While raising attendance, ticket prices and premiums on 3D pics can help exhibs grow profits, their greatest hope may lie in concessions.
It’s shaping up to be a pretty decent year for movie exhibs, according to a new study from Fitch Ratings. Attendance should grow in the low single digits, mainly because of a better slate of tentpole pics in 2012, says the ratings agency. And although the report projects that price increases will contribute to modest growth, the effects of 3D on the box office are likely to be more muted than they were last year as auds become choosier about the movies they’re willing pay a premium for.
Concessions provide a large part of theater owners’ profits because they carry profit margins of 85% to 90%. Small wonder that exhibs are stressing this area.
The two biggest chains, Regal and AMC, are offering an expanded list of premium items in an attempt to boost concession sales. And more locations are experimenting with alcoholic beverages and made-to-order hot food.
Concessions also happen to be an area where exhibs can exercise control. After all, they can’t prevent the competition for eyeballs from VOD and DVDs. Nor can stop the studios from making turkeys. But they can determine the quality and price of their food and beverages.