The Outrageous Markup On Movie Theater Snacks Isn't Helping To Fill The Seats

There's no denying the impact the COVID-19 pandemic had (and, in many ways, continues to have) on the movie industry. From increased straight-to-streaming options to the ability to rent newly released movies at home, the way consumers enjoy movies has changed considerably in the last few years. According to Box Office Mojo, the gross annual domestic box office in 2023 was $8,908,478,987, which marked a 20.9% increase over 2022. However, this total still didn't come close to the peak annual box office total in 2018 (which was almost $11.9 trillion).

This is partly due to fewer films being released by studios (2018 featured 993 releases compared to 2023's 592), but also because consumers simply haven't returned to the movies the way theaters hoped they would post-pandemic. According to data from Advan Research, in January 2024, attendance was down 33% in January 2024 compared to the same month in 2019.

All of this is to say that many movie theaters have had to get even more creative in order to continue making their money following the pandemic. While most people might know that ticket sales, subscription services (like AMC Stubs A-List), and advertising (like pre-showtime video ads) can help boost a theater's income, the real money maker for most theaters is actually their concession stands. Food, beverages, and even special merchandise (like the infamous "Dune: Part 2" popcorn bucket from spring 2024) can all help to ensure movie theaters make their income.

While it's a safe bet that just about everything at a movie theater concession stand is going to be marked up in some way, not all items experience the same level of (oftentimes) outrageous pricing. For starters, the classic movie companion, popcorn, can experience fairly significant markups at a movie theater. According to Reader's Digest, popcorn can have a 1,275% markup in price compared to how much it actually costs the theater to buy and produce. While that might sound excessive, bottled water is often marked up over 4,000%. The research firm EntTelligence, as reported by CNBC, found that the average medium popcorn at domestic movie theaters in 2023 was $8.14.

The important thing to know about concession stand sales is that 100% of the money from those sales goes directly to the theater (unlike ticket sales, but more on that later). Plus, the profit margin on concessions is usually more than 80%. A whopping 36% of AMC's total revenues comes from its concessions (and 39% of Cinemark Theatres' revenues). It's worth noting that the profitability of food and beverages has been a significant element behind the recent expansion that many theaters have made into cocktails and full-meal options.

As Rolando Rodriguez, chairman of the National Association of Theatre Owners, explained to CNBC, "The American consumer now is really demanding more than just a popcorn and a drink or nachos or candy." Whether that demand continues as prices (and markups) continue to rise remains to be seen. (Read about 12 things frugal people will always refuse to buy.)

There's a lot to know about how movie theaters, and movie studios, make their money. It is especially important to realize that even though the 2023 total box office was only about $2.27 trillion less than the total in 2019, there were almost 400 million fewer tickets sold in 2023 than sold in 2019. All of that is to say, the financial discrepancy between those years should be much worse than it is. A significant element in the current box office totals is tied to how much movie theaters have increased ticket prices. 

According to a theater market summary report from The Numbers, while the average ticket price was $9.16 in 2019, it was $10.78 in 2023. While that might not sound like a big jump on the surface, it's important to put that price increase in perspective. The $1.62 price jump that consumers experienced with their ticket prices in just the four years between 2019 and 2023 took about 10 years before that to experience the same increase. This means ticket prices not only got more expensive but they did so in a much more rapid way. Unfortunately, this has only further contributed to the barriers keeping consumers from more regularly attending movies.

Now, before you write off your local theater forever, it's important to know that the actual physical theater only gets to keep about half of the total ticket sale amount, with movie studios taking the other half (but some reports say a studio's share can be as high as 60%).