Tridip Mandal, creative head at Quint, recently took to Twitter to express his astonishment at a hefty bill of Rs 820 for a mere 55 gm of cheese popcorn and a 600 ml Pepsi during his visit to PVR Cinemas Noida.
Comparing the amount to an annual subscription to Amazon Prime, Mandal highlighted the growing concern that movie-watching has become unaffordable for families.
In response, PVR Cinemas announced weekday meals priced at Rs 99 between 9 am to 6 pm, and a refill option for popcorn and Pepsi during weekends. The Rs 99 meals include burgers, samosas and sandwiches.
According to analysts, the Food and Beverage segment contributes up to 30 percent of PVR INOX’s total revenue. The Food and Beverage segment saw a revenue collection of Rs 1,618 crore in FY23, a growth of 11 percent year-on-year (YoY).
Talking to Moneycontrol, Jinesh Joshi, a research analyst at Prabhudas Lilladher, says that lower prices may drive Food and Beverage revenues if volumes more than offset the price cut that is undertaken.
"PVR INOX's value-for-money food offerings are aimed to attract new users (youngsters) for weekday shows, who probably have limited money and would otherwise not be buying food,” said Abhisek Banerjee, Vice President at ICICI Securities.
He further said that if higher volumes compensate for the lower prices on Food and Beverages, this would be a great opportunity for PVR to grow its customer base for Food and Beverages offerings.
Joshi, however, says that the full impact of PVR INOX’s initiatives may take some time to materialise as specific details regarding the implementation of the new offer are yet to be clarified. There are no clarifications from the company about the offer, whether it will be applicable for blockbuster movies, or movies on a low budget. Whether the offer will be applicable pan-India or in certain cities.
Also read: PVR INOX shares gain after GST cut on food and beverages
Contrary opinion
PVR INOX’s offer of Food and Beverages at Rs 99 is only applicable on weekdays from 9 am to 6 pm. “Occupancy levels in weekdays during the 9 am to 6 pm slot is typically lower, and hence may not have a desired impact,” said Joshi.
The price cut by PVR INOX is important as footfalls in cinema halls remain weak post-pandemic and Food and Beverage business is an important source of revenue for the company at this time.
“Inability to take adequate price hikes at the right time would affect margins in the Food and Beverage segment on account of rising input costs,” said Sharekhan, a domestic brokerage firm, in a report dated May 16.
How big is PVR’s food and beverage business?
PVR INOX can be seen in line with Indian Quick Service Restaurant (QSR) chains like Jubilant Foodworks and Devyani International. PVR INOX’s Food and Beverage business is ranked fifth among other QSR brands, according to a report by Kotak Institutional Equities. Jubilant Foodworks, which operates ‘Dominos’ is on the ace level.
The PVR stock was trading 0.40 percent up at Rs 1,426.75 at 12.16 pm on the National Stock Exchange
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