A personal finance expert revealed how movie theaters actually make their money. It’s pretty surprising.
Humphrey Yang has over 3.3 million followers on TikTok, where he dishes on all things money. The financial guru broke down how big and small theaters earn revenue. It turns out that movies are only a small piece of the pie for lots of cinemas.
“I was shocked to find out movie studios actually take between 80% to 100% of a movie theater’s sales revenue in the first two week,” Yang explained. “Then in subsequent weeks the ratio gradually becomes more favorable to the cinema, usually resulting in a 50:50 ratio.”
That means movie theaters make their revenue somewhere else: concession stands. Theaters inflate the average price of movie theater popcorn by 1275%, and around 70% of movie patrons buy snacks at the theater, Yang found.
According to Yang, small theaters make 80% of their revenue from concessions and 20% from ticket sales. Meanwhile, larger chains, like AMC, tend to earn 35% from concessions and 65% from ticket sales.
Ultimately, the ratio will come down to the theater’s ability to negotiate a deal.
“I’ve known this since 1976. Concessions are where the money is at. Our parents used to sneak in snacks,” someone wrote.
“Another reason to go to movies after they have been out for a while,” another commented.
“We seen the prices it was obvious that’s how they make money,” a person joked.
“Nobody does popcorn as well as movie theaters so I’ll always buy it,” a user added.
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