If you’re like a large portion of the millions of Americans who went to the movies this past weekend, you probably stopped at the concessions counter before making your way into the auditorium at your local movie theater. And like many, you probably looked at the prices and wondered if a home equity loan would be enough to cover the cost of a large popcorn and couple of drinks for you and your date. And you may also have pondered as to why the prices are so high. Well, there’s a very good reason for that.
Now you may know that theaters only see a small fraction of what is taken in at the box office, with a majority of the revenue going to the studios, particularly over the opening weeks of a film’s release. So, it is at the concession stand where a theater has to earn its rent money.
But exactly what kind of profit margins are built into the concession stand prices for the theaters to make that money? The folks over at Yahoo Movies were wondering the same thing and turned to Richard B. McKenzie, professor emeritus at the UC Irvine Merage School of Business and, more importantly, author of Why Popcorn Costs So Much At The Movies And Other Pricing Puzzles, for the exact numbers, and the results are a bit surprising and perhaps something to keep in mind when thinking about sneaking your own snacks in the next time you visit your local cineplex.
$8.15: The average cost* of a large bucket popcorn (with free refill)
90¢: The estimated cost of the raw goods needed to make it, per McKenzie’s research
That’s a markup of nearly 806 percent from kernel to consumption.
$6.31: The average cost* of a large soda
40¢: The estimated cost of the raw syrup that goes into a 50.5 oz. large Coke.
Adding in the cost of cups (say from Costco, $.07 apiece), lids (half a cent each), straws (about a penny per), and soda water (about 2 cents a serving) it’d be more like 51 cents a cup. Tack on another 40 cents if the moviegoer gets a free refill, and it’s still an 593 percent markup.
$4.25: The cost of plain M&Ms at AMC
$2.08: The cost of plain M&Ms from Wal-Mart
All in all a (relative) bargain at a 104 percent markup.
*Based on our survey of theater locations in Chicago, Los Angeles, and New York.