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Sneaky Ways Movie Theaters Get You To Spend More Money - YouTube
Channel: Business Insider
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So, I just saw the new "Spider-Man."
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The ticket cost $12, my popcorn was $8,
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the candy was $4.50, and my soda was $6.
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That's over $30 for just one person.
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Movie theaters are like
theme parks or carnivals.
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Once inside, you play by their rules.
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And if you're like me,
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you spend way more than you expect to.
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AMC isn't really selling
you a movie ticket.
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They're selling you this food.
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You can't get in here
without spending money.
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It all starts with the ticket.
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You might have heard that
movie-ticket prices keep climbing,
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averaging over $9 nationwide,
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and almost twice that in big cities.
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Going to see a movie
means you have to spend
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at least the cost of admission.
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But if you think that money
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is going to the theater, you're wrong.
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Chains like Regal and AMC keep only
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about 50% of the money they take
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from ticket sales each year.
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The bulk of that ticket price
goes back to the distributor.
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And if you want to see
a higher-quality format,
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you have to pay a huge premium.
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But it doesn't really matter
how much your ticket costs,
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because if you're going
to a movie theater,
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chances are you're buying some food.
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AMC reports that more
than 71% of attendees
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purchase something at concessions.
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Kim Moon: If they did
not have concessions,
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they wouldn't be in business.
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Narrator: That's Kim Moon.
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She's a marketing instructor
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at the University of Illinois at Chicago.
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And she's right.
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Without concession sales,
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both AMC and Regal
would not make a profit.
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Moon: So, when you walk into a theater,
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you will see tons and tons of imagery,
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as it relates to food and beverage.
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Narrator: Most movie theaters are designed
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so you have to walk past
the concession counter.
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The actual movies are tucked
away, down long, dark hallways.
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But as soon as you get inside the theater,
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the food is bright, colorful,
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and, thanks to the glass
cases, visible at every angle.
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You can see popcorn popping,
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stacks of candy, and giant soda machines.
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Kit Yarrow: The big, huge boxes serve
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sort of like a billboard effect.
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They're enormous and so calling out to you
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more than an appropriately sized box.
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When you open it up, though,
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it's about the same
amount of candy in there
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as a small box that you
might find at the drugstore.
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Narrator: All of this is
surrounded by TV screens
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that loop beautiful shots
of soda and popcorn.
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Food is constantly
grabbing your attention.
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Unlike a restaurant, where the
food is prepared out of view,
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a movie theater makes everything
right in front of you.
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Yarrow: Visually taking over the space,
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they also are physically
taking over the space.
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It's really hard to get around it.
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You kind of have to stop,
figure out where you're going,
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and, in the process, you're being exposed
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to all of that stimulation.
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We're queuing people,
psychologically, to want something.
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Narrator: And then there is the smell.
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Aah, that heavenly smell.
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Ingrained in every moviegoer's brain
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is the smell of buttery popcorn.
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This smell gets your attention
as soon as you walk in
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and evokes a sense of nostalgia.
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You probably don't eat a tub of popcorn
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and a box of Buncha Crunch
at home, but here, you do.
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And in bigger theaters,
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there might even be
multiple concession areas.
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If your auditorium is on a higher floor,
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get ready to pass by two
or three tempting displays.
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And because no outside
food or drink is allowed,
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if you want to eat something
during your two-hour movie,
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you have to get it at the theater.
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OK, so you want to buy just one thing,
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something small and cheap.
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Well, good luck.
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All of the items at
concessions are more expensive
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than what you would pay
outside the theater.
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And, often, you can't
even find a small size.
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So you have to choose
between regular and large.
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What does regular even mean?
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The large seems like a better deal.
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It's only a dollar more.
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So you may be tempted
to spend a little extra.
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And if you're going to eat
all of that salty popcorn,
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you're probably going to get thirsty.
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So you'll buy a drink, too.
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And that's great news for the theater.
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Because all of the food sold
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at concessions has a huge profit margin.
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That means they're cheap to make
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but are sold at a high price.
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Remember that $8 popcorn?
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Theaters make a lot more
on that bag of popcorn
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than they make on your ticket.
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Let me show you what I mean.
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In 2018, 62% of AMC's total revenue
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came from admissions.
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Thirty-one percent was from concessions.
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But AMC was able to keep almost 84%
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of that concession revenue as profit,
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compared to just under 50%
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that they were able to
keep from admissions.
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Basically, if you spend $1
on food, AMC keeps $0.84.
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But if you spend $1 on a
ticket, it keeps only $0.50.
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So it will do whatever it can
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to get you to spend more money on food.
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Moon: Buy one, get one free;
free upgrades; free refills;
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what they're doing is
using price discrimination.
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Narrator: That means they'll offer you
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a greater value with a larger size.
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The margins aren't as good,
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but the theater is still
getting more of your money.
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And movie theaters love to offer combos.
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Popcorn with soda, a hot dog with fries,
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candy and a slushy,
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pretty much any combination
you can think of.
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Unfortunately, those combos
usually aren't a great deal.
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Unless you're sharing in a big group,
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you'll probably be stuck with
more food than you can eat
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and free refills that you won't use.
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Yarrow: They end up wasting
a lot of that popcorn,
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but, most importantly, they
end up wasting that money.
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Narrator: Many theaters have
also started offering things
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like alcoholic beverages and full meals.
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These might bring a better experience,
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but they also allow theaters
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to charge an even higher premium.
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Like this AMC deal that
offers a hot dog, curly fries,
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and a chocolate-chip cookie for $13.
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Combine all of this
with bright-red colors,
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warm lighting on the
food, and brand tie-ins,
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and it's tough to walk
away from the counter
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with just one thing.
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But the tricks don't stop at the lobby.
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Theaters list movie start times
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that are 15 to 20 minutes earlier
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than when the movie actually starts.
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This helps the theater in two ways.
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It allows them to show more
commercials before the trailers,
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which is another source of revenue,
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and it keeps moviegoers
sitting and waiting for longer.
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If you have to sit through 20
minutes of ads and trailers,
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you might give in and
go grab a box of candy,
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especially if those commercials
are for food and soda.
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And delayed start times also remove
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the pressure of missing
the beginning of the movie.
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So you might not mind waiting
in line for some snacks.
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Each interaction is designed
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to get you to spend money on concessions.
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Just look at the ticket window
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compared to the concession counter.
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At this AMC, the ticket window
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is plain and not very stimulating.
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But the concession counter is
bright, colorful, and branded.
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It immediately catches your eye.
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But those are the tricks they use
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only when you're actually at the theater.
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Theaters are also experts
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at getting you back to see another movie.
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Reward points and special-access
programs get consumers
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to go to the movies more often.
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Gaining points for each dollar you spend
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is a great motivator to buy
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a little more than you normally would.
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Moon: They report their members
going to movies more often
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with the subscription than without.
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And, of course, these members
will bring their friends
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and their families, who
will pay full price.
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Narrator: And if you
saved money on your ticket
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with a program like AMC A-List,
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you might be more willing
to spend money on food.
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Some of these programs can
actually save you money,
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but you shouldn't spend more
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just to get points or discounts faster.
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Of course, if your loyalty
program is on an app,
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the theater has 24/7
access to your attention
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and can send push notifications
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with details about promos and deals,
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like this AMC ad that offers free popcorn
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when you purchase a
ticket for your friend.
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Even when you're not at the theater,
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they're still trying to
get you to spend money.
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You might be pretty annoyed
at movie theaters right now,
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but it's not an easy business.
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Avid moviegoers want modern,
well-maintained theaters
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with high-quality formats,
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and because so much of the ticket price
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is going to the distributor,
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theaters have to find
alternative sources of revenue,
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which means snacks and drinks.
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So, should you just stay home,
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throw some Orville
Redenbacher in the microwave,
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and watch only what's on Netflix?
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Of course not!
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Going to the movies is supposed to be fun.
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But you have to make sure
the movie you're seeing
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and the food you're eating
is what you actually want,
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not just something that has been
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constantly advertised to you.
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And these tactics are employed best
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at big chains, like Regal or AMC.
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At a local theater,
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you'll often find cheaper
concessions and tickets.
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So, what can you do to save money?
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Moon: Eat before you go.
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