Start a drive-in movie theater by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your drive-in movie theater. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a drive-in movie theater?
You will need about 10 to 14 acres of land ready to be developed or you may find an abandoned drive-in up for sale. You won't be able to use old projection equipment, as the industry switched to a digital platform in the last decade. Expect to invest between $250,000 and a million to develop the property including building a projection house, concession stand, sound system, and playground.
How many acres do I need to lease or buy? The typical drive-in theater requires between 10-14 acres of land. This should allow up to 500 cars to park at your theater. You will also need to consider the space required to funnel cars off the road and through the box office. Some localities have zoning requirements in place to prevent traffic from building up along the road or highway leading into the theater.
What kind of projector do I need? Because most film studios have begun releasing movies exclusively in digital format, digital projectors have become essential to successful drive-in theaters. This will be one of your larger expenses, as digital projectors typically cost between $75,000 and $150,000 per screen and must be professionally installed and calibrated. Barco, Christie, and NEC are the three main cinema projector manufacturers today. Because not all old movies are available in digital format, if you plan to show classic movies you may also want to purchase a 35mm projector. You can often find these used.
How much is a projector screen? A quality projector screen for your drive-in theater can cost anywhere from $50,000 to $250,000 depending on your area and the specific local requirements. Most screens are made of steel and anchored in concrete. You will generally need to have a screen professionally constructed and installed to meet wind-load requirements.
How do I get an FM station to play the audio? The most common way to handle audio in a drive-in theater is use of an FM radio transmitter. To use this system you must select an FM frequency not in use and plug your FM transmitter into your projector’s audio output. This allows you to deliver film audio to patrons through their car radios. You will also need to have a supply of portable radios to rent out to those unable to receive sound through their car radios. You will need a different radio frequency for each screen. To remain FCC compliant, you will need to purchase a Part 15 FM transmitter.
What are the ongoing expenses for a drive-in movie theater?
Your payroll will be a major expenditure. Film rentals are a controllable expense as you can opt for second run flicks at a much lower rate. You will be placing weekly orders for concession supplies. Lot maintenance will also take up a large chunk of your expense spreadsheet.
How much does it cost to license a new film? The cost to license a new film will vary from film to film. The licensing fee is typically paid as a percentage of total ticket sales, with a minimum flat fee required. It will typically be around 50%, but big name new releases will often fall on the higher end during opening days or weeks with the fee gradually reducing over the life of the theater run.
How much does it cost to license a classic film? The cost to license a classic film will also vary depending on the specific movie, but will generally be lower than new releases. Second-run and classic movies can be a good option for drive-in theaters as they are often easier to obtain than new releases. However, you must take into account the level of demand in your area and how profitable older movies will be, even in the face of lower licensing fees.
How do I get the license to show films? Movie theaters obtain licenses to show films through film distributors. Because this process can be complex, it’s best to hire a booking agent to assist you in the early days of running your theater. Over time, you may choose to take this responsibility on yourself. As a small theater, booking new releases can be difficult. This is because many studios place specific requirements on leasing their films to theaters. Often, a new release will only be leased to a theater that can play the film seven days a week. If your drive-in is not open every day or has only one screen, it can be difficult to meet these requirements. Additionally, if you are located in close proximity to an indoor theater, these theaters will typically get priority because they can run the films day and night.
Who is the target market?
Your preferred customers will be someone looking for an old fashioned moviegoing experience. Drive-in movies reached peak popularity in the 1950s and 1960s. Therefore, many of your customers will be seeking a sense of nostalgia for entertainment in those times. Tailoring the theme of your theater and decor to such a historical period can help satisfy the wants and needs of your customers.
How does a drive-in movie theater make money?
You bring in income by selling tickets to your films and through the sales of concession products. Most of your profit is generated through food and drink sales as film distributors take a serious portion of ticket sales for new films.
How would I manage ticket sales? Your specific box office set up will depend on your location. You may choose to sell from a single window or set up several entry lanes to manage more traffic. Some theaters even utilize carhops to come window to window selling tickets. Although many older theaters maintain a cash-only system, today many film distribution companies require electronic sales to accurately record ticket sales and revenue.
Do I charge by vehicle, or by person? Movie studios require a per person admission price for new movies. However, you may consider holding per car specials on classic movie runs during slow periods.
How much can you charge customers?
The average ticket price per person is about $10 a piece, with discounted rates for children and seniors. You may wish to offer a car-load price of $30 to $40. Concession items will be sold for a price of between $4 and $10. If you are offering alcohol and a full menu, expect to be charging $12-$20.
Can you set up deals with local restaurants to deliver to parked cars? Although it may be possible to set up an agreement with local restaurants to service your movie goers, it may not be cost-effective. Because concessions will make up such a large portion of your theater profits, it can be counter productive to give such a large share of these profits to outside businesses.
How much profit can a drive-in movie theater make?
You may be making as little as 10% of each ticket sold when you are showing new releases during the summer blockbuster season. Concession items offer profit of 50 to 80%, but your operational expenses will eat into all those extra dollars. If you are selling out all season long, you could see a total profit of $100,000 to $150,000.
How can you make your business more profitable?
The key to success is filling up your drive-in every time you open the gates. Running obscure or old movies that don't bring in customers might be fun, but not profitable. New trends for the movie industry focus on offering premium services for regular customers over offering bargain tickets to increase the profit for every carload that buys admission.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it. You can also find available, specific drive-in movie theater domain name ideas and brainstorming techniques on our Drive-In Movie Theater Business Name Generator page.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your drive-in movie theater is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
Federal Business Licensing Requirements
There are federal regulations regarding what can and cannot be added to, sold as, and processed with food. Attached is a resource from the Food and Drug Administration detailing the process of starting a food business: How to Start a Food Business
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a drive-in movie business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Does this business violate any sound regulations? Although FM radio transmission has significantly lowered the overall ambient noise coming from drive-in theaters, hosting a large number of people in their vehicles can still produce a good deal of noise. Noise ordinances will vary significantly from place to place, so you will need to check your specific location for any applicable regulations. It is also important to keep in mind that even if there are no restrictions in place now, if your theater does produce disturbing noise levels you may be faced with new ordinances in the future. This is especially true if your theater is in close proximity to residential housing.
How can I get a license with Pepsi or Coke to provide soda? To serve Pepsi or Coke products at your theater you will need to make a distribution agreement with one of these companies. To begin the process, visit either Coke Solutions or Pepsico Partner to submit a request to serve their products. Somebody from the company will be in touch with you to develop a contract. You should consider contacting both companies to see which offers you a better deal.
Do I need licenses to serve food? Any business that serves food is required to carry a food service license. The specifics of this requirement will vary by state. Often the cost will be dependent upon your specific business and how many people you plan to serve. Check with your local business authority for the requirements in your state.
Can I serve alcoholic beverages? Although alcohol sales are becoming more popular at movie theaters, this issue is more complicated when it comes to drive-ins. The majority of drive-in theaters prohibit guests from bringing alcohol and do not sell it. Those theaters that do offer alcohol at their concession stands typically require that it be consumed within the concession or bar area. If you would like to serve alcohol at your theater you will need to obtain a liquor license that allows you to serve alcohol outdoors.
How many bathrooms do I need? Restroom requirements vary by state, but most are based on the customer capacity you carry. For example, you may be required to have one bathroom for every 40 guests. Be sure to check the specific requirements in your area, including those concerning handicap accessible restrooms. There are also restroom requirements when it comes to employees. For example, OSHA requires businesses with 16 or fewer employees to have one restroom for its staff.
Can I just have one entrance and exit, or is that a fire hazard? Specific exit requirements will depend on the local zoning laws in your state or community. Many require at least two exit points.
Certificate of Occupancy
A drive-in movie business is generally run out of a large lot. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a drive-in business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your drive-in movie business will be in compliance and able to obtain a CO.
When selling food, you will need licensing from a local health department; all establishments serving food are required to pass a health inspection. Tips for faring well on a health inspections
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a drive-in movie theater
It's a good idea to develop a website that is updated on a weekly basis that talks about the latest releases, offers trailers, lists menu options, and perhaps offers online ticket sales. You will need to make sure that your theater is listed on major online ticket outlets like Fandango and Movietickets.com. Spread the news about the new location by participating in local festivals, fairs, and conventions. You may wish to sponsor local arts and food fests, as well.
How to keep customers coming back
With so many options available for watching movies, you need to offer a unique experience. Some drive-ins now offer beer, wine, and even fine food options. The latest in projection and sound often attract avid movie-goers. Families will appreciate bounce houses or supervised play areas to allow Mom and Dad to enjoy the show without having to constantly keep an eye on the kids.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Drive-In Movie Theater In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
The successful drive-in owner will have a love of film and entertaining families in an all-American style. You won't mind working nights, weekends, and holidays as these are peak times for the movie business.
What happens during a typical day at a drive-in movie theater?
When your operate your drive-in movie theater, on any given day you might need to:
- Sell tickets and admissions to your patrons
- Work with distribution companies to book upcoming movies
- Load and program film files into your digital projectors
- Preview films to ensure proper presentation
- Clean and maintain concession equipment
- Hire your parking and concession staff
- Clean and maintain the property after each show
- Ensure customer satisfaction through patrolling of the entire property during the show
- Update websites to provide ticket times and prices
- Operate the projectors during each presentation
- Order supplies for concession stand/cleaning equipment
- Maintain attractive landscaping
- Attend trade screenings to learn about upcoming films
What are some skills and experiences that will help you build a successful drive-in movie theater?
Knowledge of film history and emerging film trends will help you select movies that your audience will appreciate. If you play movies that do not attract customers, the you will lose the money you spent to play that movie. Being able to read trends in order to predict which films will be successful will help you present movies that will be popular among your customers, maximizing your profits and success. Taking film production or film history classes can help you develop the skills needed to make these predictions.
On the other hand, you will also need to perform the administrative tasks of this business. The entertainment industry can be a confusing industry to work with, so it is important that you familiarize yourself with licensing requirements that will affect your ability to play certain movies. Taking classes in business or entertainment law can help you gain the knowledge needed to more easily navigate your way in the entertainment industry.
How do I manage the concessions? Concession sales are the heart of the movie theater business. Because of high licensing fees, most movie theaters make the bulk of their profit selling concessions. For this reason, you’ll want to put a great deal of effort into this aspect of your theater. Handling food service during the small window before the movie starts can be a difficult balance. Consider what food and drinks you plan to serve and how long each customer turnaround will take. Although popcorn and soda are the two highest yield concessions, having a few other unique offerings can make your theater stand out.
To properly run your concession stand you’ll need an area to store and prepare food and a serving area. You’ll need to consider how your food will be prepared, how much space is needed for preparation, and what equipment is required.
What is the growth potential for a drive-in movie theater?
The drive-in movie theatre model is in survival mode as customers turn to their home theaters more often to catch a flick. When you provide an experience that cannot be duplicated anywhere else, your drive-in can become a local sensation that will remain open for years to come. Each location will fill a unique need for their local community.
Do I need to be connected to a traditional theater? No. Most drive-in theaters are not affiliated with major traditional theater chains.
How do I plan for the winter months? The seasonal effects on your theater will depend on where you are located. Many drive-in theaters in warmer climates remain open year round. Even those in cooler places can find ways to stay open. If you do not plan to stay open in the colder months you will need to have a solid financial plan in place to cover ongoing expenses involved in maintaining your property and effective marketing to get your theater back up and running in the spring or summer.
Should you consider joining a franchise?
Would it be smarter to find a franchise opportunity? Because the cost to build a drive-in theater from scratch can be very high, purchasing a franchise or acquiring a current or recently closed theater can be a much more cost-effective way to get into this business. By choosing to open a franchise you are also given the additional benefit of existing relationships with film distributors and ongoing concession product deals.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a drive-in movie theater?
Build your business plan with the understanding that you may be running a seasonal business. Drive-ins operate generally between April and October in northern locations, as the costs of removing snow and weather make operating in the winter exorbitant. Think about other ways to use your property during the daytime such as classic car shows, flea markets or running charitable events for schools and community organizations. Join organizations such as North American Theater Owners to expand your contacts with distributors and vendors.
Is it better to pave the parking lot? Having a paved space for your drive-in theater is preferable for a number of reasons. Not only will it hold up much better to the constant traffic and the elements, it will also reduce dirt, dust, and mud accumulation. Some localities require paved surfaces. Be sure to check with your local zoning authorities to see what is required.
How large does the screen need to be? Modern movies are produced in two different aspect ratios: widescreen/flat (1.85:1) and scope (2.39:1). Because drive-in theaters do not have moveable screen masking to adjust by film the way indoor theaters do, you will want to build a screen somewhere between these two ratios. Many drive-in theaters use a ratio between 2.0:1 and 2.2:1. A typical drive-in screen is between 50 and 100 feet wide. Once you’ve chosen your width you will base the height on your chosen dimensions.
Screen height is also important. A drive-in screen should be at least 15 feet from the ground depending on the lay of your land. Watching drive-in movies from the back of an SUV with its rear hatch open has become very common. This modern development requires higher screen heights to allow an unobstructed view.
Do I need to have angled parking in the lot? Achieving the correct parking angle to allow all patrons to have a clear view of your screen is an essential aspect of constructing a drive-in theater. To do so, ramps are almost always required. To determine how to construct the ramps you will need to understand what angle the cars across your space will need to be at in order for the screen to be in view for both front and rear seat passengers. This will depend on the natural slope of your land and the distance between the car and the screen. Building ramps is another major drive-in start-up expense.
How and when to build a team
About six weeks before you open, you will need to be in the process of hiring and training your projectionists, managers, and concession and lot attendants. You will want to line up a landscape and lot maintenance company and ensure you have technical support available for your projectors and business computers. You will have had to contact your film distributors six months ahead of time to ensure that you are in the pipeline to receive the blockbusters for your first customers.
How many staff do I need to hire? At a bare minimum, you will need to have employees to sell tickets and concessions, provide security, run the projector, and clean up after each showing. The exact size of your staff will depend on the number of patrons you host and the overall size of your operation.