Snackbar Slowdown Bitter Pill For Exxhibs

Boxoffice is up. Ticket sales are not. A side effect of this anomaly: Concession stand sales at movie theaters are down more than $80 million from 1989, as are profits on the popcorn they sell. That’s a triple dose of bad news for exhibitors.

The ordinary U.S. consumer, according to the National Assn. of Concessionaires, traditionally spends about $1.20 on popcorn, soda and candy when he visits a movie theater. In 1989, with ticket sales rising in tandem with record b.o. figures – 1.1325 billion turns of the turnstile for $5.03 billion in tickets sold – that brought an estimated $1.35 billion to the snack bar.

But ticket sales were off in 1990, by as much as 7%. Final numbers indicate that only 1.06 billion tickets were sold, even though boxoffice totals, due to higher average ticket prices, came to $5.02 billion and almost met last year’s high. So even if consumers had maintained their accustomed buying habits, estimated concession stand sales would have dropped accordingly, to about $1.27 billion, for a loss of over $80 million.

Losses are higher, though, because consumers were not spending at their habitual rate. Despite industrywide price increases on selected snack bar items, sales are flat, at best, or down.

“Our sales are up less than 1%,” says the San Francisco-based Syufy theater chain’s Jack Myhill. “We’ve had very minimal increase across the board.”

“We’re seeing a very slight increase in this area,” says a source with one of the two major cola distributors. “Growth is down.”

Snack bar sales are, for theater owners, more than a kindness extended to hungry moviegoers. Due to the deals they cut with film distributors – who allow exhibitors to deduct the cost of their overhead from boxoffice receipts, but who take as much as 90% of ticket sales for themselves in the early weeks of a film’s run – the lion’s share of exhibitors’ operating revenue and profits comes directly from concession sales.

At some theaters, they account for 90% of profits. And the profit margin on individual items is relatively high. The $2.50 soft drink that one theater owner sells, he confesses, has an actual cost of less than 25¢.

Typically, customers have maintained a habit of spending more or less automatically when they go to the movie. While nationally the average snack bar ticket runs to $1.20, most owners of theaters in urban areas report average sales of $1.50 to $1.65.

That money breaks down into what the NAC calls the “40-40-20” formula – 40% for popcorn, 40% for soda and 20% for food items and candy.

Despite several recent advancements in reducing overhead and streamlining operations – theater owners readily confess that long lines are the greatest single reason that patrons eschew the snack bar – customers in 1990 weren’t biting.

“At a theater or at any other concession, if the lines are long, you lose the customer,” observes Portland, Ore.-based Act Ill’s Robert Perkins, who says that despite the industrywide sales slump his company saw a 6% increase in 1990. “If your [customer] volume is up and staffing isn’t adjusted for that, your per capita sales suffer.”

Further, the current Gulf war has driven up transportation costs, and that in turn has made stocking the snack bar more expensive. Several sources noted they are paying as much as 10% extra to have kernels or – often the case – bags of prepopped corn delivered to their theaters.

“It’s all grown in the Midwest, which is not where all of the theaters are,” notes American Multi-Cinema v.p. Phil Pennington. “Despite a bumper crop of corn this year, which should have meant a drop in our cost, there is an increase. Popcorn is a very transportation-intensive commodity.”

Exhibitors say they expect further price increases to be announced at their annual NATO/Showest gathering early next month in Las Vegas.

That and the slack snack sales are extra bad news for exhibs. “That makes for a double whammy,” one distribution source says. “They didn’t sell as many tickets this year, and snack bar sales were down too.”

Out of steam

In addition to lower ticket sales, many of the year’s releases came and went too quickly to be profitable to exhibitors. While some of the year’s top hits had long runs, many of the other hopefuls ran out of steam and were removed from screens before the 90-10 or 80-20 ticket share percentages had shifted in the exhibitors’ favor.

“We move a lot of people through our theaters,” remarks one exhib, but he adds, “if we get them all at once, all on one weekend, we can’t service them as well at the snack bar.”

Sources added that concession sales in other entertainment areas were also down, increasingly, in recent years. “In the early ’80s we were seeing double-digit gains every year,” a source at Pepsi Cola notes. “This year, across the board, there are increases that are 5% and less.”

Although no dependable total figures are available, it is believed that last year’s receipts for snack bar sales in all areas, including sports and other arts events, would not meet the 1989 high figure of $13.6 billion.

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 0

Leave a Reply

No Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More Film News from Variety