Movie Theatres: Why the Budget Breaker?

Movie Theaters: Why the Budget Breaker?

Jena Hicks

Anybody who has ever gone to a movie theater knows that whether you pay for a normal movie ticket, an Ultra-screen ticket, or one that offers premium seating, the real budget breaker and downside for most is in the concession prices. The majority of moviegoers opt for the “norm” choice of popcorn -- and this option, since 1999, has seen an increase in its average price by more than $3 and now has an estimated average price of at least $8.65 in relation to the price in 2016 (boxofficemojo.com). Despite this high price, consumers continue to purchase popcorn to go with their movie.

The question some are asking though: “Why do theaters make their concession stand prices so high?” When theaters sell tickets to their consumers, the majority of the money goes back to the movie producers. So, theaters receive very little profit from solely selling tickets and to compensate for the lost earnings, they increase their concession prices where they are able to collect the entirety of the profit and increase their revenue. According to Business Insider, of a theater’s total revenue, nearly 30% of it is brought in from selling their overpriced concession stand food and they continue selling it at these prices because they know that the movie-goers will continue to purchase it at the price because of demand. Theaters will sell their drinks and popcorn at an average of 11x the wholesale cost and gather 85% profit to receive the greatest benefit that they can (http://business.time.com).

In addition, movie theaters are able to bump up their prices and keep their buyers because within a theater, there is little to no competition. More than 45% of movie-goers at all ages will at least purchase popcorn when attending a movie. Therefore, theater concessions will supply more food for the consumers to purchase while discouraging any food to be brought in by attendees from outside. Movie theater companies, such as AMC, are banning the carrying in of any outside snacks in hopes of increasing revenue after seeing a decrease in the past (consumerist.com). This eliminates any competitors and pushes customers to purchase the goods that are available to them at theaters’ concession stands where they receive the majority of their revenue.

So is it completely necessary for movie theaters to have unreasonably high prices at their concession stands? In hindsight, yes, to keep the movie theater business going and our economy from dipping and falling. Within the consumer market, it can be hard to completely please both the consumers and the producers, or the attendees and the theaters in this case. The consumers don’t want the high prices that comes with the concession stand, but the theaters don’t want to go out of business. The trade-off is in the consumer's’ hands: purchase the concession food at a bit of a higher price or have no movie theater at all because suddenly it can not stay in business. The opportunity cost to continue having an outlet for entertainment seems very worth it especially if it can help the economy and keep businesses running.

Works Cited

Tuttle, Brad. "Movie Theaters Make 85% Profit at Concession Stands." Time. Time, 07 Dec. 2009. Web. 17 Apr. 2017.

Cwalters. "AMC Theater Chain Bans All Outside Snacks." Consumerist. Wordpress.com, 03 Dec. 2009. Web. 18 Apr. 2017.

Liebenson, Donald. "Consumer Spending Trends: Concessions Are the Ticket for Movie Theatre Profits." Spectrum Group, 2017. Web. 18 Apr. 2017.

Kuzoian, Sara Silverstein and Alex. "We Did the Math: Here's How Much Movie Theaters Mark up Your Popcorn and Snacks." Business Insider. Business Insider, 24 Apr. 2015. Web. 18 Apr. 2017.

"Adjusting for Movie Ticket Price Inflation." Box Office Mojo. IMDb, 2017. Web. 18 Apr. 2017.

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