How Theme Parks and Movie Theaters “Price Gouge” for Food

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I’d like to start with a quick update for those who have been asking why I seem to have dropped off the face of Earth with my commenting and what not… I left Friday afternoon for a trip to Disney World and just got back yesterday afternoon! I’ll be writing up a report and have some great post ideas from the trip but need a little bit of time to organize my thoughts.

Have you ever noticed that theme parks and movie theaters charge a LOT more for food and drinks than you would pay in any other setting? As I mentioned above, I just returned from Disney World and their concession prices reminded me of the sky high prices of concessions at movie theaters. Disney World vending machines charge $2.75 to $3.00 for a 20 oz bottle of soda. I can get the same soda from a vending machine in front of a grocery store for roughly half of that cost.

Why Do Theme Parks and Movie Theaters Charge More?

The answer should be fairly obvious but to get there I think we need to evaluate the answer to another question or two first. Do you pay these prices? Do you see others paying these prices? If the answer is yes to either of these questions you have your indirect answer. Movie theaters and theme parks wouldn’t charge these outrageous prices if people would not buy the items at their prices.

In fact, I’d be willing to go a step further and say that they likely optomize their prices so that they can make the most profit possible. I’d venture they test different prices in different locations and see how the product sells. A simple example would be at $1 they sell 100 sodas, at $2 they sell 90 sodas at $3 they sell 75 sodas and at $4 they sell 50 sodas. In this case they makes $100 at the $1 price point, $180 at the $2 price point, $225 at the $3 price point and $200 at the $4 price point.

In the above example the seller doesn’t sell quite as many sodas but they do end up maximizing their revenue. Obviously they would consider the cost as well and instead maximize profit but you get the idea.

So How Do They Pull It Off?

The reason why you pay these prices is the fact that you are a captive audience in these situations. At the movie theater you likely aren’t allowed to bring in outside food or drinks. They have the only option for concessions stand items if you don’t want to break the rules. Most people just accept it and pay the prices because the theaters have done the research to find the perfect price point to make the most money possible by pricing right below your maximum allowable wallet pain threshold.

The biggest factor is people don’t plan ahead when they know they’ll be part of a captive audience. As far as theme parks go, many people arrive at the parks and before realizing how high the prices actually are. By the time they figure out how much things cost in the park they don’t want to waste their precious time (theme park tickets aren’t cheap) traveling outside the park and just pay the prices on the menu board.

Most people don’t know you can do bring in outside food and drinks to some theme parks. Other people are lazy and some people are willing to pay the prices. Whatever the reason is, it works in favor of the theme park. I did see a few people eating food they brought into the park but I’d venture to say it was less than 10%. We personally fell in the last group for lunch and dinner. We wanted something hot and fresh so it was worth it to us. We budgeted for it and could afford it. We didn’t pay for drinks or snacks though. We brought and refilled water bottles and carried small filling snacks with us each day.

We knew we would be a captive audience and planned ahead for what we were willing to pay for. Do you buy concessions at the movies and theme parks? What do you do to save money and where do you budget for some extra spending money?

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.

Comments

  1. The same thing applies to sports venues. The way we look at it is that some refreshments, overpriced though they are, are part of the outing. Hot dogs at a ball game, popcorn at a movie. We lump those into the total cost of the experience.

    And go less frequently.

    Glad you had a good time! :)

  2. Problem is, if people stopped paying these prices for food they would jack up the ticket/admission fee to compensate. In the end they will get their money one way or another.

  3. Oh man, we DFEINITELY plan ahead for things like that. Someimtes we save up even extra and ‘treat’ ourselves by buying movie theater or themepark food, but usually we sneak food in (theater) or carry it in and put it in a locker (theme park) to eat later that day. At theme parks, we usually “treat” the girls and ourselves to ONE bought food item though, because man, their hotdogs are always so good. If we didn’t sneak food in or put it in a locker, we really wouldn’t be able to afford the trips!

  4. At theme parks we are like you: we bring in our own snacks and water bottles, but buy the meals. I HATE theme park food, so when we go to Disney I always book some of the restaurants. Disney restaurants are great: the themes, the service and generally the food are all first rate.

  5. William – You’re spot on about sports venues. I read an analysis of the per ounce prices of beer in baseball stadiums across the country once and it was astounding! I can’t remember the details, but some of the stadiums you would least expect had the most expensive beer per ounce!

  6. We plan ahead mostly. But sometimes? We just let us have our splurgy moments. Especially if we’ve saved up for it. That’s going to happen this weekend at a town festival-we could just not eat the vendor food but…it’s once in a while and well worth it to us.

  7. DC makes a very good point. Those companies will just find other ways to make money if less people buy their food. In the case of movie theaters, the movie companies actually get the bulk of the profits from admission. So theaters are forced to make their money on food or jack up the admission prices. For a lot of people that food is just part of the experience. Personally I just avoid going to the theater and watch movies at home instead.

  8. Actually, movie theaters don’t make a big profit, if any, off movie tickets. So, their only method of gaining money is the concession stand though yes, they do overcharge for it because they need the huge profits.

    I often budget if I go out the food at the event because I prefer not having to CARRY all that food and in fear of it going “bad” while you’re out possibly in warm weather. It’s never fun especially at theme parks when you’re trying to go on rides and walking around. Carrying a whole picnic basket with you – not exactly enjoyable and very inconvenient when you constantly have to put it to the side as you hit up the ride.

    Also, I see a lot of people say sporting events are the same. I do see that they overcharge also but — there is pregaming prior and also tailgating so I do not see why people would have such an issue there.

    I usually am overstuffed with food and alcohol before I even get into the arena.

  9. To this day, I find it stupefying that people still purchase theater food or theme park food for that matter. It’s quite annoying to be honest, but I’ve learned to let it go and live happily without stress. It’s their money, let them do as they please.

    Your take on how they determine price is probably spot on. I’m sure they tested quite a bit to determine what people are willing to pay and how much the price effects overall sales. It’s a shame, but when someone is willing to pay, they are willing to price gouge. It’ll never end.

  10. And you pay for convenience. But like DC mention, you will have to make up the difference. No company wants to see a decline in profits.

    • Eh if a few people quit they won’t. I don’t expect my article to change the habits of all theme park goers but if it did that’d be pretty sweet!

  11. It’s the same thing with the airport! Captive audience and an empty belly lead to irrational spending habits.

  12. It may seem weird as the budget guy, but I enjoy purchasing snacks at theme parks. I feel like it’s part of the experience. Especially something you need to eat hot or cold, I don’t want to lug around a microwave and a solar power machine to warm up my hot pocket!

    But, alas, my wife is much more frugal and awlays makes great snacks for us to bring. We do usually eat dinner out, but we bring water bottles for liquids (mostly for survival) and small snacks to keep us moving.

    And thank you for being an adult who still loves Disneyland! I get so much flack when i say i love to go every other year!

  13. I avoid buying anything at theme parks or movie theaters. However, if there are women (woman) I go to the movie with, I’ll usually get her to stuff some snacks/drinks into her handbag. Call me crazy and cheap, but works like a charm every-time.

  14. I like going to the theaters once in a while(Avengers, Hunger Games, Batman type movies) but I always bring my own snacks in haha! I haven’t ever brought in popcorn, but I’ll always bring soda/water and some candy or some snacks. Honestly, I don’t think people are afraid of breaking the rules, they’re just following orders. The movie theater says don’t do it so they don’t. Whenever I see a rule I always question it, if it makes sense, I’ll follow if not, I won’t. :) I’m also a cheap SOB and don’t like to get 500% gouged on a box of raisinets!

    • I will bring my own snacks if I go to movies and a big bottle of water. I don’t need the soda and we will break down and buy some popcorn every once in a while.

  15. We usually pack a lunch, leave it in a cooler in the car and head out for a little picnic around lunchtime. You can bring water everywhere. I mean, they might say “no food or drinks” but seriously, it’s inhumane to not let people bring water into places when it gets so hot at those places.

    • We thought about this but that would require us to drive to the parks (a pain when you can ride the free transportation) and then it takes a while to get out to your car because the parking isn’t right next to the park (you have to take trams or the monorail).

  16. My husband LOVES movie popcorn. For the three times a year we might go to the movies, we usually get some, even though it has a gazillion calories. The last time we went I did talk him into making popcorn at home and we snook it in by hiding it in my purse. It went pretty well. We will probably try that again. We do theme parks so infrequently, we would probably buy food there as part of the trip. We went to a major league baseball game this summer and bought food but packed drinks. No need for a $4 bottle of water or soda.

  17. sleepydad says:

    Yes – we were down in San Diego’s Sea World in June and found the food to be quite expensive. There is a way to save money. I didn’t do this, but a hotel staff member said to us that Sea World offers a “ALL DAY DINING” deal. Cost is $32.99 per adult; $15.99 per child (3-9). The the deal, you have access to all the participating restaurants onsite. A good deal, is when one adult pays; then gets food for the entire family. Yes cheating the system; but when you are paying $68 per adult and $60 per child for admission, give us a deal!

  18. These things are crazy expensive. We usually buy the Costco vouchers that you can get. They help save a fair few pennies.

    Or we bring our own stuff if we can. I know at a baseball game we went to not long ago, we could buy water for a $1 just outside the gate compared to $4 inside.

  19. Here is the proof that regardless of what the collective consensus of the public is, NOTHING is going to change how businesses operate. Movies can charge hgh prices because they know people WILL go see interesting movies, and people can’t sit n a movie theater for 2-3 hours without something to drink. Because you can’t bring it in with you, they pretty much have you by the nuts, and they KNOW that, those, they don’t care what we say. Because supply and demand is so crucial to the capitalist concept, there will always exist businesses who will take advantage common people because they know no body will do anything about it, or regulate the cost structure until it becomes so evident that Congress will have to get involved and regulate the ceiling ( just like what happened Immediately after Katrina). As you will see, even after this has been posted, 1 year after the original post, years from know it wil always be the same and the only thing Americans can do is bitch about it and still spend $10 for a lousy hot dog.
    So what can you do??????

    • By the way, this concept obviously applies to airports, theme parks and cruise ships as well. “captive audience” is the key word here, therefore it is by definition, a Monopoly on your location and time.

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