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Spend per Head (SPH)” i.e. the average amount spent by each customer on a single visit buying food and beverages.
In the last seven years SPH increased by 81% vs 31% increase in average ticket price.
SPH as a proportion of average ticket price has increased from 38% in FY16 to 53% in Q1 FY24. Meaning spending on popcorn and sodas have outpaced the increase in ticket prices.
The sharp gain in spend per head despite a more moderate uptick in average ticket price highlights the growing importance of food and beverage to the movie experience.
Here is my attempt at rewriting that paragraph:
The significant increase in food and beverage spending per moviegoer presents a double-edged sword for multiplexes. On the positive side, growing food and beverage revenue helps offset declining ticket sales from lower theatre occupancy rates. However, the surging per head spend on refreshments could deter some customers from frequenting cinemas as often.
Moviegoers may start prioritizing the overall experience more, which includes pricier food and drinks, over just watching a film. While higher f&b purchases pad margins, pricing some customers out of regular attendance threatens long-term box office revenues. Multiplexes must strike a delicate balance between driving per head spending and ensuring the core movie ticket remains affordable entertainment. If concessions costs balloon too much, moviegoers may cut back on theater trips and further undermine ticket sales. Boosting food and beverage revenue is crucial, but not at the expense of maximizing foot traffic and occupancy.
PVR and INOX revamped the F&B strategy to tackle this issue.
On July 12, PVR-Inox announced a slash in prices of snacks at its counters, after a customer tweeted that the high F&B prices at multiplexes had made movie-going unaffordable! Snack combos will be available for Rs 99 on weekdays from 9 am to 6 pm, while there will be unlimited popcorn and Pepsi refills on weekends.
The reduction in prices is quite dramatic when compared to prices at competing multiplexes. One multiplex in Bengaluru charges around Rs 360 for a large popcorn and Rs 360 for 810 ml of Coke. At another multiplex, 90 gm of flavoured popcorn costs Rs 288, while 600 ml of Coke costs Rs 212. Prices are likely to be similar at other multiplexes in other cities too. - Moneycontrol
Non-ticket items like food and beverage, advertisement and convenience fees accounts for 47% of the revenue for PVR INOX.
This indicates a growing dependence on income beyond just movie ticket sales as foot traffic remains below pre-pandemic levels. To compensate for lower occupancies, PVR and INOX have focused on driving higher concession purchases per patron along with revenue from corporate advertisers and online convenience fees. Though ticket sales still comprise over 50% of earnings, non-core revenue streams are becoming instrumental to maintaining profitability amid theatrical volatility.
