Movie concessions: Why do they cost so much?
As a teenager working behind the movie theater concession stand, this was a question that I was asked many, many times.
Growing up in the small town of Clinton, Arkansas, we were lucky to have a movie theater. It's still there and still owned and operated by my parents. Recently, my dad had to make a decision: Shut it down or install digital projectors (about $30k + each.) So he replaced the old reels and went digital, because he wants to provide his community a place to watch new releases without having to drive 30+ minutes. And the film companies that provide those digital movies for people to enjoy, they make most of the money on ticket sales. So that is why you are paying a little extra for a tub of popcorn, gummy bears and a coke. That's how movie theaters keep their doors open.
I found this post that explains how it works. And keep in mind, he's referring to theaters in large markets that sell many more tickets than small, family-owned theaters:
https://www.quora.com/Why-is-food-so-expensive-in-theatres
"Movie theaters, distributors, and studios make a variety of deals with each other, so there isn’t one single set of numbers to use. On average, for the first few weeks that a movie is playing in a theater, 70% of the revenue will go to the distributor/studio and 30% will be kept by the movie theater. After those few weeks are over, the numbers will change, possibly switching to the reverse, where the theater keeps 70% and the distributor/studio keeps 30%. The problem, for the theaters, is that by the time they can actually start keeping most of the money, the audience has dramatically shrunken in size.
In its opening week, Guardians of the Galaxy brought in almost $33,000 per screen for the week. Using the above numbers (Marvel’s explicit arrangements with theaters aren’t public), the studio took $23,057.30 and the theater took $9,881.70. That means that for running the movie on a big screen, probably five times a day, for a week, the cinema got to keep less than $10,000. Obviously, most movies don’t make as much money as Guardians of the Galaxy, and most movies aren’t in their first week. In week twelve, the theater got to keep $1,124.50 for a week’s worth of showing that film on a single screen.
So, theaters clearly aren’t making a killing from movie tickets. They are also expensive facilities to run. They have vast air conditioning bills. They have to be cleaned. There are constant technology advances like digital projection, 3D, IMAX, and surround sound that require huge investment. The buildings themselves take up a lot of space, often in high-demand areas, meaning high rent.
Raising tickets prices often isn’t the best solution. If they raise ticket prices, they might lose customers before they enter the doors and become a captive audience. They also have competitors that might not raise their ticket prices. Plus, 70% of the ticket increase will go to the studios, in the prime weeks.
Movie theaters have an 85% profit margin on concessions, but the total average profit margin for a theater is just 4.3% That shows that high concession profits are essential for a theater’s survival."
So don't sneak your candy into the theater! Just hit the concession stand on your way to your seat, grab a big ol' tub of popcorn and enjoy the movie!