Theatre Royal owners fear the 168-year-old site may close if a membership drive doesn't help raise funds needed for upgrades.
Tim Heath and Felicity Cripps will launch the membership drive on August 30.
Cripps and Heath said they had received great community support since taking over the theatre in 2016 but as facilities continued to become worn, it made the theatre less comfortable for patrons.
"If we don't improve facilities, people will find it harder to support us because the experience is kind of diminishing, we are afraid that without upgrades we may not survive," she said.
"People want to support the theatre but cant because it's no longer comfortable. Everyone is aware our hospitality is better than ever but the actual facilities (wearing down) by the day
"We are responding to say 'we totally understand and feel same way'."
Funds raised from the drive will be used to improve cinema lighting, and replace 177 theatre seats and 15 couches.
Heath described the cinema seats as decrepit and the couches as "in pretty bad nick".
"To keep people coming back these things need to be addressed. It's becoming a joke," he said.
"At end of each week there is nothing in pot left to address these sorts of things.
"What little money we do make, we have to spend on things like fixing a toilet, a door, the gas stove or something like that, so we thought this was a terrific way to give something back to patrons, improve the business and get more people along.
"We are looking to make it a perpetual, annual membership drive to help pay for these large overheads."
The theatre has previously received heritage grants to complete structural works.
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The Loyal Royal membership drive will launch on August 30 with plenty of locals already eager to sign up.
"Several locals said to put the word out and get (the community) to help sponsor it," Cripps said.
"There's definitely a huge amount of interest. The launch weekend is when we will invite people to come sign up in person, meet us and chat to us about the theatre.
"With the large costs, (the theatre) is not sustainable in its current model. It really needs some added support.
"(Owning the theatre) is so rewarding. It's so loved and we feel really supported by the community."
Heath said the Theatre Royal team hope to have the upgrades complete by March 27 next year - World Theatre Day.
"We thought that gives us enough time to meet our target," he said.
"If we're a bit shy then maybe we can seek extra funding from someone like Creative Victoria.
"But if the money comes in fast and furious hopefully we can get the seats done by Christmas.
"It would be a real shame for this not to succeed."
There is no shortage of top quality acts who are eager to play at the venue with comedian Arj Barker and music acts Thelma Plum, Justin Townes Earl and Paul Kelly set to perform at the venue in the coming months.
"It is definitely really cherished by a lot of people from far and wide," Heath said.
"Not just by locals but we get international artists coming who want to come back like Justin Towns Earle who has been here four times.
"If the drive is successful, definitely it will take a lot of strain of us and make (running the venue) even more enjoyable."
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