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 step 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 2 to 10 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.
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.
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 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.
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. 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.
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.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
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.
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.
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.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
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.
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.
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.
TRUiC's YouTube Channel
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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.
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.