The premium cost of food and drinks in a cinema subsidises ticket prices and helps fill seats, say researchers at the University of California-Santa Cruz and Stanford University in a recent economic analysis.
Cinema-goers aren’t being exploited by concession prices, the researchers conclude. Rather, in keeping ticket prices down, the cost of snacks ensures that more people are able to attend.
The researchers’ analysis – based on data from thousands of showings at 43 multiplex cinema theatres in 30 Spanish cities over a five year period – explains why cinema ticket prices are so low compared to similar entertainment opportunities. While some die-hard audience members will watch films – and eat popcorn – no matter what the cost, the majority focus on ticket price and decide to forego cinema snacks.
“The theatre owner has two choices. He can make money through admission tickets. Or he can make money through concessions,” said UCSC economist Ricard Gil. “If he wants to make money on the ticket, that may deter a lot of people from coming in.
“So instead he charges a higher total price on people who are willing to pay for the whole movie experience,” said Gil, “And he’s able to charge a lower price for the guy who can barely afford it.”
The same principle of economics – called price discounting – is reflected in the price of food and drink at sports stadiums and wine at the theatre. If movie popcorn were free, Gil and colleagues have estimated, each ticket could cost at least 25 per cent more – an increase of over £1.30 on an average UK cinema ticket.