You should buy our concessions and lots of them. I agree with those of you who say “But I can get this for ________ at ____________.” Yes, you can buy candy in bulk at Wal-Mart for less than what we charge. Yes, cokes at Sonic are less than what we charge. However, those places have other items that help pay the bills.
Movie theaters have high operating costs. Some of the larger expenses are:
- The electric bill for one month is around $5,000.
- Our 20 person staff is generally paid more than minimum wage, and at any given time, we need at least 3 staff members to operate.
- Light bulbs for the projectors run around $1200.
- Dolby Atmos and 3D equipment is expensive to install and maintain.
- Concession orders
- Studios take as much as 70% of our ticket sales.
Movie theaters have 3 main products.
This would appear to be plenty when you see the prices.
(1)$300 per month for an advertisement.
(2) $18 for a drink and popcorn and candy.
(3) $10 for a movie ticket.
And if we were keeping all of that, yes, it would be plenty. This is not the case.
(1)Advertisement package length is not unlimited. We can only have so many advertisements and still get them all on the screen. This is not a limitless source of income. It only accounts for a small percentage of our profits. Some theaters are able to offer larger advertisement variety and options that increase their profits, but we currently only offer on screen advertising.
(2) Concessions are the ONLY thing that keeps this theater operating. Yes, it is a large markup on some items. The profit margin is less on items like cokes and candy and a larger on popcorn. If you want to buy a concession item with the sole purpose of helping us stay open: choose popcorn. This markup is necessary because we rely on concession sales for approximately 80% of the operating costs of the theater.
(3) Based on our booking arrangement with the studio, we may only get to keep a couple of dollars of each ticket sold. For example, Furious 7 brought in our first sell out crowd in Auditorium 3, our largest. This was very exciting for us, but also a little depressing. For simplicity purposes, let’s say everyone in the auditorium in that sell out time was an adult, paying full price. 200 people. $10 a ticket. That’s $2,000. Our arrangement with Universal for that first week gave them 60% of ticket sales. That means that they get $1200 of our $2000, leaving us with $800. Keep in mind, not everyone is an adult… we had a mix of children, seniors, and discount tickets, too, so our actual total was less than that.
So why is it like that? Isn’t there a better way?
Studios spend MILLIONS making these films. Here’s an interesting read about how Paul Walker’s death increased the cost of filming by $50 million dollars (http://www.cinemablend.com/new/Fast-Furious-7-Insurance-Claim-Largest-Movie-History-43107.html)
Because of their large investment, it takes a lot of ticket sales to get their money back. Many stars are also in contract to receive a certain amount of the money. (I’ll try to stay out of the legal technicalities I picked up in my Entertainment law class.) While taking 60% of our money, the $1200 from my above example, is completely insignificant when paying off a $250 million dollar movie cost, it is a lot to us. Studios play their movies in thousands of theaters. Athens Movie Palace has to rely on Athens Movie Palace alone for their money.
Studios also dictate ticket prices to an extent. If we were to charge $1.00 for new releases, limiting the studios to only .60 cents per ticket, they will not get profit from us, meaning they have very little incentive to give us future releases. They lose money because people would come to us vs. going to more expensive theaters. Good for us in the short term, bad for us when we no longer have the rights to play movies.
Another complication is that studios will charge advances. This money is their guarantee. For Chappie, our advance was $1000. We had to pay that just to get the movie here. We had 1 person in the midnight release. If that was the only person who ever came to see the movie, we would have lost the $990 we sent to Sony.
Is there a better way? Not really. The real product here is the movie. People come here to see the movie. People pay to see movies in their house. It’s not required to have a theater to see a movie in. Theaters have to make people want to be here. This isn’t always easy. Popcorn helps. Few people have the capability to make truly authentic theater popcorn at home. And there’s no substitute to a hot buttered bucket of theater popcorn. Good quality seats help. Amazing sound helps, because again, few people can truly replicate this experience at home.
Theaters could charge less for concessions in hopes that people buy more, but if you don’t like popcorn, you won’t buy popcorn, no matter how cheap. If you are on a diet, that .50 cent candy is temptation, but probably not something you want.
It’s frustrating to know that a night at the movies is something you have to plan for. We have tried to make it as affordable as we can by having lots of matinee shows at a reduced price and by making our concessions cheaper than the closest competition.
The illusion is there, and perhaps this is magnified by the quality of our theater, but this was a multi-million dollar investment. We hope it does well and provides a way to support our families, but the reality is that theaters are not lucrative sources of endless money, at least not on the independent level. I’m sure the corporations aren’t doing too badly.
So next time you visit us, help us keep the lights on and buy some concessions!