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Pop & Circumstance: Moviegoing Gets More Costly
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Published: August 6, 2008
TAMPA -- Fueled by the release of the Batman flick "The Dark Knight," the movie industry last month experienced its highest grossing weekend ever.
The idea of moviegoers flocking to theaters this summer might seem counterintuitive during an economic slump, even though consumers may be sticking close to home for their entertainment.
The recent rush to theaters might be masking a more worrisome economic forecast, however, with skyrocketing energy and concession costs putting pressure on ticket and popcorn prices this summer.
Theater operators say they are trying to diversify the movie-going experience by adding food and concession options rather than passing on rising costs to customers.
For 30 years, ticket prices have remained so consistent that, when adjusted for inflation, they cost less today than they did in the 1970s, according to Patrick Corcoran of the National Association of Theater Owners. In 1977, the average ticket price was $2.23, which would be $8.03 in today's dollars. But the average price of a ticket during the first quarter of this year was $7.08, nearly a dollar cheaper.
Bucking that trend, some theaters recently have raised prices. The price of an adult ticket this week at randomly selected Tampa movie theaters ranged from $8 to $10.
Citing minimum wage and energy cost increases, one chain, Carmike Cinemas, raised admission prices 12 percent between early 2007 and early 2008, Michael Patrick, the chain's CEO, said in a report to investors in May.
But in his report to investors, Regal Entertainment's CEO, Michael Campbell, said he was reluctant to raise costs given the economic environment.
Jim Welman, CEO of Cobb Theaters, echoed that sentiment, saying that customers are facing the same rising costs as the chain.
"We cannot continue to pass that on to our customers," he said.
As they face their own energy crisis, theaters, which use an enormous amount of electricity, must find other sources of revenue. Concessions, especially lucrative popcorn sales, have been theater operators' salvation.
"Those voluntary purchases by the moviegoers helps to keep the ticket price low," Corcoran said. "Not everybody who goes in buys concessions, but everybody buys a ticket."
But the explosion in the cost of popcorn is causing theater owners some concern. The price of the favorite movie treat is rising because other crops that farmers could plant instead of popcorn - such as feed corn and soybeans - are rising dramatically.
The price of feed corn has shot up as demand for ethanol, which is derived from the crop, has increased with rising gas prices. As a result, popcorn producers have to pay farmers more to plant popcorn rather than the lucrative crop.
"We compete against corn, soy, wheat, and when those prices go up we have to compete to get our farmers to grow popcorn," said Seth Kunnemann of A.K. Acres Popcorn Co. in Imperial, Neb., adding that his company has experienced a 75 percent price increase in the past year.
"We've had spikes in popcorn because of specific localized drought in Indiana or other growing regions, but nothing where the whole industry has gone up," he said.
Locally, moviegoers are paying $6 or $7 for a large bag of popcorn.
Wayne Valenti, president of the Tampa Pitcher Show on North Dale Mabry Highway in the Carrollwood area, said he has seen the price of popcorn jump by several dollars a bag. Theaters generally buy popcorn in 80- or 100-pound bags. And without oil, popcorn doesn't pop. Valenti has been paying more for popping oil and higher shipping costs because of skyrocketing fuel costs.
One way theaters are offsetting rising costs is adding higher-end products such as luxury seating, in-theater restaurants and alcohol sales.
"You allow people to have dinner and a movie in the facility so that you can spread your costs," said Welman of Cobb Theaters, an Alabama-based chain that is building a "luxury" theater in Wesley Chapel in Pasco County. Welman said Cobb is trying to avoid raising the prices for the movies themselves.
"You have to be creative," Welman said. "People have a lot of challenges, whether it is the price of gas or it is people's time. If you can give people a great experience and allow them to combine those experiences ... it's one less place they have to drive to."
That's a formula that has served Tampa Pitcher Show. The independent theater and restaurant combination has operated for 27 years.
"When the economy turns down like it did since the beginning of the summer, we tend to pick up business," Valenti said. He attributes the theater's success to the fact that it serves as a one-stop shop for entertainment, with a full restaurant and first-run movies.
"Instead of people having to drive five miles one direction, five miles another, they can do it all here," he said.
Ron Simms of Tampa's Fun Lan Drive-In, which also is experiencing higher costs this year, said movie theaters often benefit from tough economic times because movie-going is relatively cheap out-of-home entertainment.
"When money is tight, people come out to the bargain, especially when they have children," Simms said. "We're not getting hurt by the economy, we're actually probably doing better than we would if the economy had stayed the same."
Reporter Jacob Schneider can be reached at jschneider@tampatrib.com or (813) 259-7850.
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