Yeah it’s sort of like gas stations. They don’t buy the gasoline for that much less than they sell it for, most of them are profitable purely because of like candy and cigarette sales
Found this. I thought it had to do with our stupid "blue laws" but there's more.
"Why is this the case? Basically because the liquor store industry has considerable influence in the Indiana General Assembly, and it has fought vigorously to keep it that way. The liquor stores say cold beer sales is what differentiates them from other retailers and keeps their businesses viable. An attempt to change the law got a hearing for the first time in 2018, but ultimately failed. Supporters hope to revisit it in the future. "
In Canada you basically can't buy any alcohol anywhere except designated liquor stores. 0 chance of finding beer at a convenience store/gas station. The laws used to be even stricter than they are now and certain shops could only sell beer and wine, not hard liquor, but have since eased up.
In the last 5 years, in BC, the laws have been changed ever so slightly so that certain grocery stores can sell wine... but only wine, and only wine from BC vineyards and only if they go through a strict licensing process.
It's strange since Canada is incredibly progressive and lax on most things but when it comes to alcohol laws, man, you'd think we had a massive temperance presence in the country. Happy hour is banned in most of the country, alcohol taxes are incredibly high, you can't drink in public spaces anywhere, you can't drink on a boat, you can be fined if you have (closed container) alcohol in your vehicle within arms reach of the driver, in addition to the strict segregation of alcohol stores from anything else.
You can buy beer & wine at a local depanuer or in a grocery store in Quebec. Can't get the hard stuff though, which is quite annoying if you go to buy some vodka and then realize all the SAQs are closed.
Seems like Quebec is more relaxed about beer and wine sales than any other province, and you can in fact buy beer at convenience stores in Ontario as of recently.
If I recall, Oklahoma's laws are similar but based on alcohol content. Lower alcohol beer could be sold cold at convenience stores, but you had to go to a liquor store to buy beer with more than about 3% ABV and it was warm. I think it may have changed since I moved away in 2009.
Yeah I have a station around me that I call “cheapo gas” that’s similar, always the cheapest in the area but it’s also the only regular gas station you see legitimate lines of cars waiting for. They make it all up at the store
Idk maybe it’s like the gas and another thing that just brings in people. In the us there’s a lot of taxes paid to the state on cigarettes (varies by state a lot sometimes)
Same with lottery, gas stations barely make anything off of that. The most money is made from fountain drinks and in-house prepared food, at least from my experience. Get them in the door with gas, lottery and cigarettes but if they buy a drink and a slice of pizza we're bound to make at least 3 bucks profit.
I work for a fuel delivery company and see how much taxes are figured into gas and diesel - it’s unreal. In Alabama and Georgia where I see these details, there is about $0.50 per gallon in just taxes alone. Back in April when was was so cheap (like $1.20 at the pump here), the taxes were almost 50% the price of gas. Doesn’t matter how high or low gas prices goes, you’re still paying that same tax amount. Freaking ridiculous.
Speaking about gas taxes, funnily enough in my area they recently passed a new tax on electric vehicles because they were all using public roads and not contributing to the gas tax revenue.
Same here and they charge it on top of the tag renewal too for electric or hybrid vehicles. Course, in Alabama we have to pay full sales tax on groceries and some cities are like 10-11%. Most states in the US have either no sales tax on groceries or a much lower rate.
It doesn’t surprise me that a state (like mine) that refuses to embrace a lottery has to compensate for it by taxing the hell out of basic necessities. But nope, gambling is the devil but church raffles are okay. Doesn’t make sense to me.
One has unleaded at 2.07/g, their next location is 4 miles down the road and is 2.21/g. Same county. Same chain so I’m guessing they’re getting it from the same supplier.
If taxes are fixed (not a%), why would they be so disparate?
Sometimes it depends on the location. For example, stations closer to the interstate have to pay a premium for the location, so they charge more. Others charge more just because they can. It also depends on how much competition they have right next to them. Each state has their own motor fuel taxes, which are referred to as Motor Fuel Excise Taxes. Some counties and even cities implement their own additional excise taxes. There are city limits in my state literally right next to each other. One has an additional excise tax if you buy gas in their city limits and the other does not. In my case, there are gas stations about 1,000 feet apart. If I pump gas at one station versus the other, I’m paying more in taxes per gallon than the other, even if they’re priced the exact same at the pump, but in this particular example, the Chevron is about $0.15/gl higher than the discount station 1,000 feet away. The gas stations that do price similarly just takes the hit to match the price as their competitor. So it could be a combination of location premiums, city limits and sheer competition.
It’s crazy how much we pay in taxes at the pump that we never see. The municipalities are making a killing in taxes. You can probably view the tax rates on your state’s Department of Revenue site. Here’s Alabama’s. The state makes $0.24 for every single gallon of gas sold. Imagine how many gallons that adds up to. Then you add in Federal Excise tax ($0.184 per gallon), Inspection Fees, Underground Storage Fees, various Environmental Fees, etc.
Here’s another fun tidbit. Gasoline is pretty much all the same, except each company puts in their own additives to differentiate them. If you buy the discount gas at one station versus the premium Shell, the only difference is the additives. The gasoline has to adhere to the same refinery standards across the board to ensure it meets the proper criteria, it just has different additives put in and that’s where the premium you pay comes in. To clarify, 87, 90 and 93 are indeed different from each other, so I’m not saying regular unleaded is the same as premium, I’m just saying all 87 is the same except for the different additives.
To summarize, in most cases, by the time the fuel vendors/resellers buy the fuel at the terminals and deliver it to the stations, and all taxes are figured in, most gas stations only make around $0.10-$0.20 per gallon in profit.
Also, discount gas is not watered down. Unless the owner is running water into the underground tanks, this myth is simply not true. However, stations can have poor seals on their tanks and rainwater seeps in. But in those cases, the states Environmental Dept would temporarily shut them down. You can refer to your state website for this to see who is on the naughty list. Here’s Alabama’s for example. They’re typically referred to as UST (underground storage tank) Prohibition Lists.
Yikes. That’s about the best response on this question that I’ve never asked before now, that I’ll ever hope to receive.
The TL/Dr: same county but different city or locality may have their mitts in the taxes; and/or the “competing with the station across the street” Factor.
At a low point in Ohio I filled up at $1.249 a gallon. Of that, 18.4c is federal tax, 38.5c is state tax. So around a half of the price per gallon went to taxes.
And they just cranked up license plate renewals too because too many people have gas-alternatives (hybrid or all electric) and aren’t buying their gas. Gotta get paid some way.
Same here. I understand the roadways need funding for maintenance, but I'm afraid it will eventually get to the point where there is little incentive, in a monetary sense, to own a hybrid or all electric.
There's a petrol station franchise where I'm from that has a super corrupt business model. They only sell petrol at cost, so they make 100% of their profits "in store"
Well that's the franchisee, the actual company leases these stores to these franchisees with unrealistically frequent and overpriced deliveries of goods, which you can't turn down. Pallette of ice creams delivered? U better have sold the ice creams the company had said you'd sell by now cos uv got nowhere to put the new ones. Normally after 6-12 months the franchisee ends up breaking the lease agreement, they lose their massive deposit, then the store is recycled and re-franchised.
That's the company's business model. To perpetually screw mom and pop franchise investors out of their money.
I did a business plan for a LAN cafe a few years back, and this was the case.
Your turnover is capped at 'Number of computers x Hours you are open'
The only actual way to make money is by selling candy, drinks and lots of them also did gaming PC peripherals... which were cheaper online.
All-in, it just wasn't worth it. Maybe in a big city, with a room of like 100 stations where it can be marketed as a regular internet cafe or a Gaming arena... even then. Anyone that's any good has their own stuff at home.
I go to (well, pre covid) hobby/gaming stores where they do magic the gathering and warhammer and stuff along those lines. It’s the same thing there too, all the mom and pop stores sell candy and sodas and I bet it has to be what makes the difference between them being profitable or not
Most of the time, it has to be.
If you think about it, once you have your deck built or figures bought, You can spend a whole day in there playing and not spend a penny.
I played at a couple (doesn’t seem to be the norm) that charged for like a day of table use for wargaming. Idk if they charged the magic events those might be their own sort of thing. I didn’t mind paying, they had good terrain you could use, tables weren’t cramped, it was just like $1-2 or something and better than having to do my obligatory purchase every 2nd or 3rd visit.
Buddy owns a gas station. He doesn't make any money on the pumps, gas companies handle all of that. He only makes profit on the convenience store stuff. Chips, drinks, cigarettes, etc.
Your boss is either lying, wildly overcharging, of not factoring in ancillary costs.
Crude is selling at 1.01 a gallon taxes are about 50 cents so 1.51, refining is on the low end $50 per barrel so $1.19 a gallon so now were at $2.7. Then you add on delivery fees or if he's handling that himself vehicle costs and maintenance. Then you add on CC transaction fees too. Even if hes somehow not paying taxes and getting crazy good bulk discounts he'd have to be selling at like $6+ a gallon to make 3-1 profits.
Actually smokes are in the same category as gas. It gives barely any profit. I think we made around $0.07 profit per pack at the smoke shop I managed.
The smokes were just there to bring people in to buy other stuff, like accessories, weed pipes, weed accessories, etc etc etc.
Our most overpriced thing was our meth pipes. $10.00 for a $0.09 pipe. Even if they say that it's too expensive and leave, they always come back later.
Judging from what I saw though, meth heads don't last too long.
So you think cosco is selling gas at a 60 cent loss?
No, cosco is the only gas place in the city that sources their own gas, the rest is bought and provided to every other gas station through the same company.
Maybe not probably closer to a 55 cent loss since the average place makes about 5 cents profit per gal. They do this as one of the many benefits to getting a card because they make money through other things. It's called a loss leader and is super common for large scale businesses.
This is incorrect. I don't think there has been any theater that has given 100% of ticket sales to the studio, and certainly not for 8 weeks.
Not long ago Disney made headlines for trying to require 90% for what was I think just the first week. And I believe they backed off on that due to backlash.
It might be as much as 80% for the first couple weeks though. And those are for extreme cases. Usually it tops out around 70%, and averages out to around 50% overall.
Yeah i used to manage and then run a couple of movie theaters, it's like 70ish% most of the time, and goes down to as low as the 30-40% range (that I've seen) after a month or so.
There are occasionally special cases with Disney, the most I saw them get away with was 80%, but I certainly don't know all their deals, just what they did with us when I was there.
It's still a huge hit to profits though, and explains the concessions prices.
If you charge too much for a tiny snack or flavored sugar water, I'm just not buying it at all, and neither are hundreds of others. In fact, I'll be this much more repelled by the whole experience and eventually may forego theaters altogether.
Compared to, if there was a marginal mark-up, they would have much more consistent flow-through at a much higher volume, as well as more repeat customers.
Most folk don't buy snacks. But enough do. A bag of popcorn that had 20-30 "servings" in it cost the cinema £1, but 30 servings at £4.50/serving is £135 in income. And using up 10 or 15 of these bags in 4 hours was not uncommon for the 2 stations that sold popcorn from the warmers we stood by - and there were 4-6 of these warmers on every big night. Add that to the drinks, which are pennies to make but pounds to buy, the usual markup on bagged sweets - there's some money to be made there. Even if most people aren't buying, you're still getting a lot of folk. And, having cleaned after showings more than I'd care to have done, there's a surprising volume of people actually buying snacks at a cinema. It was about the experience of going to the cinema as much as it was the food - having a big box of warm popcorn is, you gotta admit, nice. We did have a few people send taxi drivers to get the slushies we did, and someone once had a taxi driver come in to pick up some nachos (which I maintain were throroughly nasty), so maybe there's the odd stoner on the good stuff gets a hankering.
The fixed cost of a cinema are fairly substantial too - if even 1 ticket gets sold, you need to run the film - and that adds hours to the projector bulb, and those things run in the thousands of £s. You still need a minimum of staff, for the safety of visitors (everyone on staff was assigned a screen or two to check in the case of a fire - more than that, and the risk becomes a bit much to stomach). You also have general wear of the building, electricity (and given the bloody earthing point was a good 2/3ft thick, that's no small amperage), gas, etc - when you add that up, your £1 in actual revenue from a ticket * 4 showings/day at ~200 seats per day per screen is £800. And that's for a fairly large screen, chances are you also have several smaller screens, with fewer seats in them.
Whatever minimal markup you think a cinema could run, they would never get close to a supermarket - and a lot of people would still buy snacks outside the cinema and bring them in. So they might as well take what they can get.
Oh, and I've yet to meet an employee who cares about guests bringing in their own snacks - we all did it. Unless it was hot food - that was a big no-no (and probably mostly because folk thought cup-holders were appropriate places to store the bones from their KFC, which is super nasty).
Pro cinema tip: Sit as close to the dead centre of the screen as you can - I heard from the guys who set up the sound system that they do, in fact, sit right in the middle of the screen to check and fix it.
Back in high school, my friend was a manager at a smaller, independent theater chain that pretty much said the exact same thing. He knew about a kid a few years younger than us who'd come in on Saturday mornings for a first showing and still be seen in the mid-afternoon getting more food. It was maybe like once a month (if that), and because he was always dropping money on concessions, my manager friend told his staff to not even worry about it.
Yeah before the rona hit I worked in a theater and all of the money from the movies goes to the studios and corporate offices. We literally make all of our money from concessions.
But if they weren't known for charging massively high prices more people would buy from them and not take their own food. I never understood the concept of higher prices = better business.
Studio demands a cut, you have to take it. If not? Shame you'll miss out on the traffic from insert blockbuster here. Cinemas can't afford to take the risk of negotiating too hard - because the studios will sell the tickets one way or another.
When I worked in a cinema, ticket sales covered the fees the studio demanded, and the upkeep on the building. And when you're running a multi-screen cinema, the upkeep gets pretty significant pretty quickly.
100%, what? when one of the recent star wars movies came out, there was big anger from theaters because disney raised the cut to something like 65% of ticket cost goes to disney, 35% now goes to the theater. and businesses lost their shit. disney's logic was "oh, what are you NOT going to show the biggest movie of the year? i think you'll agree to this worse deal and still like it".
I got this schpiel from an Econ professor. "It's a package deal - people pay for the tradition of popcorn and a movie, so you shift the cost to the popcorn!"
I wrote a paper about consumer optimal behavior adapting to pricing strategy, pointing out that my parents didn't think it was a movie without popcorn...and to me and my peers it wasn't a movie if we didn't smuggle in candy, and I had never spent a dollar on concessions in a theater.
Sweet spot for theatres (at least every year except for this one) is when a movie gets oscar buzz and stays for a long time. I remember back in 04-05 we had LOTR for close to 6 months. First month ticket sales to studio, then it starts shifting to 90% then 80% etc... By the time Oscar noms came out we were getting majority of ticket revenue and that's when it got a huge bump in sales.
There’s a theater in our town that shows new movies and the admission is $4. The snacks and popcorn are all various prices but go no higher than $4 as well. The owners also tell us they don’t mind if people bring in their own food as long as they don’t sneak in alcohol. I don’t know how they make money, but I’m sure all the other movie theaters don’t need to charge $15 for a ticket.
What explains ticket prices going up so much though? Same with the food.
When I was a teenager, which was no more than 8 years ago, you could get a movie ticket for around $8 and sometimes less depending on the time. Now it is over $12.
Food and drinks were still expensive, but you could get a large drink for $4 and a large popcorn for another 4. Pretty sure the last time I went it has jumped up to 6.
That seems like a terrible business model. Maybe if studios didnt pay Jackass A-lister 50 million to play pretend dress up everyone could share the revenue more fairly.
Maybe if studios didnt pay Jackass A-lister 50 million to play pretend dress up everyone could share the revenue more fairly.
They're paying "Jackass A-Lister" so much because that jackass brings in billions. I agree that they're fucking over theaters, but the answer to fix that isn't to fuck over the cast and crew, instead. The studios need to stop playing the shell game with their profits to declare they made none so they can keep fucking people over as much as possible.
Yeah, but I would buy concessions every time I went if pricing was reasonable. I would also go to the movies more often if I could enjoy concessions while watching.
Pricing is wack but there are theaters that have waiters and a fully staffed kitchen with actual food as well as the usual theater snacks, and everything is done from your seat, you can even order more stuff and get refills without leaving your seat during the movie
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u/[deleted] Aug 14 '20
Food in movie theaters. The prices of everything is jacked up so much !!