The topic of food concessions was on a Planet Money podcast last November. The show focused on the Falcons and how they were doing going the other direction with it, but the show also touched upon why concession pricing in general is so outrageous.
Essentially, the Delaware North's of the world, who the Twins contract with to provide concessions, will set the initial cost really high across the board (which is why some products cost the same whether you are at Yankee Stadium or Target Field where the fan base income is very different). The Falcon's went a different direction.
FOUNTAIN: If you're like me, you probably thought the reason stadium food prices are so high is because the teams just want to wring every penny out of fans. But that's only half true. I head up to the front office to meet Rich McKay, the president of the Falcons. And he tells me the way stadium food usually works is teams hire a food company to do everything and then have almost no say after that.
Could you complain about - I don't know - warm beer?
RICH MCKAY: Yes, you can complain. That's all you do is complain. You don't - it's - nothing happens as a result of it.
SHAPIRO: The reason is big multinational companies compete for these contracts. And the bidding gets intense. The company that wins usually ponies up millions, sometimes tens of millions of dollars upfront and then splits the revenues from the sales with the team. And so, according to Greg Beadles, the COO of the Falcons, before a single Bud Light is even poured, those companies have dug themselves into a big hole.
GREG BEADLES: So for them to get their money back, there's only two sides of the balloon left to squeeze. And it's food quality; let's buy the cheapest food that we can. And let's charge as much as we can. And maybe, like, you know, a third is labor; let's have as few people as possible to make all of this happen.
FOUNTAIN: That's why it takes so long to get a hot dog. That's why the hot dog costs so much, and that's why it might be cold.