Once upon a time, over a hundred years ago, the motion picture camera and projector were invented. It took almost 10 years before the idea of charging the public to watch short films had caught on to the point that places of business called nickelodeons became common place.
About the same time the practice of creating motion pictures with a plot or storyline also came into being. The first film exchange had opened in 1903, but the proliferation of film houses didn't spread nationwide through virtually every town and village until 1908. It became a practice from almost the very beginning to sell peanuts or candy bars to the audience between shows for extra income. Usually a huckster from outside was allowed to come in with the agreement to share the profits with the theatre owner. As the film industry came into its own and larger more ornate and much more comfortable theatres were built in the late teens and early twenties the practice of selling concessions was frowned upon and disappeared from almost all theatres.
Throughout the haydays of hollywood and the movie palace era of the twenties theatres relied upon ticket sales as their only source of income. It wasn't until the depression that exhibitors started looking for additional avenues of income that concessions again reared their ugly head. Small town and late run houses would stoop to selling these items, but deluxe theatres still refused to do so. By the forties even the deluxers couldn't justify not taking advantage of the income from concession sales and began installing refreshment stands within their walls.
Naturally the film studios felt that they deserved a share of this income, for if it wasn't for their product the theatres wouldn't have any one to sell to. Since the exhibitors would never agree to give distribution a share of their concession gross they devised a way to get some of it anyway. They simply increased the film rental. In 1940 it was the norm not to pay more then 35% for a first run film. Many films were sold at a flat rate. That disappeared in the first runs very quickly and by 1970 had virtually disappeared from subrun as well.
So today when we pay up to 70% for firstrun film rent we are indeed giving a share of our concession gross to the studios.
Now you may ask, why have I brought this up in a thread about the cost breakdown of concession items. Good question. It was the comment about the other costs that need to be figured in to the cost of refreshments... things like utilities, rent, insurance etc. There are many ways to do accounting (just look at the front page news recently), but I was taught by the oldtime showman, those that were around back in the days of no concession stands, that all costs for running the theatre get charged against film grosses. In other words the theatre should stand on it's own as though there were still no refreshment sales. The concession income (after deducting cost of goods) is extra and is our true profit. In reality we know that very few theatres would break even if it were not for concessions. In most cases theatres show a loss at the box office when all overhead costs are charged against ticket sales. It takes a portion of the concession sales to pay off the loss, and what remains is then our profit. When we establish our house overheads for 90/10 deals we include (or should) all expenses except the actual cost of concession goods and film rental.
It is a shame that we are in an era when we as an industry must not only sell refreshments, but have video games, and screen ads to turn a decent profit.
Being the oldster that I am, I refuse to sell screen ads, film or slides, and will never have video games in my theatre as well. Refreshments are something that the public actually wants, but screen ads most do not care for. And video games would not be of any interest to my patrons, and many have thanked me for not having them as they are afraid that they would encourage teens to hang around the theatre. We are happy that we make money without a teen patronage, and we are a moveover run commercial house, not an art house.
So the point here is not to worry about trying to figure out what percentage of the house expense should be tagged onto the cost of each concession item. Let the film income pay for that and only charge the actual cost of goods against your refreshment items.
[This message has been edited by RoxyVaudeville (edited July 25, 2002).]
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