Serving Developers, Lenders, Investors and Potential Exhibitors In the Evaluation of Theatre Sales and New Construction

Key Considerations in Your Decision to Buy or Build

Owing and operating a movie theatre is not easy. I get calls everyday from someone who tells me, “My wife and I have ALWAYS wanted to open a movie theatre and here is this great little theatre in our town that has been closed for a couple of years . . .”

Or, “I want to open a movie theatre and don’t know anything about running a theatre. What do I need to know?”

These are some things you DO need to know.

It costs a lot of money to open a theatre and keep it running. Movie theatres are open 365 days a year. When everyone else is taking the day off, Christmas, New Years Eve, the Fourth of July, all major holidays are your busiest days. You will be working weekends—at your theatre.  And, I hope you are a night owl, because your normal work day will usually begin around 11:00 a.m. and end around 2:00 in the morning.

Owning and operating a movie theatre requires wearing many hats. You are responsible for food service, customer service, human resources. You must be up on state and federal laws and regulations as well as know your local building codes, personnel regulations, and labor laws.

Oh, and yes there is the fact that you don’t control the product you offer. You must compete every week for those movie titles you want to play with the other theatre owners in your market. Sometimes you will get the movie. Sometimes you won’t. This process is called Film Buying and requires expertise and industry relationships to be done successfully. There are professional buying and booking services that offer this service for a fee.

You should conduct a market analysis for any property or location you are considering for a movie theatre.

Location, location, location has always been important in the success of any business. This fact remains true for motion picture theatres.

If you are looking at an existing location or a site you wish to develop there should be approximately 10,000 residents per screen within the immediate area to support that location. But there are lots of things to consider. Of course, it would also be great if there were no other theatres in the immediate vicinity. If you have competition people are less likely to travel to your location and you have to compete for product. In more rural locations you will find that your customers are more willing to drive to see a movie and your circumference of draw is greater.

Another important thing to consider is how much area you have to move customers in and out quickly—ingress and egress for movie theatre traffic is critical.

If you are considering re-opening a theatre that has been closed, stop and consider “why” that theatre is closed. If an established operator was unable to make a theatre profitable there is probably a good reason the theatre is no longer open. That is not to say you won’t be successful in re-opening the theatre, but it is important to understand why it was closed.

If you are thinking about building a new theatre you should know that new construction costs approximately $165-175 a square foot for the building and that does not include site costs and equipment.

What is Digital Cinema? Do I Need It? Can I Buy It? Digital cinema is the biggest technological improvement in motion picture projection since the development of the projector. The industry has been working together to establish standards and manufacturers have been working to improve the technology and reduce the costs. The exhibitor trade association NATO has been working to insure that the roll out of new equipment is fair. I have been heading an exhibitor group called the CBG (Cinema Buying Group) that represents independent theatre owners. The CBG will strive to insure that its members get digital cinema equipment at a competitive group rate. For more information on digital cinema check out the NATO website at www.natoonline.org and the following links: www.cbgpurchasing.com, www.MKPE.com and www.SMPTE.org.