Friday, May 30, 2014

I heard they were dumbing down our schools, but.....

If I was a former student of the UC Irvine Merage School of Business and had considerable student loan debt, I think I'd offer to pay it off at $.10 on the dollar based on the math I learned from their own Professor Emeritus, Richard B. McKenzie:

"Just how overpriced is movie food? To find out, we turned to the guy who wrote the book on the subject: Richard B. McKenzie, professor emeritus at the UC Irvine Merage School of Business and author of Why Popcorn Costs So Much at the Movies and Other Pricing Puzzles. Here are the markups for the biggest cinema staples:
  • $8.15:The average cost* of a large bucket popcorn (with free refill)
  • 90¢: The estimated cost of the raw goods needed to make it, per McKenzie’s research
That’s a markup of nearly 90 percent from kernel to consumption"

The Yahoo/ABC report also revealed:
  • $6.31: The average cost* of a large soda
  • 40¢: The estimated cost of the raw syrup that goes into a 50.5 oz. large Coke.
After figuring in the cost of the cup, lid, a straw, and one refill, the cost rises to $.91, for "an 86 percent markup".



Reminds me of the story of the two childhood friends who hadn't seen each other in 30 years.  One went on to Texas Tech, the other to Texas A&M.  (Chris:  Feel free to substitute University of Texas here.)  They met on the street by chance one day and the Aggie asked what kind of business the Red Raider was in.

The Tech alumni said he was in the import/export business.  He said he bought decorative pillows in Asia for $2 each, then sold them wholesale in the US to Macy's for $5 each.  

The Aggie said, "WOW!  3%....not bad!   :)

Have a great weekend everyone!



  1. I never buy food or drinks at the movies. I mean $3 for a bottle of water that's $1 anywhere else?

    Two weeks ago I went into Arby's and got a small soda for $1.06. I gave the cashier $1.11 and after practically counting on her fingers in desperation she gives me 4 cents back. Then we wonder why we're so far behind other countries in math and science.

  2. Whenever you talk about "profit" I can't help but think of the banks. The six largest banks made about $76 billion in combined profits in 2013, an annual haul second only to the $82 billion in total profits the banks recorded just before the financial crisis in 2006 (WSJ).

  3. Scott, I noticed the same thing in that same article. I suspect the issue is proof reading, but dang the whole premise of the article was how big a rip off the popcorn is and then they undercut it by declaring the outrageous profit margin of 90% instead of the correct profit of almost 900%.

  4. I was terrible at math but isn't that more than a 90 percent markup for the popcorn? A hundred percent mark-up would double the price. I think this is what we used to call in Jewelry sales an eight key markup, a key being a hundred percent.

  5. I think joeh is right...that's what happens when you lay off all the proofreaders!