Inflation is in the air and everyone--including our own Jim Cramer--is talking about whether ethanol is causing higher food prices. But let's talk about a food price that's very important--one that touches my life every week when I go. No, not to the grocery store but to the movie theater!
I'm talking popcorn, the greasy, over-priced, often-stale junk theaters make a fortune on. I personally don't believe in paying such a premium for the stuff that doesn't even taste that good, but my husband is a movie theater popcorn addict.
Big news: according to new economic analysis movies would be a LOT more expensive without those overpriced tubs of popcorn. In fact, the high price of popcorn (and other snacks) helps keep ticket prices down, allowing more people to attend.
UC Santa Cruz economis Ricard Gil explains that if a movie theater owner aims to be profitable purely based on ticket prices, he or she will deter a lot of moviegoers and sell a lot fewer tickets. Spread the revenue model to include concessions and boom ticket prices go lower and you sell a lot more concessions.
This isn't rocket science, but maybe it'll make you feel better when you pay a small fortune for some popcorn and a soda--you're subsidizing your own ticket. Gil says if movie popcorn were free (it's so cheap to produce, they could give it away for next to nothing)) your ticket would cost at least 25 percent more.
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