How to start a cinema

11 Operational matters

From understanding film classification, to running a successful marketing campaign, there are a host of basic operational matters that local cinemas have to deal with on a day-to-day basis.

Film classification

The British Board of Film Classification (BBFC) is an independent, non-governmental body funded through the fees it charges to those who submit films, videos, Blu-rays, DVDs and digital games for classification.

The BBFC classifies films on behalf of the local authorities that license cinemas under the Licensing Act 2003. It does not have any powers of enforcement. There are five classification categories for theatrically released films:

Advisory categories

U – Universal – suitable for all ages

PG – Parental Guidance – General viewing but some scenes may be unsuitable for some children. Unaccompanied children of any age may watch. A PG film should not disturb a child around 8 or older. However, parents are advised to consider whether the content may upset younger or more sensitive children.

12A – No one younger than 12 may see a ‘12A’ film in a cinema unless accompanied by an adult, and films classified ‘12A’ are not recommended for a child below 12. An adult may take a younger child if, in their judgement, the film is suitable for that particular child. In such circumstances, responsibility for allowing a child under 12 to view lies with the accompanying adult.

Mandatory categories

15 and 18 which restrict viewing by age i.e. a person has to be this age or older to view a film. Essentially, the BBFC considers the content of a film in relation to the following aspects – theme, language, nudity, sex, violence, imitable techniques, horror and drugs. All classification decisions are explained by the BBFC in these terms. For more details on how the guidelines are interpreted, contact the BBFC and ask for a copy of the latest guidelines.

It should be noted that the BBFC effectively carries out its functions on behalf of local authorities that issue licences to cinemas. Local authorities may, if they do not agree with the category assigned by the BBFC, at their discretion alter any category or indeed prohibit entirely the showing of any film.

Unclassified material

Public screening of material which has not been passed by the BBFC (for example films imported from overseas especially for a festival, or locally made films not entering formal UK distribution) is subject to local authority consent, usually with at least a month’s notice in writing. Cinemas seeking to include such material in their programme usually have to submit in advance details of the unclassified films, and sometimes screening discs, to the local authority licensing committee.

The UK Cinema Association

The UKCA (formerly The Cinema Exhibitors Association, CEA) is the trade association for cinemas in the UK, representing the interests of approximately 90% of cinemas including multi-national companies, national plcs, smaller circuits, independently owned cinemas, council cinemas and regional film theatres.

  • It has an Executive Board which meets on a regular basis to direct the policies of the Association
  • Its Regional Branches hold regular meetings throughout the UK to feed opinions to the Executive Board
  • It issues regular Newsletters, in addition to an Annual Report
  • It handles national promotions encouraging people to visit the cinema
  • It is active in Europe, representing the position of UK Exhibitors
  • It carries out detailed consultative work on Governmental papers influencing exhibition – the ‘bottom line’. This includes Health & Safety, Fire Regulations, Disability Issues and European Legislation.
  • It has negotiated a 20% discount on the rate for Phonographic Performance Licences from PPL on behalf of UKCA Members.
  • It makes representation to Local Councils when requested.
  • It has specialised retained consultants in the areas of Health & Safety, Fire Safety, Food,
  • Disability and licensing who are available to advise UKCA members. Contact the Association direct for information on joining and membership fees.

Human resources issues

The cost of staffing a local cinema is routinely included in feasibility studies and business plans. However the particular skills and knowledge required by successful, effective cinema staff are usually given less attention. Fifty or more years ago the local cinema manager was a high profile local entrepreneur who was widely known in the community. They were showmen and women who understood that they provided local entertainment and, relatively speaking, a quality service with a touch of glamour. Modern cinema staff seldom approach the job in this manner despite customer care training and incentive programmes. The effect that staff has on the success of a local cinema is difficult to quantify but numerous anecdotes point to the real value of talented and trained staff. In planning terms it is therefore important to realise that the cinema manager and the staff are not simply functionaries but front-line marketing staff who should be recruited, trained and rewarded accordingly.

Some cinema operators – large multiplexes and independent cinemas – are bringing individuality back to cinema going and reintroducing ideas of showmanship and community responsibility. Cinemas operating in smaller population centres can develop a highly beneficial and close relationship with their audience, and the audience with the cinema.

Staffing structure

The way in which a cinema is staffed varies enormously depending on how it is organised, whether services are supplied in-house or contracted out, how much of the operation is voluntary in nature and the extent to which certain functions can be centralised (in a chain for example, marketing, programming and finance functions are often undertaken centrally whereas a stand-alone cinema will have to do all this at the venue). A local authority run cinema may also make use of other central council services (cleaning, payroll, IT etc.) and a charge is generally made for these against the cinema’s operating revenues.

It is not really possible therefore to present a ‘typical’ staffing structure and its associated costs. However, what is presented below is the bare minimum full time equivalents for a full time two screen stand-alone situation with an owner/manager who does all the day to day staff and building management as well as marketing the facility. While these are full time equivalents, in practice with projection, box office and ushering you are likely to employ a number of part time staff on a shift rotation. The numbers below are based on the assumption that the cinema is open 7 days per week for two evening performances plus weekend matinees and that the box office opens an hour before the first performance.

Venue (cinema) manager 1

Book-keeper / accountant / admin 1

Projectionists 1.5

Box office 2

Ushers 2.5

In practice of course, you may also employ people to take on specialist roles in the areas of education, marketing and, with a larger number of screens you might need front of house and box office managers to look after a greater number of floor staff.

Managing a campaign

If you are an individual or group who are either trying to ‘rescue’ a cinema building under threat of closure or demolition or get one up and running, you may need to galvanise public support for your venture in order to make the case that a cinema is a needed and wanted local facility. The Plaza Community Cinema is just one example of a very successful local campaign which was key to securing the support of the local authority, funders, residents, distributors, volunteers, local businesses and other support organisations.

The Plaza group were lucky enough to have the support of Sir Sydney Samuelson at the outset, who became the Patron of the organisation. They managed to drum up extensive interest in the threatened closure of the cinema and got masses of local press coverage.

The cinema manager and the staff are not simply functionaries but front-line marketing staff who should be recruited, trained and rewarded accordingly

Key points are:

  • Do not organise a campaign just for the sake of it – this may serve just to disenfranchise the very people you need on your side. You should have very clear campaign objectives.
  • Campaigns should have a short shelf life. Recognise when the job is done or the point at which you should give up.
  • Try and get a film-connected ‘celebrity’ on board.
  • When writing press releases, make sure you have a real story to tell. Even local press people need a hook.
  • Use the Internet. It costs little or nothing to create a website. This is also a good way to get petition signatures.

Film distributors

For an excellent account of UK film distribution structures read the Film Distributors’ Association Guide to UK film distribution which is downloadable from their website www.launchingfilms.com.

Programme booking

The income earning potential of films usually declines sharply in the weeks following the initial release, so delays in getting films can badly affect individual cinemas. On the other hand, non-metropolitan audiences can take longer to find out about new films, and a delay of a few weeks can prove beneficial in allowing time for word-of-mouth and profile around a film to build outside London. The effect varies depending on the type of film and the local population.

Overall it is important that cinemas establish and maintain a good relationship with film distributors so that films can be secured for the cinema at the appropriate time. The bargaining power of a cinema is the key to obtaining a good supply of films.

Solo cinemas will invariably face greater difficulty booking new films than will a chain of cinemas. At least four options for booking films are available:

  • The cinema books films directly with film distributors
  • The cinema contracts a film booking agent who works for several cinemas (and therefore tends to have a better knowledge of films and their marketing campaigns, and be able to negotiate better film rental terms, although this is not guaranteed. The ICO offers specialist booking and programme advisory services at very reasonable rates and these are available to all UK cinemas.)
  • The cinema joins a consortium with other independent cinemas in the region (in order to improve overall negotiating power)
  • The cinema teams up with a ‘hub’ cinema which has greater booking power. The hub cinema would typically be a larger cinema offering a range of local and regional programme enhancements or alternatively a range of programme and management services.

Apart from increasing bargaining strength the latter three arrangements can improve the quality of information about upcoming films to the local cinema, allowing more control over scheduling and marketing arrangements. It is important to note that although four choices are listed above, individual circumstances will play an important part in determining which type of booking arrangement is most appropriate and, more importantly, available. It is not easy to find other cinemas that are willing or able to form a consortium or a ‘hub-and-spoke’ system.

There may be an active regional exhibition consortium in your region where you can benefit from group purchasing and networking with other similar venues. Contact Creative England or your BFI FAN Hub for details.

Running bars and catering

Sub-contracted catering

The decision whether or not to sub-contract is crucial and there are a number of different options available under the ‘sub-contracting’ umbrella. The UK market is dominated by a few large companies including Benugo but many use local franchise businesses. Growth via acquisitions and mergers mean these organisations are often subsidiaries of much larger corporations. In terms of structure, many are sub-divided or have specialist subsidiaries which cater to particular niches. It is important to ensure that you talk to the right division of the company when negotiating any contract.

Contractors make their money in three main ways:

  • Management fees
  • Profits on operations
  • Supplier discounts

It is important to remember that contractors are first and foremost businesspeople. While they may have perfected the art of financial and operational control, it is a common complaint among arts venue managers that contractors do not really understand their audiences and that the food product offered is not appropriate. Much will depend here on the successful design of a specification for the contractor to adhere to. The appointment of the catering manager is also critical. If you do not like the way in which the manager is running the catering, insist on change.

Contractors are very amenable to the redeployment of their personnel if they think they might lose the contract. It is also worth considering brands. There are many brands on the market that may be appropriate for your venue.

Individual circumstances will play an important part in determining which type of booking arrangement is most appropriate. At the other end of the scale, it is sometimes possible to find a small local caterer who is able to offer an appropriate service. Such arrangements can work very well but these much smaller organisations will not benefit from the economies of scale of the big players including the supplier discounts and head office infrastructure and so are often reluctant to take on a contract.

Advantages and disadvantages of subcontracting

Advantages
  • The arts venue manager can concentrate on their core business and leave catering to a specialist.
  • With a fixed management fee arrangement budgetary management is easier and risk free.
  • Contractors (particularly the large companies) are able to secure large supplier discounts which they can pass on to customers in the form of lower prices.
  • In-house environmental health officers and specialist trainers will ensure all legal requirements are met.
  • Ideas and experiences from other locations can be brought to your operation
  • Contractors may take ‘risks’ e.g. to develop banqueting or all day trading and can introduce branded franchises at no cost to the client
  • The catering operation is managed as a discrete financial entity and provides a truer picture of catering financial performance
  • A national catering contractor can market your facility as part of a corporate activity
Disadvantages
  • The financial return may be lower, particularly in the fixed fee scenario where the venue will not derive the benefit of their own success in attracting large audiences
  • While you lose the responsibility for managing staff, you also lose the ability to motivate and reward staff whose conditions of employment and pay may be inferior to those of your own staff, creating two standards in what should be a cohesive whole
  • If you choose a franchise you are not permitted to make even the slightest change to the product or service thus you lose the flexibility to respond to the market as you see fit
  • You will be tied in to a contract for a period of several years, particularly if you want the sub-contractor to invest in the facilities, again restricting your ability to make changes. To break the contract you would have to prove a breach that may incur legal costs. It is time consuming and traumatic to change contractors and difficult to manage a transition to an in-house operation
  • If your contractor or franchise operator develops a bad reputation at another location, your operation will suffer the bad press, even if your bar or restaurant is running perfectly well
  • Managing a contractor is never cost free. It will always be necessary to spend a certain amount of management time monitoring the operation and negotiating improvements. If a contractor is under performing badly, it can be more time consuming than direct management
  • Contractors tend to offer a standardised product of a standard acceptable quality at a standard cost. While product consistency is desirable, the downside is that there is little room for flair, imagination and creativity. A contracted operation is unlikely ever to become ‘the talk of the town’.

Types of sub-contracting

Management fee

For a fixed agreed rate, the contractor is responsible for the total provision of service. The balance between the fee and costs is the contractor’s profit. The advantages of this system are that you know your revenue in advance and do not share any of the risks. The disadvantage is that you cannot benefit from supplier discounts or from additional revenues when profits are high. The management fee is likely to be in the region of 5% of turnover.

Concession fee

A concession fee is based on turnover of catering sales. Where capital investment into the catering facilities is required, the contractor will make this investment and give a smaller concession fee so that the investment is written off over the length of the contract. This has the advantage of improving your cash flow position. However, the contractor will expect the length of the contract to reflect the level of investment. It may also be possible to negotiate other terms such as a percentage of supplier discount and guaranteed minimum returns. The concession fee can be anything from around 15% to 22% of turnover.

Franchise

With franchising, ‘brand identity’ is bought for the operation in a specific location. The franchiser supports the franchisee with training, merchandising, management etc. as part of a package for which either fees or percentage of profit are paid. All costs (including investment) are met by the franchisee. The main disadvantage of franchising is that you will not be permitted to make any changes (no matter how small) to the franchise formula so, for example you cannot put chocolate sauce on your vanilla ice-cream if on the franchise menu it is served with melba sauce. However, the advantage is the considerably reduced business risk due to a ‘known quantity’ and national corporate promotion. Conversely, the failure of a brand in one location will affect the reputation of all franchisees. The well known brands will only be interested in sites they know they can make work, e.g. in city centre prime sites with a large volume of foot traffic. You can either run a franchise yourself (although managing a contractor is never cost free. It will always be necessary to spend a certain amount of management time monitoring the operation franchis eor will need to be assured that you have the skills to run the business) or you can ask a contractor to introduce one.

Sub-leases/licences

These arrangements are fairly common but tend to be the least satisfactory type of arrangement since the relationship is one of landlord/tenant (and unless specifically excluded will fall prey to the provisions of the Landlord and Tenant Acts). It is difficult to control the caterer and have them deliver the service you want for your audiences and to integrate the product offering into the venue. It is also likely to yield the lowest levels of financial return in the form of rent. The term of the lease is often long and without break clauses.

Managing the relationship

The most important part of the process is agreeing the principles at the outset i.e. prior to signing the contract. It is worth spending some considerable time negotiating the terms. While most contracts are standard, the contractor will be flexible while trying to secure your business. It may be worth employing a catering consultant to look over a contract for you to identify areas of potential difficulty and conflict. In general, if a contract is running well it should not be necessary for the venue manager to spend more than an hour or so per week meeting with the catering manager to discuss current performance and on-going issues.

In addition, there should be a monthly meeting with the regional or divisional management of the contractor to discuss financial performance and discuss projects. One area of potential concern is the relationship between the venue’s front of house staff and contractor’s staff. It is important to develop systems for ensuring consistency of service delivery and this may entail joint training initiatives in customer care. For example, the catering staff ought to be able to talk to customers about the films or events you are offering in the same way that your own staff will be able to explain what is in the bars and restaurants.

New methods of marketing

Cinema marketing operated in a predictable manner for most of the twentieth century, concentrating on star actors and directors, media reviews, poster campaigns, and trailers shown in cinemas. At the local level, newspapers continue to be important (although local radio appears to have a more variable influence) and word-of-mouth is often the best form of publicity. Novel methods of targeting key opinion formers (for example students or energetic cinemagoers) are increasingly being tried but for local cinemas with modest budgets and limited staff time these methods often appear daunting. However the arrival of social media has brought new marketing opportunities to local cinemas as well as to the multinationals.

Digital marketing

New developments in technologies and the rise of social media have brought new marketing opportunities to local cinemas as well as to the multinationals. Relatively low cost, potential reach and the quality of the dialogue that can be achieved between cinemas and audiences makes the various forms of digital based communication ideal for local cinemas.

In the past decade, the use of the internet, whether to develop a venue website, or maintain dialogue with audiences through social media, or promote and sell tickets directly, has become as important a part of the marketing mix for local cinemas as local press advertising or publishing a programme brochure.

  • Aggregator websites – A number of cinema oriented websites already provide regular programme and venue access information, for example BingFilm Unlimited (The Guardian) and findanyfilm.com.  There are also apps, such as Flixster that provide the same information.
  • E-marketing – An increasingly attractive, low cost method of advertising a cinema’s weekly programme.  A number of cinemas offer a free email service where details of the films and the performance times are sent to thousands of subscribers.
  • Websites – Most cinemas now have their own dedicated website with film listings, film copy, film stills and facilities to purchase tickets online. With the proliferation of free software sure as Drupal and WordPress creating a website doesn’t have to be prohibitively expensive. Increasingly older brochure style websites have been superseded by websites with much more visual and interactive content, like online trailers, blog posts, podcasts. With the advent of Smart phones another consideration for cinemas is to make websites optimised for mobile.
  • Advance ticket purchases can be made by visiting the appropriate websites. For audiences who have to travel significant distances the certainty of a ticket is highly desirable. Although telephone booking systems work well.  Internet bookings far exceed this.
  • Social Media (e.g. FacebookTwitterInstagramPinterest) have become an increasingly important way for cinemas to develop a conversation with their (interactive) audiences, through which the profile of particular screenings, strands of programming or events can be effectively developed in concert with the audience.
  • Publicity materials – cinema promotional material, especially film reviews and still photographs, are now distributed over the internet from specialist websites. Image.net and Picselect are the commercial websites used by most film and video distributors and other cultural organisations. An annual subscription is payable for some of these services.

For more information on digital marketing see the resource on Marketing.

Summary of key points from Chapter 11

  • The British Board of Film Classification (BBFC) on behalf of local authorities handles film classification in the UK.  Films without a BBFC certificate have to be separately licensed by the local authority
  • Front of house and box office staff are not simply functionaries but are front-line marketing staff that should be recruited, trained and rewarded accordingly
  • If you are organising a local campaign to keep a cinema open, developing good local press contacts is key
  • Booking films as a stand-alone operation may prove problematic due to lack of bargaining power with distributors. You might want to consider using the services of a professional film booker or joining a local consortium
  • Bar and catering operations can make a valuable contribution to overall trading revenues but do not be over-optimistic about their potential and on no account underestimate how difficult it may be to manage effectively
  • Sub-contracting catering and bar operations may be a sensible option as it reduces your risk although in the long term this is likely to yield less return than a directly managed operation
  • With high levels of PC and tablet ownership and ISP subscription by individual consumers, investing in electronic marketing and social media is important. Both of which offer an increasingly attractive, low cost method of advertising a cinema’s weekly programme

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