You are correct that concessions provide much of a theatre's income. But audiences come to a theatre to enjoy a movie, properly presented. Without "Film Done Right", they will either go elsewhere, or have microwave popcorn in their "home theatres". Theatres need to offer an enjoyable entertainment experience unattainable elsewhere, not just expensive concessions.

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John P. Pytlak, Senior Technical Specialist
Worldwide Technical Services, Entertainment Imaging
Eastman Kodak Company
Research Labs, Building 69, Room 7419
Rochester, New York, 14650-1922 USA
Tel: 716-477-5325 Cell: 716-781-4036 Fax: 716-722-7243
E-Mail: john.pytlak@kodak.com
Web site: http://www.kodak.com/go/motion

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We grossed a million dollars last year. We have no profit to show for it. This was only our first year and we had a lot of opening expenses. Maybe next year.

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There are very few theatres, probably less then 10% (maybe less then 1%) that make any profit from ticket sales. If concession stands were for some reason banned from theatres almost every theatre would go out of business.

During my thirty five years as a theatre owner, I have operated only single and twin theatres, plus several drive-ins. I have handled every aspect of theatre operations and have complete knowledge of what it takes and costs to run those type of operations. I have made a comfortable living doing it, but never have I operated, or known anyone else who has made a profit running theatres without the income from concessions. It's virtually impossible!

Having never owned or run a large multiplex theatre, I can only guess what the costs are to operate such. Obviously, there is savings in numbers. That is the whole philosophy of the multi plex theare. I have owned and operated several large (1500 to 1800 seat)downtown theatres in medium size cities, midsize neighborhood houses, several modest small town houses, and a large twin in a regional indoor mall. From those I think I can project fairly accurately what it would cost to operate a muliplex theatre.

Let's assume we build a tenplex theatre as a free standing location. It has a total of about 2500 seats, all stadium, with state of the art digital sound, large screens...the whole nine yards. I have read where this type of construction and equipment has taken the cost from $500,000 to $1,000,000 per screen. I'm going to assume that I'm able to watch costs closely and have it come in at $750,000 per screen for a total cost of $7,500,000. I'm able to fiance the entire amout at 8.5% for 15 years. The monthy payment would be $93,000 or a little over $21,000 per week ($2,146 per screen per week). Using my various theatres as a guide to establish average expenses, based upon similar cubic and/or square footage, number of seats, etc. I have projected the weekly costs for the entire complex to be as follows:
mortgage $ 21,146
electric/heat 4,200
Payroll & PR Taxes 5,000
telephone 50
water/sewer 275
advertising 1,000
adv materials 50
insurance 2,000
trash hauling 250
film shipping 150
maintainence & repairs 500
Petty cash 100
taxes (real estate etc.) 2,596
--------------------------------
Total weekly expenses $37,317
or $3,731 per screen

To establish gross potential, I used the actual reported average per screen grosses for the top ten pictures for the weekend of Jan. 12th-14th. A typical weekend...no holidays or other events that would effect business in an abnormal way. We are assuming here that we are playing those ten films, which would give us a total box office gross of $60,758 or $6,075 per screen.

Given a gross of $60,758 and average film rental of 50%, we would be left with $30,379 to pay our bills. With the house overhead being the $37,317 we would be $6,938 in the whole. However, basing this on an average admission price of $5.50 (Adults-$7.00, kids, srs & matinees-$4.50) we would have 11,046 admissions which with a concession per capita of $2.25 would produce concession sales of $24,853. With a cost factor of 20%, our 80% share would be $19,882 or $12,944 more then our loss at the box office, therefore giving us a nice profit for the week.

The point here is that even a theatre showing a nice profit such as the one in this example would still have lost a sizable amount of money had it not been for the concessions.

Historically, this industry started without refreshment stands, and theatres existed soley from boxoffice revenues. Film rental for first run films ran about 35% and theatres could make a profit from exhibiting motion pictures. When theatre owners saw the amount of refreshment related items that were being brought into their theatres they realized that it would be in their best interests to sell it themselves. This didn't begin to happen until the late thirties and early forties. By the late fifties and early sixties, after the advent of television, the studios become aware of the income that the theatres were garnering from refershments and suggested that since the audience that purchased them wouldn't exist if it were not for their films, they should recieve a percentage of it. Exhibitors naturally refused and would have nothing to do with it, so the studios increased their rental percentages to the point where they were indeed getting a part of it.

So the box pays most of the bills, but not all. It still takes the concession to pay the balance of them and provide the profit.

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Closest theater to me is a 12-screen in Manville, New Jersey (New York metro). All stadium, all digital, mostly mainstream with the occasional arthouse title.

TICKETS:

Adults/teens -- 9.00 after 5 PM, 5.50 before 5 PM
Seniors (62 and older) -- 5.50 all times
Kids (12 and under) -- 5.50 all times

CONCESSION STAND:

Popcorn -- 4.00 large, 3.50 medium, 3.00 small
Fountain soda (Pepsi) -- 3.50 large, 3.00 medium, 2.50 small
No free refills on popcorn or fountain soda
Combo (large popcorn & large fountain soda) -- 6.50
(No kiddie combo, though)
Nachos -- 4.50 large, 3.50 small
Hot pretzels -- 3.50
Bottled water -- 3.50 large, 2.75 small
Ice cream/yogurt bar -- 3.00
Kosher hot dogs -- 3.25

Theater also has a coffee bar

Espresso -- 2.00
Cappuccino -- 2.50
Bottled soda -- 2.00
Brownies -- 2.25
Cookies -- 2.00 large, 1.50 small

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