The Guidelines for Concessions Markup
Turning a profit with a concessions business requires marking up your products enough to bring in the needed revenue, but not so much that it drives customers away. Industry guidelines provide a benchmark for how much a concessions business can expect to mark up its offerings, but traditional business variables such as customer demand and competition also play key roles in helping you decide on a pricing strategy.
Every year, the National Association of Convenience Stores publishes a report that includes suggested markup percentages by product category. This holds true for retail convenience items that don't require preparation, meaning it doesn’t factor in service-related items where a facility’s amenities and product quality are considered. In 2012, these guidelines suggested a 106 percent markup for candy, 26 percent for beer, 39 percent for wine and 92 percent for packaged ice cream.
Basic food service is also covered by industry guidelines. Food prepared on-site has a suggested markup of 115 percent. Packaged sandwiches carry a 57 percent suggested markup. Hot beverages are at 148 percent and cold beverages 94 percent. Note that this only takes the ingredients into account and not factors such as labor or overhead costs. If those are high enough that the suggested markup doesn't bring in enough money, you'll have to adjust accordingly.
Businesses operating in areas with limited consumer choice may be able to increase the markup for their concessions, so the markup guidelines there can be whatever you want them to be. For example, if you have a soft pretzel concession at the local minor league or youth baseball stadium, you may in effect have monopoly pricing, where attendees can either pay what you decide to charge or be forced to go without. There’s a danger in getting too greedy, however, as customers can always elect to substitute a more reasonably priced snack alternative. Moreover, if they complain to the venue manager, that could cost you your place at the facility. Customers can also express their displeasure on social media, which could harm your reputation, or in extreme cases even take legal action.
Concessions pricing may be determined by what nearby rivals charge. If you’re a food truck concession selling crepes, and there are two other trucks nearby selling similar products, your food can’t be much more expensive unless you can differentiate it in other ways. This can place pressure on you to look for lower costs for your ingredients or otherwise streamline costs in order to obtain your required profit margin.