Do you have an entrepreneur mindset and a passion for film and entertainment? If so, learn how to open a movie theater. As a business owner, movie theaters can be very lucrative ventures. Plus, they contribute to the list of fun attractions within a local community.
Learning how to open a movie theater comprises much more than serving popcorn and showing films. It requires patience, skill, and hospitality industry knowledge. In this blog, we’ll cover everything from developing a concept to signing film studio licensing agreements. So without further ado, let’s jump right in!
How to Open a Movie Theater In 12 Steps
Discovering how to open a movie theater is the beginning of quite an extensive journey. But don’t worry, from onboarding a movie theater POS system to offering food favorites on the menu, we’ve got all the steps below. Read on:
1. Come Up With a Concept and Legal Entity
Movie theaters are pretty much a niche concept on their own. However, there are specific elements that theater owners have to come up with on their own. For example, what’s the color palette going to be? What about furniture designs?
Don’t forget that you also need to come up with a name and logo. Ensure that you make this fairly generic, as you want it to signal its location. You also don’t want any verbiage to be genre-specific.
It is also during this time to register the business for legal and tax purposes. Completing this step early will also make things simpler when you begin incurring expenses or seek funding options.
2. Create a Business Plan
Once you’ve let your creativity run wild and have a concept, it’s time to get more technical. A movie theater business plan will look a bit similar to those of other businesses. As a brief overview, it should comprise the following sections:
- An executive summary
- Competitive analyses
- Funding sources
- Necessary licenses and permits
- Film licensing agreement plan
- Location and design
- Menu of snacks and drinks
- Staff hiring process
- Financial projections
- Marketing and advertising plans
- Launch plan
3. Acquire the Funding
Launching a movie theater can cost a small fortune. However, there are many funding options for business owners. Business loans, credit cards, and venture capital firms will likely provide you with the most substantial funds.
When searching for funding options, you need to have a business plan in place. This is what banks and investors will refer to when making smart business decisions. It’s also vital that you’re aware of startup and recurring overhead expenses. This way, you can aim to have a safety net, even after the theater’s launch.
4. Choose a Location
A movie theater’s success depends on its location. We often hear that a property’s location is the most important aspect, regardless of its type. However, there are several relevant factors that affect movie theaters.
For one, people often get lunch or dinner before or after seeing a film. So, find a location near popular eateries. Seeing a movie might also be a last-minute decision for couples or groups spending a busy day out. With this in mind, securing a location within or near a mall would be exceptional.
Consider your geographic areas and uncover where locals flock to. If there’s an area where people gravitate toward, that’s visible, and has space for a movie theater, you’re golden.
5. Obtain the Necessary Licenses and Permits
If you launch a movie theater business before acquiring the necessary licenses and permits, you can end up in heaps of trouble. From hefty fines to lawsuits, failure to complete this step can cause you to lose your business entirely. The most important licenses, permits, and other documents to open are as follows:
- Movie theater license
- Sales tax license
- Certificate of occupancy (CO)
- Food safety certification
- Food handling permit
- Business insurance
6. Design, Construct, and Furnish the Space
A unique step when learning how to open a movie theater is determining its layout. The blueprint of a movie theater will look much different from other business models. This concept shouldn’t be a surprise to anyone, as there are very unique features.
First, the facility must have a minimum of twelve theaters. This will allow for a multiple of films to show at once. Within each theater, there should be about one hundred seats, with a staircase on each side. Ramps and wheelchair accessible seating is also necessary to meet ADA compliance requirements.
Moving toward the front of the building, there must be enough space for counters, concession stands, and kiosks. Have extra room? Install arcade games. This is a fun way for customers to pass the time before their movie, and an easy way to maximize revenue.
Keep in mind that there will also be plumbing and electrical requirements in order for your movie theater to function. In the meantime, use the following as a checklist for movie theater furnishings:
- Big screens
- POS software
- POS hardware
- Snacks and beverages
- Paper goods
- Popcorn making accessories
- Digital menu boards
- Kitchen equipment
7. Hire the Perfect Team
Movie theaters don’t require the largest team in the hospitality industry. Just ensure that you have enough people to cover your busiest shifts. Employees at the concession stand and ticketing counter are the most important when starting out. It’s also necessary to have a maintenance team to keep the facility tidy and sanitary.
If you want to keep the labor cost at a minimum, self ordering kiosks will do the trick. Movie theaters can implement such devices for people to retrieve their tickets. Think about ticketing kiosks in airports–it’s the same concept at the movies.
Kiosks are also beneficial for food and drink orders. Instead of waiting in line, customers can place their order and retrieve it at the concession counter. This saves time for everyone and can maximize profits from food and beverage sales.
8. Sign Licensing Agreements to Show Movies
Sign contracts with film distribution companies to show films to your customers. The distributors are often the major film studios in which movies are made. After building relationships with movie theaters, they can license the films to be shown.
Within these deals, the studio and theater often decide on how they'll split gross proceeds. However, these figures can change quite often.
9. Create a Movie Theater Menu
Selling popcorn is one of the largest revenue sources at the movies. In fact, many theaters adopt popcorn marketing tactics to secure more sales. From standard salt and butter to gourmet popcorn flavors, movie theaters can get super creative. Be sure to purchase ingredients from credible popcorn suppliers to get the best deal.
It's also important that the menu caters to customers with a sweet tooth. Purchase bulk candy from a wholesale candy supplier. Buying the theater's sweet treats from a wholesale candy business will be much cheaper than going through a brick and mortar or online candy store.
On the drink menu, display a mix of soft drinks and various types of alcohol (only if you have a liquor license). Various beer brands and mixed drink recipes are sure to generate substantial revenue for the theater. Offering a balanced variety is never a bad idea.
10. Market the Movie Theater to the Public
When marketing a movie theater, you’ll want to focus on the local market. Aside from the outdoor sign, you’ll likely depend on digital advertising campaigns. From Google Ads to social media efforts, related ideas can go a long way.
Just make sure that the owner or marketing expert is familiar with calculating social media ROI. This metric will inform you whether your efforts are effective. Similar concepts are just as important for SEO efforts, too.
11. Offer a Movie Membership Program
One of the best ways to retain customers for a movie theater is to show a wide variety of films. This in itself is a standard, yet one of the best customer retention strategies you can implement. However, promotion tips don’t end there.
Upon opening your movie theater, launch a customer rewards program. Allow customers to acquire points for ticket, food, and beverage purchases. Then, allow them to redeem them from a selection of rewards. Such perks could include freebies and discounts.
12. Open the Movie Theater
And… action! Once you put all of these steps into practice, it’s time to open your movie theater. Start with a soft launch and closely monitor results. After just a few months, you should have enough consumer data to plan for the theater’s future.
How to Open a Drive In Movie Theater
Learning how to open a movie theater is a standard process across the board. Sure, some processes might be different, especially when comparing an independent movie theater to a franchise unit. However, it’s almost an identical process to learning how to open a drive in movie theater.
One of the biggest changes that will differ for drive-in theaters is the design and construction aspect. Instead of investing in indoor seating and screens, outdoor options are necessary. You’ll also need to secure a lease for ample outdoor space. Aside from this feature, the processes are quite similar. It’s just a matter of preference.
Frequently Asked Questions About How to Open a Movie Theater
Starting a business requires a lot of hard work. It’s even more so when working within such a niche market. We’ve gathered a variety of questions and answers we think will help you out during the process. See below:
Is It Profitable to Own a Movie Theater?
Yes, it can be very profitable to own and operate a movie theater. This business model can generate upward to $50,000 per year, even as a new business. To reach ample success and profits, the theater must be in a great location, have comfortable seating, and great menu items.
How Do I Start a Movie Theater Business?
One can open a movie theater business by following these steps:
- Create a concept and business plan
- Acquire the right permits and licenses
- Get the necessary funding for startup costs
- Choose a location and construct the theater
- Create a menu and purchase inventory
- Market the movie theater to the masses
- Host a soft launch to locals
How Much Does It Cost to Open a Cinema Business?
It can cost anywhere from $25,000 to $500,000 to open a cinema business. Though this is quite a large range, there are many variables that can impact the cost. Location, building size, marketing materials, and licenses can add up rather quickly.
How Do Movie Theaters Get the Movies?
Movie theaters acquire new movies via licensing agreements. Once a film company finalizes a movie, they create a licensing contract with a distribution company. Then, the movie is screened to potential buyers representing movie theaters and film festivals.
How Do Small Movie Theaters Make Money?
Small movie theaters make their money by selling tickets, snacks, and drinks. Movie theater owners can get creative when maximizing revenue. By offering memberships and concession combos, they're able to make more sales.
Now that you have all the steps on how to open a movie theater, it's time to take action. Keeping up with the high demand on movie streaming platforms, it can feel discouraging to keep a movie theater afloat. But here's the thing--people enjoy going out, especially for entertainment. By implementing the right tactics and features, you'll be able to serve local consumers a fabulous experience. In fact, you might even dominate the market.