Outside food allowed in multiplexes from today, but tickets may cost more

Mumbaikars may have to spend more for movie tickets as multiplexes are likely to increase prices to offset the loss in revenue over allowing outside food from today, August 1.

According to Crisil, the multiplex industry is likely to see its operating profits decline by around Rs 100 crore if half of the movie-goers in the state carry their own food and beverages.

The rating agency estimates that multiplexes in the state will be required to increase ticket prices by Rs 70 to offset the impact on the food and beverages (F&B) division, while observing that such a sharp hike may not go well with movie-goers.

While big players like PVR and INOX are yet to announce any hike, industry sources say its only a matter of time before the price is increased to maintain the status quo.

The state government this month made it clear that while there can not be any ban on carrying outside eatables to the theatres, strict action would be taken against overcharging multiplexes from August 1.

A public interest litigation on this is pending before the Bombay High Court.

Maharashtra accounts for roughly a quarter of the revenues of multiplex operators, and non-ticket segments comprising F&B and advertising are highly profitable and subsidise losses on ticket sales.

The agency noted that non-ticket revenues are growing twice as fast as ticket sales, with a compound annual growth rate of 29 percent in the past five fiscal years, compared with 15 percent for ticket revenues.

As a result, share of non-ticket revenues has increased to around 43 percent in FY18, compared with around 30 percent in FY13.

The gross profit margin of multiplexes in the F&B segment is about 75 percent, and in the advertising segment over 80 percent, according to Sachin Gupta, senior director, Crisil Ratings.

In FY18, leading multiplexes reported an operating profit (EBITDA) of Rs 58 lakh per screen. Of this, the gross profit generated by the F&B segment was Rs 61 lakh per screen, while advertisements reeled in Rs 33 lakh per screen, he said while pointing out that these multiplexes would have bled if their only source of revenue was ticket sales.

Crisil noted that in the event the rule is imposed, the ability of multiplexes to augment their revenue streams by raising tickets prices and advertising tariffs will be the key monitorable.

Crisil Ratings’ director Nitesh Jain said multiplexes account for half of the box-office collections despite having only a fourth of the total movie screens in the country and are also the main attraction at shopping malls.

The disruption in multiplex operations will, therefore, having a cascading impact on the film industry and the footfall at malls housing such multiplexes.

With agency inputs