Unless you are taking over a going concern, trying to estimate how many people might visit your venue can be a bit of a shot in the dark. There are however, industry average occupancy ratios to help which, alongside some benchmarking against existing cinemas, can help you develop a more accurate estimate. You will also need to undertake some careful market research to verify that there is in fact a sufficiently large number of cinema-goers living within a reasonable catchment area. Average occupancy rates decline as screen numbers increase. A single screen cinema of say, 250 seats which was exceptionally successful might achieve an occupancy rate of 30-40%. However, average rates for a 2, 3 or more screen venue are more likely to be in the 15-20% range. Calculating your potential box office revenue is then a relatively simple matter once you have pinned down an average ticket yield.
A 3 screen cinema configured as 250:150:90 seats, a 15% average occupancy rate and average ticket prices of £6 would take £409,968 per annum in box office revenue based on a total of 44 screenings per week (a seven day operation with two evening performances in each screen and a Sunday matinee double bill).
44 weekly performances spread as follows:
Screen 1 – 16 x 250 = 4,000
Screen 2 – 14 x 250 = 3,500
Screen 3 – 14 x 90 = 1,260
Total capacity = 8,760 seats per week x 52
weeks = 455,520 per annum
15% x 455,520 = 68,328 seats sold @ £6 each = £409,968
Another useful ‘rule of thumb’ is to look at average admissions per screen in the UK, at present around 50,000. This figure includes multiplexes as well as independent operators, and as the multiplexes have many more screens the figure is skewed downwards. Stand alone and independent cinemas often perform significantly better than this although it is unusual to average much more than 60,000 per screen.
The figure you should not use is the average per capita visits to cinema (currently 2.6) and multiply this by your catchment population. A huge proportion of UK box office, circa 30%, comes from the capital’s West End and so this average is heavily skewed away from the rest of the country.
Working out how many people might pass through your doors using industry standard ratios is only a rough guide. You need to provide evidence that your assumptions are realistic by conducting some kind of market research. If you are taking on a ‘going concern’ there will already be some indication about the venue’s potential audience size. However, if the venue is new or has been closed for some time, you need to find out if there are enough of the right kind of people (i.e. people who go regularly to the cinema) living within a realistic catchment area. Your catchment area is probably defined by drive-time but you also need to take into account local competition (see Chapter 3 – Establishing a catchment area).