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How Much Does It Cost to Start a Movie Theater or Cinema? (Sales Forecast and Breakeven Analysis Included)

Start a Movie Theater Business

You need an estimate of $950,000 – $2,500,000 to open a movie theater. Please note that this amount includes the salaries of all the staff for the first 3 months of operation. Here are 13 factors that affect the cost of opening a cinema.

A movie theater, which is also called a cinema is a venue, usually a building that contains an auditorium for viewing films/movies or motion pictures as it is called in some quarters, for the purpose of entertainment or perhaps education.

The cost analysis as it relates to starting a standard movie theater business in the United States of America, Canada, United Kingdom, and Australia can be said to be almost the same except for few variations. For instance; the cost of setting up a full-service state of the art movie theater facility are same especially when benchmarked against the US Dollars.

For instance, if you live in the united kingdom and you decide to import cinema equipment/gadgets (projectors, silver screen, sound system et al) from Japan, you will pay same price for these gadgets no matter the part of the world you live in, the only variation will be the cost of shipping the goods to your destination.

Other factors that may be slightly different in terms of costing when it comes to starting a standard movie theater business in any part of the countries listed above are cost of labor, cost of transportation and logistics, local tax, insurance policies, business incorporation fee, branding and promotions cost, rent/leasing amongst other factors.

Over and above, when it comes to starting a medium scale movie theater, you should be prepared to either rent or lease a standard and centralized facility with good human and vehicular traffic; this is going to be one of the areas where you are expected to spend the bulk of your start–up capital.

Other areas are the amount required in setting up a full-service state of the art movie theater, the scale/size of the business and also in paying your employees at least for the first three months of starting the business.

Estimated Cost to Open a Movie Theater Business

These are the key expenses you are expected to make when starting a medium scale but standard movie theater business in the United States of America;

  1. The total fee for registering the business in the United States of America – $750.
  2. Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Air and water pollution control permit, and Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300.
  3. Marketing promotion expenses for the grand opening of the movie theater in the amount of $3,500, as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  4. The cost for hiring a business consultant (including writing business plan) – $2,500.
  5. The cost for insurance (general liability, theft, workers’ compensation and property casualty) coverage at a total premium – $30,400.
  6. The cost for leasing a standard facility in a good and centralized location – $350,000.
  7. The cost for remodeling the facility and constructing a standard movie theater – $250,000.
  8. Other start-up expenses including stationery ($500), phone and utility (gas, sewer, water and electric) deposits ($6,500).
  9. The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000.
  10. The cost for start-up inventory and cinema gadgets and equipment (movie rights, projectors, sound system, silver screen, good lighting systems et al) – $350,000.
  11. The cost for store equipment (cash register, security, ventilation, signage) – $13,750.
  12. The cost for the purchase of furniture and gadgets (Telephone, printing machines, receipt issuing computer, computers, tables and chairs et al) – $14,000.
  13. The cost of purchase and installation of CCTVs – $4,500.
  14. The cost for building and hosting a website – $600.
  15. The cost for opening party – $8,000.
  16. Miscellaneous – $10,000.

You will need an estimate of nine hundred and fifty thousand dollars ($950,000) to successfully set up a medium scale but standard movie theater in the United States of America.

Please note that this amount includes the salaries of all the staff for the first 3 months of operation and a movie theater with more than one cinema room within the same facility.

Starting a small scale but standard movie theater business that can only service a handful of clients per–time in just one location in the United States of America will cost from two hundred and fifty thousand dollars to five hundred thousand dollars ($250,000 to $500,000). Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

When it comes to starting a standard and large scale movie theater with several outlets in key cities in the United States of America, a movie theater that can accommodate over 50 people per time and a company with the intention of selling franchise and also offering complimentary services (food court and juice bars et al).

You should look towards budgeting well over two million, five hundred thousand dollars ($2.5 million). Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

Having said that, here are some of the general factors that will influence the cost of opening a movie theatre/cinema in the United States of America.

3-Year Sales Forecast and Breakeven Analysis

Initial Capital: $2,500,000

Fixed Cost: Monthly expenses such as rent, salaries, utilities, etc.

  • Rent: $15,000 per month
  • Salaries: $25,000 per month
  • Utilities and other fixed costs: $10,000 per month
  • Total Fixed Cost per Month: $50,000
  • Total Fixed Cost per Year: $600,000

Variable Cost: Costs that vary directly with sales, primarily including cost of goods sold (COGS) such as concessions.

  • COGS: 25% of sales

Revenue Streams:

  • Ticket Sales: Average of $10 per ticket
  • Concession Sales: 50% of ticket sales

Sales Growth:

  • Year 1: Starting average monthly ticket sales of 15,000 tickets
  • Year 2: 10% increase in total sales from Year 1
  • Year 3: 10% increase in total sales from Year 2

Year 1:

  • Monthly Ticket Sales: 15,000 tickets x $10 = $150,000
  • Monthly Concession Sales: $150,000 x 0.50 = $75,000
  • Total Monthly Sales: $150,000 + $75,000 = $225,000
  • Total Annual Sales: $225,000 x 12 = $2,700,000
  • Variable Costs: $2,700,000 x 0.25 = $675,000
  • Fixed Cost: $600,000
  • Total Cost: $675,000 + $600,000 = $1,275,000

Year 2:

  • Total Annual Sales: $2,700,000 x 1.10 = $2,970,000
  • Variable Costs: $2,970,000 x 0.25 = $742,500
  • Fixed Costs: $600,000
  • Total Costs: $742,500 + $600,000 = $1,342,500

Year 3:

  • Total Annual Sales: $2,970,000 x 1.10 = $3,267,000
  • Variable Costs: $3,267,000 x 0.25 = $816,750
  • Fixed Costs: $600,000
  • Total Costs: $816,750 + $600,000 = $1,416,750

Breakeven Point

Breakeven Sales Monthly = Fixed Cost per Month ÷ (1 − Variable Cost Percentage)

: = 50,000 ÷ 1−0.25

Breakeven Sales Monthly = $66,666.67

Factors That Determine the Cost of Opening a Movie Theater

1. The Size of Movie Theatre/Cinema

No doubt, a pretty large movie theater that can comfortably accommodate one thousand people per time will be more expensive to start than a movie theater than can only accommodate less than one hundred people per time.

2. The Choice of Location

In business, location is key part of what determine the success of the business. As a matter of fact, there are business consultants cum realtors who are specialized in helping people choose an ideal location for their type of business; a location that will guarantee them to profitability within the shortest time frame.

For example, renting or leasing a movie theatre / cinema facility in a location that is off – the city center or off residential estate will be less expensive when compared to renting or leasing a movie theatre in a well – populated growing residential estate; a location in an ideal cozy and serene environment, a location in a metropolitan city with the right demographic composition of children and parents who love movies and can afford to pay for your services.

3. The Required Licenses and Permits

In the United States of America, you cannot open a movie theatre without first applying for the mandatory license and permits.

You would need accreditation certificate, building license, zonal permits, signage permits amongst others. Note that there may be several inspections you must pass before you can be issued your license – this will also cost you money.

In order to get the overall cost of licensing and permits associated with opening a new movie theatre in the United States, we will advise that you reach out to your city government.

4. The Type of Facility

As regards the facility, you have the options of renting, leasing or designing and constructing your own movie theatre/cinema facility from the scratch.

With renting and leasing a facility, you might just have to spend extra to modify the facility to fit into what you have in mind, but there is a limit to how far you can go and it will be dependent on what the landlord of the facility wants.

Let us assume that you want to construct your movie theatre/cinema facility from the scratch. It means that you will buy the land or a property, course construct and equip the movie theatre to fit into what you have in mind. You will agree that you are going to spend way more when compared to people that rent or lease a facility.

5. The Cost of Hiring and Paying a Business Consultant and Attorney

As expected, if you want to get your business started on the right foundation, it will be a wise decision to hire the services of a competent business consultant and perhaps an attorney.

A business consultant will help with drafting a workable business plan document for the movie theatre / cinema, a marketing plan and strategy, comprehensive SWOT analysis, and other advisory or things that will help you with opening the business.

An attorney will help you with registering the business, drafting contract documents and offering you all the legal expertise that will help you start the business on the right foundation.

6. The Cost for Branding, Promotion and Marketing of the Movie Theatre / Cinema

Trust me, if you need massive results as it relates to competing and winning a fair share of the available market in your city, then you must be willing to pay for effective branding, promotion and marketing of your new cinema.

As a matter of fact, it is not cheap to come by an expert in branding, promotion and marketing that will help you compete with brands that are already determining the market direction of the industry in your city.

So, if you add the cost of paying a branding and marketing expert, it will sure increase the cost of opening your movie theatre/cinema.

7. The Cost of Furnishing and Equipping the Movie Theatre 

You will quite agree that aside from the basic facilities that are expected to be found in a movie theatre/cinema, an investor may decide to spend more to make the facility to look unique.

Before you can open a movie theatre/cinema, you should budget for projectors, flat screen TVs, sound system, DVD players, Satellite dish and decoder, office furniture (table, stools and sofas),

Drawers and cabinets, telephones, filing cabinets, office equipment (cash register, security and fire alarm and protection gadgets, CCTV, ventilation, signage), and interior designs amongst others.

8. The Cost of Insurance

In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers such as liability and general insurance.

Thus, it is imperative to create a budget for insurance policy cover and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your business.

9. The Cost for Registering the Business

The cost for registering the movie theatre/cinema and obtaining all the needed documents is affordable.

10. Source of Your Supplies and Ongoing Expenses

If you have access to movie production companies, it will sure cut down the cost of running the movie theatre / cinema as against buying your access to a movie from third- party service providers.

11. Cost of Recruiting and Training Your Staff

The fact that you are opening your movie theatre / cinema as a new business means that you are expected to recruit and train your staff.

The training will help you sell the corporate culture of your organization to the new employees. As expected, it will cost you money to hire expert trainers that will help you train and bring your new hires up to speed.

12. The Cost of Purchase and Customizing of Uniform for Your Employees

Your staff are expected to have different uniforms and they are expected to put on these uniforms when they are on duty. All these uniforms will cost you money which is why it must be part of your budget.

13. The Cost of Grand Opening of the Movie Theatre/Cinema

No movie theatre/cinema opens its door for business without first organizing an opening party to officially launch the business. You can choose to do a soft opening if you operate on a low budget or you can choose to go for a grand opening party.

Can a Movie Theater Business Be Bootstrapped on a Lean Budget?

Because of the nature in terms of size and cost of the machines, equipment and facility involved in starting and operating a movie theater, it is obvious that it cannot be bootstrapped on a lean budget from home.

As a matter of fact, the business is open to the general public and you would not want complete strangers to continue to storm your house on a regular basis and at different times of the day simply because you want to run a movie theater in your house.

How Much Does It Cost to Buy a Movie Theater Business Franchise?

In the United States of America, the Average Cost of Purchasing a Movie Theater/Cinema Franchise is $150,000. Examples of 3 Well – Known Movie Theater/Cinema Franchising Companies in the United States of America are;

  1. Regal Cinemas Franchise – US
  2. Cinema Grill Franchise – US
  3. Alamo Drafthouse Cinema – US