Pros and Cons of Serving Alcohol at Your Community Theater
As theater owners contemplate the decision to serve alcohol at their venue, they may find themselves torn between the allure of increased revenue and the potential risks associated with the social lubricant. On one hand, offering a wide and interesting selection of drinks to patrons can make your venue a local favorite. On the other hand, managing alcohol services can be complex and will likely come with additional costs and risks. In this article, let’s take a look at both the pros and cons of serving alcohol at community theaters, with the aim of helping owners make an informed decision about whether it’s right for their venue.
There are several pros to serving alcohol at community theaters that owners should consider, especially if the venue infrastructure falls in the ‘goldilocks’ zone. The ‘goldilocks’ zone has all of the ideal characteristics of serving alcohol in one venue; the patrons are well mannered, well paid, and friendly, the seating arrangement allows staff to easily distribute alcohol and monitor alcohol consumption without disrupting the show, the floors stay clean, the shows go off without a hitch, etc. Not all of these things are in a venue’s control, but given a beneficial set of circumstances and a flexible management, it could be a gold mine.
Alcohol sales can be particularly lucrative when sales can occur directly at the seats. But how significant is the potential boost to revenue, exactly? According to a report by the National Association of Theater Owners (NATO), alcohol sales at movie theaters accounted for an average of 7% of total concessions revenue in the United States in 2019. And a study by Nielsen found that offering alcohol at live events can increase overall ticket sales by up to 30% (Nielsen, n.d.).
The decision to serve alcohol at a community theater isn't just about the bottom line. It's about creating a more relaxed and social atmosphere for patrons, enhancing their overall experience. This can be particularly beneficial for events such as plays, concerts, and stand-up comedy shows, where patrons may be more likely to stay and socialize if they have the option to not only purchase a drink, but also have access to amenities that make drinking itself more enjoyable (think bar food). Offering a rotating selection of local drinks can also differentiate the theater from competitors and make the venue a more attractive destination for events, attracting a wider audience through its own support of local brewers.
In addition, serving alcohol at community theaters can encourage longer dwell times, as patrons may be more likely to stay and socialize if they have the option to purchase a drink. A smooth ticketing experience to get patrons inside like the one available with Fourth Wall Tickets and the entertainment services to keep them around can bring completely new revenue through other services such as VIP experience, bar games, and live TV, as it can foster a sense of community and encourage patrons to return in the future.
A final and not often thought of pro for providing alcohol services is that it can keep establishments alive during slower periods or for events that may not be as popular. It’s such a staple that stadiums generally make 30-40% of their show revenue from concessions (NCAA). Not to mention the potential for sponsorship deals. Tap in with your local brewers, bakers, and restaurants to see all your options for potential sponsorships. No doubt some sponsors may be interested in aligning their brand with a venue that offers alcohol service. Sponsorship deals can generate significant monetary value for a theater, depending on the terms of the agreement and the size and reach of the sponsoring company. For example, a major sponsorship deal with a large corporation could potentially bring in hundreds of thousands of dollars in revenue for a community theater. An owner should always seek local partnerships and sponsorships to fill a limited number of seats. At a tipping point the seats’ exclusivity will propel their own increase in value.
As community theater owners consider the possibility of serving delicious alcohol at their venue, we should mention the potential challenges and responsibilities. On the surface, the prospect of managing alcohol service may seem simple enough - hire additional staff, train current staff, plug up a couple fridges, fill them up with whatever is at the next watering hole down and start pouring drinks. But the reality is that managing alcohol service at a community theater can be a complex and time-consuming process, requiring significant resources and staff. This can be a significant cost for the theater, particularly if it does not have the infrastructure in place to support alcohol service.
Depending on your state, you could be required to pay anywhere from $100 to ~$14,000 annually for a liquor license (Ballotpedia). And by serving alcohol, a community theater increases liability and insurance costs. Theater owners will likely need to purchase additional liability insurance to cover any potential accidents or incidents related to alcohol service. And regardless of that purchase comes the added risk of disruptions or inappropriate behavior from patrons who have consumed alcohol. Legal and financial consequences for the theater become a very real possibility.
Remember that if your venue is currently serving food or ideally food requiring refrigeration or freezing, then the changes you’ll be making to your facilities to serve alcohol will likely be minimal and thus cheaper than another bar of the same size making the change.
But the risks cannot be ignored. Managing alcohol service requires significant resources and staff, and can increase liability and insurance costs. Theater owners must also be prepared for the challenges that may come with serving alcohol in dry or heavily regulated areas. After using a resilient and affordable ticketing platform such as Fourth Wall Tickets, theater owners can more comfortably weigh the pros and cons before making a decision about whether to offer alcohol service at their venue. Legal and financial advice may be helpful in ensuring that they are prepared for the additional responsibilities and costs that may come with alcohol service. So, is serving alcohol at a community theater worth it? It's a question that should ultimately only be answered by owners after they’ve achieved a thorough understanding of the potential risks and rewards, and with the aim of providing the best possible experience for patrons while also ensuring the financial stability and success of the theater.
References:
National Association of Concessionaires. (n.d.). Stadium & Arena Concessions. Retrieved from https://www.naconline.org/industry-segments/stadium-arena-concessions/
NCAA. (n.d.). Concessions. Retrieved from https://www.ncaa.org/about/resources/media-center/concessions
Ballotpedia. Retrieved from https://ballotpedia.org/Liquor_license_costs_by_state,_2018
NATO (National Association of Theater Owners). (2019). 2019 Annual Report. Retrieved from https://www.natoonline.org/wp-content/uploads/2019/03/2019-Annual-Report.pdf
Nielsen. (n.d.). The Impact of Offering Alcohol at Live Events. Retrieved from https://www.nielsen.com/us/en/insights/article/2017/the-impact-of-offering-alcohol-at-live-events/