Looking at the price discrimination graph below, movie theaters markups in their concessions are reflective of second degree price discrimination, meaning that the theaters charge a different price for different quantities. Indeed, movie exhibition houses rely on concession sales to keep their businesses viable. Mar 19, 2019 the statistic shows the likelihood of buying concessions, such as soda, candy or popcorn, at movie theaters among consumers in the united states as of february 2018. The hustle looked through annual reports 20152018 from two leading movie chains amc and cinemark and found that concessions account for 30% of total gross revenue, yet make up 4550% of gross profits. Theaters are able to keep a positive profit because of concession sales, says ricard gil, a business professor at queens university in canada. Today, concessions are the lifeblood of the theater business. So it makes sense that one locked down theater in california is trying to stay afloat by peddling takeout popcorn and other snacks. Without concession sales, both amc and regal would not make a profit. Thats why we have to make our profits on concessions. Mar 06, 2017 for movie studios, they are more concerned with revenue maximizing rather than profit maximizing based on the structure of the studiotheater arrangement. How many concessions does a movie theater have to sell to stay in. Popcorns starring role concessions are where theaters. Independent and arthouse movie theaters double down on anti.
We also know that increasing your average concession sale per customeryour per cap, is a critical function for a theater owner or manager, ranking just above food and shelter. Industry statistics cover all companies in the united states, both public and private, ranging in size from small businesses to market leaders. Their food prices were recently updated in march 2017 and have been sourced directly from their website as well as a number of reports we have received from visitors. Former movie theater employees reveal the tricks and shady. During the fourth quarter, amc reported concessions revenue rose. Since the first movie theater was established in 1905, theyve have become engrained in american culture. Virtually all the money made at the box office goes back to the film and distribution companies. In response, the brand is trying to think less like a mere movie theater chain and more like a restaurant.
Concessions is where a movie theater makes its profit. Movie theater offers concessions for curbside pickup. So, when you walk into a theater, you will see tons and tons of. Movie theaters make an estimated 85 percent profit off of concession sales, and those sales constitute 46 percent of movie theaters overall profits. Jan 05, 2006 the high prices of concessions, were told, stems from two factors. You knew movie theaters made a killing selling popcorn, candy, and soda, but wow, 85%. Movie theaters have three main sources of profit, and they include, the movies themselves, the premovie advertisements, and most important, the concessions. Using detailed weekly movie theater data on concession sales, box office revenues and transaction characteristics from a major exhibitor in spain, we shed light.
Cinemarks concession gross margin was 84% last quarter, with average domestic concession. In addition to revenue, the industry market analysis shows information on employees, companies, and average firm size. First, they say, movie theater employees earn more on average than your man at mcdonalds, so you shouldnt expect the price to. Pdf the role and determinants of concession sales in movie. Revenue for tickets and concessions both fell, though the average moviegoer is spending more on snacks than they did a year ago. Movie theaters make 85% profit at concession stands time. Any time someone brings in outside food, that hurts their bottom line, he says. The percentage of theaters revenue attributable to concession sales. The outlook for the target market isnt favorable for the movie industry because it will not be growing as fast as the overall population. Maya cinemas theater, which is located near fresno state university, is offering freshlypopped popcorn and candy so movie. As you no doubt guessed, the fattest line in that thin, 4 percent profit margin is the concessions.
Once upon a time, older generations tell us, going to the movies was considered a cheap date. Why is movie theater popcorn so outrageously expensive. Considering that, on average, concessions profits account for 40% of a theaters profits, its imperative to have a solid concessions strategy to ensure long term business success. Without these gross profits both companies would be losing hundreds of. Movietheater popcorn has been called one of americas biggest ripoffs, with a retail price of nine times what it costs to make. Movie studios arrangements vary, but the movie studio usually ends up with about 60 percent of the proceeds from american box offices. But unlike happy endings, a concessions sales strategy is not its not always easy to come by, and sometimes. In the real world, this means that wealthier people will spend more. What movie theaters are learning from restaurants eater. Its been estimated that movie theaters make an 85% profit at the concessions stand on overpriced soda, candy, nachos, hot dogs and, of course, popcorn. Who profits from movie theater ticket sales san diego reader. The role and determinants of concession sales in movie theaters. Sep 08, 2016 movie studios arrangements vary, but the movie studio usually ends up with about 60 percent of the proceeds from american box offices.
We all know that profits in the movie theater business are at the concession stand. Local theaters offering curbside concessions for your. Movie theater offers concessions for curbside pickup beasley media boston april 10th share. Thats why concessions are so expensive without the profits generated by things like popcorn and soda, most theaters could not afford to stay in business. Jun 26, 2007 today, concessions are the lifeblood of the theater business. Economics of the movie theater where the money goes and why it costs us so much october 22, 2007 november 18, 2018 john campea 151 comments the attention and interest generated by the article i put up the other day on why commercials before movies is worse than piracy continues to generate a lot of discussion and so the topic should. New, hot films, like black panther march 2018, they.
The high prices of concessions, were told, stems from two factors. Local theaters offering curbside concessions for your movie night pleasure worker at birch bay retirement village in bar harbor tested positive for covid19 inmate who stole thousands of dollars. Movie theaters have three main sources of profit, and they include, the movies themselves, the premovie advertisements, and most important, the. Like many family entertainment businesses, concessions account for a large percentage of overall profits. Its been said that all of a movie theaters profits come from concession sales. Movie theaters make 85% profit at concession stands. Probably a loss leader, and helps to keep the staff employed. Theaters earn most of their profits on concessions so they use their power to reduce their costs from their suppliers. Dec 07, 2009 without the hefty concession profits, there would be no movie theater business, even though tickets dont seem especially cheap and the movie business has done better than most in the recession. The movie theater business is actually the popcorn business. As youve seen from the above table amc offers a range of concessions at each of its cinema locations focusing on keeping the movie snack staples available all the time.
First, they say, movie theater employees earn more on average than your man at. If the studio can both release a movie in its own theater chain and control 100% of the boxoffice revenue and concessions, while also making the film available via. The real reasons movie concessions cost so much mel magazine. Movie theater concession prices markups business insider. According to mckenzie, theater owners need these concessions profits to cover the dozens of hidden house costs employee wages, installation of.
The sneaky way movie theaters are making up for falling. Nine common ways to try and increase concession profits. People arent seeing as many movies as they used to, but, when they. While it may seem illogical, movie theaters actually profit much more from concessions than they do. Movie concessions drive amc earnings business insider. Concession definition in the cambridge english dictionary. Movie theaters are making up for falling ticket sales by hiking the cost of popcorn and other snacks. Feb 02, 2010 mckenzie, author of the 2008 book why popcorn costs so much at the movies. Americas biggest ripoffs movie theater popcorn 900%. While you might think you know everything about the american cinematic experience, weve dug up some movie theater secrets that might surprise you. Sep 08, 2019 the hustle looked through annual reports 20152018 from two leading movie chains amc and cinemark and found that concessions account for 30% of total gross revenue, yet make up 4550% of gross profits.
The movie itself is considered a loss leader by the theater owner. Aug 29, 2019 since the first movie theater was established in 1905, theyve have become engrained in american culture. Movie theaters at least used to rent the films, on a sliding scale, based on popularity and length of time the film has been out. Mar 02, 2007 john fithian, president of the national association of theatre owners, said concession sales at a typical movie theater account for a fifth of total revenues but as much as 46 percent of profits. During the fourth quarter, amc reported concessions revenue rose 8. Court case that made movie theater concessions so expensive. Most restaurants can only dream of equaling the profitability of movie theater junk food. A short history of movie theater concession stands. Economics of the movie theater where the money goes and why it costs us so much. The role and determinants of concession sales in movie. If they make any money from the box office take, its like a little bonus like when you find a dollar and youre all excited and you dont know what to spend it on. According to the national association of theatre owners, they account for approximately 40 percent of theaters net revenue.
Mar 19, 2012 its been estimated that movie theaters make an 85% profit at the concessions stand on overpriced soda, candy, nachos, hot dogs and, of course, popcorn. When you buy a movie ticket, where does that money go. Ironically, its partially because of these practices that snacks cost so much in movie theaters. Likelihood of buying concessions at movie theaters. However, chains generate the bulk of their profits from concessions, which are extremely highmargin. Without the hefty concession profits, there would be no movie theater business, even though tickets dont seem especially cheap and the movie business has done better than most in the recession. Whether its with friends or family, movie theaters are undeniably, one of the most popular areas for entertainment. The need for concessions how movie distribution works. Smartmoney reports on just how much the theaters make at the concession stand. Heres how movie theaters are still making money even though ticket. Cbs news a lot of people buy popcorn, said melissa rocha, a manager at film forum, an independent movie house in manhattan. How will amcs ban, or any ban for that matter, be enforced. Theaters can stay in business because the profit margins on drinks. Now, after a michigan man sued a movie theater for overcharging customers on snacks, one theater owner is.
So if your large soda and tub of buttery popcorn is putting you. Jack oberleitner, a 55year veteran of movie theaters, is now a consultant. Of each dollar spent there, roughly 85 cents is profit, says warren miller, a senior equity analyst for morningstar who tracks the theater chains. Popcorns starring role concessions are where theaters make. The theater makes its money selling refreshments to the movie audience. Aug 04, 2014 ask movie theater owners, and theyll tell you they charge so much for concessions. Movie theater chains like regal and amc make huge profit margins on the sale of food and drinks at the concession stand. Finally, we know why movie theater concessions cost so damn much. In 2007, a piece quoted a food service strategist that in comparison to restaurant profits, which is about 60 to 75 percent on food, movie theaters earn around an 85 percent profit on. John fithian, president of the national association of theatre owners, said concession sales at a typical movie theater account for a fifth of total revenues but as much as 46 percent of profits. Its no secret that concession sales are crucial to a movie theater to survive and remain profitable.
Bidding requires that the theater agree to pay a fixed amount for the right to show the movie. Why movie theaters are trading popcorn and soda for chimichangas and. Movie theaters make money through concessions sales, advertising, and in many cases video game revenue. Independent and arthouse movie theaters double down on. The hopedfor food and beverage profits these days are potentially much more than the fat margins that movietheater popcorn and other concessions have. How theaters are changing what we eat at the movies vox. As time magazine puts it in 2009, movie theaters make 85% profit at concession stands.
There are many theater patrons who either refuse to buy concessions because of the exorbitant prices or attempt to smuggle outside food and drink into the theater. A push in this direction happened about nine years ago, with the introduction of the amc. Thats because while ticket revenues must be shared with movie distributors, 100 percent of concessions go straight into an exhibitors coffers. There are multiple methods to achieve this increase. Ask movie theater owners, and theyll tell you they charge so much for concessions. Apr 08, 2020 if the studio can both release a movie in its own theater chain and control 100% of the boxoffice revenue and concessions, while also making the film available via their own streaming service. The statistic shows the likelihood of buying concessions, such as soda, candy or popcorn, at movie theaters among consumers in the united states as of february 2018. Although concessions account for only about 20 percent of gross revenues, they represent some 40 percent of theaters profits. Mckenzie, author of the 2008 book why popcorn costs so much at the movies. Feb 27, 2017 the hopedfor food and beverage profits these days are potentially much more than the fat margins that movie theater popcorn and other concessions have always raked in over the profit from ticket. May 29, 2014 according to mckenzie, theater owners need these concessions profits to cover the dozens of hidden house costs employee wages, installation of snazzy sounds systems, energy bills, for example. While concessions account for only about 20 percent of gross revenues, they represent some 40 percent of theaters profits.
24 539 861 1297 876 217 1221 589 1588 1349 1116 186 1127 1112 863 278 62 334 133 473 940 1508 295 987 588 1075 553 34 1165 360 1108 1064 370 762 944 582 225