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I have what I thought was a great investment opportunity to own a 2 screen theater in Southeast, MI. But as I continue to read this forum, it doesn't seem that there are too many people who think small 1st run theaters can compete against the big guys. There are almost 200,000 people in the county and there is one 20 screen multiplex right down the road 11 miles away.
This theater is about $2 less per ticket and at least $1 less on each concession item. It is a good quality theater however I still need to upgrade to digital.
But with all the pessimism on this board, I am thinking I am overlooking the loss of tickets sales to the mega theater. Currently I estimate that I will lose 85% of ticket sales to that complex. That is after I already discounted 50% the area between the 2 complexes.
I guess I just need to know if anyone is competing and winning vs the multiplexes.

Many I book one that is surrounded by giant multiplexes....

We are not the norm the theater is amazing and has 4 screens.
OUR COMPETITION IN A 15 MILE RADIUS IS

---

1.US 4 SCREENS
2. 8 SCREEN
3.16 SCREEN
4.11 SCREEN
5.16 SCREEN
6.18 SCREEN
7.16 SCREEN
8. 8 SCREEN
20 MILES
1. 16 SCREEN

We are often the highest grossing on a pic out of all those theaters. IE we are number # in J edgar with 8 runs.

population 500,000

Some other thoughts-- we are at the top of the price range in the area on tickets and on concession. They also have beer and wine as does on of the other 11 screens in the area.

Grant,

The words great investment opportunity and 2 screen theater in 2011 are seldom if ever used. Please read everything you can on this forum.

Keep in mind there is a big difference between 2 screens and 4. I have run both at one location and the difference is night and day.

Is this theater currently open and showing current movies? Arthouse??

I also would bet that the 20 screen has 95% of the market share.

We run a 2 screen with a 16 screem plex about 6 miles away. We perform stronger on adult skewed pics, but lose big time on everything else.

It can work if done right.

With a population base of 200,000 have you considered being 2nd run instead of competing for first run? That amount of population should support a well run 2nd run theatre. With 2nd run, it's just the opposite of 1st run, the fewer screens the better. One screen is excellent, but 2 would do fine.

2nd run will not bring in the 13 to 30 age group, but you'll do very well with families and the over 40 age groups. The key to a successful 2nd run is to have a nicer facility and better managed theatre than the first runs, with prices at least 50% lower in both tickets and refreshments.

I have written a great deal about this subject on this forum. Doing a little research should bring those articles to you. You may feel free to contact me directly as well.

I do not know Roxy. Adding $100-$150 k on top for digital. Hard for these twins to cash flow now w/o the expense of digital.

What is the asking price of this theater?

The theater is listed for $375,000, but I think I can get it for less (20%). The big seller is that it has 3 apartments that help keep the payments very reasonable for the theater portion. The building is over 11,000 square feet so there is a little room to add another screen at a later date.
It is currently open and running. It is bank owned after the previous owner defaulted on a mortgage over $1.2 million. I have run all the numbers and I need only 600 people per week to make it work.
I think a 2nd run might work but I will have to find out how to pay for digital without VPF's.
I was also wondering if you can access revenue/ticket sales from individual theaters. I think I should be able to prove that they had the revenue to justify my projections but with the foreclosure all the historical figures are not available.

That is alot of tickets for a twin. How many tickets are they averaging right now?

I notice there are many 12+ in SE MI. How many screens within 20 mins of this location?

How much do the apartments bring in?

11,000 SQ FEET IS LARGE FOR A TWIN... HOW MANY SEATS EACH SIDE

Trying to answer all the questions.
There are 2 other one screen theaters within 20 minutes. Within 30 minutes is a huge multiplex which serves alcohol and is very expensive. Within another 40 minutes there are 2 multiplexes 20 and 16 respectively. Of course I think you are drawing a different crowd as those are located in counties of 1.2 million people and 350k people.

11,000 square feet includes the apartments above, but the ceilings are high enough to replace the apartments with a 3,000 square foot theater, the lobby is large at ~ 1,800 and the 2 theaters are about 4,500 sq ft. With 228 and 156 seats, plus another 1,700 in "back stage"/storage.

The apartments are generating $1450 per month, plus there is a church who pays $500 a month for Sunday morning service.

The theater is averaging about 400 tickets per week now. The real test will be this December. They thought Happy Feet 2 would do better than Twilight, so we really haven't seen any good weeks yet.

Thank you all for the good advice.

Grant,

Does your 600 tickets include the cost of digital? 100% cash purchase? Or financing? How long of a term on the financing? Is the 400 tickets per week now for the past year? Or different time frame?

You mention that Happy Feet 2 not performing well. This is an excellent example of why twins are NOT desirable in today's booking environment. Get a bad movie and you are stuck with it for a while. If you plan on adding a third screen upstairs be extremely careful about your remodeling costs. Code compliance can be extremely expensive. Especially if this is an old building that has not been touched for a while. You probably would have to need an elevator for example (ADA).

Discount: That 20-plex will be holding on to the good stuff for a long time. You might have to wait 8 weeks or so to get it.

The 600 tickets include financing over 20 years. The theater is priced based on the real estate value only so I know I can probably get 25 years with SBA financing. It also includes the price of digital lease from Sony and a manager to operate the cinema. I am a local investor but I have another job that would not be prudent to quit to manage. The management team in place has indicated they would stay on, but I have interviewed and found a great individual who would be perfect for the face of the theater.
The 400 tickets is only from the last 2 months. The theater was closed due to management change "foreclosure" in September and reopened in October by the Bank to get numbers to sell the theater. I am in constant discussions with the current management and I will probably wait on the purchase until we can prove the 600 number.
I have actually run the numbers for a 100% cash purchase and the break even is about 400 tickets per week. So it can hit those numbers now.
I completely understand the issue with it being 2 screens. I am hoping to be able to avoid these issues but hopefully will have a cushion to make it work.
As I said at the beginning of this post, I believe the theater could capture 15% of ticket sales in its market and that would be 900 per week and the return would be quite good.

900 tickets at $6 ave. ticket would be $280,000 a year ticket gross. Does anyone know of any twin that grosses that much?

400 tickets would be approx. $125,000.

There are only 7 twins in the KC area (western Mo & most of KS) openly reporting to Rentrak. Only 1 grosses more than $125,000. It is in a town of 5500 people. Most importantly it has no major competition within an hour.

I would want the 600 ticket number after a year. So hold tight.. Odds are good that it will still be available a year from now.