The cinema is more than just a business. It is an entertainment environment that brings people together. The big screen, a bag of popcorn and booming sound effects provide an escape that appeals to almost any age. Going to the movies is an economical, leisurely activity that keeps bringing people back and therefore can be a profitable business through ticket sales, concessions and rental income.
You'll need to make contact with film distributors before starting a cinema business. Based on the films that are available to you, you can plan your strategy for showings. Independent films can generate more profits because they cost less, but are not as popular as blockbuster hits. Alternatively, films that have already been shown at the major chains are available for independent cinema owners and can be profitable in second runs. By the time you show them, they will be available on DVD and are therefore cheaper to obtain from the distributor. Classic films are also suitable for an independent cinema owner.
For independent cinemas, the price of the tickets may not be sufficient to cover your costs, especially with advertising expenses. You will also need to rely on the high-margin profits from selling food and beverages. You can provide pizza by the slice, hot dogs, popcorn, ice cream and candy. Or, for something healthier, fresh fruit, salad, sushi and even organic juice. With the right licensing, you can serve beer and wine in addition to soda, bottled water, juice and iced tea.
Owning a cinema has other opportunities for generating income in addition to ticket and concession stand sales. You can run advertisements before the film. Rental income is also an option for the concession stand and other facilities during non-peak hours. In fact, 10 percent of cinema income can be generated from renting out retail space, says business information site Hoovers.com. Amusement machines are also popular revenue generators.
Independent or Franchise
To become a cinema owner, you have the option of running an independent theater or purchasing a franchise. An independent theater may require renovations if you are leasing. You may choose to build a theater outright if you have the capital. Buying a franchise could be a less costly alternative if you don't mind working with someone else's business model, design, regulations and profit-sharing. The franchise owner provides you with training and financial assistance. With a major franchise chain, you will have the rights to show current films.