Comparing where AMC Entertainment Holdings (AMC -2.69%) is now to where it was two years ago is a painful exercise after last week's quarterly update. As great as the year-over-year comparisons were -- when all of its U.S. theaters were closed -- AMC is nowhere near where it was before the pandemic.
Revenue clocked in 70% below where it was in the second quarter of 2019. Put another way, AMC's business would have to more than triple from here to get back to where it was just two years ago. The second quarter of 2019 was also the last time AMC cranked out a quarterly profit.
However, one interesting and encouraging metric can be found in the rubble. Dig into the line items, and you'll find that the $233 million in admissions it rang up in its latest quarter is 74% below where it was two years ago. This may not sound great, but let's keep going. The $161.5 million in served up in food and beverages in last week's report is just 67% less than where it was in the second quarter of 2019. This is good news. Let's break it down.
A good kind of concession speech
Ticket sales are nice, but it's not where theaters make the lion's share of their profits. A multiplex chain can't live off box office receipts alone. Back out the $98.9 million in film exhibition costs from the $233 million in ticket sales that AMC recorded in its latest quarter, and it can't cover the $205.5 in rent of its cavernous buildings -- much less than additional $246.2 million in operating expenses.
The real money in the multiplex game lies in its high-margin concession stands. If you think you're overpaying for your tub of popcorn and your gargantuan beverage cup, you're right. It took just $29.5 million in food and beverage costs -- not including the labor to serve it up -- to produce the $161.5 million that AMC concession stands rang up in its latest quarter. Seeing food and beverage sales hold up better than ticket sales tells you that folks are spending more on the high-margin edibles and drinkables at your local movie house. This is a great thing to see, and it gets better.
When you see that admissions revenue is 74% lower than it was two years ago, that doesn't mean 74% fewer people are going to the movies these days. The real math is even worse. As AMC points out in its earnings call, the average price for a domestic ticket has risen 15% over the past two years. Fewer patrons are driving the relative improvement in snacks and sodas. In fact, food and beverage revenue per customer at AMC's stateside locations has risen 42% over the past two years, from $5.58 to $7.91.
This is pretty incredible news. AMC took advantage of the downtime during the pandemic to roll out mobile ordering across its theaters. It has optimized its offerings. It's paying off.
Will it last? Was it just folks paying for food and beverage items in the springtime to skirt masking rules that required face coverings stay on unless actively consuming concessions? Was it just nostalgic purchases after a year of streaming from home with inferior popcorn? I would like to think AMC is being rewarded for the upgrades it has rolled out in its high-margin food and beverage business over the past two years, and if I'm right, this story will only get better as more guests grow comfortable with a return to the corner multiplex.
Attendance would have to more than quadruple to get back to where it was in 2019. What do you think will happen to already healthy food and beverage sales? Investors are rightfully scared of movie theater stocks these days, but quiet improvements in AMC's highest-margin business will pay off when you're ready to come back to see supersized films as you rock in stadium-seating-planted recliner. Don't forget the popcorn.