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  1. 095Estimate the annual revenue of one multiplex screen in a tier-1 Indian city.Estimation and market sizingCoreEquity researchCorporate finance

    Try it first

    Which input moves the answer most, and is hardest to guess?

    Show the worked solution

    Roughly Rs 4.4 crore a year, on the assumptions below. Five shows a day, 200 seats and 30% average occupancy give about 1.1 lakh admissions a year. At an average ticket of Rs 250 that is Rs 2.74 crore; food and beverage at Rs 130 a head adds Rs 1.42 crore; on-screen advertising adds perhaps Rs 0.2 crore. Every input is an assumption to state and then test.

    What is the structure before any number?

    Estimating what a hall earns is like estimating a restaurant: count the covers, then what each cover spends, then any income that does not depend on covers. Estimate each revenue stream separately: tickets and food both hang off admissions, while advertising depends on the screen, not the audience on the day. So the first job is admissions: shows a day times seats times occupancy times days.

    Assume five shows a day on a 200-seat screen, open every day. Occupancy is the soft input: a weekend evening may be nearly full while a Tuesday matinee is mostly empty. Build it rather than guess it: if weekdays run at 20% and weekends at 55%, the weighted average is (5 x 20% + 2 x 55%) / 7, about 30%.

    StreamDriverAssumptionRs crore a year
    Ticketsadmissions x average ticket109,500 x Rs 2502.74
    Food and beverageadmissions x spend per head109,500 x Rs 1301.42
    Advertisingper screenRs 20 lakh0.20
    Total4.36
    Every price, occupancy and spend figure is an illustrative assumption, not an industry statistic.
    One screen: count admissions first, then price each revenue stream5 showsa dayx 200 seatsper showx 30%occupancyx 365days= 1.09 lakhadmissions a yearAnnual revenue, Rs crore2.74Ticketsx Rs 25063% of revenue1.42Food and beveragex Rs 130 a head33% of revenue0.20Ads5%Total about Rs 4.4 crore a year, or Rs 1.19 lakh a day, before the distributor's share
    About 1.09 lakh admissions a year support Rs 2.74 crore of tickets and Rs 1.42 crore of food and beverage, with advertising a small extra, for about Rs 4.4 crore a year from one screen.

    How do you know the number is sensible?

    Check it three ways. Per day: Rs 4.4 crore over 365 days is about Rs 1.19 lakh, which is 300 admissions spending about Rs 400 each in total, plausible for a screen with five shows. Per seat: about Rs 2.2 lakh a year. And the mix: food at about a third of revenue is the kind of share multiplex operators discuss, and it is high-margin money. The softest input is occupancy: every 10 points on it moves revenue by about Rs 1.4 crore, because it drives tickets and food together.

    Say what revenue is not. Gross ticket revenue includes entertainment taxes in some form, and a large share of net ticket income goes to the film's distributor. Confirm current tax rates and typical revenue-sharing terms before using the figure for anything beyond a size estimate. Food, by contrast, the operator keeps in full, which is why its share matters to profit far more than its share of revenue suggests.

    Where candidates lose it

    The common error is assuming full houses: 5 shows x 200 seats x 365 days at Rs 250 is over Rs 9 crore from tickets alone, more than three times the ticket estimate. Average occupancy across every show, including weekday mornings, is far below a packed Friday night.

    The second loss is stopping at tickets. Food and beverage is roughly a third of revenue on these assumptions and a larger share of profit. An interviewer asking about a multiplex wants to hear that you know the business is partly a restaurant with a screen attached.

    What the interviewer asks next

    • How would a premium recliner screen with 60 seats compare, and why?
    • What share of this revenue would you expect the operator to keep after paying the distributor and taxes, and what would you check?
    • A new release fills the screen to 70% for two weeks. How much does that add to the year?