Popcorn is believed to be one of the world’s oldest snacks. Evidence —6,700-year-old cobs with puffed kernels-excavated by archaeologists in Peru suggests exactly that. For most of the time since antiquity, the humble popcorn did not cause any ruckus.

Until last week, that is, when it caused significant online chatter, after the Indian government decided to increase the goods and services tax (GST) on caramel popcorn from 5% to 18%.

Nowhere was this conversation louder than among movie-goers.

There are two kinds of people in the world. Those who watch movies in silence, and those who need the crunch of a fistful of popcorn to engage their taste buds as they stare at the silver screen.

Large multiplex chains have since clarified that the change in tax structure is applicable only to packaged popcorn and that it will be business as usual for those freshly popped tubs.

But then food and beverages (F&B) has been a nagging concern for movie-goers for a long time, even without the imposition of a new tax. Why exactly is movie food such an expensive experience? And are alternatives popping up?

Both multiplexes and audiences have valid arguments on the pricing of items that are available for a fraction of the money outside the cinemas.

Though single-screen theatres attempted to make money from almost every inch of space, audiences never felt they got a raw deal, as they do in multiplexes now. With good reason, too.

Navendra Singh, AGM at a leading real estate firm, says, “Today, I am paying more than two times the money I incur on ticket prices, on food and beverages. I have to plan my theatre outing carefully. It is no longer a weekend ritual.”

According to various estimates, movie ticket prices in multiplexes could be in the range of Rs 260-350, depending on a film’s budget, star cast and the response the film’s trailer has received. A medium-size tub of popcorn could cost anywhere between Rs 300 and Rs 500, higher than the average ticket price in multiplexes, which in the case of PVR Inox, the segment leader among multiplexes, was Rs 257 last quarter. Soft drinks may be charged in the range of Rs 200-300, with combo packs starting at Rs 600. This means, for a middle-class family of four, the entire movie-hall experience can be prohibitively expensive.

The result? Along with the increasing supply of mediocre and unentertaining films and the proliferation of streaming platforms, audiences have got one more reason to reduce the frequency of going to the movies. This is reflected in a fall in footfalls.

According to mall developers, multiplexes used to generate 10% of footfalls in malls. This has fallen to 6-7% in recent years. The total admissions (footfalls) in PVR Inox properties fell to 38.8 million in the September 2024 quarter, from 48.4 million in the same period in 2023.

Yogesh Parker, a banking professional with a leading money transfer platform, says, “Today’s audience weighs an outing in multiplexes in terms of a trade-off.” The trade-off he is referring to is whether the cost of an outing in a multiplex can be used to offset the subscription amount of streaming platforms, since most films are available on streaming platforms within two months of theatre release.

There are close to 8,500 screens in India. Of these, less than 6,500 are operational after the pandemic. There are 3,500 multiplex screens and the remaining are single screens. PVR Inox, which has 1,747 screens, has recorded a higher growth in revenues from F&B than from the sale of tickets in the past four years; the former has grown at a compound annual growth rate (CAGR) of 15.3% to Rs 1,958 crore in FY24.

In the same period, revenues from the sale of movie tickets grew at a CAGR of 13.6% to Rs 3,279 crore. This has resulted in the share of F&B in total revenues for PVR Inox increasing to 31.5% in FY24 from 27.8% in FY20.

While the share of movie ticket revenues has grown in the same period—from 50.1% to 52.8%—F&B has been outpacing it. That, along with the higher margins from F&B, goes a long way in explaining why multiplexes price it high.

Producer and film business expert Girish Johar says, “Operating profit margins in the food & beverage segment are much higher.”

Estimates suggest F&B in a cinema costs more than three times outside it. F& B is a stable source of revenue for multiplexes.

Girish Wankhede, a movie trade analyst, says, “Exhibitors share revenues from the sale of movie tickets with distributors. Also, they must pay taxes on the sale of tickets. But food and beverage revenues go entirely to the multiplex.”

Multiplexes cite the high costs of operations (real estate, staff salaries and various overheads) as a reason for high F&B prices.

Rahul Dhyani, founder of Connplex Cinemas, a miniplex (75- seat theatre) chain, says, “Today, a family spends more on dinner at a restaurant than in a multiplex. So, we don’t think F&B costs are very high.”

But not all multiplexes are sticking to the script. Some are trying to disrupt the established pricing regime in a bid to trigger demand, especially at a time when most Hindi films are failing. Recently, multiplex chain Mukta A2 Cinemas capped its F&B prices at Rs 99.

Ask Satwik Lele, COO, Mukta A2 Cinemas why they shifted their strategy and he says, “Our strategy of capping F&B prices under Rs 99 has effectively increased three times our items per head (IPH).” Essentially, Mukta is trying to play the volume game. But can focusing on volume rather than value be a sound strategy?

An analyst, who did not wish to be named, says, “Even if a multiplex caps its F&B cost at Rs 99, it will make an operating profit margin in the range of 50-75% from the food and beverages segment.” Multiplexes must now choose between value strategy—high ticket prices and F&B rates but low footfalls—and volume strategy— affordable ticket and F&B prices but high footfalls.

Ameya Naik, founder of Fantasy Films, an event management company, is in the latter camp, arguing that more people coming into the movies is the need of the hour. He says there is a large audience seeking affordable movie-going experience.

“The audiences who prefer premium services in multiplexes are irregular and smaller in number as they are clear about what they want to watch in theatres,” he says. This strategy can have a broader impact.

If F&B costs are relatively affordable, even an average film may do reasonably good business at the box office.

So which way will your neighbourhood multiplex swing?