ZEELAND — Charter House Innovations has taken the strategy of business diversification to an extreme.
The Zeeland-based manufacturer of custom furniture and other interior products not only operates a 400,000-square-foot manufacturing center, but it also owns CityFlats Hotels in Grand Rapids and Holland and Sperry’s Moviehouse in Port Huron.
“I do things a little differently from the manufacturing side,” said company owner Chuck Reid. “I like to go create my own little showrooms to showcase our capabilities to our customers and bring them in from all over the world. I not only tell people they should buy it, but I actually show them I do buy it and it’s actually pretty successful.”
Charter House Innovations’ unique growth strategy has proven so successful that Reid plans to continue creating ancillary businesses to showcase the company’s products.
In early July, the company announced it would open a new 10-screen Sperry’s Moviehouse in Holland as part of a $30 million entertainment district, according to a prior MiBiz report. The theater should open in 2019, Reid said.
The company also intends to open its third CityFlats hotel in Port Huron next year.
As far as business goes, Reid says that having the hotels and movie theaters has “immeasurably” helped grow the manufacturing side of his business.
“After we opened up our CityFlats in Holland in 2008, it just gave us a tremendous amount of credibility with our customers who would come in and check us out,” Reid said. “It just let people look at us in a different light and that we’re not just a manufacturer. We’re more than just a manufacturer. We really are a partner for them in the design and manufacturing where we can create entire environments. I don’t have anyone telling me what to do. I can do it how we want and can show off our capabilities.”
Charter House fills its movie theaters with reclining seating produced by its subsidiary First Class Seating. Likewise, Charter House manufactures the seating, millwork and other interior finishes for the CityFlats hotel locations.
Despite what has overall amounted to a decline in moviegoers over the past years, Reid sees his First Class Seating business unit as the company’s best avenue for growth in coming years.
However, overall the U.S. theater industry is expected to grow only modestly through 2020.
U.S. box office sales are expected to grow 1.2 percent to nearly $12 billion between 2015 and 2020, according to a report published by PricewaterhouseCoopers.
While the U.S. theater industry may be growing modestly, the industry is poised to surge to nearly $16 billion in the Chinese market.
For its part, Charter House expects to generate between $30 million and $40 million in annual sales for its manufacturing business this year, Reid said. The company plans to grow annual sales between 10 percent and 15 percent in the coming year.
The manufacturing operations employ roughly 250 workers. The company has approximately 600 employees across all of its units, including manufacturing, the hotels and the movie theater business.
To successfully manage a manufacturing company along with a small hotel and movie theater chain, Reid says his strategy is that he “hires good people — that’s all I can do.”
A MODEL FOR OTHER MANUFACTURERS?
Although Charter House Innovations has had success in opening ancillary businesses to promote its products, Reid says the company’s model is not fit for every manufacturer.
For one, he notes that his business is very consumer- and design-orientated, making a showroom — the hotels and movie theaters — almost a necessity.
“We’re heavily design-oriented, so if you don’t have that and you’re just taking orders and designs from a different company, it’s a little different than what we do because we like to be the innovator and create designs from scratch,” Reid said. “The kinds of partnerships we like to find are where we can help provide some design and engineering leadership and a partnership with them. All of this is to help create work for the shop to help keep everyone working.”
Going forward, Charter House Innovations also plans to bolster its core business of crafting interior decor and providing the millwork and other components for the theater business.
“The next phase of that would be to help Charter House develop the interiors and provide the millwork (for the theater industry),” Reid said. “It’s a whole new avenue that we haven’t done before. Everything we do is to pretty much to augment what Charter House is capable of doing.”
Made in Michigan: Zeeland-based Charter House Innovations has taken a unique path to growing its seating and interior decor manufacturing business. Instead of focusing only on making the product, the company also owns and manages CityFlats hotels and Sperry’s Moviehouse. Owner Chuck Reid believes operating these businesses gives his manufacturing operation a well-exposed showroom to attract customers. The company currently generates annual revenues between $30 million and $40 million and employs 250 workers in its manufacturing operation.