Have you ever wondered why a small popcorn and a drink at the movie theater cost you more than a ticket? Or why a candy bar that you can buy for a dollar at the supermarket is sold for four times as much at the concession stand? If you have, you are not alone.
Many moviegoers are baffled by the high prices of movie snacks, which seem to defy the laws of economics and common sense. In this article, we will explore some of the reasons behind the exorbitant prices of movie snacks, and how they affect the movie industry and the consumers.
Movie snacks are a major source of revenue for theaters
One of the main reasons why movie snacks are so expensive is that they are a major source of revenue for theaters. Unlike the ticket sales, which are usually split between the theater and the distributor (the company that provides the movie), the concession sales are mostly kept by the theater.
According to a report by Stanford Graduate School of Business, theaters make about 85% of their profits from concessions. This means that theaters rely heavily on selling snacks and drinks to make money, and they charge high prices to maximize their profits.
Movie snacks have a high markup
Another reason why movie snacks are so expensive is that they have a high markup, which is the difference between the cost of producing or acquiring a product and the price at which it is sold. The markup reflects how much value is added to a product by the seller, and how much consumers are willing to pay for it.
According to a study by Couponbox, movie snacks have some of the highest markups among consumer products. For example, popcorn has a markup of 1,275%, soda has a markup of 1,150%, and candy has a markup of 322%. These markups are much higher than those of other products, such as clothing (100%), furniture (200%), or cars (29%).
Movie snacks have an inelastic demand
A third reason why movie snacks are so expensive is that they have an inelastic demand, which means that the quantity demanded by consumers does not change much when the price changes. In other words, people will buy movie snacks regardless of how much they cost, because they consider them as part of the movie-going experience, or because they have few alternatives.
According to a survey by Morning Consult, 59% of Americans said they buy snacks or drinks at the theater every time or most of the time they go to see a movie. Moreover, 77% of Americans said they would still buy snacks or drinks at the theater even if the prices increased by 10%. These results suggest that moviegoers are not very sensitive to the prices of movie snacks, and that theaters can charge high prices without losing many customers.
Movie snacks face little competition
A fourth reason why movie snacks are so expensive is that they face little competition from other sellers. Most theaters have exclusive contracts with concession vendors, which prevent them from selling products from other brands or sources. This means that moviegoers have limited choices when it comes to buying snacks or drinks at the theater, and they cannot compare prices or quality with other options.
Furthermore, most theaters have policies that prohibit customers from bringing their own food or beverages into the auditoriums. This means that moviegoers have to either buy from the concession stand, or go without any snacks or drinks during the movie. Therefore, theaters have a monopoly over the market of movie snacks, and they can charge high prices without worrying about losing customers to competitors.
Movie snacks provide psychological benefits
A fifth reason why movie snacks are so expensive is that they provide psychological benefits to moviegoers. According to some researchers, eating popcorn or candy during a movie can enhance the enjoyment and immersion of the viewers, by stimulating their senses and emotions.
For example, popcorn can create a sense of anticipation and excitement, candy can create a sense of reward and satisfaction, and soda can create a sense of refreshment and hydration. Moreover, eating movie snacks can also create a sense of social bonding and sharing with other viewers, by creating a common activity and interest. Therefore, moviegoers may be willing to pay high prices for movie snacks, because they perceive them as adding value to their movie experience.
Conclusion
Movie snacks are so expensive because they are a major source of revenue for theaters, they have a high markup, they have an inelastic demand, they face little competition, and they provide psychological benefits. These factors combine to create a situation where theaters can charge high prices for movie snacks without losing many customers or affecting their satisfaction.
However, some moviegoers may find these prices unfair or unreasonable, and may look for ways to avoid or reduce them, such as by eating before or after the movie, bringing their own snacks or drinks, or choosing cheaper or smaller options. Ultimately, the decision to buy or not to buy movie snacks depends on the preferences and budget of each individual.
