Why pop corn etc. food items cost so high in multiplexes and theaters?

The following are the reasons behind the ridiculously high prices of food items inside multiplexes and theaters.

1) The charge is not for the food, it is for WHERE you buy them. Popcorn priced at Rs 5 at railway stations, suddenly becomes worth Rs 50, because the customers who come there are believed to be the ones who don’t look at the price. The multiplex owners understand that the people who can pay Rs 300-400 for a movie ticket won’t mind paying few hundred rupees for snacks. This is based on the understanding of consumer behavior.

2) The prices of the movie ticket and the snacks in the multiplexes are also kept high to encourage only those customers who can pay that much.
It is an example of market segmentation.

3) The business model of multiplexes includes sale of food and beverages as a revenue source. Generally, this is outsourced to some third party contractors. These contractors have to pay very heavy charges to the multiplex owners for getting a space inside the multiplex, so they have to recover it from their sales, leading to exorbitant prices.

4) In the long run, the illogically high prices of food and beverages (and also the movie tickets) lead to customers looking for alternatives. Till there is no competition, the mutliplexes may get away with such loot. Once, they face competition, they may come down on the earth.

5) People go to movies not very often. So they may ignore such discrepancies in prices because it affects them very rarely. So, the price burden gets distributed among a large number of customers.

The prices will remain high, till there are customers who are ready to pay. This is market economy. It is ruled by demand and supply.

Author: Sanjay Shah

Sanjay is the author of "Business Management Simplified" which provides Practical, Actionable Solutions for Entrepreneurs. It is an all-in-one guidebook to start, run and grow a small and mid-size business to the next level. He is also an SME Business Coach, Seminar Leader and Motivational/Keynote speaker, Sanjay is based in Mumbai (India). He advises many businesses on Strategy, Leadership, Marketing, Branding, Customer Experience Management and Organization Development. He conducts various self-help seminars and workshops for companies and groups in English, Hindi and Gujarati. For more info, visit : www.SanjayShahSeminar.com

Leave a Reply

Your email address will not be published. Required fields are marked *