With attendance hovering at lower levels than before the pandemic, many exhibitors are eyeing an increase in concession sales as a way to make up for lost revenue. Even though the box office is the largest revenue source for most theatres, a large portion of each ticket sold is due back to the film studio, often more than 60%.
Concessions represent an intriguing opportunity because the cost of goods sold is much lower. Moreover, moviegoers industry-wide are increasing their spending on concessions when they visit the theatre.
On the other hand, implementing expanded concessions and menu options can be complex for exhibitors used to selling popcorn, candy, and soda. In many cases, the exhibitor must hire additional staff with skills in food service, and respond to increased oversight from local authorities who monitor food preparation and alcohol sales. While the earnings potential is substantial, so are the costs.
Some exhibitors have made “premium dine-in” an essential part of their brand, such as Austin-based Alamo Drafthouse which is known for offering craft beer and restaurant-caliber dining options. Others are fine-tuning their offerings, such as Dallas-based Studio Movie Grill which is scaling back its choices to simpler fare such as burgers and pizza.
SMG’s CEO Ted Croft remains bullish on enhanced concessions, saying “The fact that we are outperforming pre-pandemic key performance indicators gives us a lot more confidence that if we just get more movies, we’re going to continue to grow.”
