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How to Start a Movie Theater Business

Start a Movie Theater Business

This is indeed one of the best times to start a movie theater in the United States; howbeit, do not neglect the importance of having the right business fundamentals prior to venturing into this business.  Note that running this business can be quite as exciting as it is lucrative.

With the right planning, execution, and hard work, you will most definitely attain long-term success. You need to put together a well-detailed business plan to ensure that you have a comprehensive understanding of your market as well as your business strategy. To help you out, below is a detailed guide on how to start a movie theatre in the United States.

Steps on How to Start a Movie Theater Business

  1. Conduct Market Research

Carrying out detailed market research will give you an upper hand, even if you’re positive that you have an ideal product or service. This particular process is vital as it helps you understand who your intended audience and competitors are, coupled with your business landscape.

Also, carry out a survey of the local community to find out the sort of films people watch. It is important you make sure you’re playing movies that people will actually watch.

a. Who is the Target Market?

In this line of business, have it in mind that your target market will be individuals and families who relish seeing movies in a theater. Your business will cater to movie-goers of all ages, shapes, and sizes. As such, it is recommended you design your marketing efforts to cut across social media platforms such as TikTok, Facebook, and Instagram.

b. Is the Movie Theater Business a Profitable Business?

Yes, movie theaters can be very profitable. In 2022, reports have it that the US movie theater industry is worth $12.1 billion. Although the industry suffered during the pandemic, have it in mind that it’s now making a full recovery and is expected to grow at an annual rate of 4.7% through 2028.

Nevertheless, note that the key to increasing revenue is to offer concessions to your customers. It is also possible to make more money by renting out your theater space for private events.

c. Are There Existing Niches in the Industry?
  • Mainstream, first-run theaters
  • Second-run theaters
  • Independent theaters
  • Drive-in movie theaters
d. Who are the Major Competitors?
  • The Music Box Theatre
  • The Cinematheque
  • IMAX Theater
  • Arclight Cinemas
  • The Landmark
  • Alamo Drafthouse
  • Tampa Theatre
  • Regal Cinemas
  • Cinemark
  • AMC Theatres
e. Are There County or State Regulations or Zoning Laws for Movie Theater Business?

Yes. There are local regulations and zoning laws to consider when looking to open a movie theater in the United States. Owing to that, it is essential you take your time to understand the regulations that come with the business in your area—including any permits, building code requirements, taxes, etc.

f. Is There a Franchise for Movie Theater Business?
  • Alamo Drafthouse Cinema: $1,275,000 to $2,025,000
  • Cinema Grill: $500,000
  • Danny Boy’s Drive-in: On Request
g. What Do You Need to Start a Movie Theater Business?
  • Business plan
  • Adequate funding
  • Appropriate equipment
  • Licenses and permits
  • A spacious facility
  • The right movies
  1. Choose a Memorable Business Name

When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with. It is essential that the name you come up with can easily be pronounced, is unique and easily memorable. Some of the catchy business name ideas suitable for a movie theater business are;

Creative Movie Theater Business Name ideas
  • Premium Movies
  • Entertainment Connections
  • Purple Screen
  • Screen Zones
  • Happy Reel
  • Cinema Plus
  • Concord Expressions
  • Joy Films
  • Ultimate Movie Experience
  • Nasaa World
  • Heck Fun
  • Moviephobia
  • Magic Tales
  • Royal Wonders
  • Big Dreams
  • WOW Screen
  • Big 8
  • Grace Funhouse
  • Movie Palace
  • Fountain of Memories
  1. Register your Business

a. What Type of Business Structure is Best for Movie Theater Business?

Have it in mind that the most common business structures are sole proprietorship, partnership, limited liability company (LLC), and corporation. However, when it comes to choosing a legal business entity, you have to decide between an LLC or a corporation as they protect you from being held personally liable if your movie theater is sued.

b. List Steps to Form an LLC
  • Choose a Business Name
  • Choose a Registered Agent
  • Obtain a Copy of Your State’s LLC Articles of Organization Form
  • Prepare the LLC Articles of Organization Form
  • File the Articles of Organization
  • Draft an Operating Agreement
  • Keep Your LLC Active
c. What Type of License is Needed to Open a Movie Theater Business?

To effectively start this sort of business, you will have to obtain a few licenses and permits. These licenses and permits will vary depending on your location but will most often include a business license, zoning permit, and occupancy permit. Ensure to contact your local government to learn more about what licenses and permits are required in your area.

d. What Type of Certification is Needed to Open a Movie Theater Business?

Although there are no stipulated certifications necessary to open or run a movie theater, below are options to consider;

  • Fire Safety Certification
  • Projectionist Certification
  • Health and Safety Certifications
  • Child Labor Certificate
e. What Documents are Needed to Open a Movie Theater Business
  • Business Plan
  • Lease or Property Ownership Documentation
  • Contracts with Movie Distributors
  • Zoning Compliance Documentation
  • Employment Contracts
  • Insurance Policies
  • Federal Employer Identification Number (EIN)
  • Music License (if applicable)
  • Liquor License Application (if applicable)
f. Do You Need a Trademark, Copyright, or Patent?

It depends! In the United States, you do not have the right to show a movie to the public unless you possess a “public performance” license from the copyright owner. Owing to that, movie theatres are expected to possess copyright agreements. These agreements feature details regarding the use of copyrighted materials, such as films and music, and any applicable fees.

  1. Do your Cost Analysis and Budgeting

a. How Much Does It Cost to Start a Movie Theater Business?

The cost of opening a movie theater will range from around $135,000 to $325,000. Most often, a good percentage of these expenses will be on theater rental, equipment, labor, and the acquisition of licenses for the films you feature. You might as well be able to keep costs low by leasing equipment or buying used ones and licensing older films rather than new releases.

b. What are the Cost Involved?
  • Licenses and permits: $100-$300
  • Insurance: $100-$300
  • Marketing and advertising: $500-$1,000
  • Website: $1,000-$2,000
  • Software: $500-$1,000
  • Theater Rental: $5,000-$10,000
  • Digital Projector & Sound Equipment: $125,000-$300,000
  • Film Licensing Fees: $300-$2,000
  • Employee Wages: $2,000-$5,000
  • Concessions: $1,000-$3,000
c. What Factors Determine the Cost of Opening a Movie Theater Business?
  • Size
  • Location
  • Type of movie theater
  • Business model
  • Equipment
  • Additional services offered
d. Do You Need to Build a Facility?

Yes. Normally, you’ll want to lease an existing theater that’s already designed for that purpose. As such, it is recommended you only look out for a theater in a viable location. Also, note that theatres attached to malls and shopping centers are preferable by patrons.

Nevertheless, as per IBISWorld, the cost of building and furnishing a movie theater facility falls between $700,000 and $2.07 million.

e. What are the Ongoing Expenses for Running a Movie Theater Business?
  • Rent or mortgage payments
  • Property taxes
  • Utilities
  • Staffing
  • Concessions
  • Marketing
f. What is the Average Salary of your Staff?
  • Ticket takers, ticket sellers, concessions personnel, and cleaning staff: $8 – $10 per hour
  • Handyman: $12 – $25 per hour
  • Movie theater manager: $30,000 and $50,000 per year.
  • Marketing professional: $30,000 and $50,000 per year
g. How Do You Get Funding to Start a Movie Theater Business?

When putting up your movie theater business plan, you would want to evaluate how you intend to raise funding to start your business. Owing to that, have it in mind that your primary sources of funding will be personal savings, family and friends, credit card financing, bank loans, crowdfunding, and angel investors.

  1. Write a Business Plan

a. Executive Summary

Joy Movie Zone (JMZ) will be a quintessential and properly designed movie theater in the city of Portland, Oregon. At JMZ, our primary intention is to provide a mind-blowing cinematic experience for people of all ages. To ensure we remain the number one choice when it comes to entertainment and movies, we will establish specially designed state-of-the-art facilities, a wide range of movies, coupled with first-class service.

b. Products and Service

At JMZ, we will offer a vast range of products and services to ensure we provide a one-in-a-kind movie-going experience. Our services include;

  • Movie Screenings
  • Concession Stand
  • Comfortable Seating
  • Special Events and Premieres
  • Private Screenings
  • Online Booking
  • Movie-related merchandise
c. Mission Statement

At JMZ, our mission is to leverage our specially designed state-of-the-art facilities, a wide range of movies, coupled with first-class service to provide our clients and patrons with a joyful and wholly exciting cinematic experience. We will always strive to cultivate and sustain a sense of community and entertainment, and ensure that our facility serves as that source of enjoyment and relaxation to everyone who visits.

Vision Statement

Our vision at JMZ is to grow to become the number one destination for movie lovers in Portland, Oregon. We will focus on meeting benchmarks and as well setting new industry standards when it comes to innovation and customer satisfaction.

At JMZ, we want to become the pacesetter in the field of entertainment. In addition, we will cultivate the cultural enrichment of the communities we intend to cater to.

d. Goals and Objectives
  • Increase Attendance
  • Boost Customer Experience
  • Expand Film Offerings
  • Upgrade Technology
  • Sustainable Practices
  • Community Engagement
  • Employee Training and Development
  • Accessibility Initiatives
  • Partnerships and Collaborations
  • Digital Experience
e. Organizational Structure
  • Cashier: Greet customers, sell tickets
  • Concessions Workers: Prepare and serve food, collect payments
  • Theater Manager: Manage employees, maintain inventory
  • Film Operator: Manage projector and sound, troubleshoot equipment

Marketing Plan

a. SWOT Analysis
  • State-of-the-art Facilities
  • Wide Range of Film Selection
  • Top Class Customer Service
  • Strategic Location
  • Loyalty Programs
  • Not Enough Seating Capacity
  • Inadequate Concession Options
  • Competitive Market
  • Special Events and Collaborations
  • Enhanced Online Presence
  • Bolstering Accessibility
  • Ever Shifting Consumer Behavior
  • Economic Conditions
  • Piracy and Copyright Infringement
b. How Do Movie Theater Businesses Make Money?

A movie theater business is known to generate revenue from the sale of movie tickets to patrons. Aside from that, they as well make money by selling concessions like popcorn, candy, and refreshments.

c. Payment Options
  • Payment via bank transfer
  • Payment via credit cards/Point of Sale Machines (POS Machines)
  • Payment via online bank transfer
  • Payment via mobile money transfer
  • Payment via QR Codes
d. Sales & Advertising Strategies

To ensure you attain success in this line of business, it is necessary you consider every marketing avenue to the fullest. Consider promoting your movie theater across a vast range of mediums to ensure you get maximum exposure.

Always ensure that your web content is optimized for search engines (SEO) to make it possible for locals to find your company online easily. If you already possess a well-detailed business plan, you by now know your unique selling points.

These might be extremely comfortable seats that recline. It can as well be ticket prices that are considered low especially when put in comparison with other local theaters. Ensure to showcase the advantages of watching a movie at your theater and people will show up.

Also, build valid partnerships with local entrepreneurs to make it possible to collaborate on promotions. These businesses might be nearby cafes, restaurants, bars, and other venues.

Financial Projection

a. How Much Should You Charge for your product/Service?

Movie tickets tend to cost around $12 and $20; although, you can choose to charge a discount for a matinee show or a premium price for weekend showings. When it comes to concessions, it is possible to charge around $5 to $12 for candy, popcorn, and sodas. If you choose to make available alcoholic beverages, you might as well charge around $10 and $20 per drink.

b. How Much Profit Do Movie Theater Business Owners Make a Year?

Within the first year of your movie theater, particularly if you choose to start with a two-screen theater, you might show two screenings per week to 75 patrons.

It is feasible to charge $15 a ticket and sell $10 worth of concessions to each person, and this totals $195,000 in annual revenue. It as well translates to around $59,000 in profit, especially when you take into consideration the industry’s 30% margin.

Howbeit, as your movie theater experience grows, it is possible to draw 200 people per screening, and that means $520,000 in annual revenue and a mind-blowing profit of $156,000.

c. What Factors Determine the Amount of Profit to Be Made?
  • Location
  • Foot traffic
  • Movies
  • Business model
  • Additional products and services
  • Operating costs
  • Technology
d. What is the Profit Margin of a Movie Theater Business?

Reports have it that after costs, your profit margin would be around 30%.

e. What is the Sales Forecast?
  • First Fiscal Year (FY1): $195,000
  • Second Fiscal Year (FY2): $520,000
  • Third Fiscal Year (FY3): $1,899,000
  1. Set Up your Shop/Office

a. How Do You Choose a Perfect Location for Movie Theater Business

Truth be told, there are certain vital things you have to take into consideration when looking to find the best space and location for your movie theater. First and foremost, you will want to go for a space that is massive enough to contain all your guests.

It is also important to make sure the space is accessible and convenient. Don’t forget to evaluate the cost of the space, and make sure that it is affordable. Howbeit, as your business grows or if you obtain additional theaters, you will likely have to recruit more employees.

b. What State and City is Best to Open a Movie Theater Business?
  • Las Vegas
  • Orlando
  • New York
  • Miami
  • Chicago
  • Atlanta
  • San Francisco
c. What Equipment is Needed to Operate?
  • Screens
  • Chairs For Ticket Buyers
  • Reel Projector
  • Computers
  • Speakers
  • Dimmable Lights
  • Sound Proofing
  • Audio/Video Receivers
  • Software To Play Films
  • HDMI Cables
  • Ticket Booth
  • Point Of Sale System
  • Cash Registers
  • Butter Warmer
  • Popcorn Maker
  • Candy
  • Refreshments
  • Insurance
  • Labor
  1. Hire Employees

You will have employees even from the very beginning of your movie theater unless you have a single screen at your theater.

If that is the case, then it is possible to handle ticket sales, cleaning, and marketing alone. Howbeit, it is necessary you consider recruiting people to take tickets and sell refreshments. Aside from that, you will as well require someone to run the projector.

  1. Launch the Business Proper

Although it will be nice to host a launch party or offer discounts at the very beginning, it is imperative you focus on differentiating yourself from the pack. Try not to show the same movies as the rest of the local theaters. Make sure to carry out unique promotions to ensure you capture the interests of your intended audience.

Don’t forget to obtain licensing deals since it makes it possible to show movies that are in demand as opposed to independent films that the general public probably wouldn’t be so eager to see.

a. What Makes a Movie Theater Business Successful?

To make this business successful, you have to sell more than just movie tickets. In this line of business, you can sell popcorn, candy, refreshments, movie memorabilia, etc.

Aside from that, you can choose to charge more for seats in the center/back of the theater. Don’t also forget to charge more for evening tickets as opposed to matinee tickets. You can as well choose to replace the front-row seats with row-style seats with tables and chairs.

It is also possible to sell premium food and drinks to your patrons at comparably high prices. You can also add an arcade to your movie theater. You can generate good revenue if your arcade features some of the latest video games.

b. What Happens During a Typical Day at a Movie Theater Business?

For a business owner in this line of business, their daily activities cuts across different segments of the business and they will perform a wide range of duties. The owner or manager will have to ensure they pick movies that resonate with their clients.

He or she will also have to take care of marketing the business, recruiting new employees, delegating work to current employees, and securing licensing deals for future films

b. What Skills and Experience Do You Need to Build a Movie Theater Business

To be able to start this business and run it successfully, it is necessary you have a solid understanding of the desires of locals.

Have it in mind that a comprehensive insight into the types of movies your intended audience would love to see has the potential to make the difference between a successful movie theater business and one that fails. The business owner will as well have to be a skilled marketer.