BECKWITH... I don't think we need anyone else to go over all that as you did a remarkable job. I think you covered most of it quite well. You obviously have given it a great deal of thought.
I'll just add a few comments. If you add more screens will more come? Yes, indeed they will for the many reasons you stated above, but not the same numbers as the original screen recieves. It will all depend on the product. Our business is product driven. Isn't it amazing how if there are six really good pictures out at a time and you have six screens with all six of those pictures, they will all do good business. If you have six duds, none of them will do business. Granted if there are several films going after the same market demographics, each one will be hurt somewhat, but over the run of each film they will all do good. However, for the most part except for those few special times like at the holidays or during the summer there aren't that many pictures doing great business at the same time. Generally, there will be one picture doing great business, one or two more doing well, a few doing average, plus a bunch of duds. Your cost of adding the extra screen(s) and the cost of the overhead to run them, along with your population and competition will determine just how many screens you can support before you cannibalize yourself.
What I have seen thus far would be appropriate for a first run operation. But what about a 2nd run situation? 2nd run theatres usually change pictures more often. In most cases a single screen will change weekly. Therefore, another formula comes into play if you're thinking of adding screens to a 2nd run. Every theatre has a holdover figure that is used to determine whether to hold a film for an additional week. Depending on ones operation, that figure may be based on various different considerations. Most exhibitors have a feel for the percentage of dropoff that will occur each week... 20%, 30% 50% or whatever and therefore can predict if an additional week will be profitable or not. While some exhibitors will only hold if they expect to make a profit, others will hold as long as they think they will at least break even. Then there are those that have a loss figure that they are willing to accept because they know that if they hold over and lose, let's say, $250 for the week it's still better then losing even more because there isn't anything else better to play.
Let's say that you have a single screen that averages $2,500 per week with a house expense of $2000 and an average concession per capita of $1.35 (remember this is 2nd run). With an average ticket price of $2.50 you would be averaging 1000 patrons per week. Your box office gross of $2,500 minus 35% film rental would leave you $1,625. Your 1000 patrons at $1.35 per cap will spend $1,350 on concessions which your share will probably be about 65% or $877. Your share of B.O. and concession combined would be $2,502. Take your house expense from that and your profit becomes $502. Now if you hold the picture over and it drops 30% and you do all the calculations again you would find that you would have a loss of almost $250. A figure that you might not accept and therefore would not hold. However, if you added a 2nd screen and can get the total overhead for it(cost of building, equiping, and operating) to lets say $1,500, that same 2nd week gross would produce a profit of $250. Using this scenario no extra product would be needed to support the 2nd screen as it would be supported entirely by holdovers. Obviously not every picture that plays the theatre hits the average gross figure or even the breakeven point. Those pictures that don't do well enough to be held over would be augmented by new product that wouldn't have been booked before on the single screen, but now would be profitable on the 2nd screen with the lower overhead. The size of the auditorium need only be in relation to the decrease in attendence of the 2nd week. Using the figure of 1000 patrons as the average for a week, then a theatre that usually drops 30% each week would pull 700 patrons to the new screen on the 2nd week moveover, of which probably 45% (315) would come on Saturday night, and of which 60% (189)would come for the biggest show, usually the 7 PM round, therefore suggesting that 200 seats would be sufficient for that auditorium. A space 35' x 65' would be needed to hold 200 seats or 2275 sq ft. @ $80 per sq ft the cost of the building would be around $182,000. Good used equipment for both projection and seating can be had for $20,000. Add plans, permits etc and the 2nd screen could be done for about $210,000 total. With low interest rates of 5% for 15 years, debt service would be $1,661 per month or $303 per week. A space this size should not exceed a weekly house overhead of $750. Add the weekly overhead and the debt service and you get a total weekly expense of about $1,100, well below the $1,500 I used earlier. Using all these figures the 2nd screen would be well worth it.
[This message has been edited by RoxyVaudeville (edited February 05, 2002).]
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