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A question to the group. Have you used (or know someone) the concession financing options and how do they work in respect to buying an existing location?
Thanks all.

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There are companies like Pacific Concessions that will finance you theatre for 50% cut of concessions for the length of the contract. But I would explore other avenues of financing first that don't leave you beholden to another company.

I've never heard of that, is that some old practice not used much anymore?? Yes, definately look elsewhere before you agree to give away half of the profits. I'd finance a theatre on a credit card before I would give anyone a percentage of the main theatre revenue source...

We supply software to Theatre Confections, I'm not sure of the terms for financing, but they are a good group to work with from a vendors perspective.
www.theatreconfections.com

Yes Concession Company Financing is still around. Pacific Concessions has a booth at ShoWest every year. The previous operator of our theatre actually renovated the theatre in part with concessions financing. We had to buy the stand and it's equipment from them when took over the theatre. Unfortunately, banks tend to not like movie theatres as loan clients (as I'm unfortunately in the middle of finding out right now but that's another story). Leasing equipment is an option. Credit cards are an option. Loans from individuals with extra cash willing to make a slow but steady return are an option. I'd explore all of these before I'd sign up with a concessions finacing company.

Rialto: Do you think that banks current unwillingness has anything to do with certain large chains filing for bankruptcy? If so, do you think that will stop well-run independents from getting financing for a while regardless of how well thought-out the business plan is?

The bankruptcies certainly haven't helped us little guys get loans or find landlords willing to rent to theatre operators. But I think it has always been difficult, at least that's what I've been told by others who have been doing this quite a bit longer than I have.

Poor quality independent operators who don't pay their bills on time also don't help. Add in the now-gone SBA bias and I think it's a tough situation.

Big, big banks and little banks in consortiums will lend large, unstable corporations (read Enron and thier ilk) billions but can a profitable little guy get a loan? Not unless you have enough collateral and personal wealth to show the bank two or more sources of repayment.

That's why concession company financing exists. It's an easy source of financing for theatre operators (though ultimately a very expensive source...an acquaintance of my business partner's likened concessions financing companies to loan sharks). Some will take the easy money and realize the pain later. I'd rather think more creatively to find another solution to the problem...one that doesn't require giving up control of my business to someone who is essentially a vendor.

Enough of my rant.

Another reason for banker distrust is that when they value the building they view it as an empty building that could be used for what else? Our theatre has run continuously for 90 years (non stop!) and they said "But if it was out of business what is the building worth?" They are very leery of the movie biz.

And that's not 50% of your profits: it 50% of your gross concession sales off the top BEFORE you pay the cost of goods sold, etc. Maybe that's whay a small popcorn costs 5.00!!!

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