Why are movie munchies so expensive?
The recent news that Loews Cineplex closed four Utah theaters, on the heels of bankruptcy filings by Loews and other big national theater chains, prompts a second look at the prices we pay at movie concessions and why.
Industry analysts say theaters are experiencing financial woes due to the construction costs of lavish megaplexes with stadium seating and the lack of hit movies to attract people.
Theater owners say they depend on concession sales to stay afloat. That's the premise for paying $3 for a small box of popcorn, and the reason why a 16-ounce soft drink costs more than a whole six-pack from the grocery store, and why we pony up $2.75 for a bottle of water.
"About 55 percent of the box-office revenue goes right to the studio, so the exhibitors depend on food sales," says Dale Harvey, Jordan Commons' general manager. "They couldn't make it without it." The Jordan Commons theater complex actively encourages snack-buying, with a huge food court offering pizza, smoothies and sandwiches, with trays that fit into the armrest of theater seats.
Other managers say theaters sometimes must pay the film studio as much as 90 percent of the ticket sales to get one of the big blockbusters for its first few weeks. (After that, the percentage drops and is as low as 50 percent.) So concession sales pay for everything from equipment to maintenance to snow removal, etc.
But if the money that is spent on refreshments is so important, movie theaters might want to take a cue from airports, which have also had a reputation for high-priced concessions, where the buzz-word now is "street pricing."
At the Salt Lake International Airport, vendors can't charge more than 18 percent over local prices, said John Buckner Jr., the airport's commercial manager. And when they dropped prices, revenues went up.
"We've found that people who were on the fence before are now off the fence and purchasing, and people who always purchased have increased the amount they're buying," Buckner said.
Utah has plenty of fence-sitters who privately admit to sneaking candy bars or even a can of soda pop in their purses or coat pockets. Or, they go out to dinner beforehand so they're not hungry during the movie. There's a value-versus-dollar line that they hate to cross.
In his book, "The Hidden Order," noted economist David Friedman concludes through a lengthy analysis that it would be in the best financial interest of a movie theater to sell popcorn for a lower price, so more moviegoers would be apt to choose that theater.
Although large chains haven't bought into that line of thinking, some independent movie houses have hit pay dirt with low prices and high volume.
Visit the Kaysville Theater on any night of the week, and you'll find customers lined up all the way down the corridor. At this second-run movie house, a giant-size bag of popcorn sells for $3, and you can bring it back during the movie for a free refill. (The Carmike-owned Ritz's giant popcorn with refill is $4.75; the Century 16's giant popcorn with a refill is $5.25. Even at the second-run Valley Fair 9 in West Valley, a giant popcorn is $4.)
Kaysville Theater's candy bars range from 75 cents to $1.50. And if you're really strapped for cash, there's a nickel candy machine. (At Century 16, candy is $2.25-$3.50.)
"Very few people pass up the snack bar here," said Mary Call, who owns the Kaysville Theater with her husband, Bill. "We go to lots of movies in regular theaters, and their concession stands don't seem as busy."
"About the only people who don't buy is people over 60," Bill Call said. "Older people just don't buy much."
At the Kaysville Theater, a 12-ounce soft drink is 75 cents; 21 ounces, $1.50; and $2 for a 32-ounce drink. (In comparison, at the Trolley Corners and the Cineplex-Odeon in Layton, 16-ounce drinks are $2.45, 32-ounce drinks are $2.70 and 44-ounce drinks are $3.20.) You can opt for the 32-ounce Kaysville Theater refill mug — filled — for $3, and then refill it when you come back to other movies for $1. (Jordan Commons' refill mug is $7; refills are 50 cents.)
"We've sold 10,000 to 12,000 of those mugs," said Bill Call. "It staggers me, because when we first got them a couple years ago, we worried that we wouldn't be able to sell them."
"We write checks directly to Disney and Warner Brothers, like the big boys do," he said. "I've gone to a lot of national association meetings, and they do surveys and find out what concession prices the traffic will bear. But when these big theater chains do their analysis, they look at dollars sold per ticket, and as long as they're making that, they don't care."
In other words, whether you buy two soft drinks for $4, or buy one soft drink for $4, the theater still gets $4.
So why don't the Calls charge more?
"Because we think you ought to be able to come to a movie and be able to buy a bag of popcorn," said Bill Call, adding, "Keep in mind that this is the motion-picture industry, and it's an industry that's been around a long time and made money for a long time. They know their business, or they seem to think they know it."
Other independent theaters, such as the Tower and the Avalon, are also known for lower prices. One theater concession manager, who works for a large chain that doesn't allow him to be identified for "on the record" comments, said prices are set nationwide at the chain headquarters.
"You're paying for quality and service," he said. "You can go to a second-run theater and pay less for popcorn, but they don't have stadium seating, and your feet will stick to the floor, and the film is old and has snow on it."
Suzanne Brown, national spokesperson for Carmike Cinemas, said concession prices are set by the company's chief operating officer but can vary around the country because they are are based on their specific market in that area.
When asked if the company has ever considered lowering concession prices in order to get more sales, Brown said she was "not available to comment on that."
She did add, though, that concessions are an integral part of the business.
Harvey says Jordan Commons' pricing is influenced by two factors: costs and what the competition is charging.
"I know we're under what our competition charges," he said.
Jordan Commons' Joopa Juice smoothies, which are $3.50 and $3.75, are in line with smoothies whipped up at juice bars around town. And Harvey pointed out that the theater's large-size popcorn ($4.75) and soft drink ($3) can be refilled for free during the movie.
"Our large popcorn and large soft drink are extremely successful," he said. "Our customers like the value."
Likewise, Trolley Corners, Century 16, The Ritz and others offer free refills on large items.
Which brings up the "value price" strategies. Like fast food venues, theaters use pricing to encourage you to mega-size for a better deal. When faced with buying a 16-ounce drink for $2.45 or a 32-ounce drink for $2.70, most folks go for the double size, whether they really need it or not. Or, how about a few handfuls of popcorn for $2.95 — or a bag several times larger for $5.25?
Some theaters offer discounted package deals. For instance, the Ritz offers a combo pack: a large popcorn and two 44-ounce drinks — all refillable — for $9.45. Faced with these options, Gen-Xers can rapidly become Gen-XLs.
It's difficult to make across-the-board comparisons with which movie theater has the highest prices, since sizes aren't standardized. A check of seven different theaters along the Wasatch Front revealed that what's called a "small" drink can be 12 ounces, 16 ounces, 21 ounces or 24 ounces, and a "large" drink can be 32 or 44 ounces, depending on the theater. Also, "theater-size" candy bars are bigger than the grocery-store sizes.
Movie theaters aren't the only entertainment spots with steep concession prices — you'll pay more at concerts, amusement parks, fairs and sports events. At any Jazz game, you'll find fans trekking back and forth for drinks and munchies almost non-stop. (Maybe the thought is, after spending $25-$82.50 for a ticket and $8 to park, why balk at a $3.50 Coke?)
Mark Steadman, who is in charge of the Delta Center's food operations, says he's never had a customer complain about high prices. Sales actually increased this year, he added.
"I would say we're pretty price-sensitive here," Steadman said. "There are margins we try to reach for budgeting purposes, and you look for thresholds for this market that people will have a comfort level with. We see what's going on nationally, and we're in the middle. For instance, we felt like we needed to have a hot dog under $3 so we held our price for $2.75."
Soft drinks come in two sizes: a 22-ounce for $2.75 and a 32-ounce for $3.50. More fans buy the large size, he said. "They don't want to keep coming back for another drink during the game."
Stedman said the Delta Center is considering lowering concession prices for some events. "For instance, this summer, because we have different demographics for the Starzz basketball summer fan versus the winter Jazz fan, we may have a special on a beverage, or food items that would be discounted. But we haven't rolled it out yet."
Last fall, the Delta Center introduced a more upscale food court, where fans can watch chefs stir-fry, toss pasta and cook up other foods on site.
"It's around $6 for a portion of pasta or stir-fry or something like that," Stedman said. "We feel our portions are large. so there's some value. We're also doing specials, maybe offering a free soft drink with purchase of another food item. We feel that we're competitive in our prices, and I'm well aware that prices on the coast are a couple dollars more."
E-MAIL: vphillips@desnews.com