Business News

Increasing F&B revenue won’t help multiplexes much if the movies aren’t good.

The share of food and beverages (F&B) revenue in the total revenue generated by key multiplexes has been increasing amid falling footfalls and rising prices of such items. However, they may not be able to raise prices further if the footfalls fail to show an uptick.

According to the data shared by PVR, India’s largest multiplex by screen count, the F&B share has increased to 30% in FY23 from 27% in FY20 including Inox’s operations after the merger. During the period, the share of revenue from ticket sales in total income fell to 51.8% from nearly 53% even though PVR raised the average ticket price (ATP) by 16.2%.

The falling footfalls and lower advertising revenue have affected the operating profitability of multiplexes. Karan Taurani, senior vice president and research analyst at Elara Capital mentioned that the box office collections and revenue for key multiplexes were almost similar between FY20 and FY23 and still, the operating margin (Ebitda margin) fell. “This is largely because of lower footfalls and advertising revenue,” Taurani said.

Between FY20 and FY23, the number of admissions and advertising revenue in PVR fell by 16.6% and 31% respectively while the Ebitda margins of the combined operations of PVR and Inox fell to 11.5% from 17.9% in FY20.

During the same period, these multiplex players were able to increase food and beverage costs by 29-30% since in recent years they changed their food menu by including high-end items.

In the coming quarters, analysts foresee little room for multiplexes to increase average ticket and F&B prices as they believe that the line-up of films is not strong enough to generate high footfalls. “There is not much confidence in the trade circuits about the future line-up of films. Therefore, footfalls may not improve materially,” an analyst, requesting anonymity said.



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