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Just How Big is the Markup on Movie Theater Food?

Amanda Bell

Just How Big is the Markup on Movie Theater Food?

We all know that movie-theater food is expensive: The concession stand employees should give you your large Coke before they ring it up, just so you can do a proper spit take when you hear the price. This is just a fact of life we have to accept, like sticky theater floors and shared-armrest jousting. But it’s worth asking: Just how overpriced is movie food? To find out, we turned to the guy who wrote the book on the subject: Richard B. McKenzie, professor emeritus at the UC Irvine Merage School of Business and author of Why Popcorn Costs So Much at the Movies and Other Pricing Puzzles. Here are the markups for the biggest cinema staples:

Popcorn

  • $8.15: The average cost* of a large bucket popcorn (with free refill)
  • 90¢: The estimated cost of the raw goods needed to make it, per McKenzie’s research

That’s a markup of nearly 806 percent from kernel to consumption.

Soda

  • $6.31: The average cost* of a large soda
  • 40¢: The estimated cost of the raw syrup that goes into a 50.5 oz. large Coke.

Adding in the cost of cups (say from Costco, $.07 apiece), lids (half a cent each), straws (about a penny per), and soda water (about 2 cents a serving) it’d be more like 51 cents a cup. Tack on another 40 cents if the moviegoer gets a free refill, and it’s still an 593 percent markup.

Candy

  • $4.25: The cost of plain M&Ms at AMC
  • $2.08: The cost of plain M&Ms from Wal-Mart

All in all a (relative) bargain at a 104 percent markup.

Why is it so damned expensive? Well, it kind of has to be if you want movie theaters to exist. According to McKenzie, theater owners need these concessions profits to cover the dozens of hidden house costs — employee wages, installation of snazzy sounds systems, energy bills, for example — since most of the actual ticket money gets sent back up the ladder to the movie studios. “If movie theaters didn’t make as much off concessions, they’d want to charge more for tickets,” says McKenzie. But raising ticket prices is complicated because movie studios “put contractual controls on theaters in terms of prices they can charge.”

The theaters — much like expensive airport newsstands — capitalize on the fact that once you get into the building, they have a monopoly on your appetite. Where else are you gonna get popcorn, bub? (Don’t answer that: Yahoo does not wish to be an accessory to your snack smuggling.) So you only have one defense against these prices: will power. As McKenzie notes, you’re only in the theater for a couple hours. “[The theaters] have you to a degree,” he warns, “but if you have so little control over your consumption behavior then you’re just going to get caught.” In which case, savor every bite and try not to picture how much every kernel is costing you.

*Based on our survey of theater locations in Chicago, Los Angeles, and New York.

UPDATE: This post's math has been corrected since its original publication

Photo credit: ThinkStock