In another thread about why movies are pulled from cinemas several posters have quoted the “cinemas make more from concession sales than ticket sales” line. I have heard this repeatedly over the years but people working in cinemas in Australia assure me that it is nonsense. Most estimate between 25 and 40% of profit comes from concession sales. They assure me that, in Australia at least, a very large percentage of people buy nothing but their ticket. A quick look around for articles about food sales in cinemas truned up this which says in part
Now while I understand that no profit is to be sneezed at, can anyone tell me where the “rampant belief” comes from. For instance does every American cinema goer spend $10-15 on junk food at each visit? Has anyone got a good cite?
Nice pull, there, Max Torque. It was refreshing to see someone nicely explain the takes granted to exhibitors. I was working at a theater when Jurassic Park was released and was shocked to hear a 10/90% split. You damn well better sell some popcorn or get ready to shut your doors…
FWIW, my grandparents owned the concessions at the local speedway and the city parks, and popcorn ( to name one) is very high on profits. Not to mention fountain drinks, cotton candy, et al.
Need proof? Next time you’re at the theater, buy any size popcorn, Keep the bucket and take it home. Next, buy a box or jar of popcorn kernels and pop the whole damn thing.
Now see how many of those buckets you can fill with the set amount of seeds and get the retail value of that amount, then subtract the cost of the box/jar, then subtract built-in costs of packaging/marketing, then add the savings of buying in bulk.
Think of it this way, keg (tap) beer comes out approx 3.2 cents per oz. a 16 oz beer at $2 or more is a pretty nice profit
> In another thread about why movies are pulled from cinemas
> several posters have quoted the “cinemas make more from
> concession sales than ticket sales” line. I have heard this
> repeatedly over the years but people working in cinemas in
> Australia assure me that it is nonsense. Most estimate
> between 25 and 40% of profit comes from concession sales.
> They assure me that, in Australia at least, a very large
> percentage of people buy nothing but their ticket. . . . For
> instance does every American cinema goer spend $10-15 on
> junk food at each visit? Has anyone got a good cite?
Notice first that two different things are being discussed here. One question is what percent of the amount of money spent at movie theaters is the concessions. The other is what percent of the profit made by the exhibitors comes from concessions. Those are quite different things.
It’s certainly not true that the average amount of money spent by an American when going to a movie is $10 to $15. I would guess that approximately half the people who go to movies in the U.S. don’t spend anything on concessions, and most of the others might only get a soft drink. A smaller percentage also get popcorn and/or candy. There are some who get hot dogs/nachos/etc., but that’s a pretty small number. I would guess that the average amount spent on concessions in an American movie theater is about $3 per filmgoer.
But quite a large amount of that is pure profit for the exhibitor. As has been shown in the discussion in this and the other thread, the profit (for the exhibitor) on the tickets themselves is a much smaller percentage. Thus it might be true that in American movie theaters, perhaps 30% of the money collected comes from concessions as opposed to tickets, but perhaps 55% of the profit for the exhibitor comes from concessions as opposed to tickets. You say that in Australia the percent of the profit to the exhibitor from concessions is about 35%. So that’s not hugely different from 55% in the U.S. It might be that in Australia there aren’t distributor deals that suck up most of the early-week profits to the distributors instead of the exhibitors.
I keep hearing that concession sales are important for movie theatres to remain profitable, and therefore justifying their high prices. However, in practice, at my local theatres concessions are getting harder and harder to purchase.
When I see a first-run movie, the concession lines in the main area (right ahead where they rip your ticket and give you the stub) are very very long. The concession stands on the sides of the theatre that could be opened easily to make extra money are completely empty and dark. It is one thing to pay a high price for popcorn and a Coke; it is an added indignity to have to stand in line 15-20 minutes to pay that high price. Most of the time I just give up and go take my seat.
Plus why doesn’t a theatre have refreshment vendors carrying soda and popcorn into the theatre itself to sell? Ballparks do it; circuses do it, why not movie theatres? I am not saying to have them hawking their wares during the movie (or even the previews), but for the people who get in early it would give them another chance to buy an overpriced concession.
It just seems logical to me that if I were a theatre owner, and my profitability depends primarily on concessions, that I would do everything in my power to make sure that lines were short and that concessions were easily purchased.
Thanks for the replies particularly Max Torque’s link to Cervaise’s fine site. I can now see some obvious differences - Sydney adult ticket prices are about $14 (except Tuesdays), no hot food is sold (or even permitted) in our cinemas. Simply adding 40-50 to the price of a ticket would adjust the figures as explained by Wendell Wagner to be in favour of ticket sales. And who can argue with fatdave because obviously that cinema is not surviving on ticket receipts.
Still it makes me wonder how movies like Schindler’s List get shown. Surely no-one felt the need to stuff themselves with junk food while watching the plight of the Jews.
Hey guys, thanks for the shoutout to my website. It’s nice to feel needed.
Several cinemas in my area do this on the opening weekend of big movies. They don’t have guys with trays like at sports arenas, but they’ll wheel a little cart into the theater and offer pre-bagged popcorn, bottles of soda, and a couple of candy items for sale off the cart in the back of the theater until the movie starts. They don’t do this for all movies, and they don’t do it after opening weekend. But it’s fairly convenient.
Naturally, labor is extremely expensive for the cinema: not because they’re paying these people more than minimum wage, but at least half the time you’re paying them to stand around doing nothing. Think about the typical cinema starting-time lineup: The popular movies all start between 6:30 and 7:30, and then the lesser titles fill in the gaps. So between 7:30 and 9:00, when the next round of big-movie showtimes begins, there’s a lot of downtime. Theoretically, this is when you send people to clean the restrooms and so on, but in reality you get a lot of people being paid to lean against the counter. The compromise, then, is to minimize the number of people standing around during those slack periods, which means huge backups during concession rushes. There’s no good solution here; profit margins are already razor-thin in the cinema biz. A good comparison is with the airlines, which also have extremely thin margins: Basically, the business model says they will abuse their patrons until they find the point at which they stop showing up, and then back off from that just a little bit.