Film-Tech Forum ARCHIVE: What to expect when replacing an old facility?

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Posted by Mike Frese (Member # 4361) on 12-15-2010, 08:40 PM:

I am in the early stages of talking to a property owner who would build to suit a new theater for us. I was wanting to hear some ideas of what type of increase in ticket sales one might expect (if any).

Current Facility: In a 30 year old strip mall with nothing special about it. 4 screens with 2 of them being a bit small at 60 or less seats. We have operated the theater for 4 years. That makes us the longest running operator in probably the last 15 years. Our seats our Irwin Marquee type seats which we put in during our first year which are nothing special.

We have increased our ticket revenues by 60% from the first year. But we are still only 9% of the market. a 100% increase to us is only 10% of our main competitor's business.

Current Location: In a bedroom community located 5-6 minutes away from the center of our market. For the majority of people in the area we are just as close to them as the other 8 plex in the area. We lack date-type of restaurants which means we get killed on Valentine’s Day weekend.

Competitor: 15 years old. Just added 2 - 3d digital screens in the past 60 days. Located on the side of town with many nicer chain restaraunts and shopping.

New Facility: Would have 6 screens and the facility would be shared with a Family Entertainment Center that we also run in a different building in the same strip center now. Our desire to combine the two into one facility is to gain efficiencies in concession sales & labor and to gain more functional space. Currently our concession sales at the FEC are minimal.

The question: could we expect a 100% increase in ticket gross by being in a new facility?

National numbers: 305 million people, 39,000 screens for a population per screen of 7,821, $10.6 billion gross sales for a per person average of $34.77

Current Market: 86,484 people, 12 screens, ave. 7207, average gross per person $21.89

Current Market with Proposed New Facility: 86,484, 14 screens, ave. 6177, average per person $22.86

Other Area Towns (with fake names)
Capitol City: 156,377 people, 24 screens, ave. 6516, ave. per person $39.02
Has state university and an arthouse theater (non-profit), has great deal of shopping and restaurants

Shelbyville: one – six plex in a market of 22,000, ave. 3667, ave. per person $22.55

Ogdenville: one-six plex in a market of 20,454, ave. 3,409, ave. per person $24.27

Neither of the six plexes has any competition for 30 miles

Posted by Tom Petrov (Member # 1534) on 12-15-2010, 11:58 PM:

quote: Mike Frese
I am in the early stages of talking to a property owner who would build to suit a new theater for us. I was wanting to hear some ideas of what type of increase in ticket sales one might expect (if any).

Current Facility: In a 30 year old strip mall with nothing special about it. 4 screens with 2 of them being a bit small at 60 or less seats. We have operated the theater for 4 years. That makes us the longest running operator in probably the last 15 years. Our seats our Irwin Marquee type seats which we put in during our first year which are nothing special.

We have increased our ticket revenues by 60% from the first year. But we are still only 9% of the market. a 100% increase to us is only 10% of our main competitor's business.

Current Location: In a bedroom community located 5-6 minutes away from the center of our market. For the majority of people in the area we are just as close to them as the other 8 plex in the area. We lack date-type of restaurants which means we get killed on Valentine’s Day weekend.

Competitor: 15 years old. Just added 2 - 3d digital screens in the past 60 days. Located on the side of town with many nicer chain restaraunts and shopping.

How close are you to the other theater?
Do you play the same movies as the other theatre or do you compete with one another?
Do you currently have digital 3D?
What is around your theatre?

Posted by Monte L Fullmer (Member # 2797) on 12-16-2010, 05:02 AM:

You'd better have a good year's worth of operating capital put away in the bank, for some of that is gonna be used up in the intital operation.

Thing about doing something like this is that you've got to find a way to outdo your competition - do something original.

Sure, you can dress it up, make it look pretty and snazzy with neon and bright lights, new this, new that, digital projection, et.al., but what is the golden key to bring them to your plex intead of them deciding on another plex to attend? Character, personality and excellent atmosphere ..and customer (guest) satisfaction are good attributes to gain success in cinema operation.

One idea is a "Cinema Grill" if it's gonna be incorp in with this family center - place to have dinner and watch the movie at the same time. If you can go first run, that's a pretty big "foot in the door" right there with this concept.

Forget about seeing that 100% increase, or any increase in ticket sales. You might be in the red for a couple of years until you cinema settles down and is adjusted to the market.

Good luck-Monte

Posted by Sam Graham (Member # 2889) on 12-16-2010, 08:19 AM:

Does the other facility have stadium seating, and if not, will yours?

That could make all the difference in the world right there.

Posted by Caleb Johnstone-Cowan (Member # 3710) on 12-16-2010, 04:43 PM:

Do you already have sufficient and/or inexpensive parking to cater for any planned expansion? Decent parking is so important in our local market, we lose out to an extent because it's expensive to park in our mall.

Posted by Mike Frese (Member # 4361) on 12-16-2010, 08:02 PM:

We are currently a seasonal first run. I estimate we are about a 35% increase from being a full-time 1st run theater. We do horrible on move-over. I believe we could really get a boost from 35% increase to much more. The question is bow to chase after that increase.

We use the Technicolor 3d film system. I am going to do everything I can to acquire a digital 3d system since 2 of the biggest movies of the year are from Disney. They play 90% of what I play. The 10% are some independent films in hopes of trying to build that business up.

The competitor does not have stadium seating. The current plan would be for this to have stadium. our current theater does not have it either.

We are about 10-12 mins away from each other. The new building would be just blocks away.

Parking is not a problem.

Posted by Robert Carnino (Member # 5633) on 12-16-2010, 09:13 PM:

Go all digital!!!!

Posted by Louis Bornwasser (Member # 3063) on 12-18-2010, 08:39 AM:

In a word, no. No 100% increase for you.

I do agree that making your place a "destination" will help. The investment needed for a perfect, all new place will not pay out given your location and your competition. Louis