Multiunit restaurant productivity assessment using three-phase data envelopment analysis

This paper focuses on uncontrollable variables’ effects on multiunit restaurant productivity using data envelopment analysis (DEA). We argue the importance of first considering managerially uncontrollable (nondiscretionary) variables as inputs in the actual DEA model, with managerially controllable variables considered post hoc for their relationship to the efficiency scores. We illustrate the merits of this approach using data from a chain of 62 full-service restaurants. From a large number of candidate inputs, we arrive at a short list of uncontrollable inputs: hourly server wage, restaurant seats, and a coding variable representing whether the restaurant is a stand-alone facility. Output variables in our model were daily sales and tip percentage. We find that just under 12% of the restaurants operate efficiently and that the average efficiency for the chain is 82%.     

Restaurant experiences triggering positive electronic word-of-mouth (eWOM) motivations

This study empirically examined which restaurant experiences trigger customers to engage in positive electronic word-of-mouth (eWOM), where the quality of restaurant service (food quality, service quality, atmosphere, and price fairness) is the antecedent of eWOM communication. The results of this study suggest that (1) restaurants’ food quality positively influences customers to spread positive eWOM, motivated by their desire to help the restaurant; (2) satisfactory restaurant experiences with service employees triggered positive eWOM, motivated by the need to help the restaurant or to express positive feelings; (3) a superior atmosphere in restaurants elicited positive eWOM motivated by a concern for others; and (4) price fairness in restaurants did not drive restaurant customers toward eWOM. Additionally, this study investigated sources of positive eWOM and types of eWOM media used among opinion leaders in the restaurant industry to enhance the practical implications of the study regarding online marketing. Because of the small number of opinion leaders in the study sample, specifying who the opinion leaders were (the source of eWOM) and the type of eWOM media the opinion leaders used had no effect. Further discussion and implications are provided in the text.     

Why do customers switch? More satiated or less satisfied

This study investigated whether restaurant customers switch to other restaurants due to satiation or diminished satisfaction. To achieve its objectives, this study extended well-known relationships among perceived quality, satisfaction, and behavioral intentions by including satiation and further examined the role of satiation on switching intentions. The results of this study showed that satiation was negatively associated with satisfaction but differed from diminished satisfaction. Further, the study results endorsed that satiation significantly influenced switching intentions, whereas satisfaction did not. This supports that customers switch to other restaurants not because they are less satisfied but because they are satiated. Regarding the relationship between perceived quality and satiation, service quality and food quality considerably reduced satiation levels, whereas physical surroundings were associated with an increase in satiation. In addition, satiation fully mediated the relationship between perceived quality and switching intentions, which emphasizes the importance of satiation in customer switching intentions. Findings and implications are provided in the main body of this paper.     

Hotels and restaurants—are the risks rewarded? Evidence from Norway

The purpose of this paper is to apply accounting-based risk measures to describe and compare the risk involved in accommodation and restaurants to three other industries. It is found that the variation in earnings is particularly high in construction, but also significant in accommodation and restaurants. The volatility in construction is caused by variance in sales. Construction companies experience low profits when the economy is depressed, while earnings boom when the economy progresses. On the other hand, earnings in retail are stable. It appears that retailing provides low risk and steady profits.The sales variance in accommodation and restaurants is fairly low. The high variability in earnings is mainly caused by operational and financial leverage. Despite the high total risk, hotels and restaurants earn less profit than the other industries examined. Apparently, the market does not reward self-inflicted risk induced by high leverage. Perhaps Norwegian accommodation providers and restaurant keepers have concerns other than maximising profit and minimising risk, and owners’ lifestyles are reflected in the financial accounts. An alternative explanation might be that the accommodation/catering sector has had unrealistic expectations in the period covered by the research.     

Does a minimum wage increase endanger restaurant jobs? Examining the role of franchising

This study examined the effect of federal minimum wage increases on the U.S. restaurant industry. Based on the competitive labor market perspective, this study expected that minimum wage increases would negatively (positively) influence restaurant employment (compensation), while franchising would positively moderate the minimum wage-employment (minimum wage-compensation) relationship. The results of the analysis showed that minimum wage increases negatively influence employment, while franchising positively moderates the adverse effect of minimum wage increases on restaurant employment. This study also revealed that minimum wage increases positively influence per employee compensation, but franchising does not significantly moderate the relationship. This study suggested that franchising provides a buffer that absorbs the adverse effects of minimum wage increases on restaurant employment. Conversely, franchise restaurants may face potential service quality issues because franchise firms seem to strategically adjust full-time employees to part-time workers to address minimum wage increases.     

Effects of service quality and food quality: The moderating role of atmospherics in an ethnic restaurant segment

This study empirically examined not only the relationship between perceived quality and satisfaction/loyalty, but also the role of customer perceptions of atmospherics in an ethnic restaurant segment. Specifically, this study, using hierarchical regression analyses, investigated the direct effects of service quality and food quality on customer satisfaction and loyalty as well as the moderating effect of the perception of atmospherics, in Korean restaurants. As expected, this study showed that service and food quality have positive and significant effects on customer satisfaction and loyalty. This suggested that, similar to other restaurant segments, employee service and food are of great importance for ethnic restaurants as well. Verifying the moderating role of atmospherics, however, this study found that good employee service can be more effective for increasing the satisfaction and loyalty of customers with a low perception of the atmospherics compared to those with a higher perception. Further, providing quality food is particularly critical for creating customer satisfaction in ethnic restaurants where atmospherics are not satisfactory. More detailed findings and implications are also discussed.     

Change in Consumer Patronage and Willingness to Pay at Different Levels of Service Attributes in Restaurants: A Study in India

Consumer patronage and consumer willingness to pay are the two most important criteria for business development. The current study investigates the changing preferences of consumers in a developing economy with respect to three major service attributes from the restaurant industry: food quality, service, and ambiance. Results indicated that consumers give greater preference to quality over service in high-end restaurants and prefer service compared with ambiance in quick-service restaurants. Food quality was found to have strong interaction effect with two other variables. When food quality was improved from low to high, consumer preferences for ambiance and service tended to change accordingly in the same direction, but not necessarily at the same level. Thus, restaurateurs have a strategic advantage when they choose high quality food and an appropriate level of service or ambiance. Consumer expectations are significantly different for high-end, full-service restaurants and quick-service restaurants in service attributes.     

To cluster or not to cluster?: Understanding geographic clustering by restaurant segment

This study tested whether geographic clustering differs by restaurant segment due to the differences in consumers’ hedonic and utilitarian values by using Ripley’s K function and a Tobit model. This study found that higher priced restaurant segments have stronger clusters than lower priced restaurants, which implies that restaurants that focus on hedonic values tend to cluster more than utilitarian focused restaurants. However, the results differ depending on whether or not restaurants are located within a central business district (CBD). For example, quick service restaurants have stronger clusters than casual restaurants outside CBDs. Practical applications may apply to new restaurants that are attempting to open. Up-scale restaurants have the advantage of reducing research costs by locating near similar restaurants. Moreover, casual restaurants do benefit by clustering near existing ones under the condition that demand is not severely hurt by competition, while quick service restaurants benefit by diffusing from each other.     

A model for wine list and wine inventory yield management

Fine dining restaurants with extensive wine lists often have high-value wine inventories and low inventory turnover ratios that reduce the owner's return on investment. The restaurant management literature does not provide fine dining restaurant managers with the tools that enable them to evaluate and make changes to wine list selections, pricing and inventory levels in order to improve the returns from the investment in wine inventory. This paper contributes to the literature by drawing concepts from yield management, retail science and menu engineering to develop a yield statistic and analytical model for managing wine list and wine inventory productivity. WINSPID (wine sales per inventory dollar) is the product of wine mark-up and inventory turnover ratio. Graphs of wine sales and inventory data, mark-up and inventory turnover ratio enable the restaurant manager to analyse, improve and monitor the wine list, wine inventory and wine supplier performance.     

The effects of dining atmospherics: An extended Mehrabian–Russell model

This study examined the relationships among dining atmospherics, emotional responses, perceived value, and behavioral intentions, using Chinese restaurants as its research setting. Results of the study revealed that dining atmospherics had significant effects on customers’ positive emotions, negative emotions, and perceived value. Further, both positive and negative emotions and perceived value also influenced customers’ post-dining behavioral intentions. Perceived value not only functioned as the greatest contributor to behavioral intentions but also mediated the relationship between emotional responses and behavioral intentions. Positive emotions and negative emotions had asymmetric effects on perceived value. Positive emotions showed a stronger capability in predicting perceived value. Chinese restaurant managers must utilize the effects of restaurant atmospherics to improve customers’ perceived value of the restaurant and their revisit intentions. Other practical implications are discussed as well.     

Share repurchases and stock market reactions: Messages from the restaurant industry

It is generally accepted that investors tend to react favorably to share repurchases. However, it is actually not uncommon for investors to underreact to some share repurchases. Recently, a number of restaurant firms have spent huge amounts of internal cash on share repurchases but little is known regarding the market’s underreaction to share repurchases in the restaurant industry. Hence, this study attempted to identify factors that could mitigate market reactions to share repurchases. Analyzing U.S. restaurant firms, this study revealed that growth opportunities, franchising, dividend payments, and spending excessive free cash flows on share repurchases negatively impacted market reactions. However, the negative impact of growth opportunities was weaker for franchise restaurants than for non-franchise restaurants. This study provides useful managerial information regarding the timing of and the amount that can be spent on restaurant firms’ share repurchases.     

Impact of Restaurant Experience on Brand Image and Customer Loyalty: Moderating Role of Dining Motivation

This study seeks to determine which restaurant experiences influence the image of a restaurant's brand and formation of customers' loyalty. The research examines the connections among restaurant experiences, brand image, satisfaction, and loyalty in the context of full-service restaurants. This study also investigates the moderating effect of customers' dining motivations on the formation of brand image. The results of this study suggest that: (a) A restaurant's environment and food quality positively influences brand image and customers' satisfaction, (b) customers' perceptions of price fairness do not influence brand image but does affect customers' satisfaction, (c) development of customers' positive brand image does not drive satisfaction but does influence loyalty in full-service restaurants, and (d) customers' dining motivations moderate the relationship between restaurant experiences and perceptions of brand image. These results provide a basis for investigating which restaurant experiences are critical in eliciting development of a positive brand image and which have behavioral consequences. This study also offers mangers a perspective for developing marketing strategies to strengthen brand image in full-service restaurants.     

Does a server's attentiveness matter? Understanding intercultural service encounters in restaurants

Interaction between customers and servers from different cultures provides an interesting case of intercultural communication. Although a server's attentive service on customers is common in full service dining restaurants, especially in the United States, this may not be preferable to customers from different cultures. Two studies examined cultural differences between Americans and Japanese customers on their preferences regarding U.S. restaurant servers’ attentiveness and a moderating effect of culture on the relationship of server attentiveness with customer orientation, customer satisfaction and tip. A survey study (N = 975) and an experimental study (N = 145) found that server attentiveness had a positive effect on customer orientation, customer satisfaction and the amount of tip for Americans, but not Japanese customers. Implications and future directions were discussed.     

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.     

A data-driven approach to measure restaurant performance by combining online reviews with historical sales data

Restaurant management requires customer responsiveness to deal with increasingly higher expectations and market competitiveness. This study proposes an approach to simplify the decision-making process of restaurant managers by combining both live social media customer feedback and historical sales data in a sales forecast model (based on TripAdvisor data and the Bass model).Our approach was validated with internal and external (i.e., online reviews) data gathered from six restaurants. The collected data was processed using data analytics for developing a dashboard that provides value for restauranteurs by taking advantage of online reviews and sales forecast. Such dashboard was evaluated by restaurant management experts, which provided positive feedback, highlighting in particular the time saved in the decision-making process.     

Dimensionality of ethnic food fine dining experience: An application of semantic network analysis

This study attempts to find the underlying dimensionality in online reviews of fine-dining ethnic food restaurant experiences in Hong Kong. This research adopted semantic network analysis with Clauset–Newman–Moore clustering. Consequently, diverse and specific dimensionality was explored in this research, including ambiance, service, food, drinks, desserts, view, location, occasions, reputation and price. The content of the reviews on five types of ethnic restaurants was different in some dimensions. Marketers of fine-dining ethnic restaurants can select a particular focus when they promote their restaurants, develop menu plan and train staff members. This study implies that the quality dimensions of traditional restaurants may not accurately represent the factual dimensions, thereby resulting in implications for developing a new index of restaurant quality.     

Enhancing service quality improvement strategies of fine-dining restaurants: New insights from integrating a two-phase decision-making model of IPGA and DEMATEL analysis

The traditional IPA model has been considered to be a decision-making tool for service quality management. However, the IPA model does not meet the assumptions of the service quality gap, and also cannot explore the connection between service quality attributes, which can easily lead to decision-making errors of service quality management. The purpose of this study is to apply the IPGA model and DEMATEL to explore the service quality improvement priority of fine-dining restaurants and the causal relationship between service quality attributes, and use it as the decision-making reference of service quality strategy planning and resource reorganizing for the restaurant industry with limited resources. The study applied the customers of 8 fine-dining restaurants in Taipei City as the study object, and there are 502 effective samples. The study result shows that the dimensions of reliability, responsiveness, and assurance are concentrated here, and are the restaurant service quality dimensions that most need to be improved from the customer perceptive. In addition, the total effect of reliability is the highest among all the service quality dimensions. Reliability and responsiveness, in addition to impacting each other, will impact assurance and empathy. According to the study result, through IPGA and DEMATEL, the service quality performance of fine-dining restaurants and the resource input priority can be grasped more objectively and accurately, which can be used as a reference for manager to plan the service quality improvement strategy.     

Does offering an organic food menu help restaurants excel in competition? An examination of diners’ decision-making

This study aims to examine whether the presence of an organic food menu can positively influence diners’ decision-making. A 3 (restaurant segment: quick service vs. casual dining vs. fine dining) by 2 (price discrepancy between competing restaurants: small vs. large) scenario-based experiment was conducted with 405 U.S. consumers. MANCOVA results indicate that using organic ingredients offers a greater advantage for the quick-service segment regarding perceived food quality, attitudes towards the restaurant, and willingness to select, compared to casual and fine dining segments. The magnitude of a premium price of organic ingredients negatively influences such advantage in the process of consumers’ decision-making. When a large (vs. small) premium price is charged for using organic ingredients, customers’ preferences for the restaurant (over its rival) significantly drops to such an extent that customers are more willing to choose the competitor (i.e., rival restaurant with a conventional menu). Discussions and implications are further elaborated.     

Restaurant servers’ perceptions of customer tipping intentions

Customer reactions to service encounters have been studied with surprisingly little emphasis on how servers’ perceive customers. If tips are an incentive to reward service then beliefs about consumers’ tipping habits may impact service delivery. An extensive survey of restaurant servers revealed that regular patrons and males were thought to be the best tippers; teenagers the worst. Females perceived males, African-Americans and foreign customers to be better tippers than did males; self reported tip income for males was greater than for females. Server ethnicity was not a factor. Systematic monitoring of these server perceptions may ensure more homogeneous service delivery.     

Slim by design: Menu strategies for promoting high-margin,healthy foods

In a world of rising obesity, restaurants have become a regulatory target. One profitable but overlooked solution may be for restaurants to focus on menu engineering strategies that could increase sales of relatively healthier, high margin appetizers and entrées and help diners become slim by design. Recent lab and field research in consumer psychology and behavioral economics offer promising solutions that responsible restaurants can use to profitably guide their customers to healthier decisions by using the three-step menu engineering process of (1) shifting attention, (2) enhancing taste expectations, and (3) increasing perception of value. A review of these studies provides key implications that can both increase the healthfulness of what customers order along with the profits of the restaurant.