Box Office Popcorn, Candy, Soda

May 23, 2008

With Friday's start to the summer movie season, get ready to dig deeper into your pockets for the summer "popcorn movie" experience. Squeezed by rising costs, many cinemas are raising concession prices.

AMC, which has about 290 theaters in the USA, on will jack up some concession items - such as popcorn, ice cream and pretzels - by 25 cents to, for example, $4.75, $5.75 and $6.75 for bags of corn.

It won't blame a single factor, saying it reviews concession prices twice a year.

Alan Teicher, owner of nine theaters in Ohio, Michigan, Indiana and Florida, is specific about one item. Eye-popping corn prices are the big reason he added 10 cents to 15 cents to his bags last week, making them about $3 to $5.50.

Wilfred Sieg, president of cinema popcorn supplier Ramsey Popcorn, says that three to four years ago farmers got about 8 cents to 10 cents per pound for popcorn. Last year, it was 17 cents to 18 cents. This year's crop could be 22 cents to 25 cents - more if there's a drought or other growing problems.

Higher concession prices, which can be 80% profit, generally help theaters deal with rising costs more than higher ticket prices do. About 55% of the admission fee goes to the film's distributor, says Patrick Corcoran, director of media and research at the National Association of Theatre Owners. Concessions generate about 20% of revenue but up to 40% of profit.

Higher ticket prices may also generate more resistance from moviegoers. Clearview Cinemas, with 52 theaters in the New York metropolitan area, recently tried axing discounts for seniors and children. At its 62nd Street location in Manhattan, for example, their tickets went from $8 to $12. It just brought back the discounts.

Among cost pressures on theaters:

--Digital conversion. The industry is in transition to digital projection. Various plans are being negotiated for third-party financing, says Corcoran, but the cost is steep: $75,000 to $100,000 per screen.

--Higher wages. Theaters were among businesses most hit by the recent three-step increase in the federal minimum wage. It went to $5.85 per hour last July 24 and goes to $6.55 on July 24 and $7.25 on July 24 next year.

--Increased popcorn costs. Higher oil prices have increased popcorn farmers' costs, such as for fertilizer and fuel.

And then there's the ethanol factor. Demand for field corn, used for animal feed, products such as high-fructose corn syrup and, increasingly, ethanol, has caused its price to explode. That's caused some farmers to shift from popcorn to easier-to-grow field corn, cutting supply and pushing its price higher, too.

Adding to theater owners' woes, the cost of popping oil, much of it made from crops that also can be used for biofuels, has nearly doubled in the last year.