Determinants of a restaurant average meal price: An application of the hedonic pricing model

This study applies the hedonic pricing model to examine important attributes influencing average customer meal prices in restaurants in Seoul, Korea. Data from 185 restaurants were collected via Internet, phone interviews, site inspections, and ZAGAT Survey, and analyzed using OLS regression. The log-linear model was found to be most suitable for the data, and the proposed hedonic model accounted for as much as 73.7% of the variation in meal prices. The results indicate that food quality and décor were important determinants of restaurants’ average meal prices while service was not. Furthermore, the study found that a restaurant's location within the building (1st floor), the types of cuisine served (Japanese and Italian), parking facilities, private dining settings, franchising, and the number of blogger reviews (e-WOM) have significant effects on restaurants’ average meal prices. The model will provide useful information for restaurateurs in deciding effective menu pricing strategies.     

An examination of executive compensation in the restaurant industry

The purpose of this empirical study is to examine executive compensation in the restaurant industry. The effects of a set of accounting-based performance measures, market-based performance measures, and executive-related factors on the compensations of firm CEOs, other senior executive managers, and board members were examined. Drawn from 16 consecutive years of data and a sample of over 2200 observations from restaurant companies, the findings revealed that determinants of equity based compensation vary by different types of executives. In addition, this study supports the notion that executive compensation in the restaurant industry is determined not only by firm performance measures but also by executive-related characteristics such as tenure.     

Analysis of the financial practices of high and low performing firms over periods of peaks and troughs of the restaurant industry cycle

This study examined the financial practices of high and low performing firms in the restaurant business over the industry cycles. The purpose is to determine whether differences exist in the financial practices of high performers versus low performers during different stages of the cycle. In this manner, this study is able to reveal the nature of financial practices of successful firms in the restaurant business. Results show that the patterns of exercising their financial strategy over the industry cycles are significantly different. The findings of this study can be used for improving corporate investment performance through understanding the cyclical behavior of the economy and the restaurant industry. This should then presumably result in competitive investment decisions of various firms, thereby improving the effectiveness of resource allocation.     

Entrepreneurial motives and characteristics: An analysis of small restaurant owners

The purpose of this study was to gain information about the characteristics of small restaurant owners in China. The data for the study were hand-collected by survey questionnaires in four cities across three provinces in China. We found three main results. First, small restaurant entrepreneurs were characterized by one of three distinct motives in that they were autonomy seekers, family protectors, or profit seekers. Second, their funding sources were predominantly private rather than institutional. And third, the entrepreneurial business was the main source of the family's income. These findings have implications for development programs, financing, and education in developing China's restaurant industry. This study appears to be the first to investigate empirically entrepreneurial activity among small business owners in the Chinese restaurant industry.     

Determinants of corporate cash-holding levels: An empirical examination of the restaurant industry

This study examines the determinants of cash-holding levels for restaurant firms. After examining a panel data set obtained from 125 publicly traded US restaurant firms between 1997 and 2008, the study provides evidence that restaurant firms with greater investment opportunities tend to hold more cash. At the same time, large restaurant firms, firms holding liquid assets other than cash, firms with higher capital expenditures, and firms paying dividends were shown to hold less cash. The results are generally supportive of the trade-off theory of cash holdings. In particular, both precautionary and transaction motives play important roles in explaining the determinants of cash holdings for restaurant firms.     

Explicit expression of anti-black biases in the full-service restaurant industry: Legal responsibilities and risks

Anecdotes detailing racial prejudices and discriminatory treatment of Black Americans while dining in full-service restaurants surface routinely in the popular press. These anecdotes are buttressed by a small number of studies documenting evidence of racist language and observed mistreatment of Black restaurant customers. In an effort to further explore the pervasiveness and correlates of such explicit expression of anti-Black biases in restaurant workplaces, this study presents findings from an online survey that was administered in two independent, large, and demographically diverse samples of current restaurant employees. We find that on average between 15 % (Qualtrics sample) and 24 % (Facebook sample) of participants agreed with statements indicating that racist language and discrimination against Black customers is common in the restaurants where they work. We explore the individual and organizational correlates of such explicit expression of anti-Black biases in restaurant workplaces and highlight the associated legal ramifications. We conclude by encouraging restaurateurs to take action against manifestations of racial prejudice in their establishments in order to fulfill their legal responsibilities to both their customers and their employees and thereby to minimize the threat of litigation.     

Factors influencing the effectiveness of online group buying in the restaurant industry

Group buying, which provides daily discounts for various services and products, is a new form of marketing that has attracted the attention of both practitioners and academic researchers. However, it is unclear what factors influence the effectiveness of a group buying promotion. This study presents an analysis of 862 restaurant group buying deals based on the secondary data collected from a restaurant guide website. The results indicate that group buying effectiveness – namely, the number of coupons sold, satisfaction improvement, and return intention of group buying customers – can be affected by the discount depth of a deal as well as the service quality and popularity of a restaurant. These findings provide useful insights regarding the elements that are necessary to make a group buying promotion work.     

The effect of increasing employee compensation on firm performance: Evidence from the restaurant industry

This study examined the effect of employee compensation on restaurant performance from both short-term and long-term perspectives. The results of this study showed that increasing employee compensation immediately enhances (decreases) restaurant revenue growth (profitability) but decreases (improves) restaurant revenue growth (profitability) after one year. The results suggested that restaurant firms can utilize employee compensation as a management tool to enhance performance in terms of both short-term revenue growth and long-term profitability gains. The results further implied that restaurant firms could consider making small but continuous increases in employee compensation to maintain higher performance outcomes. However, such increases should be implemented with appropriate initiatives to reduce shirking behaviors by overpaid employees.     

Service in the restaurant industry: an American and Irish comparison of service failures and recovery strategies

The literature on service failure and recovery has to date tended to focus on American experiences or on single nation studies. As large numbers of service firms continue to seek opportunities in foreign markets, more effort needs to be directed at assessing cross-national similarities and differences so that appropriate strategies can be developed. This study compares the effects of failure and recovery strategies in the restaurant sector of two countries with very different dining traditions—the United States and Ireland. Analysis of over 700 personal interviews with restaurant customers shows that there is much commonality with regard to service failures but significant differences in recovery efforts. Especially noteworthy, however is that American customers are much more likely to expect such measures. In both countries, overcompensation methods do not appear to influence customer repeat patronage intentions, nor do they have significant influence on the rating of recovery effort. This last finding suggests that restaurants could and should use less expensive recovery methods.     

Determinants of using operating lease in the hotel industry

This study investigated the determinants of using operating lease in the hotel industry. The hotel industry has utilized operating lease not only for operating equipment but also as a financing instrument through ‘sales and lease back.’ This study found that hotel firms with less internal funds and/or with higher debt ratios are more likely to use operating lease. Contrary to the studies of other industries, hotel firms with less financially distressed are more likely to use operating lease. This study indicated that operating lease decrease as firm size increases, but only up to a certain level, after that level operating lease increase as firm size increases. Contrary to our expectations, the growth opportunity of hotel firms appeared to have no relationship to use of operating lease. These findings contribute to further understandings of hotel industry-specific information regarding what drives hotel firms to use operating lease.     

CSR and financial performance: The role of CSR awareness in the restaurant industry

Initiatives for corporate social responsibility (CSR) often have served business as a source of competitive advantage. However, despite firms’ attempts to capitalize on their CSR efforts, stakeholders’ low awareness of these initiatives makes it difficult to realize the full value of the strategic CSR. In this study, we propose and test in the context of the restaurant industry whether CSR awareness, measured by CSR media coverage, moderates the relationship between the social and financial performance. Our results support the notion that stakeholders’ CSR awareness affects the manner in which CSR initiatives can result in financial gain. Our research has implications both for firms’ investment policies in social initiatives and for highlighting the importance of communicating CSR initiatives to relevant stakeholders.     

Estimating the impact of entertainment on the restaurant revenues of a Las Vegas hotel casino: An exploratory study

Considering the growing presence of non-gaming amenities in a mature casino market such as the Las Vegas Strip, this study examined the indirect contribution of showroom entertainment to casino-operated restaurant business volumes. Using the internal data of a Las Vegas hotel casino, this research found a statistically significant and positive relationship between daily showroom headcounts and food and beverage revenues. For each additional show attendee, daily food and beverage revenue increased $6.96. This finding suggests that casino executives should consider leveraging show traffic with additional revenue-enhancing venues such as restaurants.     

Internationalization and exposure to foreign currency risk: An examination of lodging firms

Corporate internationalization has often been linked with exposure to risk arising from foreign currency valuation. The theory of economic exposure, however, postulates that when demand and activities are sensitive to purchasing power parities, the value of domestic firms can also be influenced by exchange rates. Suspecting that domestic lodging firms are subject to foreign currency risk, the current study applied a cash-flow model in order to quantify the operating exposure of US lodging firms against currencies that significantly account for visitors to the U.S. Heckman's two-step estimation was subsequently used to examine the effect of internationalization on estimated exposure coefficients. The results indicated that domestic firms are more likely to sustain foreign currency risk, as multinationals may be capable of diversifying away the risk. The higher foreign sales ratio of lodging firms led to greater foreign currency risk, while the increased degree of operational hedging and franchising mitigated the foreign currency risk of multinational lodging firms.     

Impact of the COVID-19 pandemic: Evidence from the U.S. restaurant industry

The current study examines how the effect of COVID-19 on U.S. restaurant firms’ stock returns varies according to the firms’ pre-pandemic characteristics by employing three firm-level dimensions (financial conditions, corporate strategies, and ownership structure). Employing 795 firm-year observations obtained from annual reports and other databases, this study found that restaurant firms with past characteristics of larger size, more leverage, more cash flows, less ROA, and more internationalization are more resilient to stock declines reacting to COVID-19 than otherwise similar firms. Whereas, dividend, franchising, institutional ownership, and managerial ownership did not show any significant moderating effect on the relationship between COVID-19 and stock returns. This study sheds light on the research topic by providing insights into drivers of restaurant firm’s stock returns during the COVID-19 shock. Future studies can employ the variables and method used in the current study to extend the understanding of the issue.     

An exploratory study of managerial compensation in the restaurant industry

ABSTRACT

Set within the human capital framework, the focus of this exploratory study is to investigate how individual and industry attributes affect the earnings of salaried restaurant managers in the United States. Previous compensation studies in the restaurant industry have almost exclusively focused on executive compensation and its relationship to a firm's financial variables. Given the size of the industry, it is important to investigate compensation practices at various levels of its leadership. The findings show that relevant work experience, gender, education, race, and property size are significant attributes effecting restaurant managers’ compensation. Practical implications are provided.     

The financial impact of online customer reviews in the restaurant industry: A moderating effect of brand equity

The salient impact of electronic Word-of-Mouth (eWOM) on firm performance has been widely noticed by scholars and practitioners. While eWOM serves as an important source of information that helps reduce perceived uncertainty risks in service purchases, it is highly likely that other sources of information are simultaneously used with eWOM in the purchase decisions. Thus, this study empirically examined the financial effects of restaurant eWOM (review volume and review rating) and their changes in the presence of brand equity. Three-stage least squares analysis was employed in the empirical investigation. Our findings revealed that review volume and review rating contributed to restaurant profitability. Brand equity was found to moderate the effects of the review attributes on restaurants profitability, which implies that eWOM has a greater influence on the financial performance of weak-branded restaurants than strong-branded ones. Implications for researchers and practitioners are discussed.     

Patterns of occupational segregation by gender in the hospitality industry

This paper investigates the different patterns of occupational gender segregation in the hospitality industry in Andalusia. The methodology is based on the segregation curve and different segregation measures. The results show that cleaning jobs, customer service and jobs with less responsibility in the area of administration are dominated by women, whereas maintenance, jobs with a high level of responsibility in the areas of kitchen, restoration, and administration are dominated by men. Occupational segregation increases as the age of the workers and size of the establishment increase, but decreases with level of education and is less common among workers with training contracts, whereas it is greater among part-time and seasonal workers. Horizontal segregation is more marked than vertical segregation in the hotel industry, but horizontal and vertical segregation is similar in restaurants. Finally, vertical segregation decreases with the size of the establishment, whereas horizontal segregation increases.     

Duration of advertising effect: Considering franchising in the restaurant industry

How long do the effects of advertising actually last? This issue has received increased attention in the fields of marketing, accounting, and finance. However, despite the importance of advertising for firm management, research on the effective duration of advertising costs still remains in the exploratory stage. To address this research need, this study investigated how long advertising costs function to increase sales and intangible value in association with franchising in the restaurant industry. The results of this study showed that advertising expenditures had a positive short-term effect on sales growth, whereas advertising did not significantly impact sales growth in the long run. However, when advertising expenditures were considered together with franchising, the long-term interaction effect was positively significant. The results suggest that advertising has long-term positive effects on sales growth only in restaurant firms using a franchising system. This implies that advertising costs should be recognized as investment-like assets only in franchising restaurant firms. On the other hand, advertising ratio had both positive short-term and long-term effects on intangible value. In addition, once the advertising ratio was associated with franchising, the long-term interaction effect was negatively significant. More detailed explanations and implications are included in the conclusion.     

Moderating effect of capital intensity on the relationship between leverage and financial distress in the U.S. restaurant industry

During the recent and ongoing economic turmoil, countless businesses have been facing financial distress and many have filed for bankruptcy. This issue is especially critical for the restaurant industry due to restaurants’ sensitivity to economic fluctuations. Therefore, the purpose of this study is to examine the financial distress issue in the U.S. restaurant industry. In particular, the study examines a moderating effect of capital intensity on the relationship between a firm's leverage and degree of financial distress. The dataset includes publicly traded U.S. restaurant firms during the period 1990–2008. The study measures the degree of financial distress by modified Z-scores, and findings suggest a positive moderating effect of capital intensity on the relationship between leverage and financial distress.