“It's really just about cost of goods. You're paying a majority of the ticket on first-run movies to the studio. And on food, you're paying what rounds to 25% of just food costs, right? So you have a much better profit margin.”
How I Built This (Guy Raz) · Startups & Venture · October 2026
Guy Raz noted that by 2003 Alamo Drafthouse made more from food than from tickets, and League explains the economics. He puts the split at roughly one-third box office and two-thirds concessions, with drinks the most profitable part.
Transcript
And it was a very similar situation where the landlord called us and said that there was a competitor potentially moving in. I feel like most of the expansion that we've done or that we did early on was entirely based in fear.
Yeah. I read that by 2003, Alamo was making much more money from food than ticket sales. And that might have happened even before, which makes sense, right? I mean, because that's really where you, especially drinks, right? When people are buying multiple drinks.
I mean, it's all, it's really just about cost of goods. You know, you're paying a majority of the ticket on first-run movies to the studio, you know. And on food, you're paying what rounds to 25% of just food costs, right? So you have a much better profit margin. So there's still profit to be made in the movie tickets, but the beer and alcohol costs are less than food costs. So that's where the real profit was. But it was, you know, it's a balance of probably one-third box office, two-thirds concessions.
All right. So you've got these three locations, I guess, and you're thinking about a fourth location. And I think around this period, people sort of approach you about maybe franchising, and you did it. You opened a new franchise, a few franchises, I think, around Texas, like in Houston and maybe…
Well, at that point, I think we had become really ingrained in the Austin community and were enjoying the aspects of community building at a real scale. And there was more headache on the franchising. And I didn't, it wasn't where my passion was.
Yeah, there was probably a lot of lawyers and meetings. And you want to mount cool movies and have chit chats with directors in front of audiences, probably.
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