Movies Under the Stars: Starting a Drive-In Theater

Here are the most important factors to think about when starting your drive-in movie theater:

1. Location — Choose a suitable location that is easily accessible and has enough space to accommodate a large screen, projection booth, parking spaces for cars, and possibly concession areas. The site should also have good visibility and minimal light pollution for optimal viewing conditions.
2. Equipment — Invest in high-quality digital projection equipment and a large screen suitable for outdoor viewing. Decide on your audio delivery system. Traditional drive-ins use window-mounted speakers, but modern drive-ins often use FM transmission to broadcast sound directly to the car’s radio. This requires an FCC-approved transmitter.
3. Licenses and permits — You’ll need to obtain the rights to show films publicly. This involves working with film distribution companies to license new releases or classic films. Costs can vary based on the film’s popularity and the terms of the agreement.
4. Grants — There are a few grants that can help you get started such as Arts and Film Grants, Tourism Grants, and Cultural Grants. 
5. Register your business — A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple. Form your business immediately using ZenBusiness LLC formation service or hire one of the best LLC services on the market.
6. Legal business aspects — Register for taxes, open a business bank account, and get an EIN.
7. Concessions and facilities — Offering food and beverages can significantly boost your revenue. Set up a concession stand that sells traditional movie snacks like popcorn, nachos, and sodas, as well as options like burgers and hot dogs. Also, ensure clean and accessible restroom facilities are available.
8. Online scheduling and booking — Introduce online scheduling and booking on your website or app to allow customers to view showtimes, select movies, and purchase tickets online. 

You May Also Wonder:

Can a drive-in movie theater be profitable?

Yes, a drive-in movie theater can be a profitable business. Ticket sales alone won’t be enough to drive revenue, so make sure to offer attractive concessions for purchase.

How do I differentiate my drive-in movie theater from competitors?

To stand out from competitors in the drive-in movie theater industry, create a unique experience with themed movie nights and a welcoming atmosphere. Provide excellent customer service and delicious concessions to keep customers returning for more.

How do drive-in movies play sound?

Most use FM radio frequencies to transmit sound. In the old days, you used to hook up a speaker to your car.

How do I handle and manage food and beverage sales at my drive-in movie theater?

You need a central location where people can purchase food and beverages. You’ll manage it just like you would a cafe. 

How do I expand my drive-in movie theater business to other markets and locations?

Once you build a brand, you can find new locations in your area. In theory, you can even franchise your theater. 

Step 1: Decide if the Business Is Right for You

Pros and cons

Before starting a drive-in movie theater, it’s important to consider the pros and cons. 

Movie Theater industry trends

Industry size and growth

• Industry size and past growth – The US movie theater industry is worth $12.1 billion in 2022. The recent pandemic caused an overall decline in growth, but it is now back on the rise.((https://www.ibisworld.com/industry-statistics/market-size/movie-theaters-united-states/))
• Growth forecast – The global movie theater market is expected to grow 4.7% annually through 2028.((https://www.verifiedmarketresearch.com/product/movie-theaters-market/))
• Number of businesses – As of 2022, there are 2,525 movie theater businesses in the US.((https://www.ibisworld.com/industry-statistics/number-of-businesses/movie-theaters-united-states/))

Trends and challenges

Trends in the drive-in movie theater industry include:

• The pandemic has renewed interest in drive-in movie theaters. They’re the perfect place to see a film while being mindful of social distancing. 
• Technological advancements like digital projection screens and mobile ticketing apps have modernized the drive-in theater experience. 

Challenges in the drive-in movie theater industry include:

• Local zoning regulations can be restrictive when it comes to searching for land. Even if you find a piece of property that’s big enough, you may not be able to operate your drive-in theater on it. 
• Film licensing is a complex process that may require the assistance of a booking agent. New releases are expensive and have showing requirements, which can be difficult for a small theater to meet. 

How much does it cost to start a drive-in movie theater?

Startup costs for a drive-in range from $380,000 to $1.3 million. Costs include land lease or purchase, projection and sound equipment, and the cost to license the films you feature. You may be able to keep costs low by purchasing used equipment and licensing older films instead of new releases. 

You’ll need a handful of items to successfully launch your drive-in movie theater, including: 

• Land
• Digital projector
• Projector screen
• Film licenses
• Concessions

Start-up Costs	Ballpark Range	Average
Licenses and permits	$100-$300	$200
Insurance	$100-$300	$200
Marketing and advertising	$500-$1,000	$750
Website	$1,000-$2,000	$1,500
Software	$500-$1,000	$750
Land & Development	$250,000-$1,000,000	$625,000
Digital Projector & Sound Equipment	$125,000-$300,000	$212,500
Film Licensing Fees	$300-$2,000	$1,150
Concessions	$1,000-$3,000	$2,000
Total	$378,500 - $1,309,600	$844,050

How much can you earn from a drive-in movie theater?

The average cost to attend a drive-in movie is $20 per vehicle. If food and drink are available, patrons spend an average of $10 on concessions. Your profit margin after the costs of land, equipment, film licensing, and supplies should be about 20%. 

In your first year or two, you could hold three screenings per week for 125 cars each. You could charge $20 per vehicle and sell $10 worth of concessions to each, bringing in $585,000 in annual revenue. This would mean $117,000 in profit, assuming that 20% margin. As your drive-in theater gains recognition, you could increase your screenings to four per week to 250 cars each, bring in $1,600,000 in annual revenue, and make a handsome profit of $312,000. 

What barriers to entry are there?

There are a few barriers to entry when starting a drive-in movie theater. Here’s what you can expect:

• High startup costs
• Acquisition of land suitable for operations

Step 2: Hone Your Idea

Now that you know what’s involved in starting a drive-in movie theater, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research drive-in movie theaters in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a drive-in theater with a full-service bar or restaurant onsite. 

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Plan your drive-in theater’s features and services

You can choose to show a variety of different films at your drive-in movie theater. New releases are more expensive to show than older films. Consider offering concessions like food and alcoholic beverages to increase revenue. 

How much should you charge for attendance to your drive-in theater?

You could price your tickets at $10 to $15 per person, or charge a per-vehicle rate of $20 to $40. Depending on what you offer for concessions, you could charge between $5 and $15 per item. Alcoholic beverages might cost $10 to $20. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be movie-goers looking for an alternative to the traditional movie theater experience. You’ll have customers spanning a wide age range, so focus your marketing efforts on popular social media platforms like Facebook, TikTok, and Instagram. 

Where? Choose your drive-in theater location

You’ll need to acquire a piece of land that’s big enough for a drive-in theater, somewhere between 10 and 15 acres. Zoning requirements in your local area may limit your choices, so check with your municipality. 

In the early stages, you may want to run your administrative operations from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Business Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “drive-in theater” or “drive-in movies”, boosts SEO
• Name should allow for expansion, for ex: “Starlight Drive-in Theater” over “Retro Drive-in Theater”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Drive-in Movie Theater Business Plan

Here are the key components of a business plan:

• Executive Summary: A brief summary highlighting the key points of the drive-in movie theater business plan, including objectives, mission, and financial projections.
• Business Overview: An overview of the drive-in movie theater business, covering its history, location, target audience, and unique selling points.
• Product and Services: Description of the services offered, such as outdoor movie screenings, concessions, and potentially special events or themed nights.
• Market Analysis: Examination of the target market for the drive-in movie theater, including demographics, preferences, and trends in the entertainment industry.
• Competitive Analysis: Evaluation of other drive-in theaters in the area, assessing their strengths and weaknesses to identify opportunities for differentiation.
• Sales and Marketing: Strategies for attracting customers to the drive-in, encompassing advertising, promotions, and partnerships to boost attendance and revenue.
• Management Team: Introduction of the key members of the management team, highlighting their relevant experience and roles in running the drive-in theater.
• Operations Plan: Details on the day-to-day operations of the drive-in, covering staffing, scheduling, equipment maintenance, and customer service.
• Financial Plan: Projections for the drive-in’s financial performance, including startup costs, revenue forecasts, and profit margins, providing a roadmap for financial success.
• Appendix: Supplementary materials, such as detailed financial statements, permits, contracts, or any additional information supporting the drive-in movie theater business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to drive-in movie theaters. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your drive-in theater will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a drive-in movie theater. You might also try crowdfunding if you have an innovative concept.  

Step 8: Apply for Licenses/Permits

Starting a drive-in theater requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your drive-in movie theater as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as SimpleTix, Veezi, or Big Tickets, to build event webpages, assign parking spaces, and collect payments.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

Here are some powerful marketing strategies for your future business:

• Professional Branding — Develop a brand that blends nostalgia with modern appeal, evident in your signage, website, and social media presence.
• Local SEO — Optimize your website for local and regional searches related to drive-in theaters, movies, and unique date night ideas, enhancing visibility. Regularly update your Google My Business and Yelp profiles to strengthen your local search presence.
• Partnership Development — Network with local businesses, schools, and community groups to build relationships and offer group discounts or special event nights.
• Social Media Engagement — Use platforms like Instagram, Facebook, and Twitter to promote upcoming movies, share behind-the-scenes content, and interact with your audience.
• Movie Blog — Maintain a blog discussing classic films, new releases, and tips for the best drive-in movie experience.
• Email Marketing — Send regular newsletters about upcoming features, special theme nights, and promotions.
• Customer Spotlights and Reviews — Feature customer testimonials that highlight their experiences and favorite aspects of your drive-in.
• Themed Movie Nights — Host movie nights focused on specific themes such as 80s classics or horror marathons to attract diverse audiences.
• Special Events — Organize unique events like classic car nights or local filmmaker showcases to enhance the movie-going experience.
• Loyalty Programs — Offer discounts or season passes to frequent visitors to encourage repeat business and word-of-mouth promotion.
• Local Influencer Collaborations — Partner with local influencers or bloggers to broaden your reach, particularly during special promotions or events.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your drive-in movie theater meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your drive-in movie theater could be:

• Outdoor film fun for the whole family!
• Enjoy classics in the comfort of your own car, just like the old days
• A nostalgic movie experience with a modern-day twist

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a drive-in, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in movies for years and can offer invaluable insight and connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in drive-in theaters. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

As your business grows, you will likely need workers to fill various roles. Potential positions for a drive-in movie theater include:

• General Manager – Bookkeeping, manage inventory, run payroll
• Theater Attendants – Greet customers, serve concessions, operate projector
• Marketing Lead – Manage social media sites, generate new business

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Drive-in Movie Theater – Start Making Money!

Drive-in movie theaters are making a huge comeback as more people resume social activities. Becoming a drive-in movie theater owner takes a lot of work, but you’ll be putting smiles on your customers’ faces and good money in your pocket! 

Now that you’ve learned the business fundamentals, it’s time to get out there and build your brilliant drive-in business.