With a current global value of $4.5bn, cinema concessions revenues are set to rise this decade, increasingly providing more profit for many exhibitors than that from movie ticket sales.
According to new research from trade analyst Screen Digest, and the first time that such an in-depth study has been undertaken, if concessions account for 25% of a cinema's revenues, they will represent around 50% of its profits.
The study found one US cinema where concessions accounted for 100% of the operation's profit, with film exhibition being loss-making.
With the exhibition industry seeking to identify alternative revenue streams in the form of content programming and digital delivery systems, Screen Digest points out that many cinema already have a substantial secondary business in cinema concessions.
And yet, while it is a truism (the report says) that popcorn keeps cinemas in business, it has often been observed that while concessions may provide 50% of the profits, exhibitors rarely commit 50% of their time and efforts in the marketing and selling of their food and drinks.
The report observes that concessions are more susceptible to economic conditions than the box office. While people may continue to go to the cinema as a form of escapism in bad economic times, they will probably spend much less on concessions. Thus, for cinemas, attendance can remain stable while profitability can drop sharply.
The leading country in terms of concession spend per admission is Japan, where cinemagoers spend an average of $3.86 at the food counter with the annual value of concessions sales reaching $523.1m during 2000.
With admissions of 1,420.8 million, the US saw total concessions sales reach $2,171m during 2000, however, the average spend per admission was among the lowest of any major territory at $1.53. France, Germany and the UK all achieved an average concessions spend of $1.65 per admission
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