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  1. Maharashtra govt’s decision on allowing outside food is fair – Here is why

Maharashtra govt’s decision on allowing outside food is fair – Here is why

Screening, not F&B, is multiplexes' core business, Maharashtra govt’s decision on allowing outside food is fair.

By: | New Delhi | Published: July 17, 2018 5:00 AM
The Maharashtra government’s decision to allow outside food in multiplexes and regulate the pricing of food and beverages (F&B) available in these multiplexes may seem like a violation. (Represetatiomal image)

The Maharashtra government’s decision to allow outside food in multiplexes and regulate the pricing of food and beverages (F&B) available in these multiplexes may seem like a violation of free-market principles, but, the decision is still sound because the primary business of cinema halls/multiplexes is the screening of cinema, and not selling F&B. To be sure, F&B revenues make up around 27% of the total for PVR and 22% for Inox, a report in Mint points out, and surely account for similar proportions of revenues at other multiplexes/cinema halls. Any competition here will impact the margins of multiplexes/cinema halls—for perspective, nearly a quarter of all PVR and Inox screens in the country are in Maharashtra. But, multiplexes/cinema halls have the option of offsetting the erosion from the new F&B regulations by hiking ticket prices—as long as the government is not capping ticket prices, the new norms are fair. So, the Maharashtra government is well within its rights to insist that the MRP of products remain the same outside and inside a cinema hall.

Cinema halls/multiplexes must keep in mind that the rationale is giving the consumer a choice. Airlines sell in-flight F&B, but don’t debar flyers from bringing their own food that they can consume during the flight. Some may choose to get their own food, but a significant many will still choose the convenience of buying on the spot. Letting cinema-goers bring their own food may, at the worst, pose a security headache given the need to screen packed food. But, since most multiplexes/cinema halls already have the necessary infrastructure for screening, it just becomes a question of rigour. With numerous streaming services and over-the-top content platforms, where most of the latest movies are available with a lag of just a few weeks, already posing stiff competition, can multiplexes jack up ticket prices by as much as they would like? Maharashtra’s F&B decision just makes the need to rethink services/revenue models that much more urgent.

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