Have you ever wondered what the real mark-up is on cinema popcorn and why they can get away with charging so much? Here at FilmStrip we investigated the truth behind why cinema popcorn is so expensive and the truth is going to surprise you.

We have all had that moment of walking into a cinema, heading to the concessions counter and dropping our jaws in disbelief at the price of popcorn. Against your better judgement, you suck it up and buy it anyway because no cinema experience would be complete without a bucket of popcorn and a pint of soft drink. But why is popcorn so damn expensive at the cinema?

Everyone has heard rumours of the infamous mark-up cinemas implement on their popcorn. 100 per cent? 500 per cent? 2000 per cent? In a survey we conducted, 87 per cent of people said that they thought cinema popcorn was too expensive but 31 per cent of people didn’t know why. The average mark-up percentage guess was 3,805 per cent. So, here at FilmStrip, we decided to investigate it for ourselves and finally put an end to all the speculation.

The cinemas we will be looking at are the Odeon, Cineworld, Vue, Everyman Cinemas and Empire. Each cinema’s popcorn serving differs in weight and size, so instead we worked out how much the mark-up is for 100 grams based on their medium and large prices. Popcorn, it turns out, is extremely cheap to buy in bulk, it costs approximately 16p to make 100 grams of popped popcorn.

Our investigation found that the highest mark-up overall was by independent chain Everyman Cinema, with an eye watering 3,025 per cent increase. This was nearly 1000 per cent higher than the next highest mark-up, which was Vue with 1,050 per cent.  However out of all our cinemas, Vue is the only one that changes its popcorn price depending on whether it is peak time. Odeon came third with 1,719 per cent and Cineworld were fourth with 1,706 per cent. Odeon, however, said they would encourage customers to buy a large combo instead at £8.50 as it is ‘better value for money’. The lowest mark-up, and therefore greatest value for money, was Empire at 1,625 per cent. The average mark-up across all the cinemas was 2,025 per cent. Enough to make you choke on your popcorn.

popcorn_19581770_c9cd8edf134070ff974b5b8cd4321b9dd0dfd7a9
Everyman Cinema had the highest price per 100g and Empire had the lowest

Then why are people paying for cinema popcorn, when they know it’s expensive? According to our survey, the majority of people said that it was ‘part of the cinema experience’ and they treated it as a night out. Those who didn’t purchase cinema popcorn frequently listed ‘it’s too expensive’ as the reason why they didn’t purchase it. Others admitted that they sneak in their own food and drink from supermarkets, where it is cheaper.

“The challenge is that they have a finite audience each week so there is more limited scope to drop prices significantly”

So how are they getting away with it? The mark-up is actually one of the main sources of a cinema’s income, without this they would struggle to make a profit. Cinemas are not the hugely profitable enterprises we think them to be. The main sources of cinema income are ticketing, concessions, advertising, booking fees and, in some case, membership and grants. Though it is the main source of income, ticketing isn’t actually as profitable as you might think. When a film is first released, the cinema only gets to keep between 20 and 25 per cent of your ticket sale money and the rest goes back to the movie studio. As the weeks go on, this percentage changes and the cinema is allowed to keep a higher percentage of the ticket earnings. Meanwhile, the cinema has a huge amount of overhead costs to pay including leasing the films being shown, paying staff, equipment and rent. This is what forces cinemas to mark-up their concessions to stay in business. The bigger the cinema, the higher the overheads and therefore the higher the cost of concessions. Cinemas are charged per head for film leases and larger cinemas can fit more people.

popcorn-markups_new_new_new-venngage-free-infographic-maker
The highest markup was Everyman Cinema at 3,025% and the lowest was Empire at 1,625%

Laura Ferguson, the chief financial officer at Curzon Cinemas, says that popcorn is part of the movie experience and that, for circuit cinemas, popcorn is a business. Curzon Cinemas are a chain of cinemas based in the UK and specialising in art house films, making them different from the typical chain cinemas. The company set their popcorn prices depending on the cinema site. Refurbished and newer cinemas will have a higher price than their older counterparts. However, Curzon do not implement the same mark-ups as bigger cinemas, “Per head, we make about £2 on food and beverage. Our bigger sites make more. Circuit cinemas make about £8 per head, if they don’t make money off popcorn then they won’t make enough to run the cinema. Unless they make money then there are no cinemas.” Laura thinks that part of the real reason why people don’t question the price is because they think they are getting value for money, “Not many people realise the raw materials are quite cheap. If you are used to buying a can of coke and suddenly get a big bucket for 4 quid or something, that actually feels like quite good value.” Curzon is trying to move away from unhealthy concessions such as popcorn, by offering customers a range of other food and drink and smaller sizes. “We are trying to be as sustainable and healthy as possible, given it’s a night out. In arthouse cinemas nobody wants to be sitting next to someone eating a big vat of popcorn. We are very different than a circuit experience.”

Over half of the people we surveyed said that they felt that a consumer watchdog should be doing something about the high mark-ups on cinema popcorn and 82 per cent said they think it’s important for the public to be aware of the reasons behind it. Felicity Hannah is a freelance consumer affairs journalist and, despite being a self-professed “champion of transparency and consumer rights”, does not believe consumers have a right to know what kind of mark-up they are paying on popcorn as it “does not reflect the true cost”. “The cinema has to pay people to sell it, has to transport it, and has to spend time and back-office resource on ensuring it’s available. That kind of cost is harder to quantify.” Felicity says that this type of mark-up is not restricted to only cinemas, “I think that many shoppers would be extraordinarily surprised if they knew what the mark-up is on all sorts of products; typically, 50% on clothes – to which VAT is then added – and even several hundred percent on soft drinks like cola in cinemas and pubs.” For the cinema business, mark-ups like this are a necessity, with many closing down and struggling to stay afloat. “Consumers need to remember that if they want to have a cinema to visit then they may need to accept marked-up drinks, hotdogs and popcorn.” Though frustrating for cinemagoers, Felicity emphasises that it’s not illegal to charge high prices when no one is forced to buy it.

“The cinema has to pay people to sell it, has to transport it, and has to spend time and back-office resource on ensuring it’s available. That kind of cost is harder to quantify”

Would it be possible for cinemas to still make a profit without marking up popcorn as much as they do? Phil Clapp, the Chief Executive of the UK Cinema Association, believes it is difficult to generalise. “Every company works on different margins and the balance between ticket price and concessions income varies accordingly. The same question could be posed of restaurants or even supermarkets.” After all, the aim of any business is to make a profit. Phil points out that the general position is that cinemas are compared to sports venues or theatres, “The challenge is that they have a finite audience each week so there is more limited scope to drop prices significantly.”

Landscape

Purchasing popcorn and a drink is often seen as an essential part of the cinema experience. Though cinemas claim that customers are not forced to buy their food and drink, those which do not allow outside food and beverage to be brought in from outside are essentially giving no other option but to buy the marked-up concessions. But what other choice do cinemas have? Given the high costs of maintaining and running a modern cinema, most rely on this income to stay in business. So next time you consider going to your local cinema, and munching your way through popcorn that is marked up by over 1000 per cent, just take a moment and think. Are you willing to pay that much for the experience? Or would a bag of microwave popcorn on the sofa be a much better and cheaper idea?

We contacted all the cinemas included in this investigation, however they failed to reply or refused to comment on the matter.

*This is calculated as the price of popcorn kernels being sold at £39.95 for 50lbs from Pop Weaver and does not include price of heating, flavour and oil. We are also aware that not all cinemas pop their own and some buy it in*

Advertisements