I take issue with how some Boomers talk about housing; “Just give up brunch and Netflix and you’ll have a home in five years,” they (wrongly) advise younger people.
Well, I stand by my objection, but it seems I’ve become a little out-of-touch on another topic myself.
Maybe it’s because I grew up near one of Ireland’s absolute cheapest cinemas, but I hadn’t quite realised how pricey the five-pound-plus snack has become until I took a rare trip to the big screen recently.
While I followed the scent of freshly popped corn to the counter like a cartoon elephant drawn to a bun, my friend stood aghast ― “There’s no way we’re buying popcorn,” she said.
Looking at its price, I realised why. But how come it’s so dear to begin with?
There is a method to the madness
Researchers at Stanford Graduate School of Business (GSB) and the University of California (UC) wrote a paper stating that, though it’s painful, the prices do make sense.
That’s because, while only 20% of cinemas’ revenue comes from concessions (food, drink, and other non-ticket products), it accounts for a whopping 40% of their revenue.
Confused? I was too ― but it turns out that not all of the ticket revenue goes to the cinema. Instead, they share it with movie distributors.
The Stanford GSB and UC study also found that “die-hard” movie fans, who simply love going to the cinema, proportionally pay more for concessions ― low-traffic weeks, where bums were not hitting theatres’ seats, saw a higher proportion of snack profits than higher-traffic weeks.
That means ticket prices can stay lower, as people other than cinema-or-nothing movie-watchers will be put off by a high upfront fee.
“The argument that pricing secondary goods higher than primary goods can benefit consumers has been circulating for decades, but until now, no one has looked at hard data to see whether it’s true or not,” Wesley Hartmann, associate professor of marketing at Stanford GSB and co-author of the paper, said.
Essentially, your gut instinct is right; food profits bulk up what can be quite meagre ticket profits, especially during low-traffic weeks.
Any other insights?
Yep ― unsurprisingly, people who went to the theatre in groups tended to buy more concessions, as did those who bought their tickets online.
“The fact that the people who show up only for good or popular movies consume a lot less popcorn means that the total they pay is substantially less than that of people who will come to see anything,” Wesley Hartmann said.
“If you want to bring more consumers into the market, you need to keep ticket prices lower to attract them.”
Given that “The average price for a standard UK cinema ticket in 2023 was £7.92” compared to £6.53 in 2013 (per UK Cinema Association and Statista), that seems to have held true.
Popcorn prices, however? Those are now creeping up to the price of the ticket, though to be fair, they’ve always been proportionally pretty pricey.