are currently undergoing to increase the inclusion of people in the marketing pieces we create. 

Over the summer during blockbuster movie season, we will embark on the process of creating many new creative assets to use in video, print and online pieces, with a heavy emphasis on happy people. As the Flix brand continues to evolve and grow, our focus on happiness will grow with it. You can expect to see that reflected in all the guest facing pieces coming from the brand team here. By the next newsletter, we will have many new production pieces to show you!

BUILDING ANOTHER BREWERY

By:  Justin Rizza, Head Brewer

As I embarked upon a journey to begin the brewery installation at our third Flix Brewhouse location, I was filled with a mix of nervous anticipation and curious excitement. Upon my arrival, my nervousness vanished. Our newest location in Carmel, IN (just North of Indianapolis) seems to be perfectly located and sized for us to bring an eager population joy through food, movies, and craft beer.

Upon walking through the doors of a still very active construction site, it became immediately obvious that progress was dead-on, or ahead of schedule. It was much different than my first experience with our Des Moines project. Instead of walking into a sea of metal studs, I saw walls of sheetrock with mud and tape already applied. There was even some painting already underway.

During the next four weeks I was obligated to complete a number of brewery related projects. Plumbing the lines for the propylene glycol solution that will provide temperature control for fermentation, as well as keeping all of our tanks of freshly crafted beer cold for serving was the first priority. Compared to Des Moines it was a dream. The problems created by the staggering length of travel that the piping in our last project had to span was only exaggerated by the fact that it was all split between three very different elevations. 

Here in Carmel the path is on one elevation in a very short and easily accomplishable “L” configuration.  It all went together very quickly and painlessly and once finished we were already ahead of schedule. In the weeks prior to my arrival, the brewhouse, fermentation tanks and serving vessels had arrived and were lifted into place. The 60 foot windowed display of tanks in Des Moines seemed hard to beat but the dynamics of the layout in Carmel actually appear to have a "wow factor" advantage. The 60 feet of glass that displays the serving tanks will flow almost seamlessly into a display of equal length containing all of the fermentation vessels, as well as our stunning show piece brewhouse. The lobby area clearly will have a more intimate feel while being hugged on two sides by stainless steel vessels being used on a daily basis to proudly craft our proud beers.  It will be truly a marvelous place to brew and drink finely crafted beer.

Currently, construction continues and all of the very important and necessary details are coming together as we push on with our plans to be brewing our first batches in Indiana by the first week of April.  

Umbra Chocostout

By:  Justin Rizza, Head Brewer