Explained | Why Is Popcorn So Expensive in Cinema Halls?

The Supreme Court, said on 3 January, that cinema halls can prohibit people from carrying food into halls.

On 3 January, the Supreme Court held that cinema halls can prohibit patrons from carrying food and beverages into theatres. The Supreme Court bench, headed by Chief Justice DY Chandrachud, added that cinema halls have the right to set the terms and conditions for the sale of food items. 

Food is an integral part of the cinema-viewing experience for many and yet, several people have complained about the exorbitant F&B (food and beverage) prices in multiplexes. What makes cinema food so expensive? Why is there a need for such a huge markup? 

Why Is F&B in Cinemas Expensive? 

There are several reasons behind high food prices in theatres:

• There is no competition for the theatre once the audience enters its premises, which takes away any need or incentive to match market prices. 

• The transition of Indian theatres from single-screens to multiplexes is still underway, PVR Chairman Ajay Bijli told Economic Times. This transition is coming at higher costs, especially since the operational costs for both are different. For instance, multiplexes have larger halls and more projector set-ups.

Cinema halls rely on concession stand earnings for their revenue since a significant chunk of the box office earnings are shared with studios or distributors. 

• Another reason for the high markup on products like popcorn is that F&B is secondary spending for most customers. The primary spending is still ticket buys. 

How Does the Secondary Spending Price Affect Customers? 

• Though consuming food and drinks while watching a film is ideal for many, it’s not mandatory for viewers to purchase these items. 

• In a lot of cases, the increase in the price in F&B helps the theatre offset the costs of selling tickets at lower prices, something that's also backed up by research from Stanford GSB and the University of California.

• These lower ticket prices open the theatres up for a larger number of people which, at the end of the day, leads to an increase in foot traffic.

Do Theatres Have Any Competition?

• Even though a cinema hall doesn’t have to deal with competition, once people enter the theatre there is still the matter of getting people into the seats, especially with the rise of OTT.

• The pandemic did hit the theatre business hard since the lockdowns led to closures and there was a huge shift of content to OTT platforms like Netflix and Hotstar. People now have an alternative to theatres. 

• For this reason, among others, cinema halls are trying to create and advertise an experience that can’t be recreated in a living room.

This includes high ticket food items like sushi and pasta and ‘luxe’ (luxury) halls. All this adds to a cinema hall’s cost that then must be offset or recovered.

• The advertising costs for the movie experience and the films they showcase added with the fees for highly paid A-list stars leads to a bigger hole burning in the consumer’s pocket. 

While the latest Supreme Court ruling is a sign that times aren’t going to change any time soon, at least the next time you’re paying north of Rs 400 for popcorn, you’ll be better informed.