You buy a cinema ticket for ₹300. At the concession counter, a tub of popcorn and a soft drink may well cost even more than the seat. The skew seems unfair: the film needed stars, cameras, special effects, music, theatres and months of editing to be produced.
The popcorn required kernels, oil and a paper packet. As a business, the cinema is much better off selling the former, but it sells the latter by a larger margin. The ticket delivers the patron to the doorstep of the multiplex, while the food defines his value to the establishment.
One Seat, Two Businesses
While a cinema appears to be in the entertainment business, financially it has several businesses. It has a business of tickets, of food and beverages, of advertising and of ancillary services. These businesses have differing economics, as reflected in the numbers.
While PVR INOX made around ₹2,942 crore from ticket sales and ₹1,734 crore from food and beverages in FY2024-25, the food revenue was nearly 59% of ticket revenue, far too large to be viewed as a small add-on. Crucially, the cinema is not monolithic either: a part of the ticket revenue goes to distributors or producers.
PVR INOX , for instance, reported ₹1,311 crore as movie-exhibition costs in FY2024-25, compared to ₹1,734 crore of food and beverage revenue. Meanwhile, the direct consumption cost for its food revenue of ₹1,734 crore was about ₹432 crore. Of course, these are not the complete figures, as the multiplex has to share its food and beverage revenue with its landlords, pay salaries, and so on.
Nevertheless, they demonstrate why the concession counter is important to a cinema: the proportion of food revenue that goes into direct costs is lower than the share of ticket revenue that goes to film exhibitors, a critical expense.
The Film Creates a Captive Audience
A restaurant with unreasonable prices has a simple solution for dissatisfied customers: leave. A cinema’s captive audience cannot do the same. Once the movie rolls, the only alternatives to spending more money at the concession counter are outside food and beverages, which are inconvenient to get, possibly barred by the cinema and, in any case, a smaller chunk of the overall expenditure.
The ₹300 snack may feel expensive, but it is minuscule compared to the ₹2,000 spent on the ticket-another way of looking at it is that the cinema has reduced the customer’s options. Economists would term such an environment a captive market , where a consumer has few or no practical alternatives at the moment of sale.
Analogies can be drawn to airports, stadiums, amusement parks and music festivals. Essentially, a business holds a captive audience that is unable to buy what it wants at the moment of need, and so is open to paying more for what is on offer. The value captured by the concession counter is explained by its availability within the cinema complex.
Why Discount Tickets?
A discounted ticket is not always as costly to the cinema as it appears. Assume that reducing the price from ₹300 to ₹200 will convince a customer to watch the film who would not have done so at the higher price. The cinema’s ticket sale revenue is reduced, but not by as much as the loss in revenue from an empty seat.
The customer who enters the cinema having bought a cheaper ticket brings with him the potential for food and beverage sales, advertisements and other ancillary revenue. The same reasoning explains why cinemas resort to cheap weekday tickets, film festivals and re-release of older movies. The goal is to maximise overall revenue by filling empty seats, even if it means lower revenue per ticket.
An empty seat has no value, while a cheaper seat with higher ancillary sales may well be preferable. Cinemas face enormous fixed costs in terms of rent and maintenance, and after reaching that breakeven point, every additional visitor has the potential to generate multiple revenue streams.
The Menu Is Changing
Multiplex food counters are upgrading their offerings. Gone are the days of popcorn, samosas and bottled drinks: nachos, pizzas, coffee, desserts, regional cuisine and full-course meals are on the menu. Some multiplexes have their own food brands while others have started operating outside their screen-showing hours.
It is not only about higher spending per customer, although that is a factor. A varied menu has more selling opportunities, and even if the customer does not want popcorn, he may buy coffee. Families may order meals while watching a film, while premium seats come with food as an added incentive. Essentially, the multiplex is trying to convert the dining room into a restaurant. PVR INOX considers its food and beverage segment a “growth engine” and has experimented with captive brands, indicating its view of the concession counter as a separate business (Moneycontrol). The cinema is becoming more like a restaurant with a captive audience.
Expensive Popcorn Can Become Too Expensive
A cinema has only so much leverage. While it can raise the price of its concession counter items, it cannot raise them indefinitely, as patrons will simply stop buying food from the multiplex. They may bring their own snacks and drinks to the cinema, or reduce their theatre-visiting frequency, which defeats the purpose of extracting additional revenue by skimming over the concession counter.
The economics of the concession counter have to be balanced between encouraging sales without alienating the audience. A ₹500 food item bought by no one is not revenue. Similarly, the use of promos, cheaper sizes, combo offers and loyalty discounts is a reflection of the fact that a cinema cannot extract an infinite amount from its patrons. Captive audiences are not fully captive: they still respond to price. The concession counter has to work within its limitations just as the movie has to work within its limitations, although its leverage is arguably smaller.
The Film Is the Customer
The cinema is essentially in the entertainment business. It acquires products-i.e., movies-to sell to consumers. It competes with other distributors for viewers and, ideally, selects movies that have broad appeal. It cannot create demand by itself; while a good film will drive viewers to the cinema, a bad release will leave the multiplex with empty seats.
However, once the patrons are there, the cinema controls practically everything else: the food and beverage options, the advertising display, the premium seating and ticketing interface. It is important to remember that while the film is the reason for the patron’s presence at the multiplex, it is the concession counter that monetises that presence. This is why the economics of the concession counter have to be carefully navigated.
While it should not be exploited excessively to extract money from the captive audience, it should still be used to capture revenues from the customer’s presence at the multiplex. In essence, a cinema is a business that sells the experience of watching a film at a screen. This experience has two parts: the film itself and the additional features that come with it. While both are important, the latter often provides better value than the former.
As such, the money spent on a ₹300 concession counter snack may seem like a rip-off to the audience, but it is far smaller compared to the ₹2,000 spent on the movie ticket-and even then, the snack gives the food to go with the film.