Cinemas derive their income from several sources, the most important being:
- Ticket sales (and membership income if applicable)
- Food, drink and merchandising sales
- Advertising revenue (screen and brochure)
- Public funding
The majority of their income though, is from screening new release films and selling confectionery, fast food and ice-cream to the audiences who attend. A hit film results in high ticket income and high concession sales. And vice versa. There is comparatively little that a cinema can do if there is a poor run of film releases, as the large cinema circuits in the US and UK found during the disappointing summers of 2000 and 2010. Income is calculated as total admissions x average ticket price, while concession revenues are based on average spend per admission.
Illustrative Income Projection (all figures exclude VAT):
Estimated annual admissions 80,000 for a 3 screen cinema
Average ticket revenue £6.00
Annual ticket income £480,000
Film rentals (@38%) (£182,400)
Net ticket income £297,600
Concession income (£1.25 x 80,000) £100,000
Concession cost of sales (£40,000)
Net concession income £60,000
Screen advertising £20,000
Brochure advertising £5,000
Bar & Cafe net profit £30,000
Total annual net income £412,600