“I was shocked to find out.”

A personal finance expert has revealed how movie theaters actually make money. It’s quite surprising.

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Humphrey Yang has over 3.3 million followers on TikTok, where he talks about all things money. The financial guru explained how big and small cinemas generate revenue. It turns out that movies are only a small piece of the pie for many theaters.

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“I was shocked to learn that movie studios actually capture between 80% and 100% of a movie theater’s sales revenue in the first two weeks,” Yang said. “Then, over the following weeks, the ratio gradually becomes more favorable to the cinema, usually resulting in a 50:50 ratio.”

This means that cinemas make their income elsewhere: in concessions. Movie theaters inflate the average price of popcorn at the movie theater by 1,275 percent, and about 70 percent of moviegoers buy snacks at the movie theater, Yang found.

According to Yang, small theaters make 80 percent of their revenue from concessions and 20 percent from ticket sales. Meanwhile, major chains, like AMC, tend to earn 35% from concessions and 65% from ticket sales.

Ultimately, the ratio will depend on the theater’s ability to negotiate a deal.

“I’ve known it since 1976. The money is in the concessions. Our parents used to sneak snacks,” someone wrote.

“One more reason to go to the movies after being away for a while,” commented another.

“We saw the prices, it was obvious this is how they make money,” one person joked.

“I’m taking the whole dollar store with me,” one TikToker responded.

“No one makes popcorn as good as at the movies, so I will always buy it,” one user added.

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Financial expert explains how movie theaters actually make money: ‘I was shocked to find out’ appeared first on In The Know.