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TOPIC: How could it fail?!

How could it fail?! 26 Feb 2009 11:11 #30993

  • Bran1501
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I may be nieve, and if I am I'm sure I will read in in the responses...honesty is most appreciated...

Basically, my idea in a nut shell would include:

1. slightly more diverse and easier managed concessions (needing only to bake one type of food, all else is bought and sold as is...except the popcorn of course....not making pretzels or frying foods or heating up frozen pizzas)

2. more comfortable seating (no more rows of 20+, more legroom so others can walk by easier)

3. a free coat room with attendant (if needed, up here where I live it is)

4. other cinema/rec room for various events, similar to what theatres have finally started to do with comedy acts and such

All in all, I'd show the same movies, offer more diverse (and tasty) concessions, better amenities...for a cheaper price than local competitors....now before you go crazy with that....Theatres here - day $8.50, evening $10.50...popcorn here - $4.00 medium.....what I would do, tickets $7.00 (national average from my research), popcorn $2.50 medium....Clearly I do not know all the other expenses included like permits, insurance, taxes, etc, and all of that information would be very useful, but no one has provided estimations on those on this forum and they are most difficult to find elsewhere. So, as my original question says, How could this fail?! If not by the sole reason people would come to my theater for the cheaper price to see the same movie? Or.....will greedy litle distributors demand I increase my price to increase their profits? I just don't see how attendance can suffer at all if I price tickets now, where they were in this area 10 years ago! All advice, critiquing, criticism, banter, snide comments are welcome! haha
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Re:How could it fail?! 26 Feb 2009 11:32 #30994

  • slapintheface
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How it could fail.There are many ways but there are many ways you could do well.1st who is your competition? How many screens and what kind of films do they show.What does your facility offer they dont have.Not food but the building its self.
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Re:How could it fail?! 26 Feb 2009 16:03 #31000

  • Mike
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How can it fail? Easy! That is the wrongest question if you are talking business. It's easy to fail. 80% of small businesses fail in the first 5 years. There's a joke that goes something like... "and they're the lucky ones." With all those failures the stories of struggle and suffering go without saying. No one starts a business to fail and everyone tries everything they can throw at it before failing. That said: let's get going and lead with our chin.

Starting a movie theatre is like starting any other business except we have a cadre of geniuses making movies for us.

The # 1 glitch in the comment was national average ticket vs. what you'd like to charge. National average includes discount, dollar night, matinee, children, militaruy, etc.

Start with a plan.
Michael Hurley
Impresario
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Re:How could it fail?! 27 Feb 2009 23:06 #31019

  • Keweler
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If your only competive edge is that you are cheaper... the answer to your question is: very easy unless you have a lot more money than the others.
Once you take business away from your competitors, they will lower their prices, first they will match your prices and if that doesn't help they will undercut you. Now that's not a problem if you have a lot of money left and can stick it out, but can mean a quick exit if you depend on your cashflow.
Good luck anyway,
Jay
Last Edit: 27 Feb 2009 23:08 by Keweler.
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Re:How could it fail?! 02 Mar 2009 14:34 #31045

  • Bran1501
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well main competitors here are showcase and amc...landmark is sorda existent and from there it's a few small independents. To keep costs down I figure keep it smaller, like 5-6 cinemas, especially since I'll have that one rec room that can be used for comedy, concerts, etc...as of right now competitors have added just comedy acts 1 night a week. Another reason to keep it small is traffic in the area, it can be a pain. So instead of having a larger cinema in the middle of a metropolis, figure have 2 smaller ones on the edges of the metropolis....you get those from within the city and those in the more rural areas...They all show first run movies, the smaller independent theatres show some independent films and 2nd run movies, sometimes 1 first run movie....I'd be more selective with a first run movie....for example, when transformers 2 comes out this summer, I'd dedicate 2 if not 3 screens to it, and not both with the other first run movies for those few weeks....ideally i'd go digital in all cinemas, theatres around here are slowly updating....I'd offer easier access as I pointed out earlier....potentially a huge arcade....green technology building....was thinking something like seats that are on airplanes so people can use a tray, plus the airplane seats are comfy and built for durability! was even thinking of giving my place some class with a grand piano and some old guy playing, like in nordstrom!
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Re:How could it fail?! 02 Mar 2009 14:38 #31046

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well the only way walmart and target were successful was because they had cheaper prices and kept their costs wayyyyyy down....if it works in retail, it should work anywhere else since retail shoppers are amongst the least loyal shoppers....They stay true to brands of merchandise, not the name on the store....a panasonic tv from walmart is the exact same as the panasonic from best buy and circuit city, and look what happened to circuit city after having all their products over-priced for years! I've heard cheaper prices will not make you successful...however, that's how walmart and mcdonalds were successful, so who's right?!
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Re:How could it fail?! 02 Mar 2009 14:52 #31047

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in addition to the competitors thing...it's not secret showcase is struggling for money, so they can't afford to let down their prices (even though they should could they'd probably still profit more from the increased attendance)...and neither amc nor regal could afford to buy the theatres showcase is selling....soooooo....it appears they aren't financially stable because of their business practices....plus the best food they offer is a pub style restaurant with overpriced fried food....I can advertise my oven baked, healthier, and CHEAPER food to lure people over....was also thinking of leasing out part of the building to a chain restaurant, but that would require too much money to build too large a building I fear....it'll be expensive enough for just 5-6 screens! Any ideas how to contact angel investors when the time is right for me to go through with this? And spare me the "80% of businesses fail" blah blah...we've all heard that since we were 12 years old...there a lot of factors that go into that....movie theatres are different, people want someplace to go out, something to do, if you make it affordable they will do it more and see movies they may/may not enjoy, rather than just wait to go see a movie they know they will enjoy....average american goes to the movie theatre 4 times a year according to attendance records from last year (1.4 billion customers and roughly 305 million people in this country)
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Re:How could it fail?! 02 Mar 2009 17:21 #31049

  • rodeojack
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The problem with your logic (prices & costs way low) is that Walmart has gargantuan buying power and huge sales volumes. You have neither, as far as you've said. Therefore, you won't get any discounts on the two most expensive wholesale products you'll be buying... your film and your concessions. Without that, you're pretty much on the same playing field as everyone else. Without a doubt, you won't be outbuying Regal, or AMC, or even Landmark. More likely, you'll be fighting them for the very film you want to put in your theatre. Since the studios work off a percentage of ticket sales, is it likely they'll give you the hottest pictures when you charge half as much as your competition?

So, where else could you cut, where your competition has, or can not? Square footage is expensive. Payroll is a given. You won't be negotiating deep discounts with the power, gas or insurance companies... and probably not with the IRS and your local state taxing districts.

Not to rain on your parade... dreams have to start somewhere... but you should probably learn (a lot) about this business, then see where your ideals might fit in. Work in one for a year or so... it can be a real eye-opening experience.
Last Edit: 02 Mar 2009 17:25 by rodeojack.
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Re:How could it fail?! 02 Mar 2009 19:24 #31050

  • slapintheface
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There are thousands of theaters that have failed over the last 60 years.Just go to cinematreasures.com and look at the list of pages.That being said I am not a fan of the cheaper is better. A niche in your bsns plan to me is better than cheaper ticket price.I will not charge less for what I give better??? There are many people that will argue that point .Being in bsns is not a hobby.I am here to make money and provide the best service ,food and movies i can....
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Re:How could it fail?! 03 Mar 2009 13:51 #31063

  • Keweler
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As Rodeojack pointed out already, Target and especially Walmart have huge buying power and sell a lot of items. So while this is something to aim for (having a multinational company with billions in sales) using this as a comparison is not a good idea.
You think the big players won't lower their prizes? Mhh... what would you do?
Loose business to an upstart or fight for it? It's called profit maximisation.

Jay
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Re:How could it fail?! 03 Mar 2009 14:04 #31064

  • revrobor
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Bran1501 wrote:
All in all, I'd show the same movies,

Some of the suggestions are good but this is what will kill you. What you put on the screen is going to make you succeed or fail. You need to be different than the competition. It will mean you (or your booker) will have to search the hundreds of films made around the world each year and then you'll have to do your own promotion rather than rely on whatever it is "Hollywood" is pushing on the tube. You'll need to be different at the concession stand as well offering other things in addition to the usual theatre fare.
Bob Allen
The Old Showman
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Re:How could it fail?! 05 Mar 2009 00:44 #31090

  • Bran1501
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Thank you all for the words of wisdom, I found it to be very useful and actually pointed out a few things I hadn't thought about! As for the walmart and target comparison....I was hinting at how they got to where they are now....they had to start somewhere, and when they started out they did not have the huge buying power and advantages they have established now that keeps them locked as the top retailers! As we all know, at one point KMart, Ann & Hope, Filene's, Caldor, and others that were near/at the top and had that buying power to their advantage...yet they died and walmart and target came from no where...not to say my chain would ever become that big/popular....but thank you again for providing useful advice, much appreciated....others feel free to chime in, the more info the better.....
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Re:How could it fail?! 07 Mar 2009 23:09 #31116

  • cordbuff
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If you use cheap prices to attract customers you will get cheap customers. If you get cheap customers they will spend less or buy the cheaper items. It's a downward spiral. When you drop the price it will cost you more than just the amount you cut the price. Remember, the money you cut from the concession prices come directly from the NET profits. Thats the money you get to take home, if there is any.
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