The Economics of Movie Popcorn

The Smithsonian’s Food & Think blog recounts a long history of movie theaters’ objections to popcorn. They wanted to be as classy as live theaters. Nickelodeons didn’t have ventilation required for popcorn machines. Moreover, crunchy snacks would have been unwelcome during silent films.

But moviegoers still wanted their popcorn, and street vendors met their demand. This led to signs asking patrons to check their coats and their corn at the theater entrance.

Eventually, movie theater owners realized that if they cut out the middleman, their profits would skyrocket.  For many theaters, the transition to selling snacks helped save them from the crippling Depression. In the mid-1930s, the movie theater business started to go under. “But those that began serving popcorn and other snacks,” Smith explains, “survived.” Take, for example, a Dallas movie theater chain that installed popcorn machines in 80 theaters, but refused to install machines in their five best theaters, which they considered too high class to sell popcorn. In two years, the theaters with popcorn saw their profits soar; the five theaters without popcorn watched their profits go into the red.

Much more here, including how movie theater demand changed the types of popcorn that are grown.

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Popcorn and other concessions are important to theaters because a large percentage of ticket sales (especially during the first couple of weeks after a movie premieres) go to the studio. Recent figures I’ve seen are that concession sales are 80-90 percent profit, whereas in the opening weekend only about 20 percent of the sale price goes to the theater. This means that concessions can make up nearly half the profit for a theater–no wonder they try to keep viewers from bringing in their own refreshments.

Small bags of popcorn have now turned into buckets, perhaps in an effort to justify charging $8-10 rather than the nickel such snacks sold for when “talkies” were new. This transition is covered in the book Why Popcorn Costs So Much at the Movies and an interview with the author is here.