Is PVR a theater or a restaurant.

Have you ever gone to purchase a smartphone and found the dealer or shopkeeper convincing you to buy an insurance plan, a protective back case, a tempered glass screen protector, and headphones? These are classic examples of upselling strategies, where secondary products are sold alongside the primary product.

Similar scenarios include ordering a combo meal with a burger and coke, buying a Royal Enfield branded helmet when purchasing a new Royal Enfield bike, adding accessories like a laptop bag, wireless mouse, and extended warranty when purchasing a new laptop, or buying a matching tie, belt, and shoes when purchasing formal attire.

Breaking down these examples:

• To enjoy a burger, you don't need a coke.
• To ride your new Royal Enfield bike, you don't need a Royal Enfield branded helmet.
• To use your new laptop, you don't need a laptop bag, wireless mouse, or extended warranty.
• To wear formal attire, you don't need a matching tie, belt, and new pair of shoes.

However, these secondary purchases have become essential to fully enjoy or enhance the primary purchase.

A similar primary and secondary sale relationship is evident in the revenue model of PVR Limited.
You may have guessed it – the sale of popcorn to enjoy a movie. 

Revenue streams of PVR Ltd from the FY 2015-16 to FY 2022-23 (INR in Lakhs)

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The analysis of the data indicates that from FY 2015-16 to FY 2022-23, PVR generated nearly 80% of its revenue from the sale of movie tickets and food and beverages..

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The data reveals that during FY 2022-23, PVR's primary source of revenue, the sale of movie tickets, accounted for only half of the total revenue. Meanwhile, the secondary source of revenue, the sale of food and beverages—which depends on the primary source—constituted nearly 30% of the total revenue.

Further analysis indicates a downward trend in the percentage contribution of income from movie ticket sales going down from 58% to 50%, while the percentage contribution from food and beverage sales is on an upward trend going up from 27% to 32%.

Let us now compare the average ticket price and average spend per head on food and beverages at PVR

Data regarding how many people visited PVR during FY 2015-16 to FY 2022-23

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The average ticket price at PVR can be arrived by dividing the income from sale of movie tickets and the total admissions

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For the FY 2022-23,  the average ticket price was INR 199

The average spend per head on food and beverages at PVR can be arrived by dividing the sale of food and beverages and the total admissions

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For the FY 2022-23, the average spend per head was INR 126

The above data indicates that a person on an average at PVR spends nearly half the amount of the ticket price at PVR. This provides proper justification to the below meme.

PVR had to reconsider the exorbitant prices on food and beverages when the following tweet went viral. The tweet showed a invoice of PVR where INR 460 was charged for 55 grams of popcorn and INR 360 was charged for 600 ml of Pepsi. Thereby bringing the total to INR 820.

The person also stated that the amount was equivalent to annual subscription of Amazon Prime.

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To mitigate the backlash, PVR reduced their prices, where you could now buy the below at INR 99 during Monday to Thursday from 9 AM to 6 PM.  

• 100 g of burger or 
• 160 g of samosa or 
• 235 g of sandwich + 450 ml of Pepsi 

You would definitely get a far more bigger and tasty burger, samosa and sandwich at the Iyengar bakery and at a price lower than INR 99 each

What about Friday, Saturday and Sunday. 

During the weekends you get unlimited refills of popcorn and pepsi.
This seems to be a bit of value available for the customer. 

However, the price nevertheless still remains at half the cost of a movie ticket!

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Legal battles were fought in court to allow moviegoers to bring their own food into the theater, which could have caused at least a 20% loss in revenue for PVR. However, the verdict favored the theaters, permitting visitors to bring only water and food for infants.

PVR is well aware that their food and beverage sales are directly proportional to their movie ticket sales; as ticket sales increase, so do food and beverage sales. Unlike a regular restaurant, PVR cannot operate solely as a dining establishment. The introduction of a subscription model for movie tickets is one initiative attracting more patrons back to PVR. Additionally, the merger with INOX has consolidated PVR's market share.

We hope PVR doesn't reach a point where 50% of its revenue comes from food and beverage sales while movie ticket sales contribute only 30%.

Thank You

Happy Reading !